Monday, 4 December 2017
Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017, First Home Super Saver Tax Bill 2017; Second Reading
First of all, let me make it clear that Labor does not support these bills. In the typically Orwellian way this government likes to operate, the title of one of the bills has 'reducing pressure on housing affordability' in it. It's obvious that the measures in here won't do anything to reduce pressure on housing affordability. It's only Labor that has any comprehensive plan to deal with pressure on housing affordability, with reforming negative gearing and the capital gains tax discount being at the forefront of this. Any housing affordability package that does not deal with these concessions where the majority of the benefits go to high-income earners is a sham. Fifty per cent of the benefit of negative gearing goes to the top 10 per cent of income earners and 70 per cent of the capital gains tax concession goes to the top 10 per cent of income earners. Action needs to be taken here.
The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017 and the First Home Super Saver Tax Bill 2017 seek to introduce two measures that the government introduced in this year's budget: the First Home Super Saver Scheme; and contributing the proceeds of downsizing to superannuation. This so-called First Home Super Saver Scheme will do nothing to address housing affordability. Instead, it will undermine Australia's world-class superannuation system that Labor is proud to have created and continues to defend while the other side continually seeks to tear it down.
Superannuation accounts are supposed to be locked boxes to generate retirement income, not to be used at the whim of government to give access to whatever they wish. It sets a dangerous precedent. The government's plan would mean that first home savers who make voluntary contributions into the superannuation system can withdraw these contributions up to certain limits and an amount of associated earnings for the purpose of purchasing their first home. Concessional tax treatment applies to amounts that are withdrawn under the scheme.
It's ironic that this government has put forward this measure that goes against their own superannuation objective bill which has stalled in this parliament. That bill has sat in the Senate since late November of last year, and it's been nearly a year without debate. That bill stated the government's primary objective for superannuation to be:
To provide income in retirement to substitute or supplement the age pension.
We disagree with this, and it's unfortunate that the government has tried to push this through without general support—not to mention the fact that we had the Treasurer spruiking this scheme on social media in July, well before any legislation was drafted, let alone introduced. That only led to further confusion. But what could you expect from a confused government, from a rabble of a government?
We should also note that the ATO, which is the agency responsible for administering this scheme, says on its website:
It is emphasised that this measure is yet to be legislated, and under the current law it is not possible to withdraw superannuation contributions to buy a house. Therefore, if the law does not get enacted, any voluntary contributions made for the purpose of withdrawing them under this scheme, will remain in superannuation until such time that they would ordinarily be able to be released.
The other measure in this bill is about contributing the proceeds of downsizing to superannuation. The government proposes to allow people aged 65 or over to make a non-concessional contribution of up to $300,000 from the proceeds of selling their home. These contributions would be exempt from the age test, work test, and $1.6 million balance test for non-concessional superannuation contributions. Of course, we don't have any objections to the principle of helping people to downsize. If the government were to split the measure away from the First Home Super Saver Scheme measure, we would be open to considering the measure. However, in terms of actually reducing pressure on housing affordability, the measure is not the best. In the 2013-14 budget we had a pilot program that had the aim to do that, by trialling a means-test exemption for age pension recipients who were downsizing from their family home. Up to $200,000 in proceeds would have been put in a fund and would have been exempt from the pension means test for up to ten years. Of course, this government, in its short-sighted nature, got rid of it.
Some important factors, such as the age pension income or assets test and stamp duty issues, are not addressed. Treasury's answers to questions on notice about this measure were enlightening. Treasury did not have an estimate of how many households were expected to downsize as a result of the measure, or the assumed increase in the effective supply of housing that the measure was expected to generate. So much for reducing pressure on housing affordability! Industry Super Australia has said that this measure will be used by self-funded retirees rather than age or veteran pensioners. That's because there's no change to the pension income or asset test. As I mentioned before, were the government to split this measure from the First Home Super Saver Scheme, we'd be open to considering it; however, as it's packaged up, we will oppose the bill as a whole.
I want to take the Senate through how the Turnbull government has arrived at its housing policy shambles. It's almost impossible to tell what the Liberal Party stand for these days. They're certainly not liberal. Given their recent history of attacks on the institutions of civil society and the rule of law, it is doubtful they are even conservatives. It's increasingly obvious that they are a party of social reactionaries who are obsessed with creating some kind of half-remembered hallucination of the past in Australia—a fantasy golden age that never existed. What's worse is that it isn't even an authentically Australian hallucination. They have never had an original idea in their lives. Their entire political philosophy is on loan from the country club conservatives and evangelical reactionaries of the American Midwest. We all know them. They are men—they're almost always men—who, over the past 30 years, have set out to prove that the 1960s marked the beginning of a terrible, civilisation-threatening decline in moral values and that only a return to the values of a golden age that existed, presumably before the 1960s, will prevent complete moral destitution and a lapse of common sense. Their targets are single mothers, divorce, the decline of Western civilisation, teenage pregnancy, tax, abortion, family values, social security recipients, marriage equality, left-wing media bias, teenage promiscuity, safe schools, political correctness, nanny statism, creeping socialism and scientists.
That the Liberal Party has assembled this random sample of culture war targets in one party and still manages to call itself liberal is a considerable achievement. While the cultural warriors and reactionaries of the Liberal Party obsess about Judaeo-Christian values, young people worry about astronomical property values, student debt, penalty rate cuts and diminishing job opportunities. This is what the party of Menzies has become. Menzies championed thrift, self-reliance, private enterprise, individual responsibility and freedom, and the family as the best institutions through which the nation would express its best instincts. He warned of the danger of an all-powerful state, but he pitched his appeal to the middle class, excluding the rich and powerful, who did not need his help, and what he called the unskilled people, who he believed were protected by their unions and whose wages were safeguarded by the conciliation and arbitration system. Yet Menzies insisted:
… there is no room in Australia for a party of reaction. There is no useful place for a policy of negation.
Well, wouldn't Menzies be rolling in his grave now at this rabble across the Senate? He never claimed that his was a conservative party. On the contrary. He said:
We took the name Liberal because we were determined to be a progressive party, willing to make experiments, in no sense reactionary, but believing in the individual, his rights, and his enterprise, and rejecting the Socialist panacea.
He identified the state's obligations to address unemployment, provide economic security and material wellbeing through social legislation, and the difficulties of those who fell through the cracks were to be ameliorated. He said:
… we have nothing but the warmest human compassion—towards those … compelled to live upon the bounty of the State …
Well, look at their social security legislation now. Look at what they're doing to those people who have fallen through the cracks. It is certainly not Menzian. It is reactionary.
A few months ago the Liberal Party gave us all a glimpse of how far it has unravelled when it celebrated the 75th anniversary of Menzies's 'The Forgotten People' speech. When Menzies delivered this centrepiece of Liberal Party mythology, he positioned home ownership as the basis of a stable society. He said:
The home is the foundation of sanity and sobriety; it is the indispensable condition of continuity; its health determines the health of society as a whole.
He certainly didn't think the rich and powerful needed a leg-up. He said of them:
… in most material difficulties, the rich can look after themselves.
It's not my intention to eulogise Bob Menzies but to merely point to the fact that in the Liberal Party of 2017 there is no sign of the Liberal Party of Menzies. The broad church is gone. They've burnt it to the ground. Progressive Liberals have given up. The reactionary hard Right has somehow managed to claim Menzies's legacy and threaten retribution if the Prime Minister offends against the much diminished and increasingly deranged base. He is besieged on both sides: an uprising if he confronts the culture warriors who claim to speak for the party, and a loss of electoral support as he compromises on the more progressive liberalism he had promised the public for so long.
Rather than mythologising the 'Forgotten people' speech, today's Liberal Party—the party of Work Choices and penalty rate cuts, the party of the 2014-15 budget, the party of vindictive policies targeting social security recipients—would do well to read Menzies's speeches and other writings a bit more carefully. They would make sobering reading.
The record of the Abbott-Turnbull government on housing policy has been abysmal. The coalition's four-and-a-bit years in government have been wasted years. Since 2013, the Abbott and Turnbull governments have: refused to countenance reform of negative gearing and capital gains tax; closed the National Rental Affordability Scheme that had provided 37,000 new affordable housing units and was on track to achieve its target of 50,000; scrapped the First Home Saver Accounts scheme, which was helping people save for their first home; closed their ears and eyes to mounting evidence of housing system failure by abolishing the National Housing Supply Council and the Prime Minister's Council on Homelessness; failed to provide funding certainty under the National Partnership Agreement on Homelessness; defunded Homelessness Australia, National Shelter and the Community Housing Federation of Australia—the organisations that were out there helping the people who had fallen through the cracks of society; failed to appoint a dedicated minister for housing and homelessness; scrapped the Housing Help for Seniors trial that was announced in Labor's 2013-14 budget; and cut $44 million a year in capital funding from homelessness services under the National Partnership Agreement on Homelessness, which has meant that older women in Australia have got nowhere to go for support and help, and young people coming out of out-of-home care are on the streets and, I'm advised by some of the NGOs, are being groomed by some of the hard-heads out on the streets. This is unacceptable. This is not a Liberal Party. This is a party of reactionary, basically male Australians, who base themselves on the right wing of the Republican Party in America.
In Labor's last budget, the 2013-14 budget, the Commonwealth's matched contribution to the National Partnership Agreement on Homelessness was $159 million. In the Abbott government's first budget, the 2014-15 budget, the National Partnership Agreement on Homelessness was extended for two years, but the Commonwealth's annual contribution was cut to $115 million. These cuts were directed at capital funding, which would have contributed to increasing the supply of short-term and emergency accommodation for women and children escaping family and domestic violence. What an outrageous position for this government to have adopted. To add insult to injury, the government has consistently claimed that its contribution to homelessness funding represented an increase in funding. This was based on the ludicrous proposition that, because the National Partnership Agreement on Homeless was to expire on 30 June 2015, we must assume that the funding base from 1 July was zero; therefore their reduced funding was new money. What an absolutely obnoxious proposition to be putting forward to justify cuts for the poorest people in this country. What an obnoxious proposition from a coalition that is basing itself on the right wing of the American Republican Party. It has nothing to do with the Menzian proposition of liberalism. In the hallucinatory world of the Liberal Party, down is up and the old is new. The Liberal Party these days is less Alfred Deakin and more Jefferson Airplane.
In the 2017-18 budget, the government announced a grab bag of unrelated housing measures about which John Daley of the Grattan Institute said: 'You would need a scanning electron microscope to see any effect on housing prices'. These bills represent two measures from that grab bag.
There's a huge housing affordability challenge. Australian cities and many regional areas are now some of the least affordable in the world. Comparatively high housing costs by international standards make Australia an expensive place to live and an expensive place to do business. Cities are the engines of growth; they are also the places where housing stress is greatest. The impact of this on renters and aspiring home purchasers is well documented. The maximum affordable rent for a couple on the minimum wage with two children is $416 a week, far short of the medium Sydney rent of $743 per week for a three-bedroom house. Yet today, when they had an opportunity to actually restore the penalty rates that many working families depend on, they rejected that. This is not a government of Menzies; this is not a party of Menzies; this is a reactionary party that needs to go—and the sooner the better.
This government is like a toddler with a bowl of peas. They'll do almost anything and everything to avoid what's in front of them. What's in front of them is a hard decision that needs to be made. If we're going to tackle the housing affordability crisis in this country, if we're going to try to increase the supply of housing onto the market, and especially help first-home owners and lower-income Australians, we need to remove the perverse incentives that are rigging the system and making it harder for young Australians and low-income Australians to compete with the wealthy investors in the property market. Those two perverse incentives are negative gearing and capital gains tax concessions. We know that if we were to remove those we'd be able to raise tens of billions of dollars over the forward estimates to help pay for schools, hospitals and our social security net, and to allocate money towards infrastructure projects. There's a lot we could do with those funds.
We also know we could remove an anomaly in our system. It's an anomaly that's decades old and was set up by a previous Liberal government. At that time, there was probably some momentum and some real desire to give Australians the ability to grow their wealth by leveraging several homes, but it has created a monster. For those of us who have been following this issue closely, we have been repeatedly asking the Treasury secretary these questions, especially at every estimates: what's the government actually doing about housing affordability and how we are going to tackle that? But what we have in front of us is what we get. At best, this is rats and mice. Not only will it not impact housing affordability; the schemes themselves could also have perverse incentives. While the Greens look at the two separate parts of this bill in isolation for the sake of this debate, while we don't necessarily have any issues with the First Home Super Saver Scheme—and in my contribution I will get to some of the many problems that we have with that, but overall we see it as a fairly weak policy—
Sitting suspended from 18:30 to 19:30
So, I now go to a little bit on the legislation that we're debating here tonight. Firstly, on the First Home Super Saver Scheme, this measure would allow first home buyers, defined in certain categories and under certain definitions, to save up to $30,000 by making voluntary contributions to their superannuation fund. Those using this scheme would then be able to take advantage of superannuation tax concessions. The money put towards this scheme will be quarantined so that the scheme does not directly affect the principal accumulated through compulsory superannuation contributions. It's designed to be a voluntary scheme—essentially a side scheme—to complement and go along with your compulsory superannuation contributions.
The scheme has received muted support—that's probably the best way to describe it—for providing first home buyers with tax arrangements that are closer to the tax-free status enjoyed by existing home owners on the capital appreciation of their home. But that's about the best thing that I could find that people have said about this scheme. More often, the scheme has been criticised on a number of different grounds. It undermines the government's own Superannuation (Objective) Bill 2016, which states the superannuation system is to:
… provide income in retirement to substitute or supplement the age pension.
It's yet another measure that will only work to inflate house prices, by allowing people to spend more money on housing than they otherwise would. This is a really important one, because, as I opened with in this contribution, we have a housing affordability crisis in this country, especially in Sydney, Melbourne, Brisbane and, to some extent, Perth. That crisis is because we have investors buying multiple properties and competing with first home owners, low-income Australians and young Australians that are trying to get into a home, and this measure won't do anything to fix that. If anything, it's just going to add more people to go along to the auction on a Saturday morning to bid for the house. It's not going to increase supply of housing, and it's just going to add to the demand-side pressures that are pushing up housing prices.
Another very pertinent point, and probably the biggest criticism that I've received of this—and I sat down and had a very good chat with John Daley from the Grattan Institute about this only a couple of weeks ago—is that it's unlikely to be widely utilised and even less likely to be used by those on low incomes in this country. And, at the end of the day, that's where we have a housing affordability crisis. If you don't believe me, Acting Deputy President Williams—and I went through this in some detail when we last debated the issue around vacancy tax and deductions for home owners—look at the recent Household, Income and Labour Dynamics in Australia survey, commonly called HILDA. The data that was released was quite chilling. This was only three or four months ago. The 2016 edition of this report showed—and this is done every five years—that home ownership has been declining in Australia for some years now. The decline has been particularly concentrated among young Australians, especially in the individual category of 18 to 39. Women tend to be more affected, and their numbers are quite startling. In the 2014 survey, approximately 25 per cent of men and women aged 18 to 39 were homeowners. That's down from 36 per cent in 2002. Let's compare that: in 12 years, 36 per cent of Australians has fallen to 25 per cent. With a quick bit of maths, starting at 36 and down by about 12, that's about a third. Home ownership has declined amongst young Australians by nearly one-third over that period, and that includes during the GFC.
The other startling thing in this HILDA survey is that those who have been most affected tend to be in the lowest income quartiles. The HILDA survey tells us that it's not just about income inequality in this country; it's also about wealth inequality, and that's the point we're debating here today. We've got significant wealth inequality, and it's getting worse. Like I said before, this government is like a toddler with a bowl of peas: they'll do anything and everything to avoid it. The bowl of peas—the hard decision—is tackling what we know are the perverse incentives that are helping to create this catastrophe for young and low-income Australians where they can't buy their own home. So, it's not just the housing affordability crisis and how that affects individuals and everyone's right to have safe, affordable housing; it is also about inequality. And it is not just income inequality but wealth inequality.
Acting Deputy President Williams, your generation and mine, to some extent, grew up in a country where everybody did aspire to own their own home, and although there were ups and downs—there were high interest rates at different periods—there was the hope that you could always get a reliable, stable job. That's gone now. There's no job security anymore. You could afford your own home then, but to many young Australians now that literally is just a dream that they can never aspire to. Some would even say it's a nightmare.
The best I can say for this super home saver is that it does level the playing field at some point, if you know how to use it. As John Daley from the Grattan Institute told me, it will tend to appeal to a certain kind of demographic. Generally, young, well-educated Australians on certain income levels will know about it. Accountants and others may push it for their clients. But it's really going to advantage those who are already doing reasonably well and are on their way to having a career, and it's just going to add to housing demand pressure.
We can compare it with the Rudd government's similar First Home Saver Account scheme, which this government closed down in 2015. This is virtually a replacement for that. Of course the mechanism is different, but why did this government close down Mr Kevin Rudd's First Home Saver Account scheme? It was a dud. It was hardly used. There was almost no take-up. If, as the experts are saying, we are expecting a similar take-up with this scheme in the legislation in front of us then we can hardly put our hands on our hearts and say that this is going to do something about the housing affordability crisis in this country or give young or low-income Australians a leg up.
The second part of this bill is about putting the proceeds of downsizing into super. This measure would allow people over 65 years old to make a contribution of up to $300,000 from the proceeds of selling their home into their superannuation accounts. This contribution would be exempt from the lifetime transfer cap of $1.6 million on superannuation contributions. Here's the catch: this scheme has been heavily criticised, including by economists, as being a scheme that will only advantage the wealthy. What do the statistics tell us? It's estimated that only 35,000 people in this country have a superannuation account in excess of $1.6 million. Not many Australians have a superannuation balance of their savings over their life of $1.6 million. The average superannuation balance for a 60-year-old Australian is $240,000. So, do you think they're going to get benefits out of this scheme? No.
It undermines the government's own $1.6 million transfer cap that was passed in this place about a year ago, in November 2016. The government received a significant backlash from their political base as a result of this measure. But one wonders, and I'll ponder on it here tonight, if this might actually be a fillip for the coalition's voters, the voters that weren't happy that the government actually changed super to try and streamline it a little and make it fairer. The Greens supported many of those measures. If you're a wealthy Australian over 65, this measure will allow you to sell your home that is probably too big for you anyway, and you're thinking about downsizing. Depending on where you are, your home's probably going to be worth, looking at median or average house prices, a million dollars or more, or certainly in the high hundreds of thousands, and you'll get a $300,000 tax benefit. Australians who aren't in that situation, who aren't as fortunate as the millions of pensioners across this country that have a low superannuation balance, are not going to be able to get the same benefit.
This scheme directly adds to inequality in this country. Unless there's a really good reason for it, and something important to offset it, the Greens won't support legislation that adds to inequality in Australia, or anywhere. We've always had a clean record in that regard. We're fairly neutral to negative on the First Home Super Saver Scheme, but we don't support the downsizing measure into super. To be honest, I haven't really read any commentary that does. I'll be interested to hear a little bit more on the debate from those who support the measure.
If we really wanted to make a difference, we would tackle unfair tax breaks that rig the system in this country in favour of investors. Many of those investors own multiple properties and are the same investors who go to auctions and bid on properties that we know young and low-income Australians, especially first home buyers, are wanting to buy. This is no accident. This is a deliberate policy, a tax system that encourages speculation on housing and encourages investors who are buying to rent to spend more money than owner-occupiers. In the Greens' view, this has been a key factor in driving up the price of homes across the country and has put home ownership out of reach for many young Australians.
Young people who have saved for a deposit are being outbid by wealthy investors, who are getting a leg-up from the taxpayer, and that's what perverse about it. I called it a perverse incentive earlier because it has had perverse outcomes. I also mentioned that, if we got rid of these schemes, we could raise billions of dollars in revenue and we could fix what I see as a structural problem in this country on a key issue like housing affordability and inequality, and we could raise revenue that we could spend on our schools and hospitals.
These young people are left to pay more rent to these same investor landlords under outdated and unfair tenancy laws. That's another debate for another time. Because homes are so expensive, especially in many of the capital cities, the level of household debt in Australia is the highest in the world. That is another incredibly important debate that we have to have, because these things are all tied together. If we look at this holistically, it is policies like negative gearing and capital gains tax concessions that also contribute to problems with our financial system in terms of system stability and the inherent systemic risks.
Instead of this debt being used to build much-needed infrastructure that would create jobs and set us up for the future, we are funnelling it into mostly speculative investment in private housing that does little to improve employment or productivity in this country. They are perverse incentives. The Australian Greens have a plan to end the rigged system that benefits the already wealthy at the expense of those less well off, especially younger Australians. We've been up front leading on the issue, going back to my colleague Senator Ludlam. Senator Rhiannon has been leading on this issue for years, and when Adam Bandt in the lower house was Treasury spokesperson he argued for the removal of negative gearing and capital gains tax concessions. We are glad that Labor came out before the last election and supported a similar policy. We hope that in the future we'll actually get this done.
The Greens' plan to dismantle the rigged system that privileges investors and landlords over the rest of us, and to fix housing, is to end negative gearing for all future investment properties; to phase out negative gearing for investors with two or more properties by 20 per cent each over five years—investors with a single property would be exempt; to phase out the capital gains tax concession over five years; and to support state governments to replace stamp duty with a broad-based land tax. I know my colleagues will be talking in more detail about our broader housing plan, and about how housing is a right and everyone has a right to safe and affordable housing in this country, but I want to talk a bit more about the idea from the Greens for fixing the structural issue—a plan that has been well received by economists. The Greens' plan is about fixing the structural issue—not playing around the edges, like this policy that we are debating tonight, but helping to fix the major structural issue. Our plan is to get rid of one of the worst taxes in this country, which is stamp duty, and swap it with arguably one of the best and most efficient taxes, and that is land tax.
Swapping land tax for stamp duty would boost the economy by a massive 82c for each dollar swapped. We've had this costed by the PBO. And I notice that Mr Peter Martin in The Sydney Morning Herald recently talked about there being 'no bigger benefit imaginable for rejigging any taxes'. It also helps fix a problem that we have in the housing market, in that it frees up more supply and it helps adjust housing prices across different areas. That's a debate for another time, but I must say that I was surprised at the last estimates when the Productivity Commission said:
We see, from time to time, a lot of fiddling at the margin—
which is exactly what we're doing tonight—
with propositions around how to make first home buyers' lives easier, which appear substantially to just drive up the price of property rather than deal directly with the issue.
That was their answer in response to a question of mine about why they supported swapping a broad-based land tax for stamp duty, which they came out and said we should all be talking more about. So there's a good solution from the Greens tonight. This legislation is about fiddling around the edges, and we won't be supporting the bills. (Time expired)
I rise to speak on the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017 and the First Home Super Savers Tax Bill 2017. These bills seek to introduce two measures that the government unveiled in the 2016-17 budget—the First Home Super Savers Scheme, and contributing the proceeds of downsizing to superannuation. Let me be clear from the outset: the Labor Party opposes this legislation.
Those opposite claim that the measures in this bill will reduce pressure on housing affordability, but nothing could be further from the truth. What we have before us is the latest brain snap from a desperate government that is incapable of coming up with a housing affordability policy. The only solution it can come up with to address the housing affordability crisis is to create a crisis in superannuation. That is the best that the government has got. This is the type of government we currently have leading the nation. The Australian people are sick and tired of listening to those opposite bickering, and they're sick and tired of thought bubbles that we see the Prime Minister grasp for every single day.
All of these government policies that they've put before us, these pieces of legislation, will leave Australians worse off. It's time for the Liberals to get real about housing affordability. When the two measures in this bill were introduced in the budget earlier this year, they were so small that the Grattan Institute said, 'You would need a scanning electron microscope to see the difference it would make.' That's how insignificant and minuscule the Turnbull government's policy on housing affordability is—that's if you could even call it 'policy'.
Getting back to the bills before us, the first measure I want to talk about is the First Home Super Saver Scheme, which will do absolutely nothing to address the Australian housing affordability crisis. The government's plan is to allow people to make voluntary contributions to their superannuation and then withdraw those contributions to help them purchase their first home. The idea is that individuals would benefit from the concessional taxation arrangements that apply to the superannuation scheme. That is not what superannuation should be used for. Superannuation accounts are meant to be locked boxes to generate retirement income. This is dangerous, thoughtless policy.
I'd also like to put on record that this measure completely contradicts the government's objectives of the superannuation bill, which has been sitting undebated since last November. The government's superannuation bill says that the government's primary objective for superannuation is to 'provide income in retirement to subsidise or supplement the age pension'. That's not what the bill before us today will do. Instead, it will undermine the retirement incomes of Australians and lock the next generation of people out of securing housing when they get older. We already know that the government doesn't care about homelessness amongst the elderly, but the measures in this bill will only seek to exacerbate the issue. That's how hopeless the government are. This is the best that they've come up with. They're a government at sea without a paddle and they're completely out of touch.
I'd like to briefly talk about the terms of reference for the government's 'necessary but regrettable' royal commission into banks. Labor has serious concerns about the government's narrow focus on the industry superannuation funds. The Minister for Immigration and Border Protection even said that industry super funds will face more scrutiny given that they have 'union members on the board'. Given that this out-of-touch government has spent the last 18 months letting rorts and rip-offs continue and ignoring the ongoing pleas of families and small businesses, it is incredibly disappointing to see them hijack this royal commission to continue their attack on the union movement.
If the Turnbull government does not get this right from the start, we will only see a continuation of financial scandals, a lack of justice for victims of financial wrongdoing and the systematic risks that are contributing to the uncertainty for the financial services sector. Those opposite have spent over 600 days doing anything they could to avoid a royal commission. Pull your socks up and do it properly! That's what the Australian people want. That's what the Australian people deserve.
The second measure in this bill is contributing proceeds of the downsizing measure. The government proposes to allow people aged 65 or over to make a non-concessional contribution of up to $300,000 from the proceeds of selling their home. These contributions would be exempt from the age test, work test and the $1.6 million balance test for non-concessional superannuation contributions. Again, we see that this government is only looking after the top end of town. I can assure you there won't be very many Tasmanians—you could count on one hand—who would benefit from such legislation. Labor doesn't have any objections to the principle of helping people downsize, but this is not the best way to do it. It's not the best way to deal with the issue of looking at the barriers to downsizing or housing affordability. I also note that this bill neglects to address important factors such as the age pension, income or assets tests and stamp duty issues. So I'll repeat what my colleagues have said. If the government were to go back to the drawing board and separate the two measures in this bill, we would be open to considering the downsizing measure.
The Prime Minister might have taken Mr Joyce's by-election win as a new lease of life for his chaotic government, but I don't think that Mr Turnbull is going to finish up this year on a high, even if he thinks he will. The Liberals' policies have gotten progressively worse. The only thing this bill does, as it stands, is highlight their inability to do anything about inequality and housing affordability in this country. Under Mr Turnbull's watch, levels of home ownership continue to fall, and affordable housing for vulnerable people, including older Australians, is becoming more and more unattainable. Those are only a couple of points that highlight just how inefficient and ineffective this Turnbull government has been in addressing housing affordability. There has been no national housing plan, no housing minister, no idea and no real policy.
Earlier in the year when the household income and labour dynamics figures were released, we had those opposite get up in this place and deny that housing inequality is an issue in Australia. Wake up, Australia! Wake up, the Turnbull government! They cannot understand that there is a housing affordability crisis happening in this country. It doesn't matter what state you go to, or whether it's somebody trying to buy their first home or get a rental property, you have young person after young person competing and outbidding to get into some sort of housing. We know how difficult purchasing your first home has become. This is how offensive, delusional and out of touch this government is when they don't recognise the crisis that's on their doorstep. It doesn't matter if we're talking about federal or state governments, the Liberals are botching housing affordability full stop.
The housing affordability crisis is not just about first home buyers; new rental affordability index figures released last week show that rents for low-income households across all metropolitan areas in the nation remain unaffordable. This research highlights the devastating impact Australia's housing affordability crisis is having on low- and moderate-income households in the private rental market, as I have just said.
Housing costs are biting everyday families. Analysis of the 2016 census shows that around 30 per cent of all households, including renters and mortgagees, are in a housing crisis. In my home state of Tasmania, Hobart was the second-worst area due to the number of people living on low incomes. These are real issues—issues that are affecting families' household budgets. It is a real issue for older Australians to have secure housing in their older years. We know that a growing number of older Australian women are finding themselves homeless. These are real issues. You have families living in cars, couch surfing, or moving from one relative to the other because they can't afford even a basic rent.
We know that there hasn't been enough money invested by this government, or by any of the state governments for that matter, in housing. But the sad thing is that the Prime Minister and the Treasurer refuse to accept any responsibility at all for this crisis—because the Liberals have, effectively, given up on housing policy. Christmas is just around the corner, and my office is inundated with calls from very desperate people trying to get accommodation. Crisis accommodation is in short supply. Crisis accommodation for families is all but non-existent. The real impact of this affects all our communities. It affects everyone. It's not just those people who are finding it hard to afford to rent a house or who are trying to come up with a deposit to buy their first home; it has an impact on the entire community. It has an impact on those children who are going to school—if they are fortunate enough that they can go to school—after having to sleep in a car. That's a real impact of the housing crisis in this country. It's unacceptable. We're a rich nation. We should be able to find accommodation for all Australians. All this does is reinforce how out of touch the Turnbull government really is.
The Turnbull government own the housing crisis in Australia. They actually own it; it's their responsibility. We are four years in and nothing has been done. It's a disgrace that there isn't a housing minister. It's a disgrace that those opposite won't even acknowledge that there is a housing affordability crisis. I don't know who these people talk to. I don't know if they actually talk to the charitable organisations that help the people who are most desperate and most vulnerable. Those opposite don't understand that this crisis is real. There is nothing sadder than seeing a family going from one shelter to another trying to find accommodation and lining up to get food because they are that short of money in their household budget.
I have to say that the Turnbull government have absolutely no credibility on housing. The government have no credibility when it comes to homelessness. They have to accept that these are real issues affecting real people. There is no point turning your head and saying, 'It's not my problem. They should go and get a job,' because, as we heard from the previous speaker, Senator Whish-Wilson, there is no longer such a thing as secure employment. We have people who are underemployed and people who have a number of part-time jobs. They can't go to a bank and take a loan to buy their first home. That's unrealistic.
Nothing is happening. There is no leadership from this government. There is no leadership when it comes to policy. They just keep claiming that reforming negative gearing and capital gains tax concessions will raise rents. But this has been discredited. It is a null-and-void argument. Those people opposite should move on. We have already announced our policies that will have a real impact in terms of the housing affordability crisis. Any housing policy that doesn't deal with negative gearing and capital gains tax is a sham, and that's what this government is best known for.
We have a Prime Minister who sees a thought bubble and grabs it. That's what he does on every major issue. If he's not grabbing thought bubbles, he's doing backflips. That's what this Prime Minister is renowned for in the Australian community. We know he's desperate to save his own job. Why not come up with a decent housing affordability policy? That would be a step in the right direction.
The Liberals claimed that the 2017 budget would deliver an extraordinarily large housing package and that 'it would be an impressive and well-received package'. Let me tell you that there is nothing impressive about the package before us today. It's a do-nothing package from a do-nothing Prime Minister. Labor governments at all levels are leading the way on housing affordability, but there's not much use having terrific, progressive Labor governments if you have a federal government that is doing everything it can to undermine housing affordability.
It really is time for those opposite to take action on housing affordability. It really is, because we can't afford to wait until the next election and the incoming federal government—which will be under the leadership of Bill Shorten—to take the tough decisions to ensure that all Australians have the opportunity to either rent a home or aspire to buy their own home. It's a very sad day in this country when our young people don't even dream of owning their own home. When I grew up, even though I came from a poor family, we had our own home. We were all taught to aspire to achieving that. When you are an Australian, you work hard, take on a second job and do what you have to do so you can afford your first home. You make some sacrifices along the way. That's what we should all be working towards so that young Australians have that same dream. It is possible, but you need to have the right levers, you need to have the right policies and, dare I say, you need to have the right Prime Minister who has the right policies and who will lead this nation.
The reason we're in this crisis now is that we have a do-nothing Prime Minister. We have a Prime Minister who is bereft of any policies. He's doing nothing to drive the Australian economy. He's doing nothing to ensure that we turn the tide of people who can no longer ensure they have full-time jobs. We have now in this country—which, I'm ashamed to say, is devastating—the working poor. We've seen the government attacking penalty rates. That's what they do, because they just don't get it. Not getting it is one thing, but it's even worse than that—I think they just don't care.
If you look at the measures in these two bills, all the government are interested in doing—as they do all the time, whether it's taxation, housing affordability or tax concessions—is looking after the top end of town and looking after their mates. That's what they do. It surprises me that some of those people on the government benches whom I respect aren't more vocal. No, that's right—we have a member from the other place, Mr George Christensen. He has other ideas—oh, but that's right, he lied about them. The government are entangled in their dysfunction. They are in chaos. They have a Prime Minister and a leader who is so desperate to keep his own job that he's taken his eye off the ball. He's not putting Australians first; he's putting his own survival and his own job as the most important things. We're coming to the end of 2017 and we've seen this Prime Minister is a do-nothing Prime Minister, a Prime Minister who has let down all those people who voted for him in the hope that he would show some leadership and change the direction of this country. He has let them down. I know that not just from a Labor perspective, but I know that from my Liberal friends who voted for him because they thought he was going to do something different. He's doing something different, all right. He's ignoring the Australian people, and he does that at his own peril.
The First Home Super Saver Tax Bill should be opposed. The Greens will certainly be opposing it and speaking against it very strongly. Here again we see the Turnbull government delivering for their constituency. If you're wealthy, you'll do well out of this. We heard the previous speaker, Senator Polley, talk about all the problems the government might have—that they're wide of the mark et cetera—but they totally know what they're doing here. Remember where this bill comes from—it comes because there's a housing crisis, which has dominated the headlines for well over a year. People are doing it tough, and it's not just working-class families; it's middle-class families—so many disadvantaged people. And it's not just young people; a big cohort is women in their 50s, particularly those who become separated or whose children have left, who all of a sudden find they don't have anywhere to live. The crisis is extreme. The government won't deal with what needs to be done, because that would rob their constituency—the housing speculators, the developers, the real estate agents—of their income and their profits. They're nibbling around the edges. That's all that this is.
However, it's even worse than that, because it will make the system worse. It delivers for the wealthy. As I said, it's a Christmas present for the wealthy—the more they earn, the more they benefit from the scheme. That is clearly wrong; it will drive more inequality. If you are rich, you are going to do well. If you are rich, this is the scheme for you. The super saver scheme, as I said, only works for the rich. It will drive inequality, which is already expanding. Inequality within the housing system is a big driver of inequality overall. If you don't have certainty in your housing arrangements, it's bad for your health, it's bad for your kids' education, it's bad for your employment prospects. Housing is central to a fair and decent society. This so-called super saver scheme sounds like something out of a TV program, where they sit around a desk and wonder what can they do that sounds really fantastic—though it's not going to be fantastic for most people—and they call it the super saver scheme. But what does it do? It pushes up prices, erasing any gains people may have made in their savings. It just robs people. It robs people of their rights, and the right we're talking about here is the right to housing. Housing is a human right, and homes for all should be the policy of any decent government.
This, in the end, is a distraction from winding back the unfair tax breaks that continue to dominate the housing market and drive such unfairness and inequality. The phasing out of negative gearing and capital gains tax discounts is long overdue. I'm very proud that it's a policy the Greens have been working on for a long time. Labor's largely come on board with it, and there are more people in the general community who recognise this as a con job. How rotten is it that you have a government that pushes a system where, if you've already got four properties, it's easier to get your fifth but, if you don't have a property, well, you are probably going to be locked out of the market for the rest of time? Again, I emphasise that housing is driving and cementing inequality. That is so dangerous and so wrong for any society.
The super saver scheme is going to make things worse. It's really, really wrong. I used the term 'nibbling around the edges' before but I think I was off the mark there, because the more you think about it the more you know that we're going into dangerous territory here. The point of this Liberal Party government is this: they won't fess up to the fact that they've got to respond to the housing crisis because it's dominating the headlines so much. People are complaining to their backbenchers, their lower house members and senators all of over the place. It's a topic of conversation, quite informally, in here. They know that they have to do something, and this is the best they can come up with. Again, I emphasise: why is that? It's because they can't go against the interests of their main constituency: the big developers and those who make heaps of money out of the property industry.
It's worth bringing political donations in here. In the last 10years, the property industry has given $21 million to political parties in this country. That's significant. It's very significant. I'm not saying that bags of money are handed over and that, if you give a bag of money to some Liberal MP, that MP in turn does something for you. It's corrupting the culture of how politics works in this country. There is a matter that I have spoken about many times—and it's highly relevant to this debate—and that is the High Court case of McCloy, the former mayor of Newcastle, who took the New South Wales government to court. I'd really urge members to read that High Court decision. It's beautifully written, it's very clear and it identifies the type of corruption that is expanding in Australia because of how we're operating with political donations. It becomes a quid pro quo relationship where the MPs, those elected, may not be paid off with bags of money but they know how to vote. You see that very clearly with the planning laws around the country. The planning laws around this country have been weakened time and time again. The laws with regard to housing at a federal level—negative gearing and capital gains discount—are brought forward to benefit those who make money out of housing, to the point where housing, now, rather than being a human right, a homes-for-all-policy, is like another form of money in this country. If you're already in the game, you'll do pretty well, and you'll do pretty well out of what this government is bringing forward tonight.
Many economists are starting to recognise that we've got a problem. I want to share with you some of the comments from Saul Eslake, an economist who has really spelled out the problem we've got. He has said:
It's hard to think of any government policy that has been pursued for so long, in the face of such incontrovertible evidence that it doesn't work, than the policy of giving cash to first home buyers in the belief that doing so will promote home ownership.
You couldn't get it spelt out much clearer from an economist than that, could you? The super saver scheme will have that effect. That's what it will do if we pass this legislation tonight, because it will increase demand for housing. What does an increase in demand for housing do? It will have the effect of further inflating prices. It's a disaster. Who benefits if you inflate prices? Those already in the game. If you're locked out of it, you're sleeping in your car, you're on the waiting list for public housing or you're trying to get into a social housing scheme, this isn't going to help you. It's going to make the situation worse and lock you out for longer. Mr Eslake has also said that diverting more money into the demand side of the equation achieves two things: it pumps more heat into an already very steamy market while potentially undermining future retirement incomes.
Former Prime Minister Paul Keating has also weighed in on this. While you may not agree with him all the time, it's certainly entertaining—and sometimes he nails it. As an economic idea, he described this policy as scandalous. That's his word, 'scandalous', and it is. This needs strong language. He went on to say:
And to make matters worse, the proposed diversion of these savings into housing would simply push up the price of the current stock of properties. It would add to demand while doing nothing to supply.
Again, the people who know how the system works are revealing that what this government is up to is a con job that delivers for a few and robs the majority.
It's often interesting to look at overseas experiences, and some recent examples in Canada are very informative. There was a similar scheme introduced in Canada called the Home Buyers' Plan. The results were terrible. One of the architects of the Home Buyers' Plan now admits it was a massive mistake. This is their comment:
To date the HBP—
the Home Buyers' Plan—
has been used about 2.5 million times, with roughly $30 billion removed from savings and investments and ploughed into real estate. When combined with dirt-cheap mortgage rates … it's helped push home prices into the clouds.
They go on:
In other words, if you think letting people steal money from their financial futures in order to buy houses today which they really can't afford is going to make real estate more affordable, you've been spending too many evenings with the goat. The opposite is probable. In Canada, it's fact.
Do we want those facts in Australia? Because that's where we are heading. Those comments are also a reminder of what's going on here. We're not only driving the prices up and putting secure housing further out of the reach of so many people but also robbing the financial futures of people by misusing the superannuation scheme in this way. This is a disaster. It is a disaster that needs to be condemned in strong language.
There is no worse market failure in Australia today than the housing market. It's cruel and it's ruthless. You don't have to be that progressive or that left to know what's going on here. If you just want a society to work, even if you're not really into building an egalitarian society, what's going on here has ramifications for the type of society we should be—ramifications in terms of social service costs, health costs and education costs. What I mean by that is that, if people don't have secure housing, so many other things fall apart. I think many people would know these figures, but they're worth repeating in the context of this debate: tonight, more than 100,000 people will be homeless. They will be sleeping in cars, on the streets, on the concrete or in parks. Maybe, if they're lucky, they might have found a couch at somebody's place, but they're all part of the homeless number. That number is set to increase, and it's not just men. It used to be dominated by men once upon a time, but not now. Many women and many children, even, make up those homeless figures. Then what we see is that the government adopts measures that make no difference. At the same time as those homeless numbers, the public housing estates have been liquidated. We need major changes here.
European examples are very informative of the direction we should be going—not down these ridiculous super saver schemes that are biased in how they work but actually addressing how we bring change. We need something like a federal housing trust that would lend money according to people's requirements, and they then pay it back according to their needs. That might sound pie in the sky under the Australian system at the moment, because everything's dominated by the marketplace, but so many European countries have such a system. They don't have the crazy situation we have where only five per cent of our housing stock is social housing. In Germany, for example, it's about 30 per cent. Why is that? They have something similar to a federal housing trust where the money is lent to people. We're not talking about wiping out the private housing market; it exists alongside a strong public housing system, a strong social housing system. That is what is incredibly important. So, at the moment, the super saver scheme before us tonight needs to be defeated. We need to get it off the books, defeat it outright and get down to ensuring that Australia stands up for human rights when it comes to housing. That means homes for all. Thank you.
The Australian Conservatives can and will support schedule 2 in this bill—that is, the downsizer super scheme for those aged 65 and over—but it cannot support schedule 1, the First Home Super Saver Scheme. The downsizer scheme will likely achieve its goals to some extent. It will likely reduce the barrier to downsizing for those aged 65 and over with a type of lock-in effect and free up family homes for younger people and growing families to buy, enabling better use of our housing stock.
The First Home Super Scheme will achieve little, if anything at all. Its take-up will likely be small and by those quite sophisticated or savvy in finance, tax, super and fine print and who can probably afford a deposit anyway. Extra complexity is great for the elites. It's great for financial advisers and their children but tends to ensure inequity. Complexity is often inequitable in the areas of finance, tax, super and regulation. Keeping rules simple and the number of schemes minimal is often the most equitable path to take.
Whatever the take-up is, it will simply add to the demand and price of housing, eventually, without tackling the real drivers of our tight housing market which, I might add, are largely confined to the highly sought after suburbs in our capital cities, particularly those that are well-established, leafy or chic and with easy commutes. We will need soon to face up to the fact that our universities—or degree mills—are pumping out so many near-unemployable graduates who expect to own their own houses and who have become accustomed to living an inner-city lifestyle, which is well beyond the means of someone without a job. We will need to face up to the fact that we have a net 200,000-plus immigration intake which is applying additional pressures on the demand side.
Firstly, let me speak about schedule 2, the downsizer super scheme. The scheme will to some extent reduce the downsize barriers or lock-in effects for those aged 65 and over whose family homes have become too expensive or unwieldy to maintain. I support that; I think it's a wise thing to do. But those who take up this scheme will often be wealthier retirees—ones who don't comply with or qualify for the aged pension or have a small amount of aged pension to lose but want to downsize nonetheless. I don't think that should prevent the scheme from being introduced.
Self-funded retirees eager to downsize will be attracted by the new ability to effectively swap $300,000, or $600,000 for couples, from tax-exempt housing stock, being the family home, into tax-exempt super without the work test applying and in addition to the non-concessional contribution caps of $100,000 a year and the $1.6 million balance test, both of which such retirees may now already be at the limits of.
Some part-pensioners may also be attracted to the scheme. As super balances are in the aged pension assets test, converting proceeds from a test-exempt asset, the family home, to a test-included asset, super, is likely to reduce one's aged pension. This scheme softens the blow by allowing the proceeds of up to $300,000 per individual to be fast-tracked into tax-exempt super rather than lying around in, say, a term deposit earning a taxable return or held back from entering super more quickly due to the $100,000 a year non-concessional contributions cap.
While I suggest the take-up of this scheme may be dominated by relatively wealthy retirees, the tax costs are relatively small. It's about $20 million per year by 2021, compared with the likely impact of a housing stock better utilised, particularly in our capital cities, by those more appropriately needing the demands of the relinquished assets.
As such, the Australian Conservatives can and will support this scheme if it's split from schedule 1 of the bill. We don't support schedule 1 of the bill. This is the proposed First Home Super Saver Scheme. This is yet another scheme devised by a government that wants to be considered to be listening and doing something about so-called housing unaffordability and its impact on wannabe first-home buyers. But, like other schemes in the past, it would deliver little in the way of real assistance to its target audience. It would slightly divert more funds through voluntary super into the housing market eventually and, therefore, slightly increase the demand for and price of housing stock over the longer term. As such, it's going to impact other buyers in the market whose voluntary super cannot be put to buying a home as it is not their first. When this new scheme's introduction is a distant memory but the unaffordability of housing still remains, there will be a push for yet another scheme, as we've seen before, so the government can be seen to be listening and doing something. It is just rinse and repeat.
The government has tried to sell this to me as a tax cut for young people. I say, if you're serious about tax cuts, why don't you cut taxes for every person? None of us found it easy to buy our first home. Yes, there are elements of first-home buyers for whom it is completely unaffordable. But do you know what? If people are paying less tax and if they can get a job that is appropriate and commensurate with their qualifications, then they've got a real opportunity. If their cost of living is lower, if it's not impacted by the fact that governments continue to meddle in almost every aspect of our lives, including, say, the electricity market, which has seen prices double in the last few years because of government programs, then people will be able to make decisions more appropriately for themselves.
I also make the point that superannuation has always been for retirement. There are any number of worthy causes that superannuation could be applied to. Why not apply it to reducing HECS debt, which is going to cost the government $20 billion in bad loans over the next 10 or so years? It's going to have our balance sheets swell out to $80 billion or something in outstanding loans in that time, as well. Why wouldn't you allow young people to apply their superannuation savings to HECS debt instead of a housing loan? The reason is quite simple: superannuation is for retirement. The problem is that successive governments—most notably in recent times, the Turnbull government—have tinkered with superannuation or made such massive changes to it that no-one trusts the system anymore. It is a tax shelter. But it is a tax shelter that was designed for long-term retirement savings. The great difficulty I have with this is that, if you don't trust it, you're not going to tip extra money into it. They're now saying you can use superannuation for a first home. What's next off the rank? You're undermining the integrity or the reason for being of superannuation in its fullness.
There was a time when, I have to say, I argued at a Liberal Party meeting many years ago: 'Why couldn't we use our superannuation contributions to buy a home?' I was struggling to buy a home, like everyone else. Now, in the fullness of time, I recognise that the immediate demands and wants of the individual are often not best served by dealing with this stuff. It might mean that, in the future, if you want to seriously address these sorts of things and the cost-of-living issues, you should start to think about the level of superannuation contributions or when they actually kick in. Maybe they should kick in at the age of 30. Maybe they should be first applied to repaying the debts that have been accrued by the degree mills that don't really equip the younger generation to do stuff. Then, once the debts have been paid off to the Commonwealth, you could then say, 'Now you can start saving for your retirement.' As it sits currently, there's not a 20-year-old that I know that says, 'I'm going to put more money into superannuation because it's going to work better for me in the long term.' I don't think they're going to trust the government enough to tip money into superannuation in order then to get it out to help buy their first home. It's not really a tax cut at all; it's an increase in bureaucracy. It will advantage the elites who can access it.
If you're fair dinkum about housing affordability, you've got to look at a whole bunch of other elephants in the room. Firstly, you've got to look at the supply side, which is not in the purview of the Commonwealth. Housing affordability is directly related to the supply of housing, and it's almost entirely a state or local government issue. In South Australia they've taken the prevailing Land Management Corporation from a not-for-profit corporation to, basically, a for-profit corporation. They land-bank and they withhold things until land prices escalate and they can make some money on it. That's government working against their citizens for their own purposes.
You've also got to look at the demand side. This is where one of the great robberies of the Australian people is occurring. Our migration intake is beloved of both sides of politics, principally because, the more people that are in this country, the more demand there is for individual widgets or burgers or anything else, and, the more demand there is for any economic activity, the greater the GDP grows. Governments love to talk about GDP as this great benefit. They say, 'Look, our economy is growing.' Indeed, that's why Australia has managed to avoid a recession over the last 25 years. It's nothing to do with the Rudd government spending or anything else. Principally, it's because we've been adding 200,000-plus people to our national economy every year through migration, and that's growing our GDP.
But what might be in the national interest or what might be in government's political interest is not working for the individual Australian. That's borne out by the economic reality of the Commonwealth Bank's research which says that, when you look at per capita income and per capita returns, this migration is far too great. It is far too large, because per capita incomes are going back. Governments cannot afford to keep up with the infrastructure demands that are going on. The quality and the composition of our migration intake are acting against us, because there are too many people that are languishing on welfare for too long a period of time. We're all expected to suck it up and say, 'This is working in our interest.' Well, the everyday Australian knows that it's not working in their interest. They are dealing with the congestion, the increased taxes and the increased costs of living. They are dealing with the lower quality of life and the greater struggles they have. They are dealing with the demands it places on housing stock—you cannot get away from that.
If you want to reform, make housing more affordable and make housing more accessible for the next generation of Australians, there are things that you need to do which are eminently sensible. A lot of them are on the demand side. That's why we can't afford to continue to add a city the size of Adelaide every seven years. I regret they're not coming to Adelaide. They're all moving to Sydney and making Sydney increasingly unlivable for the people there. It's very difficult for them. We need to think about the impact that this is having on our health system, our hospital system, our roads, our public transport and our schools. The only conclusion that you can come to is that immigration is far too high. We need to at least halve immigration, to 100,000, maybe even less.
We need to make sure that immigration is acting in our national interest until it's acting to the benefit of every individual Australian rather than just to the benefit of governments. I think we can do that in a myriad of ways. Our visa system is being abused and misused—I have no doubt about that—particularly in relation to temporary workers and international students. We've got to recognise that, if someone applies to come to this country under one particular visa category, it shouldn't necessarily be a shortcut to getting permanent residency or staying here. The average Australian knows this. They know that, if someone applies to come here as a student, once they complete their studies and their degree, they should go back. If they want to come back to Australia, let them apply to come back as a permanent resident or in a particular worker category. We need to take the sugar off the table. We need to take away the easy permanent residency through the back door. If you want to address foreign ownership issues, one of the great ways to do it is by using the ethic of reciprocity. I continue to struggle with why it's okay for residents of another country to come here and purchase houses or land, or any other infrastructure, when we're not allowed to do the same in their country. I just find that extraordinary. We need foreign investment—I understand that and recognise it—but Australians want to invest in other nations as well. I struggle with this, that we are allowing a group of individuals to come to Australia, or to purchase property here without residency, when no Australian is entitled to the reciprocal right in their country. That's a meaningful difference. It would change the game and it would make house prices and apartment prices fall, which would have enormous consequences as well. That's what housing affordability is about.
If you're not going to address the elephant in the room, you're tinkering around the edges. I'm reminded about a senior Liberal many years ago who rang me when I wrote that the first home buyers grant should be abolished and he admonished me for speaking out against party policy. I posed the question and said, 'If we abolish the first home buyers grant, what will happen to house prices?' He said, 'They would fall.' I said, 'Will they fall by the same amount, or less or more than the first home buyers grant?' He said, 'They'd probably fall by more.' I said, 'Do you really want more affordable housing? If you do, you would remove the first home buyers grant.' He didn't like that because the government wanted to give something to people for free that they thought was going to benefit them. I remember even now senior government ministers saying we should be doubling and tripling the first home buyers grant—completely ignorant of economics. These people, unfortunately, are running the economic policies of the government. It's extraordinary that you can be so naive and wilfully ignorant of the realities of demand and supply.
If you want to make housing more affordable and you want to cut taxes for first home buyers or people just getting started in life, let's cut taxes for everybody. Don't cook up a scheme that's not going to work. It will be another reincarnation of the Rudd government scheme, which promised that 750,000 people would get into a first home buyers scheme and it delivered a fraction of that. You've got to deal in reality rather than aspiration. I regret that the person from the government selling this to me said my vote didn't matter anyway, that they had the numbers and they were going to get it through. I truly hope that's not the case. If they decide they want my vote then they'll split this and they'll ask me to vote for schedule 2, which I will. But I will not be voting for schedule 1. If they insist upon presenting them as a package, I'll be voting against this bill.
Earlier today, we heard all the reasons why young people in Australia are being screwed over. We know that's happening in so many areas. It's not just happening in the housing market; it's happening when it comes to education. Young people are lumbered with huge debt when they complete their tertiary education. Young people are finding it hard to access health care because of rising out-of-pocket costs. There is the cost of global warming, and the burden of action will fall heavily on young people. Of course, we know just how badly young people are being screwed over when it comes to being able to afford to put a roof over their heads.
In the First Home Super Saver Tax Bill 2017 what we have is an encapsulation of the quite pathetic response to an overinflated housing market where young people simply have no chance of ever affording their own home. Effectively, it introduces another tax break into an already overinflated housing market. It makes a bad problem worse. There is no question that we have a housing bubble at the moment. There's always speculation about how long that will last and whether we'll see an abrupt end to the housing bubble through a crash or whether there'll be just a stagnant period of capital appreciation for properties. But, whatever the outcome, we know that the current situation can't continue. We're seeing massive capital gains that are out of keeping with gains in other asset classes and that are completely out of keeping with growth in wages. One of the problems is that it creates a massive intergenerational divide, this divergent path between people who don't have property as an asset and are relying on wage growth versus people who are fortunate enough to have been able to afford a property when it was relatively cheaper or investors who benefit from huge tax breaks within the system. That means that there's a gap. It's big and it's growing and it will continue to grow and continue to widen.
At some point, though, we do need to recognise that this bubble can't continue and that the unsustainable tax breaks in the system need to be addressed. This goes in the opposite direction. This makes a bad problem worse. It's inadequate to confront the multiple challenges facing young people in the housing market. As I said, we know that these tax breaks are already stacked well in favour of investors and those who already own property. To quote Saul Eslake, a well-known economist, his view about the problem that this bill reinforces is: 'Anything that allows people to spend more buying a home than they otherwise would has one effect and one effect only: people spend more money on housing than they otherwise would.' Makes sense, doesn’t it? That means that you're going to see a housing bubble made worse and you're going to see another inflationary measure.
Of course, when you've got problems on the demand side, you don't want to continue to fuel that, and that's what this measure does. It will push up house prices for those people who are already locked out of the market. It provides another fig leaf for action when what we should be doing is taking those tax breaks out of the market, not adding new ones. If you want to make housing affordable for young people, you have to recognise that at the root of the problem are a series of tax breaks that mean that you artificially prop up demand. By giving incentives to investors to reduce their income tax by running a loss on rent and to get a boost to their profits when they sell the house—because they get a big discount on their capital gains tax—you are artificially propping up the market, and this seeks to add another incentive to an already overinflated housing market. If the government really cared about young people being able to afford their first home, they would start to do something about the incentives that already exist within the system. They would tackle negative gearing and they would tackle capital gains tax.
We're very proud of our record on this. The Greens have campaigned for many, many years on abolishing negative gearing for anyone who buys a future property. We've also campaigned very hard on the abolition of the capital gains tax discount. We think that needs to happen. We think it needs to be phased out—and phased out very, very quickly. Unfortunately, the Liberal Party is much more concerned about protecting its donors, protecting wealthy investors, than it is about looking after young people. The government is saying to young people, 'We're going to provide you with the fig leaf of actually doing something when the reality is that our existing policies in this market are making housing unaffordable for you.'
It doesn't matter how much supply we create—this isn't a supply side problem; it's always going to make more economic sense to buy a house for someone else to live in than to buy your first home. It makes sense based on the current tax settings. If we build more houses, our tax settings mean that those new houses will be swallowed up by investors. They have a head start. There is a big and growing gap between investors and wage-earners. Unless that is addressed, the reality is that you simply are not going to make any headway. Giving people a tax break by saving for their first home is not going to change that. It won't change the dynamics that operate within an already overinflated housing market.
The other element to this housing package is that it allows retirees to pocket even more money from selling their house by putting that money in tax-sheltered superannuation. So it creates an incentive for retirees—and remember, these are the people who benefited from cheap and affordable housing—another tax break through super: as if the intergenerational divide wasn't bad enough. You've now got a response at the other end of the system that will make the problem even worse. So retirees will sell their house to downsize, but, under the government's policy, these homes are going to be snatched up by investors. So it's pretty good if you're somebody who is in the position where kids have moved out of home, or you've got a big house, and you're a retiree who wants to downsize and to minimise the amount of tax you pay on the capital gains. Well, park that money in super, get a huge tax break for that—and yet there's the situation where a young person is still going to have to compete with a property investor who gets a big tax break and for whom it is cheaper to buy their second, third, fourth or fifth property than it is for a young homebuyer to buy their first.
We have to get to the root of the problem here, and the root of the problem is this tax system that stacks the odds in favour of the wealthy and investors, and against people who seek to buy their first home. The response should be that the government needs to go back to the drawing board. It needs to listen to young people and it needs to listen to the economists who have been critical of this package and who say, 'Well, it's good that you finally recognise that it's become increasingly difficult for a younger person to buy their own home, but you need to come up with a policy that helps them to get into the market, rather than one that continues to protect investors and a system where the imbalance is all wrong.'
Those of us who were fortunate to buy property when it was affordable also had the benefit of free education. Those of my vintage and older also had the benefit of being able to consume and pollute the planet with almost no cost associated with that. Yet we're handing over to those generations who follow us a legacy which means that, for the first time in human history, it might be that they will be lumbered with tougher living conditions than those we experienced. They face job uncertainty and a jobs market, where—even though many young people will be lumbered with huge fees—they don't even know if they are going to get a job at the end of their period of tertiary education, sometimes for a decade or more. They don't know whether the jobs they're training for will exist in the future. And yet we have a token response from a government that is really just protecting its mates and is not prepared to take the tough decisions which are necessary to get rid of the massive incentives that favour the wealthy.
Unless we start to rebalance the system—and until we recognise that people who own property, and have owned it now for many years, need to understand that that growth can't continue, that it should plateau out and that one of the ways of minimising a crash in the market is to try and stabilise property prices at current levels and allow, over time, young people to enter that market—then what we face is the potential for a significant and serious downturn in the market, which will cause much more disruption than if we act now and act rationally. That is why we need to get rid of negative gearing; that is why we need to abolish the capital gains tax discount; and that is why we need to ensure that we start to put in place measures that are much more rational.
If we care about downsizing and property mobility, then we have to look to more innovative solutions. The Greens have already put forward a revenue-neutral proposal where we abolish stamp duty and we replace it with a land tax. It can be done in a way in which people who have already paid stamp duty aren't subject to a land tax, and it will assist individuals who buy new properties because they won't face the huge up-front barrier that exists as a disincentive for people to move to ensure that their life circumstances are matched by the house that they live in. When you have stamp duty, you realise that there is a big barrier to moving and you reduce mobility. When you have a proposal where, rather than allowing individuals to shelter the profits of their home through super, you replace stamp duty with a land tax and you do it in a revenue-neutral way and in cooperation with the states—and we have a proposal for how to do that—you encourage mobility and you give more opportunities for people to enter the housing market.
The reality is that the government has dragged its heels for so long. We know that the constituency that the government represents includes property investors who often own three, four, five or six properties, and the government knows that it's that constituency that might be impacted by a change to negative gearing and capital gains tax. But that shouldn't stop us from making the change, because it is unfair that we have a big and growing gap and this generation is preventing future generations from enjoying the same opportunities that it has experienced. The government's got it very wrong on this one, as it does on so many issues. The reality is that most Australians want to see change and they want a better future for young Australians. They want a better future for their kids and their grandkids.
We have to start by recognising that housing is a different asset class to other assets—that it is, first and foremost, a human right; that it is, and should be, the right of every Australian to have a roof over their head; and that we need to start to tackle the tax incentives that skew the system in favour of the rich and powerful and away from ordinary Australians. That's why the Greens will support measures that help us get there; that's why we have led the debate on negative gearing and capital gains tax; that's why we've put forward innovative proposals like the replacement of stamp duty with a broad based land tax, done in conjunction with and cooperation from the states; that's why we support a significant investment in public housing; and that's why we support more funding for social housing. That's why we will not support a measure that simply overinflates an already overheated housing market; that's why we won't support a measure that says to young people, 'We're going to treat your super in the same way as we treat your ability to save for your house'; and that's why we won't support measures that allow wealthier retirees to simply park their profits in super as a tax dodge. This at least identifies a problem that everybody knows exists—that is, young people are being priced out of the housing market—but it does not do anywhere near enough to get to the root of the problem: our tax system favours the rich and powerful and it does over ordinary people. It's about time that changed.
I follow my colleague and leader in highlighting some of the significant problems with the approach that is put forward in this legislation: the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017 and the First Home Super Saver Tax Bill 2017. Naturally—I certainly hope it is natural—everybody in this chamber, from all sides, would like to see genuine measures that would improve housing affordability for average Australians. The real problem is that the measures contained in this legislation are not going to achieve that and in many respects will, by ignoring the real drivers that are making housing so unaffordable for so many Australians, actually make things worse. By pointing to something that is actually not going to work and saying, 'We've now dealt with this issue'—as this government, no doubt, will try to do—it will take the heat and the political pressure off the very strong and building frustration amongst more and more people in the community, particularly younger people, about the lack of affordable and secure housing.
A key area that this legislation completely ignores and potentially makes worse is the very large number of Australians who rent their home. I spoke about this issue just last week in regard to the latest affordability index for rental housing in Australia. Focusing on my own state of Queensland, the data is very stark. It is almost literally unaffordable for people on income support, in particular, to keep a roof over their head. None of these measures are going to help, for example, a single pensioner who does not own their own home. These measures will assist those who have more wealth and capital to get a further hold on buying a house and will make it harder for those who are simply trying to rent.
As I mentioned in one or possibly two of my contributions in recent weeks, when I was in this chamber last, over 10 years ago, this was a topic I focused a lot on. I very much recall standing in this part of the chamber and asking question after question of the then government. I asked Senator Minchin, who was the Leader of the Government in the Senate and I think the Minister for Finance, repeatedly what that Liberal government was going to do about housing affordability. It was at crisis levels then and it is at even worse levels now. The answer then was basically, 'Nothing.' In fact, most of the time the answer was, 'That's a state issue and we don't see that as a role for the federal government.' That in itself was damning. The only other thing they could come up with is, 'We keep interest rates low.' That was a farcical answer then, but it has been shown to be ludicrous to the point of economic illiteracy. That was seriously put forward as a housing affordability measure by the Howard government.
I suppose at least I can say that this government is thinking that it does have a lever or two in the housing area. At least it is saying it is not vacating the field. The trouble is, as with a number of measures of Liberal governments in the past, their measures, particularly when it comes to fiddling with the tax system, have made things worse. People talk about negative gearing, in particular, as something that both parties of the establishment have failed to address in the past. It is something that people talk about when they are in opposition but seem to not act on when they are in government, except for the Hawke government. To their credit, the Hawke government did act on that for a very brief period of time in their early days. I might be wrong here—my memory gets a bit fuzzy when I am going back to the 1980s—but I'm pretty sure Paul Keating at one stage called it a rort. That was a reasonable assessment of how it operated. That doesn't mean that people making valid use of a legal tax measure are doing something wrong, but in terms of the way it operated and operates today it is a measure that clearly operates to the benefit predominantly of those who are wealthier, so it's a regressive tax measure. That's probably a better and less emotive description to use.
It is unfortunate that the Hawke government lost the political courage in regard to negative gearing and wound it back. It is doubly unfortunate that the negative impacts of negative gearing in regard to housing affordability and distorting wealth distribution upwards were magnified by the Howard government with the changes to the capital gains tax regime. That really turbocharged the growth in wealth inequality that has continued till this day. It is very unfortunate that at that time the Labor opposition enabled that to happen by giving it the necessary support for it to pass through the Senate. Those measures on their own, if you look at the tax expenditure reports that are tabled each year in this place, have meant billions and billions of dollars of foregone revenue. It's a perfect thing to point to, frankly, whenever we hear talk from financial commentators and the dwindling number of people who try to defend the failed fundamentalist free market economic model that's been pursued for so long in this country. They always come up with, 'Oh well, where's the money to pay for investing directly in public housing, for example?'
Look at the billions and billions of dollars that are forgone each year because of these regressive tax breaks. That's where the money is and that's been a key driver in the creation of the significant and untenable growth in wealth inequality that's been built around private home ownership and investment in private housing. That has been a key driver of the massive increase in private debt that is creating a problem in terms of the underpinnings of our economy. It's a significant problem in regard to the business model of our major banks. But of course it works well for them.
When you look at the disclosure records that the Electoral Commission puts out, it is no surprise just how much money the banks and the finance industry put into the two parties of the establishment, particularly the current government. It is commented on regularly and just in the last couple of days, quite appropriately, but it can never be said often enough: it's no surprise this government resisted a meaningful inquiry into the banking industry when the banking industry, as we've all seen, basically tells this government what to do. The banking industry would certainly tell this government, 'Don't bring in tax measures that will hit our profit base,' even if it would help to create more affordable housing for the majority of Australians. Unfortunately, instead, what we get are the sorts of measures like this First Home Super Saver Tax Bill 2017.
Income inequality is something that more and more people recognise as a major problem around the world and in this country. Certainly in my own state of Queensland, income inequality and, more importantly, wealth inequality continues to steadily rise. One of the key drivers of wealth inequality is inequality when it comes to access to housing and the cost of housing. Linked to that is the steady decline in the proportion of people who own their own home. Over 40 per cent of Queenslanders 20-odd years ago owned their home outright with no mortgage. Just a year or so back that number had dropped to only a little over a quarter of Queenslanders.
The proportion of people's income that is spent on housing has increased significantly over the last 20 years, while wages growth in Queensland and elsewhere has flatlined—and that is for people who have a permanent steady, reliable and secure job. As we know, jobs are more and more insecure, and people are relying more and more on piecemeal work, casual work and part-time work. All of those people are even less able to afford a home. It is certainly out of the question for them to think about the prospect of purchasing a home, even at a sizeable debt. So all of those people are excluded from the potential alleged positive impact of this legislation. That's why we now have an entire generation of young Queenslanders and other Australians facing a lifetime of renting. Many of those people willingly adopt that approach. I rent my home, but I'm not portraying that at all in any way as a second-class option. Where it is a second-class option, though, is in regard to the security that people have in being able to continue to live in their own home.
If we really wanted to address stability of housing and the security of having a home, we would see this government adopt recommendations that have been made time and again in Senate committee reports over the years. I can remember at least a couple from more than 10 years ago when I was in this chamber previously about moving towards a consistent set of national standards for the rights of renters. I remember former Greens senator Scott Ludlam did a lot of work promoting the need for a national approach to a basic set of standards for renters' rights. These are the sorts of things that governments that have an actual commitment to addressing disadvantage and inequality across the community would take a leadership role on.
It's the classic cop-out for a national government to say, 'Well, that's up to the states.' Of course, tenancy law is a state measure, but, as we've seen time and time again, if a national government has the courage and the desire to take the lead on an issue, then they can drive it a very, very long way. Instead, we've had the opposite of that. There has certainly been no interest, no courage in wanting to do that; indeed, there has been a desire to stymie any attempts to get strong changes to the rights of renters around the country. We have, nonetheless, seen some small movements forward in some states in recent times. But this is an area where change is needed urgently, and that's the sort of thing we should be considering in this chamber, in this parliament, at a national level.
There is a growing proportion of people who are renting their homes and will rent their homes for the foreseeable future, who need to have more rights and more stability and security with regard to their homes. What we need, if we are talking about housing affordability measures, is not only to ensure that those who rent their homes have greater rights, because they certainly do not have a level playing field at the moment; in addition to that, we need measures from government that will ensure that there is a greater investment back into public, social and community housing.
What we've basically done—as one would expect under the free-market fundamentalism that we've seen from both the parties of the establishment over the last few decades—is, in effect, privatise housing. The amount of housing that used to be provided through publicly funded public housing, social housing and community housing has declined. We've just said, 'Let the market handle it.' What we've seen is a classic case of market failure. More and more people are being priced out of the market, there is more and more inequality happening, the wealthier are doing better and better, and those who are not are being put in more and more tenuous circumstances.
I encourage all senators, and anyone interested in this issue, to look again at the report from last week that looked at the enormous level of housing stress and financial stress for people on income support, whether they be pensioners, carers, sole parents, people who are unemployed, or people moving in and out of paid work. For all of those people, the proportion of their income that they're already having to pay just to keep a roof over their heads—and that's even before they deal with all the other issues that people have to deal with to get by—is simply scandalous. They are being completely left out of the debate that's before us tonight. They're being completely left out of the measures that are proposed in this legislation.
We've just had, the weekend before last, the state election in Queensland. It is not just a matter of simple partisan boasting to talk about the strong result the Greens achieved in that election; it is a matter of pointing to the fact that the public supports and is looking for parties to put forward measures that will deal with fundamental issues relating to people's cost of living and to their material needs. It is worth pointing out that, in those seats where the Greens particularly focused on and gained significant swings—seven, eight,10 per cent swings—and in the seat we're most likely to pick up, which is a leafy Liberal seat, the Greens campaigned very hard on housing affordability and on investing in public housing.
There was a laughable, ludicrous, front-page beat-up from The Courier Maileven more laughable and ludicrous than their usual front-page beat-ups—because the Greens had this crazy idea to invest significantly in large amounts of public housing. It was literally described as a Cold War, East Germany-type policy because we actually want to invest in good-quality, affordable housing for the community. That's dismissed as some crazy communist idea. Whatever the Murdoch media's distortions might want to suggest, the fact is that the public support ideas like that, particularly when they recognise that they can be paid for and the revenue can be raised when the massive tax breaks for the wealthiest are removed and when property developers pay their fair share rather than get the windfall gains they continually get. Whatever the Murdoch media's distortions want to suggest, the fact is that the public support ideas like that, particularly when they recognise that it can be paid for; that the revenue can be raised when the massive tax breaks for the wealthiest are removed and when property developers pay their fair share rather than get the windfall gains they continually get.
There's a very good reason that, out of all the groups that are recognised as needing to have their ability to donate to political parties curtailed, it's property developers that are top of the list. It's already illegal for property developers to donate to political parties in New South Wales. We've seen a wide range of examples—as my colleague Senator Rhiannon would be able tell me in great detail—of attempts by various state Liberal MPs to get around that, because they are so addicted to developer donations.
Senator Cameron interjecting—
Whether it's the back seat of a Bentley or the back seat of a Nissan, the point is that significant donations have continued, even after it was made illegal, to a whole range of New South Wales Liberal MPs or campaign workers. It's no coincidence that the Queensland Crime and Corruption Commission inquiry into political donations and distortions in the local government elections in Queensland last year singled out donations from property developers—to the exclusion of everyone else. The Greens would like to see caps on all political donations and caps on all electoral expenditure. We'd like to see a curtailment of donations from all for-profit corporations. But it's no coincidence that the one group that the Crime and Corruption Commission identified as being the most distorting, the most literally corrupting of our political process, is property developers. If you want to look at a group that is making windfall profits and windfall gains, and is behind completely inappropriate overdevelopments in our communities and in our urban spaces, and taking all of those windfall gains that could otherwise be provided to make housing affordable, it's property developers.
In the new state parliament, the Greens will very much be supporting and driving the push to ban not only political donations from property developers but also expand that—along the lines, I might say, of the Crime and Corruption Commission—to putting a cap on all political donations. They only talked about it at a local government level, because that is all their terms of reference focused on or enabled them to do—but that's what we need to do. This is a classic area. If you want real political action that's really going to deal with housing affordability, let's focus on those that are making the windfall gains now—that is, the banks, the property developers, and all those who are making the most of the massive tax breaks that are costing billions and billions of dollars that would otherwise be provided back to the coffers for public investment in all sorts of positive infrastructure, including housing.
Those figures are provided in reports to this place every year. That's not just a wild statement; that is a simple fiscal fact—billions of dollars in tax breaks that can be wound back and can provide actual relief for housing affordability. We need to couple that with proper investment in public and community housing, and to level the playing fields so that people who rent their home actually have a fair go and have basic rights. That's what we need to get housing affordability properly addressed in this country, not the sorts of measures that are put forward in this bill.
If everybody here in the chamber takes a second to listen very carefully, I think you will join me in hearing a scraping, scratching and wailing noise—which is, of course, this government being dragged kicking and screaming to the admission that Australia is experiencing a housing crisis, because that is what these bills, the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No.1) Bill 2017 and First Home Super Saver Tax Bill 2017, amount to.
There are roughly 200,000 people on the social housing waiting list in Australia, and 69,000 of those are classed as being in greatest need—meaning that they are close to ending up in homelessness or poverty because of their housing situation. Less than 0.2 per cent of all available rental housing is affordable to people living on Newstart. Home ownership among young people is at its lowest rate in 60 years. Income expended on mortgages now equals 134 per cent. So the system is in crisis and the government has been forced to admit it. We know that every single night—I've quoted this figure before and I will quote it again until there is some substantive action from this chamber on this issue—10,000 people go to sleep either on the streets or without a permanent roof over their heads. Every single night, 200 people in the suburbs of Mandurah and of Rockingham, near where I live, go to sleep on the streets—every single night. As I go to bed tonight, they will sleep under a rag, in a car, out in the open. So the system is in crisis. It is ruining people's lives. There does need to be action.
But, most unfortunately, when we pull up the hood on what can generously be described as a bit of an old clunker of a policy package, what we find is utterly inadequate. We've got a tax break, basically, for the richest 35,000 Australians, who will now be able to click their heels with joy at the fact that they can deposit an extra $300,000 in their superannuation scheme. We've got another policy mechanism which says to my generation, the generation which will retire with the least amount of super and with the least amount of savings because of an employment environment which is increasingly casualised: put an extra $30,000 aside to invest in the housing market—yet another demand-side initiative in a housing market which, as has been rightly noted by my colleagues Senator Bartlett and Senator Di Natale, is already being overheated by demand-side initiatives put forward by the LNP and, unfortunately, left alone by the Labor Party.
If you want to know what modern distortion of politics based on the influence of vested interest looks like, you need look no further than the housing market and our policy systems in Australia. Negative gearing and capital gains tax exemptions amount to nothing more than a rort, pushed for and advocated for by the richest, most wealthy and most powerful Australians—on their behalf, no-one else's. Seventy per cent of the benefit of these policies go to the top 30 per cent of our society. They have been proven over and over again to do nothing except exacerbate the problems which cause homelessness and financial instability, and which cause people to lose their homes and their dignity. Yet there is not a member on the LNP side of the benches who would really lift a finger to do a damn thing about it. They know the minute that they do, their offices will be deluged by a veritable army of besuited lobbyists who will go in to bat for these vested interests.
Meanwhile, on the opposite side of the chamber, you have very many sympathetic words towards the problem. There are very many solemn pledges that action must be taken and very many remonstrations that when they were in government they did this and when they get back in government they will do that. Well, it isn't good enough. Nowhere in this chamber is there a commitment to the fundamental reforms of housing policy in Australia which are so urgently needed if we are to address these problems. Find me the senator who does not sit on the Greens benches who will support comprehensive, value-based land tax reform. It is not easy, not simple and not shiny but utterly necessary if we are to address this problem. Find me the senator in this chamber who is willing to confront the vested interests which sustain negative gearing and capital gains tax concessions in their current form. You won't find them, or, if you do find them, you will find them then subsequently bound to a different policy position because it's too hard to do otherwise.
It is not good enough. My generation stands on the abyss, on the precipice, of being the first in Australian history to have a lower quality of life than those that came before. Inequality, driven by an economic model which is destructive at its very core, is robbing us of our future, and nowhere is that more clear than in the housing market. We have subscribed to a myth in this country. It's a myth that you can treat housing as a market, a casino, another delicate and pretty addition to a bejewelled portfolio of investments, that we can treat it that way, that we can incentivise its treatment in that way, and that nobody will get hurt. It is a delusion subscribed to by so many, and it does not work. It destroys lives. It is destroying lives as we sit here. Yet the challenges presented by the housing market are not insurmountable. There exists a wealth of excellently undertaken research, put forward by some of the most committed experts and advocates in the nation, detailing the steps we would be able to take to alleviate this problem: reforming and removing negative gearing, reforming and removing capital gains tax exemptions, transitioning to a values based land tax, and utilising some of our reserves in the superannuation space to incentivise the building of and facilitate the construction of affordable housing. These are policy solutions which sit on the table before this Senate, waiting to be picked up by those brave enough to cop the flak that comes with grasping them, waiting for a party to come forward and say: 'This is not right. This cannot be. This must not be. We must act.'
I am proud to sit here this evening with the only party, so far, that has been willing to do that—not just to act as though it will do it but to actually do it. I would not suggest for a moment that there are many on either side of this chamber who would answer in the affirmative when asked the question: do you like the fact that people sleep homeless on the streets every night in Australia? I don't think there's a member of this chamber who would answer in the affirmative if asked the question: do you think that it is right that a generation is being locked out of the housing market, that kids of the people who send you here are competing with property investors for their first home and that the Australian dream of a home somewhere to call your own is moving further into the distance? Nobody here would genuinely answer in the affirmative to that question. But it is not enough to bemoan the seemingly inevitable passing of a golden age in which education was affordable—near free for many of those in here—housing was affordable and employment was reliable.
It is not enough to simply cry a sentimental tear for the passing of these things. These are the privileges which allow you to be here. These are the privileges, the rights, which are being denied to my generation. They have been sacrificed on the altars of big business and vested interests and the politics of the possible. These things are lost when the courage leaves this place, when the determination leaves this place and when the conviction leaves this place. That is what goes.
I vote against this series of bills tonight with a great feeling of disappointment. There are those within this chamber on both sides who recognise this problem. There are those within this chamber who feel as I do and who, in an ideal world, would act as we Greens will tonight against these bills, in the name of what actually needs to be done to alleviate this problem. The great tragedy of instances such as this is that so many more of those who feel this way do not act in accordance with these values. They do not feel the sentiments strongly enough to put them before the vested interests which are so good at getting in their ears and so willing to fund their campaigns. But these are the key issues of our time. If we do not act on them, a generation will be lost. I, as the youngest person to be elected to this chamber, will not sit by and watch these opportunities go unacted upon. Nor will I sit by and allow inaction to take place without calling it out for the political cowardice that it is. I thank the chamber for its time.
Senator Cameron, I hope you feel appropriately chastised after that speech from Senator Steele-John for your apparent impotence in this debate. Perhaps you will have the opportunity in due course. I'll come back to Senator Steele-John's comments in a moment, but, before I do, I want to put on the record, as others have done in this debate, why I share the concern held by many that this is a very serious issue. Like Senator Steele-John, I am a young person—not as young as him but still younger than most in this chamber—and I feel the pain of my generation when it comes to housing affordability. Most of my friends don't yet own a home, although they certainly aspire to it, and many of them right now are wrestling with the challenges of the housing market. They are struggling to save a sufficiently large deposit to buy a home, or are struggling to service large mortgages, or are contemplating servicing large mortgages and all the impacts that will have on them, their life decisions and their family.
There are some, particularly in the media, who like to suggest that this is not a serious issue and that young people these days are just entitled and want to have everything at once. While there are perhaps some valid criticisms of my generation, happily in this debate we have some objective data which allows us to measure whether, in fact, housing affordability is more severe and problematic than it ever has been before. All of that data points to the answer being yes. To take one example—one stable measure throughout time—which is the average number of years of average salary required to buy an average home. In the mid-1980s it would take about three years of household income for an average household to buy an average home. Today it's more than six years—more than doubling. In cities like Melbourne and Sydney, it is considerably higher. It up to eight or nine times the average person's salary to buy an average home. Another good measure which really captures the difficulty for young people to enter the housing market is the proportion of household income required to save a deposit to enter the housing market. In 1990 it was 50 per cent of an average household income to save a deposit for an average home. Now, according to the Reserve Bank of Australia, it is 100 per cent. So there are some fairly tangible measures of why this problem is serious and why we should confront it.
Before I get to the measures that the federal government announced in the budget and the other ideas that other senators have suggested in this debate that the federal government should take up—and I do acknowledge that there is a role for the federal government in this debate—I think it is very important that we recognise that, primarily, those with the most powerful levers at their control are state and local governments when it comes to the question of housing affordability. This is best captured in an annual report produced by a think tank in the United States called Demographia, which, for more than 13 years, have measured housing affordability in comparable Western countries. The consistent finding that they reach year after year after year is that jurisdictions that have the most restricted land supply policies and the most restrictive development policies, which allow the least new homes to be built, surprisingly, or perhaps unsurprisingly, have the least affordable homes. Those jurisdictions with relatively relaxed land release policies with relatively light regulation on property construction are also the jurisdictions that have the most affordable housing. It holds both internationally and within one country, such as the United States, when you compare jurisdictions for housing affordability. In cities like San Francisco, with very restrictive land release and housing development policies, compared to a city Houston, which has very relaxed policies in that area, the gulf in housing affordability is particularly stark.
It's a very relevant point for Australia to consider, because Australia is not like jurisdictions like Hong Kong, Singapore or Switzerland, which have relatively limited land masses and where there is a natural restriction on the supply of land for housing. We are the least densely populated continent on the planet and there is no shortage of land available to be developed for housing. The only restrictions we have on the release of land and the regulation of what you can do on that land are those that are artificially imposed by governments. As Senator Whish-Wilson will remember from his economics classes, when you artificially restrict the supply of something, its price goes up.
This is an issue where the primary responsibility rests with state governments and local councils, who do control very important levers in this area. That's not to say that the federal government has no role in increasing housing supply. There are some ways in which we can do so. I was very pleased that the government announced in the budget that they were examining all the Commonwealth land held by the federal government, including some now unused defence sites and whether or not they can be developed for housing. There's one in Maribyrnong, in my home state of Victoria, which is going to be developed for a very significant housing development, and I think that is a really positive move. Of course, the federal government can also incentivise states to release more land and help states meet the cost of infrastructure if that land is on the fringe. That is often a great cost borne by states, which leads them to be reluctant to release new land. So there are some things that the government can do and does do to expand supply—but, primarily, that is a matter for state and local governments.
As I said, in a moment I'll come to the things that the federal government is doing that I support and which are in this legislation—which I hope passes the Senate, if not tonight, in the next few days—but I think we should consider the things that the federal government should not be doing that have been advocated by other senators in this debate. Senator Steele-John was not alone among Greens senators and, indeed, Labor senators in advocating that negative gearing and capital gains tax be reformed or abolished in order to deliver more affordable housing. If you took the word 'housing' out of that sentence and you applied it to any other market, people would ask that you have your head read. If we were ever worried about the affordability of bread, milk, meat or any other staple products, no-one would suggest that a way of solving that affordability problem would be to increase taxes on people who buy them or who produce them. That is exactly what Labor and Greens senators are suggesting in this debate. They think that somehow housing will become more affordable if we increase taxes on housing. It's very strange logic and, happily, we have the experience in this country of having tried to do so under the Hawke government, as previous senators have mentioned, and it was not a happy experiment—even the then Hawke government realised the adverse impact that had on housing affordability, particularly for renters, and in cities like Sydney that led to a massive spike in rental prices, and they quickly reversed their decision.
What I love most about the discussion about negative gearing—and it was particularly evident in Senator Steele-John's speech—is the idea that Labor and Greens senators are striking a real blow against the rich and the ruling class by getting rid of negative gearing, and that it'll really teach all those rich fat cats to stop taking advantage of the tax system. The truth is much more mundane. The people who most often take advantage of negative gearing are, in fact, middle-income people. The professions who most frequently take up negative gearing are teachers and police. Even if you abolished negative gearing, as the Greens and Labor propose, it wouldn't remove negative gearing as a feature from the system entirely. It would just close it to middle-income people. It would remain an option for high-income people, and it's worth spelling out exactly how this is the case so that perhaps the Greens senators and other senators can reconsider their policy in this area.
Rich people don't need to use negative gearing, because they don't derive their income primarily from a salary; they derive their income from investment income from shares, property and other assets. Often they hold these assets in a company structure, so they can put a home, a commercial property, shares, or any other asset or business within a company structure. Any losses incurred by one of those asset classes can be offset against the income earned in the other asset classes, so rich people, effectively, always have access to negative gearing because they are able to include all of their income-generating assets in one structure, a company structure.
Middle-income people can't do that. They can't afford to set up a company structure or put their home or their investment property in a company structure, because they don't have enough money to make that worthwhile. Accounting and legal fees, let alone the complexity of doing so, mean that it's not worthwhile for them. So the negative gearing system that we have instituted in this country is available to those middle-income people, and it allows them to offset the losses they might make on their investment property against their personal salary income and levels the playing field between them and wealthy people. Abolishing negative gearing would have the perverse effect of taking away this right for middle-income people but preserving it for the wealthy, which I assume is not the intention of the Greens and others.
I'd like to come now to another idea proposed by the Greens—and particularly clearly articulated in Senator Bartlett's speech—which is that the federal government should abolish stamp duty and replace it with a land tax. Whatever we think of the merits of that idea, there's a fairly major obstacle to implementing it—that is, stamp duties are levelled at the state level by state governments. Any land tax that would be levelled would happen at the state level, so proposing a swap from one to the other is not really something we can practically do here in Canberra. Senator Seselja might make some observations in his speech about how that experiment is going at the territory level where, right now in the ACT, the ACT government is doing a swap between land tax and stamp duty, and—
Senator Seselja interjecting—
Lo and behold; surprise, surprise. What does it result in, Senator Seselja? In higher taxes. Most homes in the ACT are now paying more tax than they did previously under the old system. It was supposed to be revenue-neutral. It was supposed to be a direct swap. It's not working out that way for most homeowners in the ACT.
I'll come now to the measures in this bill that the government are proposing, and I want to focus on the initiative to encourage savings because, as I mentioned earlier in my speech—as have others—one of the real barriers to entering the housing market is being able to save enough for a deposit. While the bank may be willing to lend you a significant amount towards the principal cost of the home, you do have to be able to save enough for a deposit. In a climate—particularly like that of the last few years—where house prices have been rising, the amount that you have to save for a deposit has been increasing quite fast as well. So many young couples have been struggling to keep up with the rising house prices, and therefore the rising deposit, and it's made it really difficult for them.
The government has proposed—and I want to particularly congratulate my colleague in the other place Michael Sukkar for championing this initiative—the First Home Super Saver Scheme, which takes advantage of the superannuation system we already have in place, and has a tax advantage of being able to save money. While it's a very important thing for young people to begin to save for their retirement in 40, 50 or 60 years time, wouldn't it be better if they were also able to save for a much more immediate and important financial goal?
For most young people, it is to get into the property market. This policy will allow young people to make contributions of up to $30,000, at a total of $15,000 per year, into a specially sequestered part of their superannuation account to go towards their first home. They won't be able to remove any money from their superannuation for this purpose other than the money they put in for it. It won't come out of the legislated requirement of employers to put in nine per cent per annum towards their savings for retirement. It will allow them to put in extra above and beyond what they are already saving, but to do so for a particularly important purpose for most young people.
Giving that significant tax discount for many young working people will allow them to save for their deposit much more quickly than they otherwise would and to save a bit of tax on the way. I think this is a really positive, sensible, measured and targeted initiative. It goes to the heart of the real problem for young people in getting into housing market in a precise way and it uses existing legal structures. It does not necessitate the creation of any new legal structures. The superannuation system is there. We trust the superannuation industry to manage this money for the short time it will be there. I think that's a really positive initiative.
Another really positive initiative is to reduce the barriers to downsizing. One of the problems in the housing market is the incentives that are in place, partly in the tax system but also in the welfare system. Many older people who may still be living in the family home in which they raised their children but their children have grown up and moved out have perverse incentives to stay in that home longer than they might otherwise wish to, because of their superannuation, their pension or other welfare or taxation stresses that they may face. So they stay in their home for much longer than they would otherwise prefer to, and those homes are not available to young people and families who are looking for homes. It would make very good financial sense for a lot of older couples to downsize.
We have made some changes to the superannuation system to incentivise older couples who wish to downsize to do so. From 1 July next year, people who are aged 65 or over will be able to make a non-concessional contribution of up to $300,000 into superannuation from the sale of their family home, as long as they have held it for at least 10 years. If both members of a couple choose to do so, contributions of up to $600,000 may be made, and that is on top of all the existing caps. So any couple that has already reached their cap will be able to make this extra contribution of up to $600,000 into their superannuation. This is a real win-win initiative. It will improve the availability of family style homes in the housing stock, which is going to be particularly welcomed by young families. It will help secure the retirement income of older couples. It will encourage them to downsize when moving into a smaller and more appropriate home might be a very wise thing for them to do.
I will finish on one final note, which is to address another observation made by Senator Bartlett. As is often the case in these debates, when the Greens can't quite bring themselves to understand why other parties or senators have a different position to them, they look for a bogeyman. In this case, they've decided that it is property developers: property developers are the reason why the Liberal Party and the Labor Party and others may have the position they do on this issue. It's an intellectually lazy argument. We could easily make the same argument about them. It's certainly known that renewable energy companies donate generously to the Greens and that the Greens strongly support policies which encourage renewable energy. Renewable energy companies benefit from this because of the protection that, for example, a renewable energy target or other subsidies or schemes provide for the industry. Yet you don't often hear coalition or other senators come into this place and say, 'The only reason the Greens are supporting a renewable energy target is that they are trying to help their mates in the renewable energy industry who donate money to them.' It wouldn't be true because the Greens sincerely support renewable energy. They believe in it, and that's probably why renewable energy companies donate to them. I don't think that the cart and the horse are the other way around and that the Greens dreamt up this policy as a result of donations from the renewable energy industry.
It would be nice if the Greens occasionally showed that kind of understanding and that kind of goodwill towards other parties. There are many reasons for holding the positions that we do. Most of them, I believe, derive from genuinely philosophically held positions, well thought out positions derived from a careful analysis of the facts and the problems and out of a genuine attempt to solve them. Not everything in politics that is different from your own view must be badly motivated. Not everything in politics must be caused by some evil bogeyman behind the scenes making donations. If we were to follow the Greens' logic, we wouldn't just ban donations at state level in New South Wales from property developers; we'd also ban donations from any company that got an incentive out of the political system, and that would rule out many of their donors, too. I'd be interested to see whether they propose it. It would rule out the trade unions donating, too. If we didn't want to have people who potentially got something out of it donating to politics, we wouldn't allow trade unions to donate to the Labor Party.
I don't really believe that's why trade unions donate to the Labor Party. I don't believe that's why the Labor Party holds the positions that they do. I believe they hold those positions because they've sincerely thought about them and it goes to the core of their philosophy. That is my final plea in this debate tonight: even when we disagree in this place, it's not necessary to ascribe bad motives to others.
It's great to follow Senator Paterson, who always gives such a well-thought-through contribution, and I thank him for it. It has been an interesting and robust debate so far. In the brief time I've got before we move to the adjournment debate, I want to put a few points on the record.
One is that this legislation is a part of a comprehensive package. I pay tribute, not just to Michael Sukkar, as Senator Paterson has, but also to Scott Morrison, for their leadership of this package. In my own portfolio, Minister Porter and I have worked on other aspects, including the social housing and the commitment to giving certainty for homelessness funding. When the Treasurer, Scott Morrison, and the Prime Minister and others of us in the government looked at this, we didn't just look at one aspect, as some would perhaps have us do, we looked at all aspects. We looked at what levers can be pulled on the supply side and what levers can be pulled, in this case, for first-home buyers. I think it's a very well-calibrated package, when you look at the challenges for first-home buyers, to give this effective tax break, not just for people's retirement 30 or 40 years down the track but for that important first asset, but calibrated in a way so that it won't act as other incentive programs have acted in the past when, for instance, a lump sum is suddenly handed to people and we can see a sudden inflationary impact.
I also want to touch on some of the other aspects of the debate. The Greens say it's all about taxing people more, and we hear a lot about that. But they don't want to take responsibility for the policies that they often push—at a local council level, at a state and territory government level—that is, the restriction of land supply. It's always the restriction of land supply. They're always against new housing developments, whether that's unit developments or whether that's greenfields. I've seen so many examples, here in the ACT and right around the country.
Going back some years, I recall very well a Greens-inspired policy: there was a long-planned-for suburb called Throsby here in the ACT. It had been on the books for 30 years. And of course, when you don't allow it to be developed for other reasons—only light grazing and the like—it has some environmental values, and that's a really good thing, and we value that in Canberra. But the Greens' response to that was to try and have the suburb not developed at all—even though it had been there, on the plan for decades, so that it would be available for housing. Labor responded to that by wiping out a lot of the development in that suburb. What we have seen over the last couple of years is that land finally started to be released in Throsby for $1,000 a square metre—in a greenfields site on the edge of town: $500,000 for a 500 square metre block on the outskirts of Canberra. That's not affordable for a first home buyer. That was created specifically by this Greens-Labor policy of squeezing land supply because of environmental values. We can balance the two realities: we can preserve land for environmental values but still get land to market so that there can be enough for first-home buyers.
The Greens will often help create the problem, and then lament it. And their answer to it is more taxes. Well, we don't agree with that. We do agree with a range of policies that open up land supply, that create some of the right incentives—like we see with this bill—and that look after the most vulnerable people in our community, as evidenced by our homelessness package, where we have put money on the table that no governments previously done, because these programs always ended. The homelessness package that we have put on the table, this legislation, is one part of an overall housing package. That homelessness aspect actually puts money on the table in perpetuity for homelessness funding, which is exactly what the sector asked for. You wouldn't hear some of those opposite ever giving credit for that. But I absolutely pay tribute to people like Michael Sukkar and Scott Morrison, who have shown great leadership in this area.