Matthew Canavan (Queensland, Liberal National Party) Share this | Hansard source

I will take that interjection from Senator Ludlam. One thing he never mentions is that when the capital gains tax changed in 1999—I believe it was with the support of the Labor Party—it was a change from a real base for capital gains taxation to a nominal base for capital gains taxation. So before 1999, you could remove the effect of inflation from your capital gains tax calculations; after 1999, it was based on whatever the capital price increase was with inflation.

It is actually not clear that that change, certainly not in theory, is a change that supports investment in housing. It depends on the rate of inflation relative to the rate of real house price growth. In fact, over time those two things tend to be about 2½ per cent each, of about five per cent growth in housing over time, and it actually is neutral whether you have a nominal basis for capital gains tax or a real basis for capital gains tax. No other country in the world taxes capital gains on a nominal basis at the full rate of income tax for those reasons.

Finally, one thing that goes unremarked in this place is something that I want to raise from this corner of the chamber—that is, if we are serious about looking for lower housing prices and more housing affordability, the one area we should be looking at is outside the city limits because there is an abundant supply of affordable housing and affordable land in our regional and remote areas. Indeed, house prices in regional Queensland, where I am from, tend to be about half what they are in our major cities—or even less than half if you are just looking at Sydney. What we can do in this chamber—we cannot release land, but we can create policies that drive growth and opportunities and jobs in those regional areas to attract people to those areas. We cannot force people, and I do not want to force people, to move to Townsville or Cairns or Mackay—although the standard of living in those places is much better than in Sydney, in my humble view—but we can encourage them by creating the jobs and the opportunities that will encourage them to move. That will do two things: it will reduce the demand for housing in our major cities and help relieve the price pressure there, and it will support construction and growth and development in our regional areas. This will improve housing affordability across the board. That is why one of the best solutions to our housing affordability problems is regional development. I believe that the Abbott-Truss government will soon release its Northern Australia white paper, which will try to supercharge development in those areas that I know are dear to Senator McLucas as well—like Cairns, Townsville, Mackay and Rockhampton—and that is one solution to our housing affordability issues.