Thursday, 25 October 2018
Social Services Legislation Amendment (Housing Affordability) Bill 2017; Second Reading
Close to 120,000 Australians have no home. A disproportionate number of them are young, but one of the most rapidly growing groups without housing or shelter are older Australians. It says a lot about the priorities and the general level of paralysis within this government that we're only today finally getting the chance to debate the Social Services Legislation Amendment (Housing Affordability) Bill 2017. It was first introduced on 14 September 2017. It was intended to give effect to elements of the government's housing statement that was contained in the May 2017 budget. If nothing else, the bill is a stark reminder to us all that homelessness has not somehow gone away.
The bill also reminds us that this government continues to avoid the big issues in housing. Like many of its policies in other areas, it is reactionary, it is a punishment and it is fails to protect the needs of those who are the most vulnerable. Rental stress, out-of-reach house prices and the simple problem of finding somewhere to live that is close to work are not far from the minds of many, if not most, Australians. You'd be forgiven for thinking that, because house prices in Sydney and Melbourne appear to have topped out for the time being, this government seems to think that it's a case of game over and problem solved. If it truly believes that, it is delusional.
From the outset, I wish to thank the member for Jagajaga and her staff for the generous help and support they've always provided to those of us who cannot claim to have anything like her understanding of these matters. Let me also take the opportunity to thank her too for the enormous contribution that she has made in this place since 1996 to reforming public policy over what has been a long and distinguished time in public life. I'd also like to thank Senator Doug Cameron from New South Wales for his long and ongoing interest in the provision of housing for those who are the most vulnerable and thank him for his ongoing efforts and support.
In the years since this bill was presented, we have yet further evidence that the housing market and housing policy continue to fail so many of our citizens in so many ways. Those failings are captured in two excellent reports that together show that current policies are not delivering an adequate supply of housing for the underprivileged, for renters or even for first home buyers. The first of those is the ninth in the annual series of reports on rental affordability that are prepared by Anglicare, Rental affordability snapshot2018. The second is the Grattan Institute's March 2018 study, Housing affordability: re-imagining the Australian dream. Both are compulsory reading for anyone who is seriously interested in the issues that are before us today. Each, in its own way, exposes the degree to which a reordering of government priorities and a reallocation of public funding is needed to address housing affordability.
Taken together, these two reports show governments don't need to spend more; they just need to direct funding to where it will do the most good. Governments need to pare back the tens of billions spent annually on unproductive tax concessions, such as negative gearing and capital gains tax discounts, and redirect a portion of those funds to those who are in real need. At the same time, governments must address the stop-go pattern in housing starts that damages confidence in the housing sector and perpetuate chronic areas of undersupply.
The government needs to get its priorities right. Anglicare is one of Australia's most respected and highly credentialed peak charitable bodies. The ninth in its series of rental affordability snapshots follows the pattern of previous reports, showing that low-income earners have little or no chance of buying their own home and are effectively excluded from the private rental market. In its April 2016 report, Anglicare surveyed the rental market and found that, with the over 75,000 rental properties that were then available across Australia, only 21 properties were affordable for single adults living on Newstart and only one was suitable for young people living on youth allowance. They found that despite the high level of pensions compared to the allowances, affordable rentals were extremely limited for a single person living on any government payment.
Anglicare's April 2017 report showed a dire shortage of affordable rental houses for people on low incomes. Nationally, only six per cent of over 67,000 dwellings that were surveyed were suitable for any of the 10 selected households in receipt of government benefits. The 2018 report shows the position has continued to slide and has been further exacerbated by the loss of some lower cost properties to Airbnb. The report makes it plain too that rents in many regional areas are not that much lower than those in the capital cities. So, even where work is available, those on low or even average incomes will struggle to find affordable housing anywhere in Australia. None of this should be a surprise, nor should we expect any significant improvement in Anglicare's 2019 report, notwithstanding the myriad of bandaid measures in the Treasurer's 2017 budget, many of which were recycled in this year's budget.
Private rents in the last year in most markets moved up by around 2.7 per cent, enough to outstrip wage increases and the CPI. Over the decade to April 2017, the minimum wage rose 31 per cent and inflation went up 27 per cent but rents soared by 48 per cent. Government payments such as Newstart and youth allowance have fallen in real terms since the mid to late 1990s, which is shameful. Affordability issues and supply shortages at the lower end of the housing market are now deeply ingrained in the system. In the then Treasurer's 2017 budget, he claimed that there are no silver bullets to make housing more affordable but, by adopting a comprehensive approach by working together, we can make a difference.
Having listed a couple of worthwhile and not-so-worthwhile initiatives, the Treasurer concluded his budget announcements on housing by claiming that the measures he outlined represented a comprehensive package that can make a difference. The trouble is, of course, that the then Treasurer's proposals do precious little to directly address the biggest problem with housing affordability in our biggest housing markets. There are disastrous effects of negative gearing and capital gains concessions on house prices, housing affordability and household indebtedness. That's not to mention the billions of dollars that the federal budget haemorrhages every year to underpin the entire madness.
Compounding the then Treasurer's credibility problem, he spent the last year and a half wrongly claiming that a rationalisation on negative gearing and capital gains tax concessions would ramp up rents and take a chainsaw approach to the housing market. He's even continued down that track whilst knowing full well that such rhetoric is totally at odds with the thinking of most independent commentators and the advice of his own department. The trouble with his two massive tax concessions is not just that they force up house prices and corrupt the housing market but that they also punch a huge hole in the federal budget. Such a hole, in fact, that there is little left over to help those locked out of home ownership and the private rental market.
Back in 2016, the respected Grattan Institute estimated that capital gains and negative gearing concessions were actually contributing to higher taxes on all Australians. To quote their media release:
Long overdue changes to negative gearing and capital gains tax would save the Commonwealth Government about $5.3 billion a year.
Their 2018 study merely amplifies these criticisms, concluding that present policy has not delivered the volume and type of housing we need to meet demand, given our current rate of population growth. It's still my favourite statistic on the budget looting effects that these two overblown tax concessions caused that in 1998-99, the year that capital gains tax discounts and negative gearing were joined, there were 1.3 million tax-paying landlords, making a collective return of $700 billion in tax to the government. By 2010-11, all up there were 1.8 million landlords, making a combined tax loss of $7.8 billion. That should shock those opposite.
The odds are it's a whole lot worse now. In the early 1990s, investor demand accounted for about 16 per cent of home loans. After dipping during the GFC, it climbed to a total of 55 per cent of total home loans before APRA controls were tightened in 2015. APRA controls have tightened again and again, and the investment share of housing demand has dropped. The government seems confident that that has fixed the housing-demand problem, and I'm not too sure about that, because investors still make up the majority of homebuyers. In any event, the drain that negative gearing and capital gains tax concessions impose on the federal budget remains a cancer on the system.
As The Salvation Army pointed out in its submission to the community services committee's inquiry into this bill, if just a part of the excessive and unnecessary tax expenditures on negative gearing and capital gains tax were put into providing more affordable housing, the country would be a whole lot better off. We could easily double the $1.7 billion that the government annually spends on public and social housing if a fraction of the money he offered up in unproductive tax concessions was redirected to those most in need.
The sharpest decline in homeownership, according to the Melbourne Institute, since 2002 has been among couples with dependent children—so the families that I care for. In 2002, 55 per cent of individuals in this family type were homeowners but, by 2014, it had slid to 38 per cent. A similar fall in homeownership in the 18- to 39-year-old group saw ownership rates down from 36 per cent in 2002 to 25 per cent in 2014. First home owner grants offered by state and territory governments have become less favoured and arguably less popular form of housing assistance. New dwellings financed by first home buyer schemes decreased from 29 per cent of the market in 2009 to 13 per cent in 2017.
In the last four years, the size of the average mortgage rose by $70,000 or about 19 per cent. Home loan affordability is at its 2015 peak but loan repayments are still above the notional stress level of 30 per cent of family income. From 2011 to 2016 average rents across the country rose from $285 a week to $335 a week, or about 17 per cent. Over the same period, the CPI rose by about 10 per cent. Private debt levels partly driven by housing costs are at an all-time high and the second highest as a percentage of income in the world. Once interest rates start to rise there will be a significant increase in debt and rent stress, particularly if wages don't start to rise too.
For its part, the Commonwealth has devoted a disproportionate level of budget support to underpin spending on investment properties. At the lower end of the income scale, the Commonwealth provides around $4.5 billion a year to 1.35 million low-and moderate-income households in the form of Commonwealth rent assistance. But, even after Commonwealth rent assistance is taken into account, about 40 per cent of those receiving this form of help experience rental stress—that is, they are paying more than 30 per cent of their weekly income in rent. I'd also add that, by propping up the rental market instead of providing affordable housing, we're putting further stress on families because they have no permanency of dwelling and they have to move, often causing their children to have to move school and creating more and more stress for already stressed families. Our national stock of public housing has fallen in recent years, and this has only been partially offset by a rise in community housing. Together, they are insufficient to meet demand, and around 190,000 applicants are on waiting lists for social housing around Australia—and climbing every week.
Since the Rudd government's reforms in 2009, the federal government has provided significant support through the states and territories to help those on low incomes and the homeless via the National Housing and Homelessness Agreement. The current government has pledged to retain NHHA funding to around $1.3 billion per annum until the scheme is replaced. It says that funding will be maintained at or around the current levels, which is good but it needs to increase. As part of its 2017-18 budget proposals the Commonwealth announced it will provide an additional $375 million over three years from 2018 on. So it's not that the government is doing nothing; it is that it is not doing enough. The real question is: are its priorities right? I would say no.
Commentators, such as the highly respected Ross Gittins, have said that the government is adopting a punishment model of social welfare. Most other commentators agree. On numerous occasions, as I read through various briefs, speeches and commentaries on the ARDS, I keep encountering statements to the effect that rental arrears are not a massive issue. To quote from a recent Bills Digest:
Over the five years from 2011-12 to 2015-16 national rent collection rates have averaged 99.4 per cent for public housing, 99.2 per cent for community housing and 99.2 per cent for state owned and managed Indigenous housing.
So, really, a tiny number of rental arrears. The rate of evictions is also extremely low, less than one per thousand tenants per year.
The Labor bill on housing contained none of the nasties that this government has introduced, and even some Liberal senators have identified them as being punitive. To quote Ross Gittins when speaking about the government on this issue:
They seem all toughness and no love. They want to be seen as the great punishers and straighteners—(Time expired)