Wednesday, 27 November 2019
Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019, Foreign Acquisitions and Takeovers Fees Imposition Amendment (Near-new Dwelling Interests) Bill 2019; Second Reading
I thank the chamber for the opportunity to speak in support of the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Near-new Dwelling Interests) Bill 2019. But in doing so, the shadow housing minister, the member for Blaxland, who is at the table as well, and I say that we don't think these bills or indeed this government are doing enough to improve housing affordability in this country.
The Australian dream of owning a place you can call your own obviously isn't a reality for all Australians; it's out of reach for too many people, and particularly young people, and I'd invite the House to consider these 10 facts. First, the percentage of Australians who own their own home has dropped to its lowest level since Robert Menzies was Prime Minister back in the 1960s. Second, the cost of housing continues to rise as wages continue to stagnate. Third, house prices in our major cities have gone up by over 15 per cent in the last five years. Fourth, prices in Melbourne have gone up by 30 per cent and prices in Sydney have gone up by 20 per cent over that period. Fifth, it can take a typical household more than 10 years to save a 20 per cent deposit. Sixth, the household debt to income ratio has skyrocketed to almost 200 per cent, which is the highest it has ever been. Seventh, the number of Australians behind in their mortgage today is at its greatest level since the global financial crisis. Eighth, over one million low-income households are in financial housing stress and over 40 per cent of low-income households renting in Australia are suffering rental stress. Ninth, there are more homeless Australians than ever before. And, tenth, with forecasts of continuing double-digit price increases in Sydney and Melbourne at the same time as the RBA expects wages to continue to stagnate, this problem is actually expected to get worse, not better.
Housing affordability is a massive issue. It's an intergenerational issue. It's a key issue for our community, for our country and for governments at all levels. But while Australians are struggling, this government has no comprehensive plan to deal with it. It has no plan to fix the floundering economy, no plan to lift wages and no plan to seriously address housing affordability, which has gotten worse on its watch. That's why I move:
That all words after "That" be omitted with a view to substituting the following words:
"whilst not declining to give the bill a second reading, the House notes that under this Government, housing affordability has gotten worse, and as a result:
(1) the percentage of Australians who own their own home has dropped to its lowest level since Robert Menzies was Prime Minister back in the 1960s;
(2) the number of Australians behind in their mortgage payments is at its highest level since the global financial crisis;
(3) the Australian Institute of Health and Welfare has shown that in 2017–18 over one million low income households were in financial housing stress and that 43.1 per cent of low income households renting in Australia were suffering rental stress; and
(4) there are more homeless Australians than ever before".
The government's management of these bills has been nothing short of a debacle. Those opposite announced these measures in the 2017 budget—more than 2½ years ago. Two and a half years have passed and the government still hasn't implemented them. They've had to fix mistake after mistake after mistake, including some that we identified from this side of the House, during that time. There are members of the government who think this whole bill is a mistake. With regard to the removal of the capital gains tax exemption, our old mate the member for Fadden was reported as saying:
Sometimes things get announced and don't get progressed and it's just best to leave it that way.
Regarding the detail of the bills, there are really four main parts to the measures in the bills. They remove the entitlement to the CGT main residence exemption for foreign residents, they clarify the application of the principal asset test, they provide a capital gains tax incentive for investment in affordable housing and they enable a reconciliation payment for near-new dwelling certificates. During that 2½-year period, but particularly when it was first announced, there have been some legitimate concerns raised by the community. Representing a big Kiwi community in South-East Queensland, I know New Zealand citizens living in Australia were especially concerned that they would be negatively affected. On top of that, Australians living abroad—there is something like 100,000 Australians living or working offshore—have been concerned they'd be impacted by the changes. These criticisms of the bills were a factor in the government waiting until after the election to bring these proposed changes to the House.
Another big factor is the fact that there have been improvements made to the bill, and we welcome those. The original bill had some substantial flaws. These changes will have the effect of lessening the impact, particularly on Australian expats overseas and New Zealanders living here in Australia. We were pleased that we could advocate on behalf of both of those groups and to help get the outcome that is now in these bills, which have been changed from what was first proposed in the budget of 2017. The government has also moved to make arrangements for certain life events, new amendments which allow foreign residents to still access the main-residence exemption when they've had particular life events, such as divorce, death, terminal illness—all of those sorts of difficult issues. I want to congratulate my predecessor in this gig the member for McMahon, and also the member for Fenner, for fighting hard for so many of these positive changes which are being implemented in this bill. The government has also extended the transition period until the middle of next year. That's a good thing because it has relieved some of the uncertainty for taxpayers overseas. These are good developments. They make what was a bad bill in 2017 a better bill and something that we are able to support.
As I said earlier, the Australian dream of owning your own place isn't a reality for too many Australians, particularly young Australians. Too many people think that a home of their own is simply out of reach. I think it is fair to say that, although we are supporting these bills and although there are welcome steps in these bills, nobody should pretend that they will fix the lack of affordable housing in this country or have a significant impact on housing affordability. The details of the bills are all in the memoranda, so I won't go through them in too much detail, but I will flag a couple of concerns with the aspect of the bill which goes to the CGT arrangements for affordable housing. We are not convinced that it will actually add to the amount of housing. We're worried it may just cause more churn. There are other issues that we have raised over the last couple of years that we think still apply, and we note that the National Affordable Housing Consortium has said that the increase in the discount from 50 to 60 per cent is grossly inadequate to drive investment. So we support the bills, but we don't think they will be game changers when it comes to housing affordability.
There are couple of other important points that I want to raise because they are very closely related. When we talk about housing affordability, yes, it goes to tax arrangements and, yes, it goes to the incentives in the system, the provision and public housing. All of these things are important, but there are two things that don't get talked about enough by those opposite when they talk about housing affordability.
The first one is stagnant wages. One of the reasons why we have record household debt, one of the reasons why we have substantial mortgage stress is that wages in this country are stagnant. The Reserve Bank deputy governor did a terrific job yesterday of laying out what we're up against. He said that over the last seven years or so—so largely the life of those opposite in government—low wages growth in this country has become the 'new normal', in the Reserve Bank deputy governor's words. Feeble, weak wages growth has become a feature of the economic mismanagement of those opposite. If the Australian people want to know whether this is deliberate or accidental, I refer them to the finance minister's views, publicly expressed, that slower wages growth is a deliberate design feature of the government's economic policy framework. So for all of those Australians who feel with some justification that no matter how hard they work they just can't keep up with the cost of child care or electricity or servicing the mortgage, as we see in so much of the data, those Australians should know that the finance minister and, indeed, the cabinet of the Morrison government want it to be that way. This stagnant wages growth is a deliberate design feature, in the finance minister's own words. Wages growth under this government is actually the weakest it's been under any government. In the most recent data, which came out in the last week or two, we saw that wages growth had slowed even further. This is a big problem, and the fact that people's wages are not keeping up with the cost of living, that it's harder and harder to service the mortgage or to pay the rent is related to the issue of housing affordability. That's an important consideration which barely gets a mention by those opposite when they talk about housing affordability.
The second related point goes to monetary policy. The Reserve Bank governor last night gave a speech about unconventional monetary policy and quantitative easing. As he has said repeatedly, there is not enough effort being put into fiscal policy—the efforts of the government in the budget—to boost an economy which has been floundering and which has deteriorated even since the election.
The point we make about the governor's speech is that he wouldn't even be needing to contemplate these quite extreme monetary policy measures if the government was doing a good job managing the economy. If the government was doing its job managing the economy in the interests of workers and pensioners, we wouldn't have a Reserve Bank that has already had to cut interest rates to record lows—to a quarter of what they were during the GFC. We would haven't the Reserve Bank contemplating quantitative easing if the government was doing its job and coming to the table with a measured, proportionate and responsible fiscal policy to not only help the Australian economy and boost the Australian economy but, more importantly, help the workers, pensioners and families who make up our society. That's another important issue here, when we talk about housing affordability.
We have got interest rates at 75 basis points, the lowest they've ever been—a quarter of what they were during the GFC. The real risk there is that the effectiveness of those low interest rates is diminishing over time. Monetary policy can't do the heavy lifting that it could do when rates were higher, so we've got a real problem here: a government that won't come to the table and a Reserve Bank running out of runway when it comes to monetary policy and contemplating quantitative easing. The real risk here is that, as official rates get lower and lower, asset prices get puffed up, which at the same time as not stimulating enough demand in the economy makes houses more unaffordable. Plus, it's hard on savers who are relying on interest—a substantial chunk of the population for whom savings is an important part of the way they provide for themselves and for their loved ones. That's a substantial issue which deserves more discussion as we debate these bills in this House.
In summary, we support the bills. We don't think they will be a silver bullet. We think they are worthy of support, with the improvements that have been made since we have been arguing for them. But there is a problem of housing affordability in this country, and it has many facets. It impacts particularly on the young, but not just the young. It is a function of stagnant wages and what the Reserve Bank has had to do to boost the economy in the absence of a government that has any plan to boost an economy which has deteriorated on its watch.
The original question was that this bill be now read a second time. To this the honourable member for Rankin has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The question now is that the amendment be agreed to.
I rise to speak on the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Near-new Dwelling Interests) Bill 2019. Young people are getting screwed. Nowhere is this more apparent than when it comes to housing. We are in a society now where, for young people, doing the right thing is no longer enough. You can go to school, to uni or to TAFE, you can finish your degrees and you can then graduate, go out and look for work and, under this government, find yourself facing a world of insecure unemployment and low wages. Then, when you try to find a house, not only may you well have a debt hanging around your neck as a result of having done the right thing and studied but you go out and look for a house and find that so many of them are out of reach, not only for buying but even for renting.
In my electorate of Melbourne, we're at the point now where most renting is severely unaffordable, even for an average student share house. There is no city in Australia where it is affordable to rent on Newstart, and many Australians are finding themselves under increasing housing stress. When it comes to buying a place, if you even think that you are on the ladder towards buying a place, you find yourself in a situation that previous generations have just not found themselves in. Go back a couple of decades and you will find that an average house cost about six times a young person's income upon graduating. Fast forward to now, and it's above 12 times. With low wages, high house prices and high levels of debt, people are finding themselves unable to put a roof over their heads. Why is it the case that having a roof over your head is no longer affordable? The biggest reason is that in this country we've stopped thinking about housing as a basic right that every citizen should have and started thinking about it more as an investment class to favour the very wealthy, with the government funnelling billions of dollars of tax subsidies into pushing up prices. As a result, if a young person goes to an auction now to try to buy a house—
Government members interjecting—
I'm very pleased that half of the coalition has come in to listen to this speech—it is the best reception I've ever got—but they might like to listen quietly because the message from young people needs to be heard.
Government members interjecting—
No wonder they shout; they represent the generations that already have five, six or seven houses—and they are intent on passing laws that prop that up at the expense of young people. So what happens if a young person goes to an auction to buy a house? They are bidding against someone who may already have two or three houses and is about to buy a new one knowing they can push the price up and up and up and knowing that, even if they pay over the odds for that house, they can then claim any loss as a tax break and a few years later sell the house and get a tax break on that as well. This comes at the cost of billions of dollars that could be spent on affordable housing, renewable energy, schools, hospitals and making university free. Instead the government is saying: 'There's scarce money around. What are we going to do with it? We are going to put it into giving people who already have a couple of houses a subsidy to go and buy more and push up prices even further.' As a result, so many young people are now priced out of the housing market and the rental market.
There's another reason it is so hard for people to afford a home: wages have stagnated or gone backwards. If you have just finished school and you're looking for a place to live and/or a job—you have done TAFE or university—you face the highest level of insecure work we've ever had and low wages. So you don't have enough money in your pocket to afford rent, let alone a mortgage. If you are lucky enough to get a meeting with the bank manager, if you are on a short-term contract—as so many people now are—the bank manager says, 'How can I be guaranteed you will have a job next year?' Graduate teachers in schools are being put on one-year contracts. There will always be schools. Why can't these jobs be permanent? Putting people into insecure work makes it impossible for them to plan their lives and do basic things like buying a house.
But there's a third reason why we have this problem at the moment. As well as this government's intention to give billions of dollars in subsidies to people who already have three or four houses at the expense of people who have none, as well as this government driving down wages to the point where we're seeing low levels of wage growth—in fact, some wages are going backwards—we have not seen new builds of public housing for decades. Part of the way to both bring down rents and make houses more affordable to people is to build public housing at the bottom end of the market. By definition, people who live in public housing are on low incomes. People who may be on Newstart or in low-wage jobs—
Mr Falinski interjecting—
I hear the interjection that apparently public housing is something like Soviet Russia. That is what you would expect from someone who is born with a silver spoon in their mouth, who has never had to live in public housing. I am proud to have the highest level of public housing in Victoria in my electorate. The people who live there make a contribution to this society. They contribute far more than the backbench of the Liberal Party ever does—people who sit there sucking on the public teat—
I don't think there's anything to withdraw. There is nothing to withdraw. I made no imputation against any individual person. If they think there's something to withdraw then an individual who is aggrieved can get up and say it, and I'll consider what they have to say.
Thank you, Member for Melbourne. Members on my right, it is extremely difficult for me to be able to hear the debate, to be able to hear what the member for Melbourne is saying. I have asked several times for order and I would ask that that be respected, or I will be forced to resort to the standing orders. I will not say this again. The member for Melbourne has the call.
Thank you, Madam Deputy Speaker. If there were any doubt about the point that I was making, we have a government that is funnelling billions in public subsidies towards people who already have houses, including those who've already got several houses, and that comes at the expense of people who've got none. So, for those who sit there enjoying their massive subsidies for having their three or four houses—and we all know what's on the parliamentary register; we all know how many houses people have got—to turn around, interject and say anyone who is living in public housing doesn't have the right to an affordable house over their head because somehow that is akin to Soviet Russia shows exactly the mentality of this government and why inequality is at a 70-year high under this government. People who live in public housing have a right to a roof over their heads. They have the right to ask government for help. It is not just those who have got two, three or four houses who have the right to come in here and say, 'Give us more public subsidies so that we can buy even more.'
Everyone in this society has the right to an affordable roof over their head, whether they live in public housing, whether they're a young person trying to enter the housing market or whether they're an older woman who finds herself in her 50s in the fastest-growing group of homeless people. That is older women who find, after having their marriage end, that they don't have enough superannuation or enough to live on. Everyone in this country has the right to a roof over their head and an affordable rate. If only we could get back to thinking like that. If some continue thinking that somehow government getting involved in assisting people putting a roof over their head is Soviet Russia, as the government is claiming from the interjections we've heard that haven't been withdrawn, we will continue becoming a more unequal society. The fact is that the government cannot see that, if you've got a dollar of public money and you have a choice about how to spend it, the better thing to do, rather than continuing to allow subsidies that inflate the price of housing, like negative gearing and capital gains tax for people who've already got several houses, is instead to put that money into helping states build more public housing. We would be killing a number of birds with one stone.
We could have a construction-led economic recovery in this country by building affordable housing. The Greens have a costed plan as part of our Green New Deal to say that we will build half a million new public and affordable houses over the next decade, subsidised by winding back the unfair tax breaks for those who've already got several houses. If we as a society said, 'We need some rebalancing because young people are priced out of the housing market, and perhaps we need to redirect some of the subsidies we're giving at the moment to people who have three or four houses already and put them into building affordable housing for people at the bottom end of the market or people who are coming into the rental market, expanding the public housing stock in this country,' we'd not only help drive down rents and make housing more affordable for people but also find that Australia becomes a more equal place. It should be the job of every government and every generation to leave the country better off for the ones who come after it, but we are not at that point at the moment. We are at the point at the moment where young people don't have the money they need to buy a house, because houses have become too expensive and the work that they get is insecure. And there is not enough public housing being built for the people who are in genuine need.
For anyone who comes into an event in Melbourne, you come in down the Tullamarine Freeway and you hit the red and yellow CityLink sticks and you'll see those big tower blocks that are there in Melbourne. They were all built in about the 1960s. The state government is also responsible here, because there has not been a new build of public housing on the scale that we saw in the 1960s since the 1960s. Population has gone up but they have not built new public housing. There was an effort under the Rudd government to put some money into building new public housing but that ended up being a massive exercise in cost shifting. In a number of respects state governments just took the money and said, 'Thank you very much. We're not going to spend any more out of our own pockets.' And we didn't have the growth in new public housing we needed.
If the federal government is serious about tackling housing affordability it needs to say perhaps part of the answer is building new public housing. Work with the state governments so that there's no cost shifting, and take this money that we're currently giving in negative gearing and capital gains tax subsidies and use it to build more public housing stock. Then we could also lead a charge—and I implore the housing minister to consider this—for national rental standards where we end no-ground evictions right across the country, where we have rent caps for the people who have accepted that they may be in a rental for a very long time and where we limit the amount that landlords are able to continue to boost up and up and up the amount of rent that people pay just because they know that the market is so tight and renters have nowhere else to go. These are some meaningful things that you could do to address the housing pressure, but it requires a mind shift. It requires moving away, as the government said in their own words, from thinking that a roof above someone's head is some kind of soviet-era Stalinist plan and instead saying something very basic, which is that everyone in this country, no matter how much you earn or what age you are, has the right to a roof over their head at an affordable rate. If that was the enshrined principle then we could have rental reform, we could have housing reform and Australia could become a much more equal society.
In summing up, I want to thank those who have contributed to the debate. The government recognises the importance of additional investment to meet Australians' needs for more affordable housing, as well as making it easier for Australians to get into the housing market. It's important to the wellbeing of all Australians and access to secure and affordable housing no doubt improves social and economic participation, and education and health outcomes, which is why it is such a focus of the Morrison government.
These bills represent an important step in ensuring that Australians have access to secure and affordable housing, and encouraging investment into affordable rental housing, while continuing to strengthen the integrity of Australia's tax system. It follows the Treasury Laws Amendment (Housing Tax Integrity) Act and the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Act, which give effect to a number of measures that support housing affordability for all Australians, which were announced in the 2017-18 budget.
Schedule 1 to the main bill delivers on the government's commitment to implement tighter rules for foreign residents owning Australian property. This schedule introduces reforms to strengthen the capital gains tax rules for foreign residents. Foreign residents will be denied access to the main residence CGT exemption with grandfathering arrangements, importantly, until 30 June 2020. However, those who have been a foreign resident for six years or less may be able to continue to access the main residence exemption if certain life events, as defined, occur during that period of foreign residency. The principal asset test will also be modified to address an integrity issue with the CGT rules for indirect interests in Australian real property. These two reforms were announced alongside an expansion of the foreign residence CGT withholding regime which has already been legislated and came into effect on 1 July 2017.
Schedule 2 to the bill, meanwhile, allows resident investors in qualifying affordable renting housing to obtain a CGT discount of up to 60 per cent. The changes will provide up to an additional 10 per cent CGT discount for investments in affordable housing, thereby encouraging increased investment in affordable rental housing.
Schedule 3 to the bill is a technical amendment which supports changes announced in the 2017-18 budget that streamlined the foreign investment framework. This amendment introduces a reconciliation payment for dwellings sold by a developer under the near-new dwelling exemption certificate that was introduced by regulation on 24 June 2017. This ensures that, where a near-new dwelling is sold by a developer to a foreign person, the developer provides a reconciliation payment in respect of that sale. It ensures integrity in that system.
Thank you again to those who have contributed to this debate and participated in the public consultation with the government on these measures. I therefore commend the bill to the House. The government will not be supporting the opposition's amendment.
The original question was that this bill now be read a second time. To this the honourable member for Rankin has moved as an amendment that certain words after 'That' be omitted with a view to substituting other words. The immediate question before the House is that the amendment moved by the honourable member for Rankin be agreed to.