Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

My question is to the Prime Minister. I refer to the Prime Minister's confirmation that people who are negatively geared can claim an increased tax deduction if banks pass on the cost of the bank tax. How much will these increased negatively geared deductions cost the budget? Why do banks and property investors get tax deductions while everybody else gets increased bank fees?

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

Really, that bow is so long that the honourable member is pulling—it is taller than he is! Really! So, it is a revelation that people who borrow money to buy income-producing property can deduct the interest from the income? Well, that is still the law in Australia—it still is. It has been there for more than a century, and it is only the opposition who are the ones who want to abolish that.

The honourable member knows this full well as he tries to create a cloud of mystery about this and as he tries to run that this is the real protection racket of the major banks. Now we are seeing it being run with great vigour. The fact is that the major bank levy will be a cost to the banks, and they will use it to calculate their net income in accordance with normal company tax principles. As he knows very well, people who borrow money are able to buy an income-producing asset and can offset the interest against the income from the asset.

Of course, the big threat to that is the Labor Party, which wants to limit the ability to do that only to people who have substantial investment income. So people who are seeking to buy an investment property or buy a business or buy shares or buy some equipment and who want to offset the interest costs against their wages or their salary or their professional income will not be allowed to do that by the Labor Party, because it is a party that talks about fairness but practises the exact opposite. Those with lots of investment income will be able to deduct their interest; those on wages and salaries will not. That is Labor's idea of fairness. It is the complete antithesis of fairness. The honourable member should be ashamed of himself for proposing a policy that is so at odds with all of the principles his party has purported to stand for for over a century.