Senate debates

Wednesday, 22 March 2017

Matters of Public Importance

Housing Affordability

5:21 pm

Photo of Gavin MarshallGavin Marshall (Victoria, Deputy-President) Share this | | Hansard source

I inform the Senate that, at 8.30 am today, three proposals were received in accordance with standing order 75 from Senators Gallagher, Hinch and Siewert. The question of which proposal would be submitted to the Senate was determined by lot. As a result, I inform the Senate that the following letter has been received from Senator Siewert:

Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:

How the federal government's housing affordability policy will fail young Australians unless it ends tax breaks for investors, removes stamp duties, and transitions to a broad-based land tax.

Is the proposal supported?

More than the number of senators required by the standing orders having risen in their places—

The proposal is supported. I understand that informal arrangements have been made to allocate specific times to each of the speakers in today's debate. With the concurrence of the Senate, I shall ask the clerks to set the clocks accordingly.

5:22 pm

Photo of Lee RhiannonLee Rhiannon (NSW, Australian Greens) Share this | | Hansard source

Flo Seckold has lived in Millers Point for 83 years. She was born there, she went to school there and she met her husband, Teddy, there. Millers Point is part of the famous Rocks, at the southern end of the approach to the Sydney Harbour Bridge. Three years ago, Teddy died. The day after Teddy's funeral, Flo received a letter telling her she was to be evicted, evicted from her home, from her community, along with all the other public housing tenants in Millers Point. In a recent interview, she said:

I have been crying for three years now and you couldn't get me to cry before that. There is nothing that I haven't loved about living here.

These are the actions of the New South Wales Liberal-National government. Their justification for removing all public housing from Millers Point speaks to a broader problem: how we treat housing. The justification that the government used was that they could sell the land to luxury buyers and use that money to build public housing elsewhere in Sydney. There was no thought, however, given to the fact that houses are more than bricks and mortar. They are people's homes. It is where they may have raised their kids, supported loved ones and formed deep friendships with neighbours, and where they are part of a community.

Successive conservative governments deliberately ignore what makes houses homes for people. The Liberal-National government take this uncaring approach because their constituency are property developers and property investors, and their policies are designed to help protect and boost the profits of their backers—the developers and investors. That is why this government has been so unwilling to take on capital gains tax discounts and negative gearing.

This ideology explains why the government continues to distract people from the reforms to housing in Australia that we so urgently need. We know that reforming negative gearing and capital gains tax discounts will put people seeking a home on more of an even footing when competing at an auction with investors seeking profit. We know that most of the benefits of those tax breaks go to the top income earners and have contributed to the speculation bubble that we are now in. We also know that the billions of dollars spent on these tax breaks could be spent on much-needed public and social housing.

Yet what do we get from the Abbott-Turnbull government? We get a whole lot of deception and a whole lot of rubbish. There has been the rubbish that young people should save their money, not spend it on smashed avocado on toast; the rubbish that young people should raid their superannuation accounts, and the rubbish that young people should get a higher paying job—meanwhile, we know that what the government wants to do is cut penalty rates, and therefore many of those young people would get less money. Then there is the rubbish about the states not releasing enough land on city fringes.

Today the Turnbull government went over the top in terms of their own actions. They came up with the ugliest, most insulting idea on the housing crisis—an idea that not only distracts from the real problems of tax breaks and underinvestment in public housing but also scapegoats communities already under attack from the far right and, increasingly, all sections of the Liberal-National party. The headline in the Murdoch papers said it all: 'Send migrants bush to ease house prices'.

The Greens are not against stimulating regional cities. Indeed, our regions are crying out for more investment, more jobs and better transport links. We wholeheartedly support that. But our cities should also be welcoming of migrants and our newest Australians. I am sure regional Australia would welcome everyone if it was provided with the proper investment and infrastructure.

As I said, this government delivers for its own constituency, and that is why it does not have any policies to solve the housing crisis. One piece of the puzzle is political donations. The Greens' Democracy for Sale project has revealed that the Liberal and National parties, over the past five years, have received more than $10 million from the property sector. This is clearly cash for housing policies that keep housing a commodity. Another piece of the puzzle is political self-interest. Coalition MPs own over 330 properties between them. And, when it comes to the electorates where voters most benefit from investor tax breaks, as with capital gains tax discounts and negative gearing, they are all Liberal-held seats. So self-interest, political interest and financial interest are what are driving this Liberal-National party to allow the real hardship that is developing right across Australia with the growing housing crisis.

The Greens have no such conflicts of interest. We will stand up to the speculators and the profit gougers with our plans for secure, affordable housing for all. We are campaigning for sensible and fair tax reform to put people seeking a home on a more even footing with investors. We also want a big boost to the public and community housing sectors, and emergency shelter funding. We need to learn from the progressive European countries that have large, affordable housing sectors serving a wide range of people. The schemes provide high-quality buildings, mixed into the inner city, and guarantee homes for all. In many parts of Europe, people rent for their whole lives. They do not feel compelled to buy a house, because they have security of tenure—something that must come in in Australia to ensure that people can rent their home, can have dignity, can be secure in their future and that their kids can continue to go the local school, and can build links in that community.

Right now, the situation in Australia is not good. But let us remember that, after the Second World War, things were different. The federal government then funded one in six new homes. Half of those homes went to returning veterans. It was not a perfect program, but it remains an outstanding achievement, as housing was not regarded as a commodity nor treated in that way but as a deep commitment from the government of the day for homes for all.

Let us remember that about 300,000 people were homeless at some stage last year. What would we say if 300,000 students were turned away from school because their parents could not afford to pay? There would be a front-page outcry about that, even in the Murdoch papers, and we would demand a new, transformative, approach. That is what we need for housing now: a transformative approach so that we do have governments committed to homes for all.

5:30 pm

Photo of Jenny McAllisterJenny McAllister (NSW, Australian Labor Party) Share this | | Hansard source

The motion we are considering this afternoon asks us to debate how the federal government's housing affordability policy will fail young Australians unless it ends tax breaks for investors, removes stamp duties, and transitions to a broad based land tax. Sadly, I think the motion misdescribes the problem, because the Turnbull government's housing affordability policy has already failed young Australians, and it is at risk of failing other generations as well. The real problem is that this government does not have a policy about housing affordability and has not had a policy about it at any point since it was first elected. What we know so far about its newly discovered interest in this problem are some media lines from Scott Morrison about a package of measures that might be in the budget. Perhaps they are related to his trip to the UK to find out how they do it, or perhaps not, because we do not have any detail whatsoever even about what underpins the thinking of this government when it comes to housing affordability.

I say to the government that Rome is burning. Sydney house prices have jumped 70 per cent in the last five years, while average income growth has increased just 13 per cent. This cannot go on. The government has wasted three years of government without dealing with this. The truth is that despite the recent noise about this issue they still do not really know who is in charge of housing affordability. Last week we learnt, through a Senate inquiry, that there is an ongoing and consistent lack of clarity at the ministerial level and the bureaucratic level about who within government is actually responsible for housing.

Since my first days in this place I have been deeply concerned about the complete lack of accountability within the government on this crucial issue. Back in 2015 in an estimates hearing, the Treasury secretary, Mr John Fraser, told the Senate Economics Legislation Committee that the lead agency for housing affordability was the Department of Social Services. I will say that this answer was given after a fair bit of quiet confab between the officers at the table, because, actually, at that point in time, no one in Treasury had it at the top of their mind about who in the government was actually responsible for this issue. At the time the answer that was provided was the Department of Social Services. Earlier this year we saw the appointment of a new Assistant Minister to the Treasurer, the Hon. Michael Sukkar MP. He announced through a media release that he had been given responsibility for housing affordability, amongst other things. But when you dig a little deeper into this you see it is all still pretty murky and it is all still pretty unclear.

From questions during the last couple of weeks through estimates and through the administrative orders inquiry held by the Finance and Public Administration Reference Committee, what did we find out? Everybody has got a different story about who is in charge and who is doing what. The Treasury tells us that they do not lead, that everybody cooperates together, but that Prime Minister and Cabinet chairs an interdepartmental committee on the matter, despite not having portfolio responsibility for housing. Incidentally, this committee was formed back in December, when they discovered, belatedly, that this might be an issue of interest to Australians. Under the published administrative orders the Department of Social Services does have responsibility for housing affordability. That seems to be still in place. Senator Cormann told us in estimates that the Treasurer is described as having responsibility for housing affordability in cabinet, but only to extent that measures are relevant to the economics team, and the truth is that published administrative orders limit the Treasurer's role to housing supply. The Treasury did confirm that its assistant minister is responsible for housing policy. Finally, although the government is very, very keen to talk about housing supply, absolutely nobody is responsible for considering housing demand.

A piecemeal approach—a complete disorganisation—has contributed to total policy paralysis in this area. I have heard many explanations from various bureaucrats about how this is complex, how we need a whole-of-government approach and how, naturally, there are many parts of government that have a contribution to make on this et cetera. Everybody agrees that it is complex, and I do not need to be convinced that this is a complex policy area. But unless it is clear who is in charge and who is leading on this issue, we will see no progress. It is unsurprising to me that after three years this government has produced absolutely nothing of substance in relation to housing policy. At the same time we are hearing a chorus of concerns from all sorts of participants in the market about the rate of growth of investor loans and the level of household debt.

Let us start with debt. Australians carry challenging levels of household debt. The data shows that we are actually leading the world. I know that we Australians like to win things, but this is not the kind of competition that you want to win. Australian household debt makes up 187 per cent of total disposable income and that is one of the highest rates in the world. The effect of this situation on families and households is great insecurity. In this situation people are understandably nervous about small changes in the economy that might impact on their ability to sustain and carry that debt. Some of our regulators are beginning to sound the alarm. The RBA Governor has spoken about it, and the RBA's minutes have noted that borrowing for housing by investors is also picking up. The growth in household debt is faster than growth in household income, and there is now a discussion about another round of macroprudential controls.

Macroprudential controls for the investment market are considered to be a last resort by our regulatory institutions to curb excesses in the property market. They are deployed when the risks associated with exposure to mortgages appear to be too great or possibly are too great. In early 2015, APRA imposed restraints that required banks to achieve growth of less than 10 per cent in annual investor lending, and it is concerning to see the regulators now noting that investor demand for loans has rebounded and is again approaching that threshold.

The Turnbull government needs to take some responsibility for this situation, because the current policy settings are putting intense pressure on the housing market. The Governor of the Reserve Bank noted this month that recent data 'suggests that there had been a build-up of risks associated with the housing market'. The ASIC chairman, Greg Medcraft, said there was little doubt that a real estate bubble existed in Sydney and Melbourne. No-one in that position would use the word 'bubble' lightly.

The housing market is under pressure by continued surges in investment borrowing and prices in Sydney and Melbourne. In January, we saw that loans to investors in property had risen by 28 per cent since last May. There is no ambiguity about why. Tax concessions for investors are significantly contributing to this situation. That is why Labor have been very clear about our intentions. We introduced reform proposals on negative gearing and capital gains tax more than a year ago. These changes limit negative gearing tax concessions to newly built homes. They reduce the capital gains tax concession from 50 per cent to 25 per cent. It produces a budget saving; this is positive for the budget. It would save the budget $565 million over four years. You would think a coalition government that talks endlessly about the imperative for budget repair would embrace these reforms. But, no, that is not the situation. The coalition has doggedly opposed these measured, responsible reforms—reforms that go to system stability, that go to household security and that go to budget repair. These have not even been contemplated by the coalition. We have broader policies that are also important. I know my colleague Senator Cameron will want to talk about housing and homelessness, issues about which he is incredibly passionate.

But the raw facts are these: without an actual plan to intervene in this policy area, to secure a future for Australians, and particularly young Australians, we face a very grave future. And young Australians in particular risk having their lifetime financial security compromised. The current policies on negative gearing and capital gains tax generate great benefits for the wealthy, and it is time for government to take seriously proposals to address this distortion in our housing market.

5:40 pm

Photo of Malcolm RobertsMalcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | | Hansard source

In the late 1990s and early 2000s, the Australian Bureau of Statistics revealed that 68 per cent of the income of a person on an average weekly income was spent on charges to government—68 per cent. That is equivalent to your wages for working from Monday to smoko mid-morning Thursday paying the government: rates, levies, fees, charges, GST, special charges and so on. Sixty-eight per cent; working three and one-third days out of five. The rest is all the people have left to spend on their own lives. That was from the Australian Bureau of Statistics. Think about some of these things. The price of food as basic as a loaf of bread—50 per cent tax. Sorry; that is the cost of a loaf of bread. Then there is housing. Studies have shown that around 88 per cent of the cost of a house is tax, and I will talk more about that in a minute. The price of petrol: 70 per cent is made up of tax. When we look at food, when we look at bread, 50 per cent of the cost of a loaf of bread is tax. So in effect that is a 100 per cent tax rate—an effective tax rate of 100 per cent. Convert the housing; that is almost 100 per cent effective tax rate. Convert the price of petrol, that is an effective tax rate of 230 per cent. This means that a person gets up in a home and she makes some sandwiches to save money because of the cost-of-living pressures. She is paying a 100 per cent tax rate on bread. She then walks out of her house, where she is paying a 100 per cent effective tax rate. And her petrol on the way to work, she fills up the car at a 230 per cent effective tax rate.

What do we see as the solution to everything the Greens come up with? Add another tax. It gets worse than that for housing affordability; because if half the cost of a house is tax, then that means the loan itself is double what it has to be. Think of the added interest when the loan is double what it has to be. Now you understand why housing is not affordable for young people. We can thank the Greens for that, because the Greens tax imposts are adding enormously to the cost of living. And we can thank the Greens, because due to their ridiculous policies they are raising the cost of energy and energy prices. That is decreasing employment and increasing costs. We must get back to basics and look at the whole tax system comprehensively.

5:43 pm

Photo of James PatersonJames Paterson (Victoria, Liberal Party) Share this | | Hansard source

As I often do when I have the opportunity to speak in front of you, I regret to say that I have to acknowledge you as Mr Acting Deputy President Marshall, but it is good to see your years of wisdom and experience being utilised in the chair.

Colleagues, I am not a particularly religious person, but today I am convinced that miracles do happen. Miracles happen because we have discovered for the second time that the Australian Greens have a tax that they do not like. I was delighted to discover earlier this year that the Greens, during the backpacker tax, discovered a tax they did not like. They campaigned vigorously against that. I was delighted to see that. I really appreciated the logic that the Greens brought to that debate and that aspect of tax. They realised that a tax on someone's employment might discourage people from being employed, and a tax on someone coming to work in Australia might discourage them from coming to work in Australia.

It is wonderful to see that that solid economic logic from the Greens has been applied to a second area of policy. They have realised that stamp duty, a tax applied to housing, makes housing more expensive and that perhaps this tax on housing is not a good thing and we should reduce it, if not get rid of it altogether. I hope the Greens apply this logic to other areas of tax policy. They might realise that, say, a tax on employment, in the form of a payroll tax, also discourages people from being employed and puts an extra cost on employment. They might realise that the tax on investment, the company tax, might reduce the amount of investment that takes place and that we should get rid of it if we want to see more investment.

I hope this is a sign of Senator Whish-Wilson's good economic influence on the Greens. I hope it continues. I look forward to seeing it play out in other areas of economic policy. But unfortunately it has not been quite consistent, even in this motion today. The Greens rightly recognise that stamp duty does make housing unaffordable and that we should get rid of that tax on housing. But at the same time they are arguing that we should in fact increase taxes on housing for some forms of people who would buy houses—in this case, investors. I am not sure how a tax on investment in housing is ever going to make housing more affordable. I will come to that in a minute.

There was one unfortunate aspect of the contribution from the Greens earlier in this debate today. We had to endure yet another tedious conspiracy theory from Senator Rhiannon about how donors to the coalition drive our policy on this issue. If every time the Greens got up and spoke about renewable energy one of us got up and said that their policy was being driven by the fact that renewable energy companies donate to the Greens, that would be very tedious. And I honestly do not believe that is true. I believe the Greens are genuinely committed to renewable energy, whatever the cost, as they have demonstrated. And I honestly believe that renewable energy companies donate to the Greens because of the Greens policy on renewable energy and not the reverse—that is, renewable energy companies do not dictate to the Greens what their policy on renewable energy should be. I wish they would apply that logic to others in this place and accept that we are sincere in advocating the positions we hold.

I am very sincerely concerned about housing affordability because, more than most in this chamber, it affects my generation. As I have said before in these debates, my wife and I still rent at home in Melbourne. We do not yet own our own home. But no-one watching this at home need lose too much sleep over that. As I said, I am on a good salary as a senator and I will certainly be able to afford a good home when my wife and I are ready to purchase. But getting elected to the Senate is not a very good housing affordability strategy for most people in my generation—or it is certainly a very limited one. In fact, among all my peers and friends in my age group there is only one who has bought a home and is paying off a very big mortgage. So I absolutely understand the seriousness of this issue; it affects my generation more than any other. But we need to separate the issues that will address and actually fix the problems caused in this area from those that will not. Obsession over new taxes in this area is totally misplaced, totally unwise and will not solve the problem.

We will in due course see the government's plan in this area. I am really looking forward to the budget, where it has been widely flagged that there will be changes proposed to help improve housing affordability. It has been widely flagged that the emphasis will be on supply. I am pleased about that. Think about any other area of policy. If we decided that bread or milk were unaffordable, would we enact government policies to increase tax on those products or would we enact government policies to facilitate the extra supply of those products? It would certainly be the latter.

I want to refer to one very valuable study in this area, an annual study which I think is the gold standard of policy analysis in this area. It is done by Demographia, an international group. They compare cities around the world for housing affordability. They released their latest study earlier this year—and there is an excellent article about this issue, by Leith van Onselen, published in Macrobusiness on 23 January this year. It goes through the cities that are unaffordable and have unaffordable housing. Unsurprisingly, cities like Hong Kong and Singapore have relatively unaffordable housing. You can see why that might be the case. They have a natural constraint on the supply of housing, so it is obvious that there is not much that those jurisdictions can do to increase supply. But it is unusual to see listed shortly after those countries Australia, which has no actual restrictions on the availability of land—and, therefore, housing—except the artificial ones we impose on ourselves. Regrettably, most of those restrictions are made at the local council and state government level.

The study shows one of the most important facts in this debate. Yes, the construction cost of housing is one issue that increases the unaffordability of housing. But fundamentally the source of expensive and unaffordable housing in this country is the value of the land that sits underneath that housing. It is the increase in land values that has primarily driven the increase in housing unaffordability. Why in Australia, one of the least densely populated countries in the world, would we have a shortage of land and a high land price? There is only one reason, and that is an artificial restriction on the supply of land.

We know what those policies are. State governments have been loath to release sufficient quantities of land to allow people to build homes on them, and local councils have been loath to allow people to do on that land things which would allow them to supply more housing. We have these artificial constraints on housing driving up the costs of land and, as a result, housing is becoming more unaffordable.

Unfortunately, the federal government is somewhat constrained in its capacity to deal with that because of the Constitution. I do not think anyone proposes to change that. All we can do is encourage states and local councils to provide an increased supply of land and allow people to do more on their land so that more houses can be built and that supply problem addressed. I hope that they do so, and I know that we will do whatever is within our power to assist that process.

I want to conclude on one final matter that was raised by Senator McAllister about the structure of the government's housing affordability policies and responsibilities. Last week I enjoyed, as I always do, attending the references committee hearing which she chaired and for which I was the deputy chair. It concerned the administrative arrangement orders of the government. In particular, I enjoyed the questions she asked and the interest she had in housing affordability. I am surprised though that Senator McAllister said she was confused by it. I know Senator McAllister is a very smart person and a very astute observer of the workings of government, and I did not think the answers we got from the public servants who appeared were confusing at all. I think it was incredibly straightforward.

They said, as we know, that historically the Department of Social Services has had a significant area of responsibility in housing affordability, particularly the supply of housing to people in need, people who cannot afford to provide it themselves. That has always been the case. They also said that, as we know, the government has taken a wider interest in this issue and recognises that this is an issue primarily of supply. That is why my friend the member for Deakin, Michael Sukkar, was recently appointed as the Assistant Minister to the Treasurer to further assist in this area. It is a whole-of-government problem, particularly at the federal government level, because there are so many moving parts. It makes eminent good sense to me that we would appoint someone like Michael Sukkar to assist in this area.

I am not sure where Senator McAllister's confusion comes from. I think it is abundantly clear. We will see on budget night the Treasurer announcing the fruits of the work that has been done between the Department of Social Services, under Christian Porter's leadership, and the Department of the Treasury, under Michael Sukkar's leadership. We will see that this government does have a plan to address this issue and will make best endeavours to make a positive contribution on this issue, recognising the fact that primarily the constraints in this area are about supply and they are primarily controlled by state and local governments. We urge them to do everything they can in their power to provide more land to reduce the price of housing and make it more affordable for my generation and generations to come.

5:53 pm

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | | Hansard source

I am pleased to engage in this matter of public importance discussion tonight and certainly to follow Senator Paterson, who used his own circumstances as an example. How dare someone from this place on a $200,000 base rate complain about housing affordability and still being able to only rent. If he gets re-elected time and time again, as we seem to see with the Liberals in Victoria, he will have a career that most people would be envious of—not his politics but the career he will have here earning plenty of money to look after his wife and family in the future. Unfortunately, that is not the position most people find themselves in. They can only dream about having a base rate of $200,000, such as Senator Paterson has.

We get an argument from One Nation and the coalition. They are joined at the hip on every issue now. On taking penalty rates away from workers they are joined at the hip. On this issue of housing affordability they are joined at the hip. Senator Hanson should just apply to rejoin the Liberal Party—that would close the circle—because really Senator Hanson does nothing more in here than vote with the Liberals. That is the position. They are always votes in this place that hurt working-class people in the country.

The argument Senator Roberts has put up is simply about tax—there is too much tax. I wonder how people think we build edifices like this. Where does the money come from? Where does the money come from for health? Where does the money come from for education? Where does the money come from for infrastructure? It comes from taxes. When One Nation and the coalition are out there talking about small government and small taxes, working-class people need to understand that they are going to be in big trouble because they will not be able to get decent education, decent health, decent infrastructure and decent transport. These are the challenges. Housing is not a challenge in isolation. Housing is about being in a situation where you can access health, education, and transport to and from your job. Housing is not just simply about fixing high taxes and everything will be okay. If it were that simple, probably this neoliberal government would have done it. It is not that simple.

The argument that has been put forward again by Senator Paterson is that it really is a state issue, that we have got limited capacity, that there is an artificial constraint there—the artificial constraint being the Constitution—and that, if you fix supply and fix taxes, everything will be okay. Let us have a look at the record of the Abbott and Turnbull governments. The coalition government have been there for nearly four years and all of a sudden they have discovered housing affordability. There has been only one member of the coalition that I remember actually talking about housing affordability seriously and it is John Alexander in the other place. He has been arguing that capital gains tax and negative gearing have to be fixed.

Let us look at this government's record. This is the mob who say: 'It's not our doing. We should just simply leave it alone.' When they came to power they refused to countenance any reform to negative gearing and capital gains tax simply because of ideological grounds, not because of any economic analysis or economic imperatives. It is simply: let the big end of town, rich people, get tax benefits paid for by poor people. That is the position over there, supported by Senator Hanson. So they refuse to deal with negative gearing and capital gains tax.

They closed the National Rental Affordability Scheme, which was one of the best schemes delivering good housing at reasonable cost across the country. There are 30,000 new affordable units and we were on track to achieve 50,000. That was the first increase in housing stock in this country for decades, and it was a Labor government that did it.

They scrapped the first home saver account, which was helping people save for their first home. Senator Paterson came in here whinging about having to live in rented accommodation. I bet his rental accommodation is not like working-class people's rental accommodation. I bet it is nothing like that. I bet he is doing all right, and you would be with a $200,000 base wage. He came in here whingeing he cannot get a house. They cut $44 million a year from homelessness services. That is the other aspect of housing—homelessness. They failed to provide funding certainty under the National Partnership Agreement on Homelessness. They drip-fed it. And good people out there, working hard to help homeless people, were unsure of whether they were going to have a job under this government. The government have just refused to appoint a dedicated minister for housing and homelessness. If they are actually serious about housing and homelessness, appoint a minister. Get a minister to be there to look at the issues and deal with the issues.

Let me come back to negative gearing and capital gains tax. It is not just Labor that is saying this. This morning, the Assistant Minister to the Treasurer, Michael Sukkar, gave a speech that I was at. He again ruled out negative gearing reform. This was at a breakfast hosted by the Australian Institute of Architects. It went down like a lead balloon. The president of the Institute of Architects, Professor Ken Maher, got up and made his speech. He said that the tax treatment of property, including negative gearing, was clearly in need of reform. Add that to the line of experts who say that capital gains tax and negative gearing need to be dealt with. Add that to that list of eminent economists and eminent analysts in this country who say that.

Another one is John Daley of the Grattan Institute. He says it is long overdue to change negative gearing and capital gains tax. He said it would save the Commonwealth government about $5.3 billion a year, Senator Hanson. Will One Nation support getting rid of negative gearing and capital gains tax and save the Commonwealth $5.3 billion a year? Then the institute say that the interaction of a 50 per cent capital gains tax with negative gearing distorts investment decisions. It makes housing markets more volatile and reduces home ownership. Senator Paterson wants to get into a house. He feels that he cannot get a house. He is in rental. The first thing he should do is support Labor to get rid of capital gains tax and negative gearing. It will then be easier for him to get a house. And with his $200,000 base salary, it would become even easier. The Grattan Institute say that if you do the two measures, not just negative gearing but also capital gains tax, if you get rid of them, it will reduce the cost to the public purse by $11.7 billion every year. They also go on to say that most of these tax concessions, these tax breaks, largely benefit the wealthy. That is where the money is going—to the wealthy. It is not like you hear in here that it is going to emergency service workers. The bulk of the money goes to the wealthy. That is where the money goes. Why should workers who are getting their penalty rates ripped away at the weekend by people like Senator Hanson be subsidising the wealthy in this country? So the message I have got for the Liberals and Senator Hanson is: fix capital gains tax and negative gearing. Make it fairer and maybe Senator Paterson might get a house to own one day.

6:03 pm

Photo of Pauline HansonPauline Hanson (Queensland, Pauline Hanson's One Nation Party) Share this | | Hansard source

I have heard so much hypocrisy from the other side of the house, from Senator Cameron, that I cannot believe it. He talks about getting rid of capital gains tax. Why wasn't it done in the period of time that the Labor Party were in government? No, they will not do it. So they whinge and complain when they are on the other side of this house, but they will not do it when they are in government because it does not work. Another part of the hypocrisy is when he talks about housing affordability. When foreign investors came into Australia and wanted to do a development they had to sell at least half of it to Australians. Guess what? Labor did away with that. The whole development could be sold to foreign investors. I am also told in relation to these big developments in Melbourne that 75 per cent of Melbourne city is owned by foreign investors. Forget about Australian ownership. Apart from that, do they pay stamp duty? What I have been told is that they only pay about $1,000 per apartment. So where is the money going? Out of the country, back to foreign investors.

The elephant in the room here—which no-one is taking any notice of—as to why housing affordability is out of the price range of ordinary Australians is immigration. You cannot continue to bring in huge numbers of migrants to Australia if you do not have the infrastructure—and housing is one. In this last financial year, we brought in 209,000 migrants and it is expected that in the next financial year there will be a further 226,000. We cannot provide housing for our own people here. We have 200,000 homeless people. We have rising costs of housing as well. The Greens are purporting to get rid of the— (Time expired)

6:06 pm

Photo of Dean SmithDean Smith (WA, Liberal Party) Share this | | Hansard source

We have heard a lot today, much of it not very interesting, I have got to say, and much of it greatly ill-informed. If I could just reflect on Senator Hanson's contribution. Again, Senator Hanson, you hit the nail on the head. You focused on Labor's hypocrisy. Here we come, after just a few years, and Labor is quick to talk about the things that the coalition has not done, but Senator Hanson nailed it very succinctly by identifying Labor's hypocrisy on the issue of housing affordability. So, congratulations, Senator Hanson.

Photo of Pauline HansonPauline Hanson (Queensland, Pauline Hanson's One Nation Party) Share this | | Hansard source

My pleasure.

Photo of Dean SmithDean Smith (WA, Liberal Party) Share this | | Hansard source

This afternoon, in the brief time that is available to me, let me just outline to you how my approach to tackling this issue. It is important that we get some expert opinion onto the public record with regard to the issue of housing affordability and, in particular, what it means for young people. So in a few moments I want to reflect on a recent contribution that the assistant governor of the RBA Luci Ellis made at a recent conference in Melbourne.

In addition to that I think it is important—I am sure Senator Whish-Wilson will make some remarks in these respects—to consider those macro trends happening across the Australian economy that are affecting housing affordability. Senator Whish-Wilson, you can probably guess three of them, but let me help you: the population growth we have experienced, the interstate migration we are experiencing and, of course, those issues of supply which deal with land release and which deal with some of the poor construction activity we saw in decades past. I want to give people a degree of confidence that they can trust the Turnbull coalition government to tackle this issue.

It was a familiar poor shot by Senator Cameron, who was again resorting to a personality attack, going after Senator Paterson's very honest and frank contribution. It was revealing that Senator Cameron did not seek to correct the record of the rumour that is circulating around this Senate. I do not know if you have heard it, Senator Whish-Wilson. It is that Senator Cameron, a senator for New South Wales, might soon find himself a senator for Tasmania. How else could you explain Senator Cameron's purchase of a $1.5 million property in Hobart? How else could you explain it unless the Labor senator for New South Wales was planning to be a Labor senator for Tasmania? Why else would he go and buy a $1.5 million property in Hobart? I have not heard that from Senator Cameron. Let me make that very clear: I have not heard it from Senator Cameron. If it is not true I am sure he will correct the record. I am sure if it is not $1.5 million he will tell us it is $1 million or $2 million. But it is up to Senator Cameron to correct the record.

It is refreshing that we had the Australian Greens come into the Australian Senate this afternoon to talk about low taxes and about removing taxes. As Senator Paterson's contribution alluded, if they could do that across the broad brush of economic activity that would be a great advantage. We might even see a more credible Australian Greens if they could argue for reduced taxes and, by extension, reduced government spending across a whole variety of economic activity in the Australian economy. Of course, what we know is that what the Greens would like to take away with one tax cut they would like to improve with another tax hike.

I just want to reflect on an article of 25 November 2016. Senator Whish-Wilson, you probably know it well. It is Phillip Coorey's article about the Greens plan to introduce an inheritance tax. For all those people listening to the broadcast this afternoon, no matter where you live, you will not be untouched by the Greens inheritance tax. Let's just briefly share with those people listening to the broadcast what the Phil Coorey article said. It begins by saying:

Greens leader Richard Di Natale will up the ante on the taxation of investment property by recommending his party adopt as policy the imposition of death taxes on real estate.

It goes on to say, 'Senator Di Natale will flag imposing an "inheritance tax" on properties in which the owner was not the occupant.'

This is the Phil Coorey article of November 2016 headed, 'Greens recommend death taxes for investors.' The article goes on to say:

In his speech to the Greens national conference, Senator Di Natale will badge it as a measure to help address growing housing inequality. While he is realistic enough to accept the idea will not be readily embraced by the political mainstream—

One hundred per cent correct; well done!

he will point out it was the Greens who first proposed—

other tax cut arrangements with regard to housing issues. Then there is a quote from Senator Di Natale:

"I know this is a difficult issue but as a society, it's a conversation we have to have if we want to tackle the kind of soaring income inequality … "

This is the danger. We have what is a very, very important and genuine concern in the community around the issue of housing availability and affordability, and then we have ideas been prosecuted by the Greens that are ill-conceived, ill-thought out and not consistent. They might, in actual fact, be the gateway for worse policies like inheritance taxes and death taxes. Just a suggestion, if I may, Senator Whish-Wilson: if the Greens want to establish a bit more credibility in the community, you might want to rule out things like death taxes and inheritance taxes, because they sure do send a shiver up the spines of ordinary Australian families.

I just want, in the time that is available to me, to reflect on the comments that were made by Luci Ellis, the assistant governor of the economic division at the Reserve Bank of Australia. She made these comments at the Australasian Housing Researchers Conference in February of this year. These are fresh reflections on the issue of housing affordability. These are reflections from an expert no less than the assistant governor of the Reserve Bank of Australia. Quoting from the Illawarra Mercury, let me just share what Luci Ellis had to say at that conference. Luci Ellis was reflecting on some of the issues that exist around housing affordability and the issue around housing supply, and made some very interesting observations about young people, which is an important element of the MPI we are dealing with this afternoon. The article says:

While the proportion of 25 to 34 year olds owning the home they lived in had fallen from around 60 per cent to around 50 per cent since the 1970s, this wasn't necessarily a cause for concern.

Then a quote from Luci Ellis:

"Most of the decline happened by the early 1990s, before the big increase in housing prices relative to incomes," she said. "What changed during that earlier period was that people started partnering and settling down later in life."

Ownership rates for young people declined partly because "many people wait to settle down before they buy a home".

"By saying this, I am not suggesting that people should not worry about whether households can achieve their desired housing tenure," she said. "I am suggesting that the situation is more complex than would be suggested by a single-minded focus on a single metric of affordability such as median housing prices."

In summary, Luci Ellis, the Assistant Governor of the RBA, is making a very important point: these issues happen in the context of broader demographic changes—those that we are living through and those that might have happened prior to us coming to this party. I think she makes a very interesting point where she starts to discuss what I think is a critical issue, and that is the issue around loan-to-valuation ratios. In that regard, as reported in the Illawarra Mercury, Luci Ellis says:

So it's surprising that as housing prices have risen, the loan-to-valuation ratio hasn't shifted up over time. One reason might be that more borrowers are getting help from friends and family to accumulate the deposit. Careful analysis of data shows that the share of first home buyers receiving that help has been increasing over the decades, but actually remains low.

In researching for this contribution this afternoon, I think the comments that Luci Ellis made at the Australasian Housing Researchers Conference in Melbourne on 16 February 2017 are very enlightening. We cannot hide from the fact that this issue is not immune from the broader demographic trends that are happening across our community.

6:15 pm

Photo of Peter Whish-WilsonPeter Whish-Wilson (Tasmania, Australian Greens) Share this | | Hansard source

I am not quite sure where Senator Smith is going with his analysis in recognising that we have a housing affordability crisis in this country and that they are going to be tackling it in this year's budget. I will wait with bated breath to see what package of policies and incentives the government is going to put forward. This is an issue that is taken very seriously by the Greens. This is an issue that we continually raise in estimates with the Treasury secretary, in committee work and in this place. We will always stand up for young Australians—we have generational inequality that needs to change in this country—and for low-income Australians, the battlers who want to try and get ahead.

We do have a problem with housing in this country. Depending on where you live, we have a very big problem in some places. We have the dubious honour of spending the highest proportion of income on housing in the world. As Senator McAllister said earlier, we have the highest household debts in the wold. The proportion of young people who own their own home, particularly in certain areas of Australia, is in decline and is now at the lowest level in 60 years. It is easy to see why. It is because housing prices continue to go through the roof, inequality is being created on a generational scale, the economy is being distorted because of perverse incentives that the government refuses to change and the financial system is being loaded with risk.

Australia's housing market is being driven by a tax system that favours investors over owner-occupiers. The Treasurer went to the UK over Christmas, apparently to sit on committees and collect information on housing affordability. That was great. We are looking forward to the new ideas. But what he should have done was come home via Africa and go on a safari—because there are some big elephants that the Treasurer cannot see in the Treasury and in his own party room. Those policy elephants are negative gearing and capital gains tax concessions. The capital gains tax discount is the sixth largest tax expenditure in this country and cost us $6.8 billion in 2016-17. It goes mostly to the wealthy, with 73 per cent of the benefit flowing to the top 10 per cent of income earners. Negative gearing costs us nearly $4 billion a year, and over half the benefits go to the top 20 per cent of households in this country.

There is no reason why wealthy Australians who generate income from investments such as property should be taxed at different rates than everyone else. The Reserve Bank is among an overwhelming number of groups pushing for reform for these tax breaks. We have figures from the Parliamentary Library around negative gains and capital gains discounts. On average, investors are receiving benefits of $4,500 a year. But this rises to $9,200 per household in the highest income quartiles. And guess what, Senator Cameron? The top 10 negative-gearing electorates are all Liberal electorates when you look at the data. The Prime Minister and his wife themselves own nine properties between them, including five investment properties.

If Senator Hanson bothered looking at the data, she would not come in here blaming immigration and migrants in this country, people who flee to Australia from persecution, people whom we should be helping, for the housing crisis in this country. What a ridiculous notion. How many houses do they own? They would be lucky if they own a single house, Senator Macdonald. Most of them are in public housing or on waiting lists or have been put up by their communities in places like Launceston—where I live—by church groups and other community groups who look after them. They do not own nine properties!

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party) Share this | | Hansard source

How many do you have?

Photo of Peter Whish-WilsonPeter Whish-Wilson (Tasmania, Australian Greens) Share this | | Hansard source

Immigrants do not own nine properties in this country. What a stupid notion put forward by One Nation. But that should not surprise any of us in here at all.

The Greens have over the years wanted to get rid of capital gains tax concessions and negative gearing. We have recently put forward a very good proposal for swapping stamp duty for land taxes. We are happy to push the boundaries on housing reform and we are happy to lead the national debate in this area. We put forward an innovative way for the federal government to assist the states to transition from the worst form of tax, stamp duty, which is a tax on transactions—even Senator Paterson agrees with that—to the best form, which is a broad based land tax. Almost every economist and housing industry group in the country agrees that this reform needs to happen. But no-one has suggested it yet, because they are worried about political campaigns.

I am not saying that this whole debate is not complex and complicated; it is, and we have to look at it in a very holistic manner. But this particular proposal, putting forward a broad based stamp duty reduction or scrapping stamp duty and replacing it with a land tax, will do four important things. It would reduce the cost of buying a house for young and low-income Australians and free up those cherished family homes for new homeowners—because stamp duty stops older Australians from resizing to more appropriate housing. Public infrastructure investment by governments would be recaptured. Senator Paterson says, 'Why don't we just release more supply?' What are the reasons we do not release more supply? We do not have proper government investment in infrastructure in outer suburbs and in rural and regional communities in this country. On housing affordability, the best way to solve that crisis on the supply side is investing in productive, long-term infrastructure such as public transport. Where property values increase because they are close to public transport, land tax collections will rise, and that is smart, and that is money we can use for schools and hospitals. It will improve rental supply and rental housing standards for tenants. Investors speculating and sitting on underutilised and vacant properties would decrease, which of course is very important, because a lot of supply, as Senator Paterson refuses to mention, is actually hoarded. It is sat on and not made available for rent and for providing a fix for the housing affordability crisis.

We are happy to provide details to senators in this chamber and to have this debate here today, because that is exactly what we should be doing in the Senate: we should be getting on with brave reform and helping young and low-income Australians tackle the housing affordability crisis.