Thursday, 5 December 2019
Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019, Foreign Acquisitions and Takeovers Fees Imposition Amendment (Near-new Dwelling Interests) Bill 2019; Second Reading
I'd like to say from the outset that Labor will support these two bills: the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Near-new Dwelling Interests) Bill 2019. However, as we've seen too many times, just because you put a phrase into the title of a bill, that doesn't make it so. While we won't stand in the way of the measures contained in the reducing pressure on housing affordability measures bill, let it be clear that they won't do a lot to deal with the significant issue of housing affordability.
These bills contain several measures. They remove the entitlement to the CGT main-residence exemption for foreign residents; they clarify the application of the principal-asset test; they provide a capital gains tax incentive for investment in affordable housing, increasing the discount from 50 to 60 per cent; and they enable a reconciliation payment for near-new dwelling certificates. The measure with the biggest financial impact is the CGT main-residence exemption changes, which, according to the government, will raise around $150 million per year. The original measure, as part of the 2017 budget, had some flaws, including its potential impact on expats and New Zealanders living in Australia. Labor is glad the flaws will now be fixed. This is a good measure that provides important revenue for the budget.
The other measures in these bills have a minor cost impact to the budget, with the 50 to 60 per cent increase costing $50 million over two years, from 2019-20, and the near-new dwelling certificate reconciliation payments costing $5.1 million per year. Labor will support these measures. We believe they are worthy of our support but they won't do anything meaningful to reduce pressure on housing affordability. The problems with housing affordability stem from the fact that this government has no plan for the economy. With wages growth at record lows, it's no wonder that people are finding it difficult to get into the housing market. An ABC Australia Talks national survey found that 63 per cent of Australians say that owning a home is out of reach for young people. The latest statistics from the Australian Institute of Health and Welfare, put out a few months ago, showed that the rate of home ownership for people aged 25 to 29 declined from 50 per cent in 1971 to 37 per cent in 2016. Similarly, the rate of homeownership among people aged 30 to 34 dropped, from 64 per cent in 1971 to 50 per cent in 2016. Moody's Investors Service has said that housing affordability will decline in 2020.
Should wages continue to stagnate—and, given what we've heard recently from the Reserve Bank, we shouldn't expect anything else—this won't help with the housing affordability issue. It not only means that we have a situation where people are struggling with the cost of living; it makes it difficult for people to save up to purchase a home or keep up with the rent or mortgage payments. This is just one manifestation of the real-world implications of an economy that is floundering on this government's watch. The measures in the legislation before us today, along with other measures recently initiated by the government, such as their First Home Loan Deposit Scheme, will have benefits but won't be the silver bullet.
As I said at the outset, Labor will support the bill but the government needs to do more, particularly on dealing with the economy floundering on its watch, in order to help with the issue of housing affordability in this country.
I thank senators who have contributed to this debate. This is an important piece of legislation to reduce pressure on housing affordability. I commend the bills to the Senate.
Question agreed to.
Bills read a second time.