Negative Gearing

Mr HAWKE (Mitchell) (19:30): The government have recently made a lot about their changes helping and assisting young people. One change that I fear is negative is the government's secret modelling of removal of tax concessions in relation to negative gearing, which would impact, in particular, young people's opportunity to get ahead. My electorate of Mitchell is one of the electorates with the highest proportion of people that negatively gear in the country, and I want to say that both positive gearing and negative gearing are legitimate pathways for people to create wealth for themselves and their families in Australia. We're talking about very ordinary and very simple people with very average incomes, in the main, who access negative gearing in particular. I want to note that probably about five to 10 per cent of property portfolios, or something similar, are positively geared, which means that most people with property portfolios access negative gearing and tax concessions by claiming a loss on rent on investment properties that they own.

Why a Labor government would seek to undermine a fundamental principle of Australia's wealth creation for ordinary people still remains a great mystery to me. Not only did they promise it under their leader Bill Shorten in an election which they lost, but they have now accepted that they are modelling and looking at the policy of negative gearing in Australia and have asked for advice about how to further address it.

The research has come back from voters, particularly from people across Sydney—and I'll just speak about Sydney for a moment—including in north-west Sydney, in my electorate, which has about 15,300 people who have a negative rent income. This is the single highest number in the country, and that is one of the concerns I have. But there are many other parts of Sydney which would be affected. For example, the seats of Bennelong, Greenway and Reid each have 12,000 to 13,000 people who claim a loss on their rent in an investment property that they own. If you go to any of these areas or you understand Sydney very well—I challenge the Labor members, in each of those cases, to go to their electorates and ask them about this—you will find that the average income of people who own those investment properties and are claiming that loss on their investment property and rent are very ordinary Australians who are sacrificing and putting aside money now to own an investment property for the future. They're doing so deliberately as part of their family's wealth creation

The Australian Financial Review had a very good story in relation to this, and it certainly sought some interviews with people around the country. There are plenty of examples you can go to, and I won't spent all day today talking about them. There are so many people who've come forward to say that they have deliberately decided to have an investment property put together for their family's future in which they have a loss of $500 and they obviously get a tax concession under our current system. This process—which they do over many, many years of their life, to end up owning that property for their children or their family wealth, to be able to make sure they don't have to live off the government in the future—is a very important process to them, and they are sacrificing their income and sacrificing other ways of generating wealth by using this mechanism. Are they doing anything wrong? Absolutely not. Are they taking money off other people? No, they are not. Is this unfair? No, it isn't, because anybody can access it and anyone can put money aside to do it. Other people make other valid choices about their investment and income decisions and their lives. But if you decide to take advantage of this, whether it's positively geared or negatively geared, this provides pathways for very ordinary people with very ordinary incomes to end up with an investment property—a second or first property in some cases, depending on their circumstances—which they would not ordinarily have had.

On the ladder of opportunity that Labor likes to talk about, this is one of the fundamental ways that Australians have used to create and generate their own wealth. But Labor is considering changes to these concessions again, after the verdict of the Australian people—including, I might add, in seats like Reid, Bennelong and Parramatta. The verdict about these tax concessions was clear and almost unanimous in 2019. It was that people wanted them. People wanted access to them. Ordinary Australians want to be able to generate wealth for their family's future and do it by negatively gearing as well as positively gearing.

For Labor to be back at this table, to be looking at options again, to be considering it and to be not ruling out changes, in all parts of Western Sydney and Sydney, which are very simple places that want to just get ahead for themselves and their families, it is the wrong thing to be doing. On behalf of my electorate, which is absolutely No. 1 in the country for accessing these concessions—people who earn their way in life, have high incomes and work hard—but also for every other part of Western Sydney that's taking advantage of them, I say to Labor: drop this flawed proposal to change negative gearing.