Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

My question is to the finance minister, Senator Cormann, representing the Treasurer, who I believe is still Mr Joe Hockey.

Government Senators:

Government senators interjecting—

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

We hit a sore spot. Why has the government—Mr President, it is so rowdy.

Stephen Parry (President) Share this | Link to this | Hansard source

Order! Well, Senator Ludlam, do not invite that sort of rowdiness.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Why has the government ruled out considering changes to negative gearing or capital gains tax concessions as part of its tax review? If the government is not persuaded by the costed proposal to reform negative gearing introduced by the Australian Greens, will it at least reconsider its opposition in the light of the views of the head of the Abbott government's Financial Systems Inquiry, David Murray or Justice Richard Edmonds, who believes Mr Hockey's tax review has 'turned septic'? In the face of the evidence, will you include consideration of these measures in your tax review and, if not, why not?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I thank Senator Ludlam for his question and I am pleased to confirm again that the government has absolutely no plans to make any changes to negative gearing. The reason is that this government understands about market economics. We understand that the price of anything is a function of supply and demand. If you are going to reduce the supply of private rental properties, you will push up the cost of rents and you will reduce housing affordability for those Australians who are currently renting. That, of course, was the experience of the Hawke government: even the then Treasurer, Paul Keating, after having pressed ahead with a change in this space, had to pull back. Of course, at various times, various Labor politicians, who tried to make a name for themselves, popped up and tried to suggest that they would make a change. Mark Latham, when he was the shadow Assistant Treasurer, said he was going to make changes to negative gearing until he was called back by the then leader, Simon Crean. I notice there is another view that perhaps the Labor Party wants to go down again into this negative-gearing space but, when I was listening to Mr Shorten the other week, I was finding it very hard to understand what Mr Shorten was actually saying. Was he in favour of a change to negative gearing or was he in favour of the status quo? This led to his answer in the press conference last week, but I did not have a clue what he was talking about.

Stephen Parry (President) Share this | Link to this | Hansard source

Pause the clock.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Mr President, I rise on a point of order. Careful examination of the Hansard will show that I did not ask the minister about the Labor Party's position; I asked about the government's position. Why are you even ruling out consideration of these messages?

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Ludlam, there is no point of order. The minister up-front answered your question very succinctly and the minister is enhancing his answer, which he is entitled to do.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I would encourage Senator Ludlam and the Labor Party to have a bit of a read of the opinion piece by the former Kevin Rudd speechwriter in The Australian today where he very succinctly pointed out that this proposition that somehow negative gearing is a tax break for the rich is false. I might just inform the Senate that the bulk of people with negatively geared investment properties are average income earners—883,325 of the 1.26 million people or 70 per cent of those claiming the rebate earn less than $80,000. Around half a million— (Time expired)

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Why have a number of government spokespeople, including the Treasurer, the Prime Minister and most recently the finance minister in this Senate, repeated the completely baseless myth that winding back negative gearing will increase rents? Will the minister commit to revising Liberal Party talking points to ensure that the debate proceeds on the basis of facts rather than people simply making stuff up?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

It is not a baseless myth; it is actually lived experience. You can look no further than the experience of the Hawke government with Mr Keating as Treasurer when it tried to intervene in the market in this way. The basic proposition here is that we should stop people from being able to deduct the cost of generating income from their taxable income. That is what Senator Ludlam proposing. That is not a sensible way of running an economy.

I will finish by providing the factual information that I was starting to provide to the Senate before. Around half a million Australians in the 32.5 per cent tax bracket negatively gear. These are Australians earning between $37,001 and $80,000—hardly rich Australians. I understand that the Left in Australia and the Labor-Greens alliance want to run a class warfare campaign, trying to say that this is an unfair and unreasonable tax break for the rich. But, no, it is not, actually. (Time expired)

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Mr President, I ask a final supplementary question. I refer to Ipsos polling published this morning indicating seven out of 10 Australians describe housing in our capital cities as unaffordable for prospective first home buyers, which is in direct contradiction to Mr Hockey's offensive free advice of a few days ago to just get a better job. Will the government commit to restoring the half a billion dollars of funding it tore out of housing affordability programs, including the National Rental Affordability Scheme, capital works for homelessness services, the first home savers scheme, the National Housing Supply Council, Homelessness Australia, the Community Housing Federation and National Shelter— (Time expired)

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Obviously the government is very concerned to ensure that housing is as affordable as possible, but we also understand the laws of the market. The truth is that, if you want to make housing more affordable sustainably, you need to boost supply rather than boost demand. If you boost demand in an overheated market then you will push up the price of housing even further. This is one of the reasons why we will not take up Senator Ludlam's proposition to get rid of negative gearing.

Negative gearing is not a specific tax concession. 'Negative gearing' is a colloquial term for legitimate tax deductions for financing expenses associated with investments. The principle of allowing deductions for expenses incurred in the earning of assessable income is well established in our tax system. Incidentally, job classifications from the ATO show that the majority of people accessing negative gearing are teachers, nurses, clerical workers, emergency workers and salespeople. So the Greens can continue to run down this path where they will be hurting Middle Australia— (Time expired)