Bill Shorten (Maribyrnong, Australian Labor Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister. Given that we now know that the Prime Minister's idea of tax reform is giving large multinationals and high-income earners a tax cut, isn't this just another example of an out-of-touch Prime Minister delivering for the top end of town? And since when did negative gearing become a basic economic freedom?

Honourable Members:

Honourable members interjecting—

Tony Smith (Speaker) Share this | Link to this | Hansard source

Members on my right! The member for Petrie and the member for Corangamite!

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

In answer to the second part of the honourable member's question as to when the ability to deduct net rental losses and net investment losses against personal income became recognised in the tax code, the answer to that question is 1915. It is not a recently developed idea. Let me give an example on the question of negative gearing. As we know, most people who engage in negative gearing, who deduct net rental losses against their income, are earning $80,000 a year or less. Ninety per cent of people who engage in negative gearing own two properties or less, and almost all of them own one. The average deduction is less than $10,000 a year. So, this is not a scheme for the super rich.

Labor often says: 'Why should people be able to negative gear multiple properties?' That is a question they can pose but they have not provided an answer to it. What they have done is banned it for everybody, unless you have a lot of investment income. Let me give an example—a very typical one. Let's give an example of a nurse who earns $50,000 a year. Let's say after a Labor government and after their policy is introduced she nonetheless takes out a loan to buy an old apartment as an investment property. She rents it out and the rental income is $7,000 less than the interest on the loan and the other deductible costs. She works hard every weekend. She undertakes renovations in between her shifts so she can rent out the property and help fund her retirement. It is a very typical case. Under Labor, Katrina, the nurse, would be unable to use the $7,000 loss to reduce her $50,000 taxable income to $43,000. She will have to pay an extra $2,520 in income tax—an increase in her annual income tax bill of 42 per cent. There is Labor's fairness working. That is Labor's a approach to fairness—denying basic economic rights, basic freedoms, to ordinary working Australians while reserving them to people with large investment portfolios and investment income. I would say to every member opposite who has an investment property or several and is negative gearing it that perhaps they could put up their hands now and acknowledge the terrible wrong that they are committing.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The member for Braddon will resume his seat.

Ms MacTiernan interjecting—

The member for Perth is warned.

An honourable member interjecting—

Members on my right will cease interjecting.