Mr PEDERICK (Hammond) (12:01): I rise to support the motion moved by the member for Waite:
That this house opposes Bill Shorten and Labor's plans to abolish negative gearing and increase capital gains tax by 50 per cent, which would damage Australia's housing market and destroy equity in people's homes.
This is a very typical, short-sighted Labor policy. The Labor Party, both in this state and this country, are seen as a party who hate success. They hate employers, but they expect people to be employed. They hate people owning assets, but they still think that economic growth is going to come from somewhere. They think that things are going to roll along smoothly, they will suck tax out of people and everything will be rosy. That is not how it works.
There are a lot of battlers—hundreds of thousands of battlers—right across the market who have negatively geared property. They are the workers at the coalface, whether they be nurses, police, factory workers or farmhands—people having a fair crack to make a great future for themselves and who see the potential in negative gearing property.
We must remember that we are dealing with the Labor Party, who hate success at all levels. They may not say it publicly, but I think they do in some areas. They want to tax inheritance and death duties. They think that people who leave this earth should not pass on their success and that that money should be whittled away to everyone. I do not agree with that. Someone has worked hard, a family has worked hard or a couple has worked hard and they have created success. Why should they not enjoy that success?
With success come challenges. There are always challenges. People have a go and do not always win; sometimes they lose out. That happens too many times. If we do not have those risk-takers, those achievers, at all levels of society we will run into real trouble. If we do not have people investing in the housing market because they cannot see room for growth, where are some people going to live? We have already heard from other members on this side of the house that housing prices will decrease by 9 per cent and rents will go up by 10 per cent. I would have thought that some people who rent are Labor voters and some are Liberal voters.
We should be looking after the people who rent houses and make sure that housing is not just affordable but available. The housing market has definitely slowed, not so much here in this state but we have seen some massive slowdowns in the Eastern States, particularly in Sydney in New South Wales, and in Melbourne in Victoria. Prices have fallen for 12 consecutive months and property values in Sydney are down more than 6 per cent, and in Melbourne more than 4 per cent, from last year's peaks.
These movements followed intervention by the Australian Prudential Regulation Authority which sought to strengthen residential lending standards following an upsurge in lending to property investors. The decision by APRA to place a 10 per cent benchmark limit on the growth in bank lending to investors and clamp down on interest-only loans has had an impact. From a high of 10.8 per cent in mid-2015, growth in housing loans to investors has slowed to 1.5 per cent today. This has not come at the expense of lending to owner-occupiers, but credit growth has remained relatively stable at around 7.5 per cent over the last couple of years.
This has created a huge, changing dynamic away from investors driving much of the growth in the housing market to one where owner-occupiers are back playing the predominant role. This is particularly good news for people getting into the market for the first time. In the last 12 months, more than 100,000 first-home buyers received a loan approval, and that was the highest number since 2009. Their share of the overall number of owner-occupier loans was 18 per cent. This was significantly up from 12.9 per cent in early 2016. Acknowledging that the heat has come out of the housing market, the Reserve Bank said in its monetary policy statement:
Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low.
This 'pull-back is a welcome development', said RBA governor, Philip Lowe, and is putting the market 'on a more sustainable footing'. One of the world's leading rating agencies, Standard & Poor's, recently reaffirmed Australia's AAA credit rating and has commented positively on the orderly unwind in the housing market, which it says 'won't weigh heavily on consumer spending and the financial system's asset quality'.
But—and this is the big but—all the benefits now flowing from this managed transition housing market are at risk from the Labor Party's and Bill Shorten's reckless attack on negative gearing and the capital gains tax discount. In their determination to drive property prices further down, Labor and Bill Shorten are taking to the next election a policy to limit negative gearing to only newly constructed housing and to cut the capital gains tax discount on assets that are held for longer than 12 months from 50 to 25 per cent.
This will punish not only the 1.3 million people with negatively geared properties across Australia but everyone with equity in their home because when they eventually sell their property they will do so in a market with fewer potential buyers. This is exactly what will happen if this Labor government is elected next month. What is more, many of those accessing negative gearing are people the public would not consider rich. Of course they do not. As I explained earlier in my contribution, there are many people just trying to make life better for themselves into the future, better for their family, better for their children, so that they have something to pass on to the next generations.
They are prepared to fight for it, they are prepared to battle for it, they are prepared to give up social events on weekends or going out for dinner and even to give up holidays so that they can build that base. You see and hear stories of people who have even gone for 10 or 20 years without a holiday because they are making a better life for themselves, yet here we have the Labor opposition federally and Bill Shorten wanting to belt all these people—good taxpaying citizens of this country—who are trying to make a better life.
These people are part of the workforce. About two-thirds of those with negatively geared properties have a taxable income of less than $80,000. Of everyone claiming a net rental loss, 70 per cent do so with only one property and 72 per cent claim a net loss of $10,000 or less. As I have indicated, these people who negatively gear property are among the 58,000 teachers, 41,000 nurses and 19,000 police and emergency service workers who look after us. A report by RiskWise warned of the unintended consequences. Property prices could fall about 9 per cent and rents could go up 10 per cent. Other published research suggests that Bill Shorten's Labor policy could accelerate the cyclical weaknesses in housing prices by further limiting housing demand, with spillover to consumer spending.
Australia is enjoying its 27th consecutive year of economic growth, a AAA credit rating from the three leading agencies and a budget deficit that is the lowest in a decade, and a budget was brought down yesterday by the federal Liberal and National government that will bring the budget into surplus. This is not the time to give Labor a chance to roll the dice with its reckless and punitive taxation policy that puts at risk our economic strength.