Scott Ludlam (WA, Australian Greens) Share this | Hansard source

It is really timely that the Australian Senate should be debating housing affordability, because it is a debate that has been submerged—it has been somewhat subliminal. Major party political spokespeople—particularly the coalition—spend a lot of time talking about the cost of living and almost no time talking about the cost of housing.

A couple of weeks ago we introduced an initiative to phase out negative gearing. It would be grandfathered for those who already negatively gear their properties, but it would henceforth be unavailable. Over a period of 10 years or so negative gearing would effectively be wound back and taken out of our tax system. It is one of the largest tax expenditures on the books in Australia. Over a ten year period, if you get the impact of negative gearing having been almost completely unwound from the Australian tax system, the Parliamentary Budget Office estimated that it would be worth roughly $42 billion. To a government that has been cutting taxes and slashing revenue since it arrived, I would have thought that would be something that coalition MPs would be very keen—not necessarily to adopt, I understand that is not how politics works—to at least talk through the merits of it, to at least have the argument and to at least challenge it on the facts. We are seeing no such behaviour from the Australian government.

I want to acknowledge the Australian Labor Party. It was very difficult to get the Labor Party to move or even discuss this subject when they were in government, and that was not for lack of trying. However, I think that they can be commended at least for being willing to entertain the debate. Mr Bowen has been out canvassing a number of different options. We understand that there is a bunch of policy work and a discussion paper going on behind the scenes. At least the Labor Party and some of the crossbenchers are willing to engage in the debate, and that is all that we are asking for.

Why on earth would you not include negative gearing and the way that capital gains are concessionally taxed in your tax review? It was meant to be open to all comers: 'Put everything on the table. Let us have a look at the entirety of the Australian tax system and see if we can have a more intelligent and mature debate than the one that ensued after the Henry tax review.' No such luck, because, while that invitation was made, since then the Treasurer and the Prime Minister have been busy ruling things out as too scary to even talk about, not even wanting to look at the evidence. The arguments that have been put forward serially by senior government spokespeople from the Prime Minister on down—Minister for Finance Cormann was at it again yesterday—are that, if you abolish negative gearing, you push up rents. He even sought to give us a condescending little lecture in the realities of market economics—how wonderful!—that if you abolish negative gearing you will push up rents by somehow restricting supply. Absolutely unbelievable!

If we could come out of this debate with anything at all, the one thing that I would implore is that we set this appalling unsubstantiated myth aside once and for all and just engage the debate on the facts. Instead, we have people as senior as the Treasurer and the Prime Minister just making unsubstantiated, unsupportable stuff up on the fly. Do not come in here and tell us that you have suddenly discovered the plight of renters. A third of the households in this country rent, about a third are owner occupiers and about a third are property investors. The table has been tilted by these extraordinary tax concessions that are paid out to property investors. The largest amount of those benefits accrue to those with the most wealth. Wealth inequality in this country is staggering, and it is growing, and this is one of the key levers. It has been deployed invisibly and subliminally. When we talk about winding it back, removing it or at least opening up a conversation about levelling the playing field, we are told, 'No, let the market sort it out,' when the market is subject to this gargantuan distortion.

A cabinet submission on negative gearing from the coalition in 1987 belied this complete untruth—this myth—that negative gearing keeps rents low. It has manifestly failed to keep rents low, and it has failed as a supply initiative. It has failed on the two criteria on which you would concessionally grant these massive expenditures to property investors. It has failed, and it is time that we dealt with it. ABC Fact Check, this April, comprehensively and quite forensically demolished the arguments that rents would be pushed up if negative gearing went. Successive reports by the Grattan Institute, by ACOSS and recently by the Australia Institute—as well as a MacroBusiness article yesterday—quite elegantly demolished this notion. Negative gearing does nothing to boost housing supply, because 95 per cent of it is going into existing established properties. It has failed as a supply initiative. If investors sold their properties in revolt, guess who they would be selling those properties to? Renters. That frees up one rental dwelling, and the net balance is zero. It will not have an impact on forcing rents up; if anything, it would be precisely the opposite.

The time period of 1985 to 1987 is wheeled out as, 'The last time they tried to lift negative gearing, the earth almost spiralled into the sun'. The rental data and the facts from that period, 1985 to 1987, totally demolish that myth. Rents were going up in Sydney and Perth because rental vacancies were less than 1½ per cent. They stayed flat or declined in Canberra, Melbourne, Brisbane and Adelaide. The myth that negative gearing pushed rents up is a lie. All I ask senators in this debate—if you could maybe talk to your spokespeople about the talking point that they get across—is just not to put fabrications in there. At least can we have this debate on the merits? Abolishing negative gearing will not push rents up. It will level the playing field in favour of first home buyers and renters. Ultimately, that helps the people hardest hit by the housing affordability crisis in Australia, and that means homeless people.

Skyrocketing and unaffordable rents push people into homelessness, and homelessness can kill you. It kills people not just in cities that get below freezing in winter but right across this country. Homelessness can be terminal for people suffering from a myriad of other life difficulties. Homelessness can kill, and it is time that we dealt with it. Senator Waters put it in very stark terms in an article that she put up on Daily Life only a couple of days ago, reminding us that domestic violence is the biggest cause of homelessness in Australia. Domestic violence is the No. 1 cause—that is, women, sometimes with their kids, fleeing violent and unsafe households and finding themselves with nowhere to go.

With this initiative, $3 billion would be put back into consolidated revenue in the first three years—not even in the entire 10 year period. That is $3 billion over the forward estimates that we propose to plough into homelessness. By 2020, with the money that we have estimated, you could basically house every rough sleeper in the country—at least 7½ thousand people—at the same time as cutting 7,000 families from the social housing waiting list. People in acute emergency circumstances can be told that they will be on that emergency waiting list for more than a year. This plan is the kind of supply-side initiative that we need—not this failed injection of cash to property investors, but an actual investment into new supply.

I desperately hope that we will not hear that we are against supply, and that all we need is more supply and more land release. This situation is extremely complex but at least get the elephant in the room out in the open. The recent Senate inquiry into domestic violence showed that housing unaffordability is causing bottlenecks in domestic violence refuges across Australia. Senator Waters writes:

Women are being turned away because there's no affordable, safe, long-term housing for those already living at refuges to move on to.

Effectively, what we confirmed in the budget estimates hearing before last is that 438 women a day are being turned away. They are coming to shelters and to crisis accommodation and being told that there is nowhere for them to go

That is what housing-affordability crisis means. It is not in the real-estate pages, how much capital accumulation is, in investment properties, and how great it is that Tony Abbott's Sydney property has appreciated in value. Good on him. But homelessness kills people and it is time that we unkinked these extraordinary tax expenditures and levelled the playing field for first-home buyers and for the homeless in this country.