Thursday, 16 February 2017
Questions without Notice: Take Note of Answers
That the Senate take note of the answer given by Senator Brandis to the question I asked.
Once again, we see a government in absolute chaos. We see a rabble of the government. We see Phil Coorey from the Financial Review exposing the discussions that are taking place within the government to modify capital gains tax, yet this morning we see the Assistant Treasurer out debunking this. One minute they are going to do something about it and the next minute they are not. We had Senator Brandis today saying that they had no intention of changing capital gains tax. Well, what a folly this is. That is because every time a young couple try to buy a house in my home state of New South Wales—and I am sure it is the same in other states around the place—they have to front up against an investor who is getting tax breaks through capital gains tax and negative gearing.
We have said consistently for over a year to get rid of it and level the playing field between young people trying to get into their first home and investors who may have five, six, seven, a dozen or more than a dozen homes. Why should we be subsidising investors to make it hard for young people in this country to get a start and to be able to buy a house? The article in the Financial Review clearly demonstrates that the coalition are at war internally on this issue.
You can interject all you like, Senator Brandis, with your haughty, superior approach. You can do that all you like. What I am interested in are young people who are trying to buy a home. I know what your position is. You are heading off to London on the taxpayer teat to live in the mansion in London that is supplied for you when you go to London. That is where this guy is off to. He does not have to worry about what his future is. We know that he is going to get sent off to London because he is the worst minister in the government. In a recent review in the Adelaide press, he got four out of 10. Even Barnaby Joyce, the Deputy Prime Minister, got more than that. That is not much good for Senator Brandis.
You will be okay, Senator Brandis. You will be one of the leaners. Remember the lifters and leaners that you were on about? You are going to lean on the public purse in London. We know what you are all about. You do not care about young people who are trying to get a start with a house. You do not care about young people being at a disadvantage with the developers and the investors coming in and getting an advantage from capital gains tax and negative gearing. Why would you care? You are off to London. You will not have a care in the world. The Prime Minister wants to get rid of you. The coalition wants to get rid of you. So, do not come here lecturing us about the issues that we have to deal with, when you are leaning on the public purse back in London—the 'lifters and the leaners'! You were supporting that, and you will be leaning well back in London, living off the public purse. We know what you are about. And young couples in my home state of New South Wales are battling to get access to a home.
This is the mob that wants to cut pensions, make you work until you are 70 for your pension. And no matter what Senator Brandis says today, you can never trust anything this government says. You could not trust them on marriage equality. You could not trust them on climate policy. You could not trust them on the GST. You cannot trust them on income tax cuts. They are in retreat on company tax cuts, the capital gains tax—they are all over the place on it. They have been backflipping on the Gonski school reforms. They have backflipped on the Australian republic. They backflipped on income tax cuts to the states. They are an absolute rabble of a government. Never believe anything that comes out of Senator Brandis's mouth, because he is a temporary politician. He is off to London, off on the public purse. He is going to be a great leaner in London. (Time expired)
Well, you have got to the bottom of the barrel, haven't you, when you roll out dear old Senator Cameron? He talks about lies and he talks about being unable to trust, and the first thing that comes to my mind is 'Mediscare'. Remember 'Mediscare'? On 30 June, in the evening, Senator Cameron: a phone call from a friend of mine in rural WA telling me that his aged mother, in a nursing home, had a call—not a robo-call, but from someone representing this mob—asking her what she was going to do on 1 July, because the coalition, in government, was going to withdraw all aged-care facilities and Medicare. And don't you walk out of here now, Senator Cameron, after the nonsense that you have just projected, because we know very, very well what you are about.
Let me tell you about capital gains tax. The Treasurer only the other day—and on 16 February, this very day, the following day—the government has no intention of supporting Labor's policies on negative gearing or capital gains tax. I reckon I can understand that. I can read it, and I hope people who are listening can also do so.
I came into the parliament having been in business for some 45 years, and I wanted to see no increase in taxes and I wanted to see smaller government. And whilst I am in this place I will continue to prosecute that case. But let me tell the people of Western Australia—and my good colleague Senator Dean Smith knows—what is happening on 11 March when Labor is in government. The best predictor of future behaviour is past behaviour. I go back to when that miserable Treasurer, that failed Treasurer, Mr Eric Ripper was the Treasurer under the Gallop government. He remained there. Mr Gallop was not a bad bloke; he could not handle the pace, and it is to his credit that he made that decision, but poor old Eric stayed on under the failed Carpenter government as well. And do you know what he did, Attorney-General? He decided to introduce—I will call it—the new premium property tax. This was to be a tax affecting 900 owner-occupiers, particularly in Perth, and it was to put a tax on unimproved land value.
So, if anyone wants to guess what my good friend Mr Mark 'Sneakers' McGowan will do in the unlikely and hopeless event of him becoming the next premier of the state, look no further than Mr Eric Ripper. And do you know, the outburst: there was an absolute outburst of rage. And do you know who it came from? Mainly from people who voted Labor. Why? Because it is the fact that in this country, except for the Senator Camerons of this world, everybody these days is aspirational. People have moved on from the 1920s version of the old union Labor—families, children move on. They want to get into the property market. And of course over time, owners of properties that they themselves purchased or that were maybe left to them by parents or whatever find that values go up.
So, what did dear old Mr Ripper have to do? Senator Smith remembers. He had to humiliatingly backtrack, because his own constituents rejected him. And what was happening in 2001, Attorney-General? We were coming up to a state election, and so many Labor candidates knew very well that people in their electorates would have been severely disadvantaged. But do not worry too much about what might happen into the future; learn from the events of history. Those who ignore them are bound to repeat them. What did Mr Keating do as Treasurer of this country in the Hawke period? He introduced negative gearing on property. And do you know what happened? Rents all went up. Why? Because people went out of the housing market. There was then an overdemand and a lower supply, and of course up went the prices.
The simple fact of the matter is that it is not the intention of the Turnbull government or its Treasurer, Mr Morrison, to change capital gains tax. Why? You pay capital gains tax only when you actually make a profit. You have invested. You have encountered a risk. You invest, you sell, you make a profit and you pay some tax. You pay the tax only when you make a profit. (Time expired)
We have seen leaks in the past couple of days in the Financial Reviewreports that the Turnbull government is planning capital gains tax reforms that they intend to roll out for the main budget. Actually, I would welcome it. I would really welcome it if the government was actually undertaking some work on housing policy. I have not been in this place as long as other senators—coming up to two years, in fact—but in the entire time I have been here, I have been attending the hearings of economics estimates. I and other senators have asked Treasury officials what is happening in terms of a policy for housing affordability and how this is being dealt with within the economics portfolio, and I have watched as Treasury officials, when asked who is responsible for housing affordability in this government, look at one another, literally scratch their chins and have to confer quietly before coming back with an answer that they suppose that it is in one of the other line agencies, because until very recently this government's view was that housing affordability was a soft social issue off there in the never-never and something they did not have to worry about as an economic policy concern. That is not my view, it is not the view of the Labor Party and I would venture that it is not the view of the very many Australians who, as Senator Back notes, have aspirations to enter the housing market.
I come from and represent the great state of New South Wales. The city I live in, Sydney, is the second-least affordable city to buy a house in the world. When I speak to young men and young women—and I did speak to a young woman about this in recent days—they tell me about what happens when they go looking for a house. These are young professionals, and they are quite flexible about where in metropolitan Sydney they might live, so long as it would actually be practical for them to continue to work in the professions that they have worked so hard to acquire and have been educated for. They are in despair because every single time they go to an auction, they are faced with somebody seeking to make a property investment, and the person that they are bidding against has a whole range of tax advantages that are not available to a young first homebuyer hoping to enter the market. That is the great unfairness of the current tax arrangements around housing that Labor has sought to address.
After all this time, the coalition seems to have finally received the message that they too ought to be worried about housing affordability. I think the reason it took them so long to come to this rather obvious realisation or conclusion is that they have a tin ear for the challenges that face normal people in the economy. There is no better example than seeing senior members of the government suggest that the way out of this is to have mum and dad stump up for a house, or to move away from your job and into a regional community. They have absolutely no idea of the challenges that are facing young Australians seeking to enter the housing market.
Of course, in their response to this we do not see any of the processes of grown-up government that we were promised. We do not hear about these things in an orderly way; we read about it as a leak in the newspaper. It is the way we learn quite a lot about the inner workings of the Turnbull government, because, as others in this chamber have observed, it is characterised by extraordinary disunity, riven by division and unable to determine an ideological or policy direction. The truth is that the Prime Minister does not lead his party, and whenever he seeks to set a direction, it is followed by confusion. In the last couple of days we have had the Prime Minister say, in a guarded way, that the government has no plans to adopt Labor's policy. That is a very cautious kind of response. We have had Senator Cormann say, more definitively:
The government has absolutely no intention of reducing the capital gains tax discount or making changes to negative gearing.
Who knows what to think? Last week the government lost a senator, but today, in denying these reports, it seems that they have lost an entire tax reform agenda—again. This is a government completely unable to establish an economic direction for the country.
Let me start with some congratulations to opposition senators, because in this take note session they have at least focused on an issue that is very important to Australian families and to young Australians who are aspirational and want to buy and own their own homes. Of course, the Turnbull government also recognises that this is an important priority, because we in Australia know that home ownership supports stronger communities and social cohesion in our communities, which in turn provide employment opportunities and positive educational and health outcomes.
But a proper and real understanding of the core underlying issues that affect housing affordability in our country is absent. You have been good at identifying the problem but very poor at understanding the underlying issues driving poor housing affordability in some parts of our country. The first point is that there is no single housing market in our country. When you come here and talk about housing affordability, it is important to be clear and distinct as to what part of the country you are talking about. I give full credit to Senator McAllister because she did identify the very real issues in Sydney. We know that housing prices are increasing in Sydney and Melbourne, but we also know that they are falling in places like Perth and Darwin.
Why are they changing? Why are they rising in some places and falling in others? It is because there are some underlying economic issues, and I suspect, Senator Ketter, you know this. I suspect you know that population growth is an important element of housing affordability. I am sure you know that interstate migration is an important element of housing affordability, and I know that as a member of the Senate Committee on Economics you will be well aware that the low interest rate environment is also an important factor. Let me supply some facts around those underlying themes that Labor senators have been quick to ignore. The first fact is that Australia's population growth has averaged 1.6 per cent between 2005 and 2014, almost the highest in the OECD. That clearly affects demand. In addition, there has been a reversal of interstate migration from mining states, including in my home state of Western Australia, back to Sydney and Melbourne, where there are stronger labour markets—again, a key driver of demand. Let me add to that that, while lower interest rates have made things easier for current home owners with mortgages, they have made it harder for first homebuyers to enter the market by increasing demand for housing and making it harder to save for a deposit. We are agreed: there is a priority; there is an issue around housing affordability. But what you fail to do is to be accurate about the underlying influences and provide a policy response to those drivers of demand.
But it is also about land release. You do not have to be Einstein to know that matters around land release do not fall within the domain of the federal government. They are responsibilities that, properly, are held by state and local governments. So it is important to work with state, territory and local governments to facilitate, more readily, land access.
Of course, this brings me back to the alternative policy position of Labor. Rather than having a constructive debate about population growth, interstate migration and a low-interest-rate environment, you would like to bring a sledgehammer to property prices with ill thought out changes to negative gearing that actually will not solve the underlying issues of housing affordability. Instead, they could crash the housing market. Again, we are agreed: we know this is an issue. We know it is more important in some parts of our country than in other parts of the country. But Labor's approach does not provide a solution. It does not provide a long-term plan to improve housing affordability for Australian families. We are agreed: it is a priority, it is important, but you do not have a clear policy response.
So the question is one of what the Commonwealth can do, with state, territory and local governments, to improve issues around demand. What can we be doing to improve issues around land release and land supply. It was interesting that you did not— (Time expired)
I rise to address the question Senator Cameron asked of Senator Brandis. We are talking about taxation policy—capital gains tax in this instance. The coalition likes to trot out on a regular basis the mythology that they are the more competent economic managers and that Australians can feel more confident in relation to tax with the coalition. I made a contribution in taking note of answers yesterday, where I have attempted to put the facts on the table when it comes to profligate spending. The IMF has quite clearly illustrated that it was under two periods of the Howard government that needlessly wasteful spending occurred.
When it comes to the level of taxation, the government likes to trot out this notion and mythology that they are the lower-taxing government. I noted that last year Mr Stephen Koukoulas, a well-known economist, put some facts together in relation to the figures concerning the top 10 years of tax-to-GDP ratios since 1980-81. It might surprise the senators opposite to know that eight of the top 10 years of tax-to-GDP were under liberal governments: 2004-05, 2000-01 et cetera. An even more extraordinary fact was that of the 10 lowest tax-to-GDP ratio periods under governments of either persuasion, all 10 of those periods were under Labor governments. Labor, in fact, has the record of having a lower tax-to-GDP ratio.
We look at taxation as being fair and we want to see fair outcomes for people, so we want to look at the taxation system as a whole. Once again—and I have made this point regularly—when it comes to holistic reform of our taxation system the coalition squibbed that. Prime Minister Abbott initiated the process of an orderly review of our taxation system, the issue of a tax white paper. Prime Minister Turnbull came in and scrapped all of that, putting aside all of the submissions that were put to the government and to Treasury. All the work that was done to look at the tax system just disappeared.
My colleagues have talked about the fact that we have a government here riven by internal division in respect of this issue of capital gains tax. We are witnessing a slow-motion train wreck on this government's watch. Today we heard Senator Brandis talk about Labor's policies regarding negative gearing and capital gains tax—that it would lead to increasing rent prices. The Turnbull government tries almost weekly to mount a weak scare campaign on Labor's housing affordability policy, but cannot agree on whether Labor's policy will crash or increase prices.
Minister O'Dwyer has come out previously on both sides of the fence on this particular issue. She has argued that housing affordability is an issue that can be dealt with in a couple of different ways. We saw Treasurer Scott Morrison turned inside out over the reform of negative gearing. He has argued that there are excesses in negative gearing, but he has been rolled in cabinet, with the Prime Minister pushing for reform of negative gearing. And there was at House of Representatives Economics Committee report on home ownership that produced no recommendations.
We know that the government is very divided. We know that high-profile Liberals like Mike Baird, Rob Stokes, Jeff Kennett and federal Liberal backbenchers have also called on Prime Minister Turnbull and Mr Morrison to consider reforms to negative gearing. Last week the IMF called on the Australian government to reform the capital gains tax discount. It argued:
The [Commonwealth] tax system provides households with incentives for leveraged real estate investment that likely amplifies housing cycles.
So there we have it: the official verdict on that.
We know that this is ideologically driven madness, which we have seen time and time again from the coalition. They are looking at cuts to family payments, cuts to Centrelink, cuts to Medicare and cuts to community legal centres— (Time expired)