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Wednesday, 28 February 2018
Page: 2406

Mr THISTLETHWAITE (Kingsford Smith) (17:18): Housing affordability is a huge issue in the electorate that I represent. Over the course of the last decade in particular, we've seen massive growth in the cost of housing both for purchasers and for renters, and that growth has gone on unabated. In fact, in the suburb that I live in the cost of housing has increased by 16 per cent over the course of the last year. That's one year alone. There is this notion that the heat is coming out of the housing market in Sydney. Well, we're not seeing it in the electorate that I represent. And, of course, it's putting a lot of cost-of-living pressure on households.

Not only are households now faced with very, very low wages growth—and wages are only growing at around two per cent a year now—but, if you look at the Wage Price Index data this week, you see data on median average incomes which suggests that they've fallen below the inflation rate, so households are actually going backwards. When you factor in electricity prices, electricity prices have risen outrageously under this government because it can't get its act together and get a policy together that provides investment certainty for renewables, so the cost of electricity has gone up dramatically. Private health insurance has increased once again. It's been ticked off by this government and premiums have increased dramatically. There have been big increases in the cost of child care and huge increases in the cost of education, and, of course, the cost of housing added to that means that families are struggling. They are struggling to make ends meet, but, at the same time, this government is proposing a tax increase with an increase in the Medicare levy and putting more and more pressure on households.

For years now, experts and the Australian citizens have been saying, 'We need a circuit breaker in our housing market. We need a fair dinkum set of policies that will take the pressure off house prices and make living in Australia, particularly in the capital cities, more affordable.' All of those experts point to the fact that Australia has the largest and most generous tax concessions around housing, particularly the deductibility of interest payments on loans, in the world. They are the most generous and the benefits of those tax deductions go predominantly to well-off Australians—those who are in the higher income brackets. I'm talking, of course, of negative gearing and capital gains tax discounts. When these were introduced by the Howard government—interestingly, by the Treasurer that those opposite like to provide accolades to, Treasurer Costello—they weren't funded in the budget, particularly the 50 per cent discount on capital gains tax. This was in a period when Australia was earning quite a bit of revenue from the mining boom and the Howard government squandered it, basically. They squandered it on tax deductions for wealthy Australians that were unfunded. In other words, there was no mechanism in the budget to fund that revenue that was lost because of these tax deductions.

If you're an investor in the housing market these days going along to an auction on a Saturday, you can go along armed with the fact that this government is going to give you a tax deduction. It's going to support you through negative gearing. If you're a first home buyer going along to buy a home that you want to live in, you get nothing from the government—no support whatsoever. That is the great shame of this government when it comes to supporting hardworking Australians. If you're a first home buyer you get no support, but, if you're an investor that may be looking to negatively gear their seventh or eighth investment property, you'll get support from the government—and that's wrong. The beneficiaries of that are those in the highest income tax brackets. For negative gearing, I think 50 per cent of the benefit of negative gearing goes to the top 10 per cent of income earners. It's even higher for the capital gains tax discount, because, when you sell the property, you get a 50 per cent discount on capital gains tax if it's an investment property.

Those measures are too generous and they're adding heat to the housing market. All of the good economists in Australia have recognised that and have been recommending reform of that for many years. It's only Labor that's listened to them and listened to the Australian public. Labor proposed reform at the last election and continues to propose it as we move forward to the next election. Not only will this generate additional revenue for the budget, estimated at about $30 billion over the course of a decade; it will also operate to take some of that heat out of the housing market. If you look at the housing market as a pot of boiling water, it's akin to turning down the heat a little bit. People's house prices aren't going to go down, as was suggested by the Prime Minister—and, let's face it, the Minister for Revenue and Financial Services actually suggested that they might go up. She was saying that they'll go up; the Prime Minister was saying they'll go down. They couldn't work out a consistent message. It was a scare campaign that wasn't based on fact, and that was the reason why they were saying those things. The reality is that it will simply take some of the heat out of the housing market and ensure that first home buyers can compete.

Labor also offered a number of other reforms that we believe will assist with housing affordability, most notably by proposing a uniform vacant properties tax for capital cities above a certain population level. Labor, working in concert with state governments, proposed a tax for properties that remain vacant as a deterrent for people to buy properties and then leave them with no-one in them. Wealthy individuals are the only ones who can afford to do that.

We've also proposed a bond aggregator, and the subject of this particular bill is the establishment of a national housing finance and investment corporation that would have responsibility for the operation of a bond aggregator scheme to ensure that housing affordability is improved and administer a facility to enable developers to look at housing affordability and developing properties that are affordable. These bills do give effect to the government's announcement in the 2017-18 budget that it would establish a national housing finance and investment corporation and operate an affordable-housing bond aggregator and administer the national housing infrastructure facility.

The bond aggregator will bring together the lending requirements of a number of community housing providers and finance those requirements by issuing bonds to institutional investors. The national housing infrastructure facility is intended to provide financial assistance of up to $1 billion in the form of occasional loans, grants and other financial instruments. The facility comprises $600 million for concessional loans, $225 million for equality and equity investment, and $175 million in grants.

Labor, as I said, announced, as part of our plan for housing affordability and jobs, in 2017, that we would establish a bond aggregator to increase investment in affordable housing. Whilst this bill doesn't exactly mirror what Labor was proposing, what we've said is that we won't oppose it in the House but we will send it to a Senate inquiry to ensure that it fulfils the obligations for which it was established. And they should be: to help community housing providers access cheap finance, to provide for new affordable rental housing. A housing bond aggregator should also directly source cumulative funds from wholesale markets on behalf of community housing providers by issuing bonds to private investors. Funds raised by those bond issues could then be loaned to providers.

The bill also provides for the appointment of a board to administer the facility, and the criteria and skills that are required for a person to be appointed to that board, noting that they would be appointed on a part-time basis. It also outlines the powers of the Treasurer regarding the board and the directions that the Treasurer can make to the board, particularly in respect of the investment mandate of the board. Importantly, it also ensures that there is an investment mandate for this particular board and that they operate within the bounds of the intent of the regulations and true to that goal of improving housing affordability.

In conclusion, can I say that, whilst this is a step in the right direction, we do have some misgivings about whether or not it will fulfil those obligations. But I go back to the point that I made earlier: unless you are tackling the outrageous tax concessions, the overly generous tax concessions, that exist around negative gearing and capital gains tax discounts in the Australian housing market, you are not fair dinkum about housing affordability, and many, many economists have pointed that out. It's a shame that this government is beholden to the development lobby and unable to make that brave decision and act in the interests of Australians, particularly first home buyers, and institute reform to negative gearing and capital gains tax.

In their absence, a future Labor government will, by restricting negative gearing to new investment properties, ensure that we grow jobs in that industry—it has been estimated, by about 25,000 a year—and ensure that there is still the possibility to negatively gear a property but only on new investments, so that first home buyers aren't competing with investors on existing housing stock, and that generally means the bottom of the market, where they go in on existing housing stock, particularly the unit market. Importantly, we will be removing and reducing that outrageous discount that exists for capital gains tax, which was unfunded when it was introduced into the budget by the Howard government. So it's Labor that's acting and listening to the Australian people when it comes to housing affordability.