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Monday, 29 February 2016
Page: 1330

Senator BACK (Western Australia) (16:46): At some time in the second half of this year, the Australian people will have to make their minds up about who they trust to manage our economy into the future. It is a critically important question at any time, but especially so now as we have the black clouds hanging over the world economy. The next five to six years are going to be very difficult for this country, this region and the world generally. This is the reason why the Turnbull government is consulting widely, taking advice from every sector and not rushing precipitously into decisions.

The contrast is clear, and that contrast is with the alternative: the Labor government of the last six years. It was a government that was not able to carefully consider options and a government that was not able to stand back to consult widely from broad, cross-section of the community before they made their precipitous decisions and set about destroying what was a very, very sound economic circumstance in this country. That was one of no net debt, no deficits and cash in the bank.

Let me just reflect on a couple of those quickly, like the Gillard memorial halls. That, as we know, largely wasted around $16 billion of expenditure. There was a circumstance in Victoria where by the time the money actually came to be spent there was not a need to do it, but they could not claw it back. There was a circumstance in New South Wales where we know there was fast overcharging of poor quality properties, where schools had the situation of classroom blocks being knocked down to put temporary classroom blocks in place that were inferior. We had to—through the exercise of the committee of which I was a member—organise Mr Brad Orgill and his group to do an in-depth evaluation, in which he came up with the failure of what was a precipitously organised program.

I then move to the mining tax, a tax which excluded Mr Martin Ferguson—probably the only person on that side who had any knowledge at all of the resources and energy sector—from a series of negotiations with major miners. They were told by this side and by people in the community generally that the mining tax would earn no net income at all—and it did not. Companies paid millions of dollars to be able to prove they would not be paying the tax. But worse than that, Mr Swan—the then world's best Treasurer—made the estimate as to how much money he would make from this mining tax and then spent it. As time went on, we knew very well that the mining tax would make no money and that it would cost more. Imagine a tax, even from a Labor government, that actually cost more than it brought in. So then we had a circumstance where it had to be reversed. I could go on further: pink batts. I could talk about the vehicle leasing scheme, et cetera.

Now, I turn to the latest of the failed examples of poor planning by an incompetent group, which is now in shadow ministry, and that is negative gearing. The property sector is the largest sector in the nation: it accounts for 11½ per cent of our national wealth and it creates more than 1.1 million jobs in this economy, more than mining and manufacturing combined. Understand that there are some 840,000 Australians with taxable incomes below $80,000 a year who negatively gear property. That includes, let me read them out: 530,800 teachers; 52,000 retail workers; 35,900 nurses and midwives; and 200,600 hospitality workers. But understand that—because I will get to why it is such a poor policy by Mr Shorten and his group—91 per cent of the Australian community who negatively gear have only one or two properties, so we are talking about nine per cent.

Why is it such poor policy? That is because what Labor proposes would be to allow negative gearing only on new property. But what happens to that property? Whether it is purchased and built by a homeowner initially or by an investor, immediately once it is sold it ceases to be eligible for negative gearing. Therefore, this great idea of encouraging people to only negatively gear in new properties by its very definition has a very, very short time frame. So what we know will inevitably happen is that we will see a deterioration of prices in that sector, including in all of residential construction.

It was put to me on the weekend—and I do not believe it; I do not think Labor is so cynical—that residential construction, one of the biggest employers in the construction sector, is not unionised. I refuse to believe that Mr Shorten's motive would be to try to bring down a sector simply because it is not unionised. But we know the importance of the supply to construction, the real estate industry, real estate sales industry, property management, strata management, property maintenance industries and property investment itself.

That is why the proposal by Mr Shorten and his group is a poor one. Yes, I negatively gear. Yes, inevitably what happens is that over time—if you invest wisely—your properties end up positively geared. I have two properties positively geared, so they are now net contributors to the Australian tax system. It is not just the negative gearing but the capital gains tax over time that is important. I asked a staff member from my branch office in Esperance—one who I have the pleasure of saying is here in Canberra with me at the moment—what her attitude and position is. With her permission, I will tell you. She is a single young person on a moderate income. She has a teaching qualification. She invested, initially, in a small rental property. I think she invested with another family member. To quote her: 'I considered negative gearing to be my risk insurance. I would probably not have invested in property as a means of wealth creation if I did not have the safety net of negative gearing. The money earned of course has been saved.' She has built equity and she is now in a position to put a deposit down on a home for herself, in Esperance. As she said, 'I would not have built an investment property as it is stressful, time consuming and risky. But having a small, cheap, older home there waiting was easy and it created wealth.' And she in fact is part of that numeric of teachers who have been involved in this process.

I say in conclusion that the people of Australia have got a simple choice in the second half of this year. Do they want a responsible Prime Minister who will consult widely and will use the breadth of his own business expertise over time and that of his colleagues to actually come up with tax policies that will work into the future, that will put us back into a position of surplus again, so that we can meet the black clouds that are over this country. That is who I say the Australian people need to select—not the pattern of the past, that we had a Labor government that followed on from the Keating government, which built-up $95 billion of debt, and now we have about $600 billion of debt.

I finish with the comment by Senator Scott Ludlam today about affordable housing. I join with him, it is a critically important issue we have to solve it. (Time expired)