Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

Today I raise the legitimate concerns of many of my constituents about the negative gearing policy of the Labor Party. The policy should be held up as an example of what not to do in public policy making, and I will say why. I certainly consulted widely, and I will continue to do so through Cowan, as a local resident and the local member. All should be aware that this relates to basic tax principles, being able to deduct the cost of it generating income. However, beyond that point, the impact on property owners and renters will be severe. Labor's negative gearing and capital gains tax plan is reckless and hasty, and it is designed to raise money and address housing affordability. That is made clear by their statements and their interjections in question time. Their plan will see a loss of 30 per cent of buyers for existing properties, and obviously that will see the price of existing homes fall in value as fewer buyers are in the market. Labor thinks that Australians will be lining up to thank them for this policy, but, when Australians realise that under Labor they could owe more on their mortgage than their home is worth, Australians will not welcome this policy.

An additional point worth making is that, when lenders see the situation of negative equity emerging across the suburbs of Australia, they will then consider acting to restore the ratio of the bank's security against the loan, and that action is likely to be asking for a top-up payment from the borrower. This would be difficult for many to pay and would crash confidence. Foreclosures could follow if additional payments could not be made.

Labor offers this country an economic and personal financial crisis. Labor should consider the reality check that already there has been a substantial drop in investor property purchases due to such talk about negative gearing changes. I do not want this important economic sector being damaged, and Labor has demonstrated the folly of reckless changes to tax policies in this area. In Perth it is known that no real estate agent's business can survive on sales commissions alone, and that they need the fees generated by managing rental properties. Labor's policy will see a reduction in rentals, with fewer investors in the existing property market, and as investors see that investment in new property does not give them a flexible asset that can be sold to other investors.

Currently, more than 80 per cent of rentals in Perth are owned by investors. Based upon the Labor policy, rental property numbers will fall across the board, rents will rise and real estate agent businesses will fail because of a lack of rental stock. As a result of Labor's policy, the industry faces rental properties becoming unaffordable, increasing numbers of home loan defaults, and state and territory public housing list blow-outs. Homelessness will rise, and the net worth of middle-income and lower income families will fall. There will also be a loss of jobs in the real estate sector, with reductions in rentals. The Labor policy will be a catastrophe for this country. On the issue of support for first home buyers, state shared equity schemes such as Keystart in Western Australia are far better options than confidence-crushing reckless policy such as Labor produces.