"Around a third of the buyers for residential property currently are investors. What Labor is proposing will take all or almost all of them out of the market. Malcolm Turnbull on ABC 7.30 said his negative gearing policy was 'common sense'. John Daley thinks he is wrong. Credit:ABC 7.30 "If you take a third of the buyers out of the market, prices, values will fall. That's common sense," he said. Sales seized on his comments: "So, is what you're saying to voters 'I don't actually have any hard evidence here. It's my common sense and so you have to trust my analysis on this?' " she asked. "Well Leigh, your viewers tonight understand the laws of supply and demand," Mr Turnbull said.

"But what I am asking you is how do you know you are taking out a third [of buyers from the market] ... where's your modelling for the fact you're taking out a third?" Sales said. Mr Keating accused the ABC's 7.30 program of being 'a news magazine, instead of a hard new breaking operation'. Credit:ABC 7.30 Mr Turnbull referred to banking and Australian Taxation Office statistics that showed about a third of people who borrowed money to buy property are investors and "most of them" would be negative gearing. "We can say very confidently that under Labor's plan all or almost all of those investors, personal investors ... would not take that risk," he said. Seventy per cent of people who negatively geared in Australia owned just one property, and another 20 per cent owned two, according to the Prime Minister.

"Most of them are on average earnings or less," he said. "The Labor party wants to take them out of the market." Sales countered with figures from a recent Grattan Institute report that showed the top 10 per cent of income earners received ¾ of taxable capital gains. "These policies favour most people who are on the highest incomes," she said. "Of course people on the highest incomes will make the highest gains because they tend to have more property," Mr Turnbull said.

"There are well over a million Australians, most of whom are on average earnings, who have an investment property and they are negative gearing," he said. Sales suggested this meant the remaining Australian population, some 23 million people, were not involved in negative gearing. "There are obviously many Australians who don't invest in property but does that mean you should ban all Australians from being able to do it?" Mr Turnbull said. Negative gearing was not a tax break, the Prime Minister said, it was a standard concession. Earlier in the interview the pair canvassed the announcement that France had won the $50 billion contract to build Australia's next fleet of submarines.

Asked how much extra it would cost to build the submarines in South Australia rather than import from France, Mr Turnbull said the premium was "very manageable". He said the "bulk" of the submarines would be built in Australia, leaving some components to be shipped from overseas. Mr Turnbull said he had spoken to his Japanese counterpart Shinzo Abe shortly after the deal was announced. Japan was overlooked for the defence contract, a move that could damage relations with Australia's key strategic partner in the Pacific. Mr Abe's government had expressed disappointment that it had not won the contract, with Defence Minister Gen Nakatani saying the decision was "deeply regrettable", adding Tokyo would "ask Australia to explain why they didn't pick our design". "In all of my discussions with minister Abe, including the most recent one, each of us share our unwavering commitment to our strong special strategic partnership with Japan," Mr Turnbull said.