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Wednesday, 24 February 2016
Page: 2068


Mr SHORTEN (MaribyrnongLeader of the Opposition) (14:16): My question is to the Prime Minister. This morning when speaking about Labor's negative gearing reforms, the Prime Minister predicted a decline in housing prices. But earlier this morning, when also speaking about Labor's reforms, the Assistant Treasurer predicted an increase in the cost of housing for all Australians. Prime Minister, if you cannot even get your scare campaign right, doesn't this just show that your government is in complete and utter chaos?

Mrs McNamara interjecting

The SPEAKER: The member for Dobell will not interject.

Mr Morrison interjecting

The SPEAKER: The Treasurer will not interject.

Mr Sukkar interjecting

The SPEAKER: The member for Deakin will cease interjecting.

Mr TURNBULL (WentworthPrime Minister) (14:16): I thank the Leader of the Opposition for his question. Earlier today, his shadow Treasurer published a press release, which referred to an economic report on this subject by ACIL Allen last year. What they omitted to mention was this comment on what was understood to be Labor's policy, which is essentially limiting negative gearing to new dwellings. They described it as:

… likely to add considerable turmoil and volatility to rental property and housing markets.

…   .   .

… the main and lasting effect of the measure would be to add significant distortions to investment in different categories of residential property—

that is the bit they did not quote.

What the Labor Party proposes to do is administer two contradictory shocks, massive shocks, to the residential housing market. They are proposing to remove—

Ms Butler interjecting

The SPEAKER: The member for Griffith is warned!

Mr TURNBULL: from the market for established dwellings one third of demand. All investors would be gone. When I say all investors, I mean all investors: even if an investor borrowed an amount of money such that the interest was less than the rent, they still would not invest after 1 July 2017, because the Labor Party proposes to eliminate the deduction of any net rental losses. So you might be an investor with a very modest loan, which is normally covered by the rent. But what if the tenant goes away? What if the tenant trashes the building? What if there is some damage?

Ms Butler interjecting

The SPEAKER: The member for Griffith will leave under 94(a).

The member for Griffith then left the chamber.

Mr TURNBULL: You cannot deduct that. The reality is: the Labor Party policy does not simply apply to net interest losses; it applies to all net rental losses. That is their document. This will eliminate all investors from the established property market. That naturally will cause prices to fall—how can it not? The market is subdued. We heard yesterday that it is forecast to grow at relatively low rates—and indeed in Perth it is going to decline, so it is estimated.

Into that subdued market environment—an environment most of Australians' net worth where resides—the Labor Party provides this enormous shock: removing a third of the buyers. They are putting Australians' savings at risk. They are putting the values of their homes at risk. At the same time, they then want to pour all of that investment interest into new properties which can only be designed—presumably, entirely contradictorily—to drive those prices up. It is the most ill-conceived, potentially destructive policy ever proposed by any opposition. How could you do something as destructive as that?