Kate Chaney (Curtin, Independent) Share this | Hansard source

It has taken 25 years of short-sighted policy from both major parties to create our current housing crisis. Housing is now half as affordable as it was when compared to wages. Young people despair at ever being able to afford a house. Renters can't save enough to break into the market, and the gap between those who own a home and those who can't get a foot in the door keeps widening. In my electorate, like the rest of Australia, access to housing is one of the top concerns I hear. People I speak to in Curtin want to see politicians working together across all levels of government so that all Australians have somewhere appropriate to live and can aspire to homeownership like generations before them.

During my first term my community did some work on housing. There were 180 Curtin constituents who attended our two housing forums. Hundreds more contributed to our electorate-wide housing survey, and the resulting solutions are articulated in our Curtin housing report. What I found from this process is that my community is willing to work through difficult discussions and is open to change. We know there is no single solution, no silver bullet. We need all the options on the table, and we need to be willing to pull every lever. One topic that's been avoided because it's seen as being politically unpalatable is reviewing capital gains tax and negative gearing—the generous tax concessions that are given to investors that potentially distort and fuel the housing market and put young people on the back foot. But, in our Curtin housing survey, three-quarters of respondents said these concessions need to be reformed. Negative gearing has been described by the Grattan Institute as a 'tax shelter on wages', as investors can deduct losses from wages—and do so immediately—rather than just deducting from other investment incomes. The result is that reducing taxes on wages by investing in property is a primary goal for many investors. This tax treatment is more generous than most comparable countries that impose limits on deductibility against wages and salaries.

It's the combination of these tax concessions for capital gains and negative gearing write-offs that provides many investors with a sizable tax advantage. These concessions come at a significant cost to the budget and distort the housing market by reducing homeownership and creating advantages for investors over homebuyers. As part of the government's commitment to making housing more affordable, we need to explore how we might reform CGT and negative gearing for housing. We need to create a more level playing field.

There are many options for reform that are not necessarily political suicide. On capital gains tax, we could reduce the rate of the capital gains tax concession. We could apply the concessions only to new builds, or just apartments. We could limit the CGT concession to one property. On negative gearing: we could remove negative gearing from second, or third, or fourth investment properties. We could make it so that rental property losses can only be offset against rental income, not against wages, salaries or other non-investment income. For both, we could grandfather these concessions or reduce them gradually over time.

In each of these options, there's a sliding scale in timing, percentage and application. Any reform in this area will boost budget revenue and this money could go to assist other parts of the housing puzzle, especially housing supply issues. Instead of being spent on tax concessions that are not addressing the housing problem, these funds could be spent on attracting more workers to the housing and construction sector or boosting investment in social and affordable housing.

As well as public appetite, reform in this area has a huge amount of expert support, including at the tax reform forum convened by my colleague the member for Wentworth last week. To be clear, this is not a silver bullet. Modelling by Deloitte Australia and the Grattan Institute show that it could reduce house prices by two to five per cent in the long run and increase rents by 0.5 per cent in the short run. It could shift between 2.5 per cent and 4.7 per cent of Australians from renting to owning. That may not sound like a huge shift, but it's a life-changing shift if you live in one of Curtin's 20,000 rental households, many of whom would love to buy, but can't get into the market.

For those renters, it's deeply disheartening to go to another auction and watch what you had hoped would be your home being bought by an investor looking for a return. We owe it to future generations of aspiring homeowners to take a level-headed, open-minded approach to reform in this area. I urge the government to consider a range of reform options for capital gains tax concessions and negative gearing as part of the work that will come out of the economic reform roundtable.

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