Luke Howarth (Petrie, Liberal Party) Share this | Hansard source

It gives me great pleasure to speak on the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017. The legislation before the House takes practical steps to ensure that we have a strong rental market and that people are not taking advantage of our tax system.

The Treasurer outlined an array of measures in his budget speech earlier this year to ensure integrity and stability in the real estate market. Yesterday, I spoke on key legislation that will help first home buyers supercharge their savings as they plan to purchase their first home. I also spoke about incentives for older Australians to downsize, opening up the market for growing families. Today, I rise to speak on legislation that is aimed at improving our rental property market and the integrity of our tax system. I'll outline, firstly, measures that impose the framework of our tax system with regard to deductions for rental properties and assets and, secondly, measures that ensure the rental market increases the number of homes available to Australians.

The bill focuses on individuals who claim travel expenses when visiting their rental properties. I was speaking to one constituent who was telling me that he owned and managed his properties in Bundaberg, approximately 340 kilometres from his home. He was very concerned about the discontinuation of his ability to claim a deduction for travelling to and from his rental properties; he felt that it would not be financially viable to continue managing his properties. These proposed amendments don't prevent investors from engaging third parties to provide property management services. These services will still remain deductible. Yes, this bill does limit people travelling to their property and claiming deductions for travel. That's no longer going to be available. So I would say to people, if you're going to drive 340 kilometres return to visit your house to do a bit of maintenance on it, it's probably more viable to ensure that a local handyman, plumber or gardener—for whatever it is that you need doing—in that area services the property for you. That would make a lot more sense.

Unfortunately, we've seen some people take advantage in relation to this claim when they've actually been on holidays and so forth. They have been treating the system unfairly. For example, a person living in New South Wales who owns a home on Queensland's sunny Gold Coast may decide to take a trip up to their unit once or twice a year to inspect it, replace a flyscreen or put some mulch on the gardens. However, the primary purpose of their trip was a holiday; it was to enjoy the beaches and maybe do just a little bit of handyman work. That's fine. They can still have an investment property there, but their airfares to fly or to drive there and return won't be tax deductible. So from here on in it might be worth it getting a real estate agent to manage that property and to use the services of local tradespeople in that area. I noted previously—and I want to emphasise this to property investors—that maintenance is still fully deductible, but I encourage all people to employ a local tradie and help boost the economy and then claim those expenses back on their tax return. You can still maintain your rental properties. However, you can no longer claim your airfares or any associated travel costs for your trip.

The bill also tackles another integrity measure regarding generous valuations for plant and equipment purchased. We are cracking down on property owners claiming depreciation of assets that were part of their original contract when they purchased the property. So if you've bought a new property and the dishwasher was included or some type of vehicle or machinery was included, you've really purchased that as part of the property price. You've really got that as part of the value. You won't get to also depreciate that asset when it's being purchased as part of that property.

I'd like to expand on some key aspects of the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017. The government is very aware of the importance of foreign investment. However, we want to discourage foreign investors from buying real estate in Australia and leaving it empty for months or even years on end. If a person from overseas, perhaps living in Europe, bought a house in Australia, firstly they would need to seek approval through the Foreign Investment Review Board, commonly called FIRB. Key to this approval is that foreign investors are allowed to purchase only new properties in Australia—not renovated homes but brand-new houses, townhouses or units.

This legislation we are debating today ensures that owners of non-residential foreign investment homes prove that their property in Australia is being rented out for at least six months a year. Otherwise, they will be charged a vacancy fee. The fee will vary depending on the property. For example, a $600,000 property would be charged $5,500, whereas a property valued at $2 million would be charged $22,300 if the property is left vacant. The purpose of this is to ensure that these properties are not left vacant. It's to free up accommodation for Australians to rent, to make sure that there is plenty of supply for Australians. And this is very important. New properties have to be bought so that the supply increases, but we also want to make sure that those properties are rented out. I want to stress that these amendments do not apply to Australians. So, for Aussies who own a home, wherever in the country it is—in Townsville or Cairns, or in Western Australia—and who use that home only during school holidays, for a few months a year, that is okay. That is up to them. They can continue to do that if it's a holiday home and they can afford to do so. So it doesn't affect Australians.

We are serious about ensuring that strict regulatory practices are in place to protect Australia's real estate. There are multiple cases where investors have had to sell their property because they didn't have the correct approvals through FIRB. The Treasurer has ordered the forced sale of 61 houses since the coalition was elected, totalling over $107 million. Labor cannot be trusted with foreign investment. The member for McMahon, who spoke earlier, when he was the Assistant Treasurer made changes to the foreign investment legislation to make it easier for foreigners to buy property without any scrutiny at all. He dumped the screening arrangements for temporary residents to notify the Foreign Investment Review Board of residential purchases. When the opposition was in government, not one divestment order for a property was issued for illegally acquiring a property—not one. There have been 61 since we came in, totalling over $107 million. And the shadow foreign minister wants to change the Foreign Investment Review Board requirements for the purchase of agricultural land—wants to put it through the roof. The coalition brought it down to $15 million, and the Labor Party want to put it back up.

In my electorate, people do not support that. They want to make sure there is a register that is accountable so that the government knows how much of our land is foreign owned. I remember that when the Kidman cattle station came up for sale people wanted to make sure it was majority Australian owned. They'd been very, very clear about that. So, taking that $15 million combined level—an aggregate level—and increasing it through the roof, as the shadow minister for foreign affairs, Senator Wong, wants to do, is not supported by my electorate and I suspect is not supported by the people in the electorates of many of those on the other side of the House.

The coalition has been at the forefront of ensuring that foreign investment is regulated. As I said, we want to ensure that we know how much foreign investment we have in this country. It was a Liberal government that established the FIRB back in 1976. This non-statutory body was established to monitor foreign investment proposals and compliance within its policies. The coalition government have continually moved to improve our foreign investment framework. The government have also introduced tough new laws to ensure capital gains tax is paid by our foreign investors and those who purchase property whilst living in Australia on a visa. We want to ensure that taxes owed to the Australian government are paid here and not taken overseas, and this is a very important area that the coalition are also cracking down on. We have continually taken measures to ensure we know who is buying our land and to restrict the types of properties foreign investors are able to buy. This legislation is just another example of our government always looking to protect Australia's interests.

Our government is committed to affordable housing. Ensuring our community has affordable housing and making sure that supply increases, and that the current supply is available for rent, provides options and ensures that there's much more housing available for those who need it most. Our goal is to increase the number of rental properties available for Australians to live in. I believe Labor's policy to try to fix the property market through abolishing negative gearing will only push house prices down and rental prices up. As an example, in my electorate, someone like Lisa and Todd might purchase a home for $450,000 up in Burpengary East in my electorate, or perhaps in Griffin in my electorate. They put a $35,000 deposit down. They don't have 20 per cent, so they'll probably be up for mortgage insurance as well. They currently would owe $415,000. Labor want to abolish negative gearing on existing homes. Lisa and Todd have got a new home, an existing home, and they will owe 415 grand on it, having purchased it for $450,000. If the value of that home drops by just five per cent when Lisa and Todd go to sell, it will be worth $425,000. That means, because of Labor's policy of abolishing negative gearing, they will have lost $25,000 of their own deposit. I see a lot of young couples in my electorate in this situation, with less than 20 per cent deposit. It would be great if they had a bigger deposit, but Labor is voting against our super saver scheme that will give those people and everyone in their electorate a $6,000 tax break. They're voting against young people who want to be able to do that, and I fear their policy could mean that people who buy a house and have to sell in a reasonable time frame will see the value of their house fall and, when they pay out their loan, there goes their deposit.

The other thing, which we didn't campaign on in the last election—the coalition was very positive in the last election—concerns the people in my electorate, in Deception Bay, Kippa-Ring and Clontarf, who rent. I've continually said that there are a lot of low-income people who won't buy their own home. They can't afford to buy their own home. There is always a percentage of Australians on lower wages and there needs to be lots of rental stock available. If people can't negatively gear then I like to say they'll have to positively gear. They'll have to make sure that the rent is covering the loan on that property. Right now interest rates are low—God help these people if the interest rate goes up. If interest rates go up, rents will go up significantly and you'll see a real housing crisis for the people in this country who can least afford it.

Labor don't like this bill and the bill we introduced yesterday because they go a long way to addressing some of the excesses in the rental property market. People going on holidays—travelling—because of rental properties will be gone, and we will be making sure that people can't claim deductions for things when they were bought as part of a house. Sure, if the dishwasher or the air conditioner breaks down and they need to buy a new one, great, then they should be able to claim that as a deduction—but not when it has been purchased as part of the house and it's already part of the deal. The coalition has been moving on that. We also see Labor wanting, as I say, to not have the records that the coalition have kept in relation to foreign investment, which will see more foreign investment. They talk about wanting to make sure Australians have a big deal—this is important.

It's good that the opposition is actually supporting this bill, as the shadow Treasurer has said. These bills are important steps in making sure that housing is more affordable and that there are more rental properties available—and they're good for our housing market and for my electorate in general.

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