Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Hansard source

I'm speaking in support of these two bills, which seek to implement three of the government's 2017-18 budget measures, ostensibly related to housing affordability. Schedule 1 of the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 amends the Income Tax Assessment Act to ensure that travel expenditure incurred in gaining or producing assessable income from residential premises is not deductible; and not recognised in the cost base of the property for capital gains tax purposes. This particular amendment seeks to address concerns that some taxpayers have been claiming travel deductions without correctly apportioning costs or have been claiming travel costs that were for private purposes. The amendments are not intended to affect deductions for institutional investors in residential premises, nor are they intended to affect deductions for travel expenditure incurred in carrying on a business. That's a very important distinction to make.

It's clearing up an area of our law where tax concessions have been too generous, but this bill doesn't go far enough in respect of those generous tax concessions that exist in housing, particularly when it comes to investment properties. I'm speaking, of course, of negative gearing and the capital gains tax discount, which this government has allowed to stay in place and refuses to tackle, fuelling an explosion in house prices, particularly in Sydney and Melbourne. Basically, although we are supporting this particular measure, the bill simply doesn't go far enough. If the government were fair dinkum about tackling housing affordability and taking the upward pressure off house prices, particularly in markets like Sydney and Melbourne, they would look at this issue of negative gearing. If two people rock up to an auction on the weekend to compete for a house, and one of them is an investor, who may be going to negatively gear their seventh or eighth investment property, they get more support from the government than the other, who is going along to seek to buy their first home and get a foot in the door of the market. That is simply unfair and something that Labor stands against.

Schedule 2 of the bill amends the Income Tax Assessment Act to deny income tax deductions for the decline in the value of previously used depreciating assets used in gaining or producing assessable income from the use of residential premises for the purposes of residential accommodation. These bills will implement an annual vacancy fee on foreign owners of residential real estate where residential property is not occupied or genuinely available on the rental market for at least six months in a 12-month period. The Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017 imposes the vacancy fee and establishes the amount payable. Broadly, the fee which will be payable when the dwelling is left vacant is the fee that was payable at the time of the foreign investment application. Labor support these measures, and we won't oppose them.

It's clear, however, that these aren't about housing affordability. These are, plain and simple, primarily integrity measures. When it comes to housing affordability the government is unwilling to do what's necessary to tackle these issues of negative gearing and capital gains tax. That represents just how out of touch the government is. In the electorate that I represent not a week goes by where I don't get a complaint or a concern from a constituent, predominantly a parent or grandparent, worried and concerned about the fact that their kids will never be able to afford to buy a home in the community that they grew up in around their family networks and friends. In modern-day Australia, that's a great shame. It represents a failing of government. It's incumbent upon governments to ensure that housing is affordable for Australians as really housing is a human right.

I've discussed in this place in the past the reality of attempting to buy a home in the community that I live in. In the last three years—2014 to 2017—the price of a home in the suburb of Malabar has grown by a whopping 46 per cent to an average of $2 million, adding $635,000 to the value. That equates to an increase of $580 every single day. That is how much the value of properties in Malabar has gone up every single day, on average. In Coogee the case is no different: on average, prices there have grown by $592 every day to just under $2.4 million. These are the eye-watering facts about the area that I represent. As you can imagine, it's causing considerable concern among people struggling to enter the housing market and struggling with the soaring costs of rents associated with that generally high cost of living.

The seriousness of this issue requires a serious approach. Unfortunately, the government are not giving that serious consideration. Their total indifference to the fact that they're completely out of touch on this issue has left Australians facing unprecedented financial pressures when it comes to housing affordability. This week we've seen the government fail to alleviate another area of cost pressure for households, with their so-called plan for energy. They've come up blank when it comes to dealing with this issue. All we're going to see is household electricity prices continuing to increase into the future.

Investors have been given a leg up for too long by this government when it comes to the housing market. It's absolutely unacceptable that a person going along to an auction this weekend to purchase their seventh or eighth investment property will get a tax deduction from this government to negatively gear over the years to come and gets more support from the government than a young couple that may be just married and are seeking to buy their first home. Australia has a progressive taxation system, and improving the fairness of that system should be a key priority. Currently the way that system works is unfair, because 50 per cent of the benefit of negative gearing goes to the top 10 per cent of income earners. The people that are benefiting from this outdated system, the most generous tax concessions in the world for property investors, are the wealthiest Australians. The top 10 per cent are absolutely getting the benefit from this. Fifty per cent of those benefits go to the top 10 per cent.

When it comes to capital gains tax concessions and discounts, the problem gets even worse, because in terms of the capital gains tax discount—the 50 per cent discount on the capital gain that you make from selling an investment property—70 per cent of that benefit goes to the top 10 per cent of income earners. That says everything about the inequity that exists in the housing market at the moment which is fuelling outrageous increases in prices. When it comes to superannuation we have a similar scenario, where 30 per cent of the benefit of superannuation tax concessions goes to the top 10 per cent of income earners.

If you're fair dinkum about tackling some of those issues and bringing a bit of equity into the system, you need to look at that system of negative gearing and capital gains tax discounts and who's benefiting from them. Ultimately, you're shrinking the pie of homeownership for the majority of Australians by providing a tax concession that encourages the few to invest in more. First home buyers now only make up around 13 per cent of all home purchasers—well below the historic average of 20 per cent. This is quite an alarming trend. With housing making up 60 per cent of all assets owned by Australian households, it has become a source of great frustration and misery for those who are missing out in our society. For many, home ownership has transformed from a dream into a nightmare.

That's something that Labor have been listening to the community about and are serious about changing. We want to end some of the imbalance that exists in our taxation system at the moment when it comes to overly generous, massive concessions that benefit the most wealthy in our country at the expense of the majority. Labor will build on our existing proposals with new policies to improve housing affordability, to increase supply, to boost jobs and to reduce economic risks.

We've announced a housing affordability policy. It's been there for some years. We announced it in the lead-up to the last election, and we haven't been a small target on this issue. We have been willing to listen to the community and willing to do the necessary legwork when it comes to the economic modelling and working out how changing the system would affect the market. We've announced the policy, and we've had the policy independently modelled and independently costed, importantly, by the Parliamentary Budget Office. That has indicated that the policy raises additional revenue—not only over the forward estimates but over the medium term—that we can put back into the budget to ensure we properly invest in schools and hospitals. It will also create 25,000 new jobs per year in Australia and over 55,000 new homes over three years to boost those employment numbers.

The elements of the policy are quite simple. Firstly, we'll reform negative gearing and ensure that it's restricted to new housing stock. Anyone that's currently in the system will be grandfathered. So, it's an orderly transition. There's no dramatic change for people who are currently in the system. If you're negatively gearing a property, you'll be able to continue to do so. But, from a particular date in the future, if Labor is elected, negative gearing will be restricted to those people seeking to buy off-the-plan developments. That will boost the housing supply and create jobs in this sector. We will reduce the capital gains tax discount on the sale of investment properties by half—reducing the generosity of a policy that, when it was introduced by Peter Costello as the former Treasurer of this country during the Howard government years, was unfunded. That says everything about the profligacy of that particular government and the spend-at-all-costs approach that they had—which we are all paying for now. It was that government that introduced policies like the 50 per cent discount on capital gains tax, the changes to superannuation and uncapping payments for people. Those policies were unfunded. In other words, there was no source of funding for them in the budget. We are all paying for that now. Not only were they bad policies; they were irresponsible fiscal policies and Australians are paying for them now.

But we will fix that. We will: reduce the capital gains tax discount on the sale of investment properties by half; facilitate a COAG process to introduce a uniform vacant property tax across all major cities; limit direct borrowing by self-managed superannuation funds that invest in property; increase foreign investors fees and penalties; establish a bond aggregator to increase investment in housing affordability; boost homelessness support for vulnerable Australians; get better results from the national rental affordability agreement; re-establish, importantly, the Housing Support Council; and, importantly, make sure that there's a seat at the cabinet table for a minister for housing who can advocate on behalf of Australians about the importance of this issue.

That is a set of policies that demonstrates a party is fair dinkum about the issue of housing affordability in this country. That's a serious housing affordability policy. That's what a serious housing affordability policy looks like. It is fully costed, it is independently verified that it will work, it will create 25,000 jobs in the economy and it will boost housing supply by 55,000 dwellings over the course of three years. It is independently costed and independently modelled, and it is something that will work. That's what Australia needs if we're going to tackle this housing affordability crisis. Only Labor are fair dinkum about making sure that we tackle the issues of negative gearing and capital gains tax and that we produce a bit of affordability in the housing market in Australia to ensure that particularly those young families who are seeking to get into the market have the opportunity to get a dwelling and a roof over their head and to live, importantly, close to their families and in the communities which they grew up in.

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