Wednesday, 14 June 2017
Matters of Public Importance
Purchase of New Dwellings by Foreign Non-Residents
I inform the Senate that at 8.30 am today nine proposals were received in accordance with standing order No. 75. 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 Hanson:
Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:
The need to limit the number of new dwellings which can be purchased be foreign non-residents.
Is the proposal supported?
More than the number of senators required by the standing orders having risen in their places—
The PRESIDENT: 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 clock accordingly.
There is a need to limit the number of new dwellings purchased by foreign investors. In Australia there is no limit on the number of new dwellings which can be purchased by foreign investors. There is no way of knowing how many residential properties are owned by foreign investors. We do know that foreign investors are seeking to buy new dwellings in ever-increasing numbers, because each year more and more approvals are sought by the Foreign Investment Review Board. Let me just explain: in 2012-13 it was 4,499; in 2015-16 it was 26,052. In a four-year period, from 2012 to 2016, foreign investors were given approval to purchase 62,440 properties. A fee of $5,000 is paid for each approval, making it very likely that these approval numbers do represent properties purchased. In 2014-15, foreign investors were given approval to purchase 17.5 per cent of all new property in New South Wales, and over 15 per cent in Victoria. It is not unreasonable to suggest that in areas of Sydney and Melbourne the percentage of new dwellings being bought by foreign investors is likely to be 30 to 40 per cent, displacing many Australians wanting to buy in these areas.
I have asked the Treasury about the policy intent that underpins the unlimited sale of new residential property to foreign investors. They tell me that allowing foreign investors to buy as many new homes as they like increases the supply of new homes and creates jobs in the construction industry. Well, these are bureaucrats gone absolutely mad. These people who live in Canberra can probably have their homes. They have no relevance to people in Sydney or Melbourne who cannot buy homes in their own cities, where they have grown up as children and where they wish to be around family and friends. This is nonsensical, and it is ridiculous. Yes, I support the building industry, by all means, but not at the expense of Australians owning their own homes.
We know that the government no longer believes that story, because the government announced in the budget an annual vacancy charge. This charge will apply when a property is not occupied or genuinely available on the rental market for at least six months each year. The charge is to be equal to the application fee at the time the property was acquired, which is currently $5,000. It is unclear how the new annual vacancy charge will operate. How will the government identify properties which are vacant for six months or more? How will the government maintain a current address for each foreign investor? And, if they do manage to have a current address, how will the government collect the penalty in a cost-effective way in foreign jurisdictions? My opinion of this, of what has been put before us, is that it is unworkable. It is not going to work out. The government will be chasing their tail. Of course, they will set up another administration and put on another 50 or 100 people at total cost to the taxpayer.
But I do agree with the government's plan to cap at 50 per cent the number of new dwellings a developer can sell to foreign investors. At least they are doing something about it, but under Labor in 2009 and I believe it was Minister Chris Bowen who said at the time: 'Oh, no, it will be all foreign investors. We'll allow you to build all these units, but you can sell the whole lot to foreign investors.' So now we have a situation, mainly in Melbourne, where you have these complexes that have been built and are totally foreign-owned. No-one lives in them, so it has just done Australians out of the opportunity of owning their own homes.
It is common knowledge that the housing shortage in Australia results from an imbalance between supply and demand. There is too much demand for housing due in part to foreign investors, as well as too little supply in areas where people need to live. So people have to move out of the place where they grew up. They need to work there and need family assistance when they have children and they want to be around friends. But these are the people who are being forced out their places because of foreign investors driving up the prices of housing. So they have been told to move out further. They are moving away from the places that they have grown up in, close to the work, and it is costing them more and more.
The government wants to increase the supply of new housing, but this plan avoids the need to deal with the underlying problem. Very few people are talking about the demand side of the housing problem, but I am going to. As a community, we do have the ability to reduce demand by slowing the rate of immigration into this country, and this is something I have advocated for a long time. A reduction in the number of migrants, together with changes in the ability of foreign investors to buy residential housing, would make a genuine difference to the lives of so many who would dearly love to buy a new or existing home.
The present rate of immigration is too high, at 190,000 annually. The figure should be reduced to around 100,000 until we can rebalance housing, jobs and infrastructure. We cannot provide sufficient quality housing at a price ordinary people can afford. This is evidenced in the alarming increase of homeless people on the streets and the number of families and children sleeping in cars in hospital car parks or where they feel safe.
The advocates of unlimited immigration through the humanitarian program or the points system show remarkably little interest in the Australians who already live here and are struggling. The Australian Greens want to open up our borders to anyone, but they always want others to pay. My suggestion to the Australian Greens is that they and their supporters take up sponsorship of the new settlers—take them into your homes, pay all their outgoings and do not burden other Australians.
The shortage of housing in Australia is a government-made problem and can be solved by government. The buck-passing between the federal government and the states needs to stop. What stops the government reducing the number of new migrants, refugees, 457 visa holders and those buying their way into this country? Their answer is: while our productivity remains low, the only way to grow the economy is to increase the size of the population. Well, they are wrong. Big businesses are the ones that will profit from this. They are the ones making money out of it, while Australians are queuing for housing, health, nursing homes and everything else that was available to them, even jobs. The federal government needs to be honest with the people of Australia and tell them the truth. The truth is that poor decision making by successive governments has led to a less productive economy than we might otherwise have had.
One Nation believes the shortage of housing for Australians would be improved by limiting foreign investors to one new property and making it illegal to sell an established home to a foreign investor. What we are advocating is that at point of sale, when you are wanting to buy an established house, you must present identification that you are a permanent resident or an Australian citizen entitled to buy an established house. You must sign on the contract, and that must match the name. That is then sent to the Foreign Investment Review Board and also sent to the immigration department. I do not believe that foreign students should be able to buy houses in Australia. They are entitled to, but a lot them do not sell the houses when they leave the country. The Australian dream is to own your own home, and I will continue my fight to give that opportunity to every Australian.
I had a look at One Nation's policy in relation to housing and to say that it is a scant policy would be overselling the position. Senator Hanson talks about One Nation working for the people. If you were actually serious about housing policy, you would support many of the policies Labor has put forward to deal with housing issues. To simply come in here and run a rant against foreign investment, when it is not the biggest housing policy issue that this country is facing, just demonstrates what One Nation are about. They are about division and they are about pushing a line that plays to the lowest common denominator in this country. They do not have a clue about dealing with housing policy.
On 21 April, Labor announced a tranche of policy which is about trying to deal seriously with the issue and not just using it as some attack on migration and on foreigners, playing to the lowest common denominator within Australia. We have a comprehensive package of policies on housing and we will continue to develop our housing policy leading up to the next election. There is a crisis for many young people in this country who are trying to buy a home and set up a home for the future. The housing crisis is only getting worse. You look at the skyrocketing prices in places like Melbourne and Sydney and other places around the country and you wonder how some young kids are ever going to get into a home. Home ownership is at 60-year lows and home ownership rates for 25- to 34-year-olds have collapsed from around 60 per cent to less than 40 per cent in the past 30 years. Rental stress is also on the rise, with the proportion of low-income households in rental stress now at more than 40 per cent. So 40 per cent of people who cannot own their own home and are renting a home are in rental stress. To pay the rent they are not putting food on the table; they are not getting the kids new shoes when they need new shoes. These are the practical issues that, surely, One Nation, if they claim they are working for the people, should be addressing. But, no, let's go for the easy hit, and that is foreign investment, and let's never develop a policy that actually goes to the real issues—that is One Nation.
Only a Labor government will tackle housing affordability. We are building on our existing proposals with new policies to improve affordability, increase housing supply, boost jobs and reduce the economic risks associated with distorted investment decisions. Any housing affordability package that does not involve reforms to negative gearing and capital gains tax discounts is an absolute sham. Unless One Nation start to adopt those types of policies, then their argument that they stand up for working people in this country will, like many of their policies, be shown to be nothing more than a sham. Labor's plan involves a number of issues. Firstly, we want to reform negative gearing and capital gains tax concessions. Why should investors, backed by taxpayers' funds, be able to lock out young people trying to get their first home? We just do not think it is right and we have taken a strong position on that. We also want to limit direct borrowing by self-managed superannuation funds. Rich people with millions of dollars in superannuation are using those superannuation funds to invest in housing and, again, locking people out of the housing market who are simply in there trying to buy a home—especially first homebuyers.
We would facilitate a COAG process to introduce a uniform vacant property tax across all major cities. We would increase foreign investor fees and penalties. We think that is an issue, but we do not think it is the basis of a housing policy. We think it is an issue we should deal with, but it cannot be the key issue in any housing affordability package.
We would establish a bond aggregator to increase investment in affordable housing. But we realise that a bond aggregator on its own will not bridge the gap between the investment and returns that are needed to build more affordable housing. We will have more to say about that in the lead-up to the next election. Simply, we accept that the bond aggregator is a positive step but that on its own it is not enough.
We would boost homelessness support for vulnerable Australians. If One Nation say that they stand up for Australian working people, why are they not asking the federal government: 'Why have you taken $44 million a year out of support for low-income housing? And support for women who are trying to get away from domestic violence?' Why would they be silent on that and simply come here and do a 10-minute speech on foreign investment when that is not the key issue that is driving rental stress and problems for working families in this country?
We would also argue that we would get better results from the National Affordable Housing Agreement. There is $1.3 billion going into the National Affordable Housing Agreement every year. We would deal with that in the context of getting better results out of that money that is put into place—more accountability from the states. These are all complex issues, but issues that anyone who knows anything about the housing affordability problem would be dealing with. You would not come in here and just run us a racist line about foreign investment.
We would also re-establish the National Housing Supply Council and reinstate a minister for housing. The National Housing Supply Council, when it is up and running, would be able to give advice to government about how to deal with some of these issues in a more comprehensive and sophisticated way. It would actually do the analysis about what is causing the hikes in house prices and come up with policy that assists government to deal with that issue.
We would also reinstate a minister for housing. When the coalition came out with this so-called package of housing at the last budget, people around the country who are dealing with this issue basically dismissed it as being ineffectual and not dealing with the key issues. We certainly believe that the Foreign Investment Review Board rules currently apply a range of restrictions on foreign purchasers of property in Australia, but that is not the key issue. It is not the key issue—the key issue is the tax benefits that rich Australian get, supported by poorer Australians' tax, to go in and run negative gearing and capital gains tax concessions. That is one of the fundamental issues. A young person goes into a bidding game against someone who is getting the support of government through negative gearing and capital gains tax concessions, and they have absolutely no chance of winning that bidding war.
Again: when these rich people are using self-managed super funds to then boost their capacity to outbid young Australians to buy a home, that is a problem. I am sure we will hear the arguments that this is all about allowing firies, police and teachers to invest. The reality is that the bulk of the benefits from negative gearing and capital gains tax concessions go to some of the richest Liberal seats in the country. They do not go to National Party seats where people are battling. They do not go to battling Labor Party seats. They go to the richest seats in the country. Unless we deal with that unfair advantage, then coming in here and arguing about foreign investment does nothing for working families in this country.
I think there is one issue on which everyone in this chamber does agree on, and that is that housing affordability is a serious issue and a serious challenge, and it is particularly affecting young people in Australia. As I have said in this chamber before, I am keenly aware of that, as a younger person myself, because it is my friends, my family and other people in my age group who are right now struggling to enter the housing market, who are struggling to save for a deposit and who are worried that they will never be able to pay off a mortgage on a home they would like to live in. So I agree with the concerns raised by fellow senators in this debate so far that housing affordability is a serious issue.
I might shock Senator Cameron here, but I agree with him in part as well. I agree with him that although foreign investment in housing is an issue, it is also right to say it is not the most important issue—it is not the key issue in housing affordability. That is where I disagree with One Nation senators. This government has done a number of things to ensure that foreign investment in housing is appropriate and is regulated as it should be. In a moment I will go through and document for the record some of those initiatives. But it is very misleading to come in here and to tell young people in Australia that the reason they cannot buy and cannot afford a home is that foreign investors are stopping them from doing it. The truth is, and the evidence shows, that this is only one small part of the housing affordability problem. This is a much more complex problem and a much broader problem. To come in here and give people false hope that if we somehow shut off foreign investment in housing tomorrow all of a sudden housing will become affordable and achievable for young Australians is misleading, and I think that is a wrong thing to do.
Where I disagree with Senator Cameron is that rich people are the people to blame for the housing affordability crisis. Rich people are not to blame for the housing affordability crisis, just like they are not to blame for non-existent crises in every other product and service market in Australia which does not have an affordability crisis. No-one comes into this chamber and talks about the national bread affordability crisis, the national milk affordability crisis or the national newspaper affordability crisis. The reason no-one comes in here and talks about an affordability crisis in those areas is because there is not an affordability crisis in those areas. The reason there is no affordability crisis in those areas is there are no artificial government restrictions on the supply of those products or services. If ever price and affordability became an issue in those markets the increasing prices would provide ample incentive for people to enter into those markets to provide those products and services and they would keep those prices under check and under control.
Unfortunately, that is not possible in the housing market. If ever there were a market with incentive to get into, the housing market is it. Prices have skyrocketed. There is profit there to be made. One would think rational, profit-seeking people would be leaping to get into the housing market to provide houses for people to increase the supply of homes and, in doing so, help lower the price of homes. Their inability to do so is not because of their unwillingness or a lack of interest in doing so, but it is because of the artificial restrictions governments have placed on the supply of housing.
The truth is, when we talk about a housing affordability crisis, what we really mean is a land affordability crisis. Yes, the home on top of the land is a bit more expensive than it used to be, but not dramatically so—not 50 per cent more expensive in one year, for example, which is the kind of price increase we have seen in my home state in the city of Melbourne, or a 60 per cent increase, as we have seen in Sydney. What accounts for that spectacular increase in price is the increase in the value of the land that sits underneath the home. It is a land affordability crisis that we have.
In every other market, if we had an affordability crisis, what would we do? We would seek to increase the supply of that scarce good and hope that the prices would fall, as they always do. In this market, though, governments and, particularly in this place, state governments and local governments have artificially restricted the supply of land. So people who want to supply the market and want to provide more affordable homes have less ability to do so.
For the record, I want to detail briefly some of the foreign investment controls that this government has put in place to respond to the concerns of the community that it is a factor influencing housing affordability. For example, in the most recent budget we limited foreign ownership in new developments. The government has ensured that dwellings in new developments in Australia will be kept available for Australians by introducing a 50 per cent cap on foreign ownership in new developments. That means that for Australians who want to buy a home in a new development, whether that is an apartment block or a housing estate, at least 50 per cent of that will be quarantined and set aside for local buyers and only 50 per cent of it can go to foreign buyers.
Another measure in this budget is to charge foreign owners who leave their residential properties vacant. One of the persistent concerns in the media has been that foreign investors are buying properties here in Australia and not leasing those properties and not making them available to be rented and that that is contributing to the lack of housing affordability. So one of the measures announced in the budget this year is that, if a foreign owned residential property is left vacant for more than six months in a year, a charge will be levied on that foreign owner equivalent to the foreign investment application fee which was paid at the time of application. This initiative hopes to encourage those foreign investors who might be buying homes in Australia and leaving them vacant to make them available to rent, because housing affordability is not just about purchasing a home; it is also about being able to rent a home—and the greater the availability of rental property, the better.
Another initiative in this budget is to improve the integrity of capital gains tax rules for foreign investors to make sure that the law is being adhered to there. We do not want foreign investors to avoid capital gains tax that they are required to pay and we do not want to encourage people to invest in homes in Australia under the false belief that they can avoid capital gains tax. They need to pay the capital gains tax that is required. We are assisting in this area by bolstering the foreign resident capital gains tax withholding regime by increasing the withholding rate from 10 per cent to 12½ per cent, as well as increasing the number of foreign residents caught in the regime by reducing the threshold from $2 million to $750,000.
Of course, that is not the only initiative in the budget on housing affordability. One measure which I know is particularly valued by young Australians is the First Home Super Saver Scheme, which allows them to use their superannuation account to save towards a deposit for their first home. Contrary to speculation and perhaps some fearmongering in the media, this is not a drawdown on the compulsory contributions that they pay through their income into superannuation, but it is extra contributions that they choose to make from their before-tax income above and beyond the minimum 9.25 per cent contribution that they make. They will do so in a tax concessional way which will allow them to save more quickly and to save more than they may have otherwise been able to save. We hope that that will solve one of those issues in entering the housing market. Servicing a mortgage is a difficult thing to do, but what many young people say is an even more difficult thing to do is to save a sufficient deposit to get into the housing market in the first place.
There are other initiatives in the budget, including a National Housing Infrastructure Facility and unlocking Commonwealth land, which is one of the few levers that the Commonwealth government has when it comes to land supply. The Commonwealth is a landholder and landowner and the government is seeking to make as much of that as possible available for home development. I think that is a really important and welcome initiative. One of them is in my home state of Victoria, in the suburb of Maribyrnong, which could build, I believe, up to 6,000 dwellings. That would be a really substantial increase in supply in an inner urban area of Melbourne. That is a really welcome initiative.
But, as I conclude, I think it is worth pointing out, as I have done before in this place, that overwhelmingly the levers to improve housing affordability lie with state governments and local governments. While ever they choose to artificially restrict the supply of land—both on the fringes of our cities, with urban growth boundaries, as we have in my home state of Victoria, which limit development outside of that boundary, or within urban areas by heavily restricting what one can build on a plot of land, with how long it takes to get approval and how expensive it is to do so—housing will not be as affordable as it should be. All the international evidence shows that cities around the world that have the most liberal and open land release policies and the most liberal and open development procedures and policies are also those which have the most affordable housing. There is no reason why Australia could not have that too. We have a plentiful supply of land and that will require some change in attitude from our state and local governments.
It is a time-honoured tactic of conservatives to scapegoat foreigners and blame them for social problems. If anyone has so far doubted that One Nation are part of the establishment, witness the xenophobia in this matter of public importance. Truly, this gives One Nation the credentials to be willing and able conservative government partners.
The problems in housing are real. But, as with our problems in employment, climate and infrastructure, they are not caused by so-called 'foreigners'. Blaming them is a tired and true tactic to distract from the real causes of the problem. Blaming foreigners is a characteristic of fascism. We know what the real causes of the housing crisis are. I am not for a minute deluded enough to think that facts matter to the conservative establishment. But I say to One Nation supporters, to all decent people who really want to fix these problems: do not be fooled. The facts show that the villains in housing are wealthy developers, property speculators, corrupt political decision makers and the big banks. And these villains are right here in Australia. Those that are causing these problems are in fact the constituency of conservative politicians. The only problem they are interested in solving is the perception that they do not care. They are not interested in actually providing affordable, secure homes for everyone. The evidence is in this matter of public importance. Limiting the number of new dwellings which can be purchased by foreign nonresidents will do almost nothing for the availability of affordable stable housing.
Of all the housing problems to pick, One Nation chooses the one that will make the least amount of difference. They could have tackled unfair tax breaks, underfunded homelessness services or underinvestment in public and community housing. But, no, they want to go for the dog-whistle option. One Nation chooses the one that makes the least amount of difference. The facts bear this out. In March, claims were made that more than one in 10 properties sold in New South Wales were bought by foreigners. However, an analysis of the data in the Australian Financial Review showed that only two per cent of buyers were in fact foreign tax residents. The rest of the one in 10 were in fact dual citizens, visa holders or people with long-term connections to Australia. As a reporter argued: if we mean what we say about being a country that gives migrants equal rights, there is no reason to treat them any differently. The only reason to treat them differently is if you are trying to scapegoat them to create a cowardly political distraction. So it is only two per cent of buyers in New South Wales, and this figure is almost certainly lower nationwide.
One might claim that foreign buyers are still pushing up prices or using up supply that could be housing people living in Australia. A 2016 Treasury report looked into this. They analysed high-demand areas in Sydney and Melbourne. They found that foreign investment added to the supply of housing. When it comes to prices, they found foreign investment only increased prices by between $80 and $122 each quarter. Compare that to the median prices of between $800,000 and $900,000. That is about 0.013 per cent. But, again, facts matter little when you want to drum up xenophobia. One Nation ignores the fact that it is wealthy domestic investors that are buying multiple properties at the expense of people seeking to buy their own home. It is mostly domestic investors that are leaving properties vacant and relying on sky-high capital gains to make money. One Nation deliberately ignores that it is their mates on the Liberal-National benches that allow and encourage wealthy domestic investors to game the system for private gain. The real problems lie not with so-called foreigners but with politicians making decisions in favour of a wealthy few.
The Greens want to abolish the capital gains tax discount, reform negative gearing and swap stamp duty for a fairer land tax. These measures would put those seeking a home on a more even footing with investors. We want to increase investment in public and community housing. We want to urgently give much needed funds to struggling homelessness services. We want to strengthen rights for people who rent to ensure they enjoy affordable, stable homes for life if they choose not to buy. (Time expired)
I welcome the opportunity to contribute to what I do consider to be a matter of public importance—the issue of housing affordability. I welcome the opportunity for discussion about this. What is a matter of regret, though, is that One Nation has chosen to focus on a very narrow aspect of this issue when we know, from numerous inquiries into this matter, that housing affordability is a vexed issue. It is a complex matter: it is not just a supply issue and it is not just a demand issue; it is something that requires a lot of government attention to address. It is overly simplistic to focus on this one aspect of housing affordability.
I am a member of the Senate economics committee, and that committee handed down a very substantial report in 2015 on the matter of housing affordability. During the course of that committee's deliberations, there was consideration of the impact of foreign buyers on the issue of housing affordability. Although it wasn't one of the key concerns of the inquiry, it was raised by a number of witnesses during the hearings as a potential cause of recent house price inflation.
I note that the committee made reference to the House of Representatives Standing Committee on Economics, which held an inquiry into the subject and released a report in November 2014 that had four key findings: that there was a lack of accurate or timely data that tracks foreign investment in residential real estate; there had been a significant failure of leadership by the Foreign Investment Review Board, which was unable to provide basic compliance information to the committee about its investigations and enforcement activities; that there needed to be a greater willingness to enforce foreign investment rules in order to improve compliance; and that the Australian taxpayer currently foots the bill for the administration of FIRB and the Foreign Investment and Trade Policy Division of Treasury. There were 12 recommendations following from those particular findings.
The issue of foreign buyers has been looked at, but the view from the Senate economics committee was to acknowledge the complexity and urgency of housing affordability in Australia. As I said earlier, it is not really categorised as a supply-side issue or a demand-side issue but that supply is not keeping up with demand, and there is a need for policy interventions without making the matter worse. This is a complex issue. We know that there is, in fact, a crisis, and I will not reiterate some of the points that Senator Cameron has made in respect of some of the key aspects of the crisis that we are confronting.
I want to dwell on a couple of the Labor plans for addressing this issue. Of course, chief amongst those is the plan to reform negative gearing and capital gains tax concessions. It is a matter of record that Labor is the only party with the courage to come forward with a policy that is going to make some inroads into this particular issue. We admit it is not the be-all and end-all of the response, but many quite credible economists and commentators have identified that these tax distortions are causing the exacerbation of the problem. It is a matter of regret for public policy that, with Labor having held out the opportunity for a bipartisan position on this—and despite the fact that the former Treasurer and the current Treasurer have expressed their concerns about negative gearing and identified it as a particular issue—for base political reasons, the coalition has decided not to take up the lead of Labor in this area. I think it is a matter of great disappointment. I also note that One Nation has not supported the brave proposal to reform negative gearing and capital gains tax concessions.
We have also proposed a number of other measures. Increasing foreign investor fees and penalties is another one—I will turn to that in a bit more detail—and re-establishing the National Housing Supply Council, which was abolished by the Abbott government on 8 November 2013. If there is one, I suppose, indicator of the lack of commitment from those opposite on this issue and trying to address this issue, it is that, as a way of addressing what was then referred to as the budget emergency, the coalition, as one of its first major steps, abolished a number of its non-statutory bodies, including the National Housing Supply Council, which had been formed back in May of 2008.
The council comprised a number of experts of a diverse range of relevant fields, including academia, finance, economics, urban development, residential construction, urban planning and social housing sectors. The council's role was to provide estimates, projections, analysis and policy advice in relation to housing supply and demand. So, in abolishing this body, the government quite clearly demonstrated its lack of interest in this matter and, I think, stands condemned as a result of that.
Currently, the Foreign Investment Review Board rules apply a range of restrictions on foreign purchases of property in Australia, including a general restriction on the purchase of existing dwellings—although there are some exemptions to that. While foreign investment purchases account for a relatively low amount of overall purchases each year, FIRB data does show that the number of foreign investment purchases has grown by about 275 per cent over the three years to 2014-15.
As I mentioned earlier, one of the measures that Labor is proposing is to increase application fees for foreign investment in residential real estate. So we would actually double the application fees that currently apply, and what we proposed is that from 1 July 2019, for properties of a million dollars or less, the current fee of $5,000 would be doubled to $10,000; over a million dollars and up to $2 million, the current fee would be increased—as I say, doubled—to $20,200; and between $2 million and less than $3 million, the new fee would be $40,600 Those fees would then in our proposal continue to be indexed by the CPI.
We also proposed increased penalties for breaching the Foreign Investment Review Board rules. That would mean that, for foreign buyers who acquire new or existing dwellings without approval, we would increase the criminal penalty to $270,000 and $1.35 million for a company; and increase the civil penalty to be the greater of the following: the 20 per cent of the purchase price in addition to the relevant application fee or 20 per cent of the market value of the property in addition to the relevant application fee.
We would also double the maximum financial penalties for a number of other breaches including where, for example, a nonresident acquired an established property or a temporary resident acquired more than one established property; and a range of other breaches which I will mention: where a temporary resident fails to sell established property when it ceases to be their principal residence; if a temporary resident rents out an established property; failure to complete construction within four years without seeking an extension; where a developer fails to market apartments in Australia; where a property developer fails to comply with reporting conditions associated with an approval; and where a foreign person fails to comply with reporting conditions which require them to notify actual purchase and sale of established properties. So these are some of the more effective ways that we can deal with this issue. Establishing these penalties sends a very clear signal that breaches in this area will not be tolerated. These are the ways to address housing affordability. (Time expired)
It is good that this time of debating in the Senate chamber has taken on a very serious subject today. Too often in these matters of public importance we are debating motions put up by the Greens political party, which are simply based on fantasy and which never have any factual base to them. I congratulate the One Nation Party for at least putting forward for discussion in this Senate a motion on the important issue of housing for Australians and the limits that need to be placed on some of the acquisitions by foreign non-residents.
The government will place a limit on foreign ownership in new developments. We will introduce an annual charge on foreign owners who buy residential property and leave it vacant and we will tighten the foreign investor tax integrity rules to reduce avoidance of capital gains tax on Australian property. I intend to elaborate on those three initiatives that the government is already putting in place, if time permits, but first of all can I say that I listened with interest to what Senator Ketter from the Australian Labor Party said. I always wonder with the Australian Labor Party that they were in office for six years—six terribly long years, I might say—and never once did they do anything to seriously address the issues which Senator Ketter says now a Labor government would put in place.
Home ownership, particularly for young Australians, is an important issue; it is a goal for all Australians to own their own homes, but it becomes very difficult if the broader parameters are not in order. I remember when I was buying a home and, admittedly, it was now some time ago—in the days of the Hawke and Keating administration of our country. I say this as often as I can, because people do not believe me when I say that I was paying 17 per cent interest on my housing loan in the Labor years. That was when Paul Keating said that we had to have a recession and the Labor Party was, as they are now, promising everything to everybody and spending wildly without having any idea of where the money was coming from and borrowing money from overseas. As a result of Labor's mismanagement at the time, I and other young home buyers—and I was young in those days—were paying 17 per cent interest on my housing loan. Of course, business loans in those days were above 20 per cent.
Fortunately, those days are gone, and there is encouragement for young people in some of the initiatives of this government to acquire a house and pay it off over their lifetime. Of course, to do that or to even contemplate acquiring a house, one must have a job. Again, under Labor administrations, we found unemployment very high. Regrettably, at the moment in my home state of Queensland, unemployment is unacceptably high in the city of Townsville, where I have my office. I am embarrassed to say that we currently have the record for the highest unemployment. It means that there will be a lot of people in Townsville who will not even be able to think about buying a house, and those who have in recent years purchased a house at values are now finding it extremely difficult to continue with payments and to maintain the value of their house when it was acquired during the time of the Gillard-Rudd administration.
It is important that governments not only look at the direct issue of housing affordability and what might be causing the problems that we see, particularly in the major capital cities these days, but also address the wider economic position of Australia so that we can get the fundamentals right, so that we can get people into jobs so that we can get the economy going reasonably well. That is why I can never understand why the Greens political party, in particular, are always attacking the job creation policies of coalition governments. The Adani issue is a classic and very recent issue about that. Adani will create jobs. It will boost the economy of Queensland. It will provide for economic growth in the North of our country, yet the Greens are totally opposed to it. They are trying to use every trick in the parliamentary book to stop that process from proceeding. Fortunately, today, I was delighted to see that the native title amendment bill was passed, which was the last legal impediment to the Adani coalmine. The Senate graciously—well, almost graciously—adopted a motion congratulating the federal government and the minister and also the Queensland government and the Premier on their leadership in bringing those job prospects to a part of Queensland that desperately needs them.
I did mention in relation to this motion brought forward by Senator Hanson that the government is already acting on the things that Senator Hanson mentioned in her initial contribution. We do not necessarily agree with Senator Hanson in what she is proposing, and I have made that clear. But I do again thank her for raising this important issue for discussion.
The government will ensure that dwellings in Australia are kept available for Australians by introducing a 50 per cent cap on foreign ownership in new developments. This will be applied through conditions imposed on new dwelling exemption certificates. These new dwelling exemption certificates are granted to property developers and act as a pre-approval, allowing for the sale of new dwellings in a specified development to foreign persons, without each foreign purchaser seeking their own foreign investment approval. The current certificates do not limit the proportion of dwellings that can be sold to foreign investors. What we are doing will strengthen the existing rules that apply to certificates where the government considers whether developers market or advertise the development in Australia. The new 50 per cent cap builds on existing rules to ensure Australian buyers have access to a greater pool of homes to buy in these new developments. Developments have to be multistorey and have at least 50 dwellings. From budget night, developers who are granted a new dwelling exemption certificate will be subject to a condition which limits the sale to foreign investors of new dwellings in that development to 50 per cent. it is a budget measure that is just one of the steps which the government is taking. I did mention at the beginning of my contribution that we are also going to charge foreign owners who leave their residential properties vacant a fee, and we are going to improve the integrity of capital gains tax rules for foreign investors.
Unfortunately, I am not going to have time in the time allotted to me in this debate to go into the detail of those two issues, suffice to say that they will make a difference and they do demonstrate that the coalition government, the Turnbull government is taking real steps forward to address the problem identified in this motion.
As a servant to the people of Queensland and Australia, I rise to speak to Senator Hanson's important MPI—the need to limit the number of new dwellings which can be purchased by foreign non-residents. Buying a home is the single biggest investment in most people's lives. As the first rung on the ladder to home ownership, the first home purchase is the single most important step people can take towards financial security and independence. What homeownership comes down to is the principle that Australians can own a share of our own country. The very idea that successive governments have allowed this to be put at risk by foreigners is utterly repugnant. The birthright of ordinary Australian working families is being stolen by foreigners, aided by incompetent governments. We had a mining boom yet how many young people these days can afford to buy their own house thanks to energy policies, overregulation and tax that is destroying investment and destroying employment, disrupting markets and smashing freedom?
As our leader has informed the Senate, in 2014-15 alone, over 17 per cent of all new residential properties in New South Wales and over 15 per cent in Victoria were bought by foreign—that is, mainly Chinese—buyers. As these were concentrated in Sydney and Melbourne, this means that around 30 per cent to 40 per cent of all new properties in the cities are now bought by foreigners. And where are house prices rising most quickly? Sydney and Melbourne. Where are most immigrants and most foreign purchasers? Sydney and Melbourne. This is a shocking yet totally deplorable fact that around 30 per cent to 40 per cent of all new properties in these cities are now bought by foreigners. Anyone who imagines that adding up to 40 per cent of extra buyers to a market of limited supply does not drive up prices are economic troglodytes.
Never mind negative gearing, it is clear that it is foreign Chinese property speculators together with the flood of new immigrants that are pushing up house price and locking Aussies out of buying a home. Do you remember Kevin Rudd? How could anyone forget Kevin Rudd? Prior to Kevin Rudd, changing the foreign investment rules nearly 10 years ago to allow open slather buying up of Australia properties by foreign owners would have been illegal. The ALP and former Prime Minister Kevin Rudd were too busy buying headlines, flinging billions of dollars around and claiming the greatest moral threat—based on a lie—while people were homeless.
In the words of our leader, Senator Hanson, we need to slash immigration numbers. We need to limit all foreign buyers to just one property and actually enforce the law to prevent foreigners buying any established homes. We at Pauline Hanson's One Nation have the courage to say what people think, the courage to cut the number of immigrants and also to raise the discussion on the quality of immigration. We also need all foreign owned empty properties, whose darkened windows blight the Sydney and Melbourne landscapes and skylines, to be returned to the marketplace. What was the government's response to this in the budget? Senator Hanson has already discussed that—tokenism, window-dressing, like so many ineffectual Turnbull budget measures that will have no effect. How much will it cost to enforce this window dressing? How much more regulation will cripple buyers of houses?
So what is the government's response to date? It is to talk about the supply side and to say that it is a state problem. Yes, supply is obviously a part of the equation. However, the other side of soaring prices of the demand problem is firmly the result of federal government policies. The demand problem is all about unrestricted foreign speculators and too many immigrants. Unlike some members and senators who will sell out this country and its interests for a fistful of yuan, One Nation will stand up for the birthright of Australian workers. Just as One Nation senators will never take a plum $900,000 a year job on retirement in return for selling our vital strategic assets to China and just as we will never take a bribe to support Chinese military aggression and the illegal seizure of another nation's territory, so too One Nation will never betray the right of Aussie working families to own their own home. If Chinese investors dare to complain about One Nation's unapologetically nationalist policies, they need only look to their own government that does the same. You and I cannot buy property in mainland China, so why should we let the Chinese snap up all our property here? We should not.