The prime minister, Malcolm Turnbull, has lambasted Labor’s proposed crackdown on negative gearing, saying it would slow or even halt Australia’s transition to a successful 21st century economy.



Addressing Liberal party members, he said this would have the inevitable consequence of reducing investment.



“It is calculated to slow down, to obstruct, to even stop our successful transition to a diverse, successful 21st century economy,” he told the NSW Liberal party state council meeting at Tumbi Umbi on the NSW central coast.



Turnbull said transitioning from an economy led by the mining boom to one led by the diverse range of huge opportunities in the new global economy was the defining challenge of our times.



Yet Labor’s proposal to limit the ability to offset investment losses against personal income tax would have the inevitable consequence of reducing investment.



Turnbull said the coalition understood what was needed to achieve economic transformation and that included innovation, investment, technology, productivity and competition.



“Every lever of our government is pulling in that direction. Every lever of Labor’s policy is pulling in precisely the opposite direction,” he said, in a clear pitch to voters before the election later this year.



The prime minister foreshadowed a return to the “pub test” which he said played such a key part in the success of the Howard coalition government, elected 20 years ago.



He said that was a watershed moment and at the heart of it was John Howard’s appreciation of what Australians would regard as fair and reasonable in the national interest. He termed it the pub test.



“On every tough call, you had to earn community support, you had to make your case compellingly, you had to win the public trust,” he said.



Turnbull said his government was upfront about the challenges and the choices and explained plainly and directly why changes and reforms were needed to improve people’s lives.



“Respecting the people who put us into parliament is our first obligation. Respecting their intelligence is the principal thing we have to undertake if we want to win their trust and hold it,” he said.

Turnbull said the 2013 senate election, which resulted in a record 18 cross-benchers, was an embarrassment for Australian democracy.



“To have people elected through back-room preference whispering deals, elected on a tiny percentage of votes, was a disgrace,” he said.



Turnbull said there had been speculation senate voting changes might benefit one side or the other but the only beneficiaries would be voters who could decide where their preferences went.