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Wednesday, 8 February 2017
Page: 389

Ms CLAYDON (Newcastle) (11:05): It gives me great pleasure to rise today to speak on the Report on the inquiry into home ownership, by the Standing Committee on Economics, albeit that it is somewhat challenging to listen to some arguments from members opposite. I think this is an important opportunity for me and indeed many of my colleagues to correct the record, because, if ever there was a report that proves just how desperately out of touch this government is, it is the one before us today. This is the report of a committee that looked into one of the most pressing social problems and issues facing our country: the declining rate of home ownership. It came up with precisely no recommendations to redress that situation. What a complete waste of government time, resources, committee members and indeed those people who took time and acted in good faith to make submissions and appear before the committee with well-considered arguments and proposals for a way forward but were completely dismissed. It would be comic if it were not so tragic.

The committee heard, for example, that the median house price in Sydney now is well over $1 million. Of course, that is no surprise to anybody living within the Sydney CBD and the surrounding Greater Sydney region. The committee also heard, of course, that the home ownership rates for people under 55 years of age now and for Australians on low incomes are dropping dramatically. These figures are on a trajectory that should be deeply worrying to this government. Indeed, the committee was told time and time again that a generation of young Australians is now facing a life of renting after being effectively locked out of the market entirely. And yet the committee found no reason to propose a single recommendation on how to redress this situation.

I have seen firsthand the impacts of these skyrocketing prices in my home city of Newcastle. In the past year, house prices in the inner city areas of Newcastle have climbed 7.7 per cent to nearly $700,000. That is not the median price of $1 million of Sydney but is rapidly climbing in an area that was always a much more affordable option than Sydney. To see those prices ramping up quickly over time is a really worrying trend. This means that prospective home buyers in Newcastle have to cobble together now an extra $40,000 just to get a foot in the market. And there is no sign of respite for 2017. In fact, the NAB predicts that Newcastle property prices will again outperform the broader market as vast numbers of people get priced out and indeed pushed out of Sydney and Melbourne. Many Novocastrians have watched in dismay as month by month, year by year, the long-held dream of home ownership slips away, further out of their grasp.

Too often, young Novocastrians tell me about the anxiety and, indeed, deep sense of hopelessness that they feel as they try desperately to compete with investors to secure a home. And they are not alone. The situation is being replicated in capital cities and large towns right across the country. The complete lack of recommendations in this report is not just shoddy work; it is a slap in the face to many thousands of Australians who are resigning themselves to the possibility that they will never own their own home. As it is so often the case, the Liberals will prefer to blame the victim instead. Joe Hockey's advice to young people desperately wanting to own their own home was that they needed to get a good job. Never mind that those jobs simply are not there for many young people, and even the high-income earners are struggling to pay off the average mortgage in many cities these days. Deputy Prime Minister Barnaby Joyce told would-be home buyers that they do not deserve or, indeed, should not really expect to be living in capital cities. They should just give up on that notion of living in a capital city and instead move to regional Australia with little regard, of course, to people whose families, work and lives are based there in Sydney or Melbourne. But it was perhaps the advice of the Prime Minister himself that really showed just how out of touch those opposite are when he suggested that young people just needed to get themselves some rich parents to subsidise their purchase. Unbelievable!

And it would not be overstating the situation to say that we have indeed reached crisis point. Both state and federal Liberal leaders have finally conceded that we now have an issue. This has only happened, somewhat belatedly, indeed the last month for the Prime Minister, but it is a welcome revelation. Yet, sadly, the Prime Minister is still belligerently refusing to admit that the problem is, in part, due to the excessive federal government tax concessions for property investors and understanding that that is driving the problem in the first place. The federal government spends as much as $10 billion a year on negative gearing and capital gains tax concessions for property investors. Jaw-droppingly, that is more than it spends on child care and higher education combined. It is an astonishing fact and I think most Australians would be horrified to understand the size of these tax concessions. Less than 10 per cent of Australians are benefitting from those tax concessions—I might add—and the 90 per cent that do not get the benefit are being forced to pay through ballooning property prices and to withstand insecure housing and mounting federal debt.

These expensive tax breaks create a perverse incentive for property investors to drive up house prices by chasing loss-making deals, safe in the knowledge that they will be underwritten by the Commonwealth. Not only is this unfair and a phenomenal waste of public money, but it goes nowhere near achieving its stated aim of increasing the housing supply. In fact, only seven per cent of negative gearing goes toward new properties—a stark example of a policy that has gone terribly wrong and is no longer fit for purpose. While those with the vested interest in retaining those taxpayer-funded rivers of gold like to talk about the mum and dad investors that will be hurt if the tax concessions are removed, the reality, of course, is that half the benefits of these excessive tax breaks go to the richest 10 per cent of the population. And people on taxable incomes of over $100,000 a year account for 80 per cent of the total debt for investor housing.

Another myth that gets rolled out to justify retaining negative gearing is that removing it will drive rents up. We heard that from the member just preceding me. In fact, after accounting for inflation we know that rents actually fell or flatlined in a number of cities when it was removed for a short period of time in the 1980s. As is often the case, the Turnbull government has chosen to dedicate precious taxpayers' money to those who do not need it at the expense of those who cannot afford it. They have chosen to back the landlords to buy their fifth or sixth investment property at the expense of would-be home owners desperate to secure their first home. Last week, the Commonwealth Bank warned that investors will continue to be a significant influence on house prices in 2017 and onwards until federal tax laws favouring leveraged housing investment are reformed.

It is a welcome sign that the government have admitted there is a problem, but we desperately need them to get on board and reform these outrageous tax concessions that are rendering many Australians into insecure, unaffordable housing for the rest of their lives.