Craig Emerson (Rankin, Australian Labor Party) Share this | Hansard source

This motion is nothing more or less than an exercise in blame shifting—trying to shift the blame for rising interest rates. There have been three interest rate rises since the last election, making seven successive interest rate rises, and there will almost certainly be another interest rate rise in this calendar year—and who knows what the new year will bring, such is the fiscal environment, the high-spending environment, that this government has created through its extravagant spending commitments.

I remember when the housing boom was well underway and the Treasurer began warning of the consequences of a housing bubble. But I do not recall him saying that the problem was land availability. The Treasurer was not saying that at the time, when the housing bubble was well underway. The Prime Minister did even worse: he welcomed the housing bubble. The Prime Minister said that it was terrific that house prices were going through the roof, because it meant that those people who were in houses were enjoying higher wealth as a result of the increase in house prices. He had absolutely no consideration, no regard and no sympathy for those people who were shut out of first home ownership. I thought that he was someone who would be interested in first home ownership, but, no; he did not care a toss about first homeowners and people trying to get a home. Instead he said, ‘This is great: housing prices are going up, so people’s wealth is going up.’ Now he is seeking to shift the blame onto the states.

The Productivity Commission report that came out in March 2004 had a fair bit to say about this. It is like the elephant in the room about which no-one wishes to speak and which no-one wants to acknowledge. The report talks about the tax changes which were implemented by this government and about the impact of those changes on housing affordability. It says:

Interactions between negative gearing, ‘capital works’ deductions, post-1999 capital gains provisions and marginal income tax rates have lent impetus to investment demand during the housing boom.

The report recommends that:

The Australian Government should, as soon as practicable, establish a review of those aspects of the personal income tax regime that may have recently contributed to excessive investment in rental housing. The focus of the review should be on the Capital Gains Tax provisions.

I know that members opposite and the Prime Minister will say, ‘That means that the member for Rankin is in favour of changing the capital gains tax regime.’ I am not. I am not arguing that; but members opposite and the Prime Minister need to recognise and acknowledge the contribution of those tax changes to the housing affordability issue. The same report talks about land release, and it is very interesting. It says:

Cheaper, more readily available housing finance in a booming economy, with some added policy stimulus, has resulted in a prolonged surge in demand.

It asks why supply has not responded quickly and then it says:

Even in a best-practice supply chain, it can take several years to bring new land on-stream, to provide the associated infrastructure and to construct new dwellings.

But even if this were not so, there would have been major price pressures in the recent cycle, because much of the surge in demand came from people seeking to upgrade their dwellings (mainly in established areas) in response to increased purchasing power.

The report says that there are some influences as a result of the inability of state governments to release land instantaneously. We know that, but the Prime Minister is trying to shift the blame by saying, ‘That is the whole story or almost the whole story.’ The Productivity Commission report goes on to say:

Constraints on the supply of land at the urban fringe have contributed to housing price pressures, particularly in Sydney. However, because recent price increases have been due mainly to the surge in demand in established areas, improvements to land release policies or planning approval processes could not have greatly alleviated them.

Of course, the government wishes to deny the existence of this report. It shows that the government is seeking to simply shift the blame onto the states for its culpability and its extravagant spending commitments which have resulted in three interest rate rises since an election when the Prime Minister promised to keep interest rates at record lows. Another interest rate rise is in prospect and the new year could bring even further increases in interest rates.

This government stands condemned for its economic culpability and its extravagant spending commitments which are putting upward pressure on interest rates. It always took the credit when interest rates were low but, now that interest rates are rising, it is everyone else’s fault. It is the states’ fault, it is the world economy and it is everyone else. It is time the Howard government took responsibility for its economic culpability and the interest rate rises that have occurred—at a time when it promised to keep interest rates at record lows. It stands condemned for its economic culpability.

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