Christian Porter (Pearce, Liberal Party, Minister for Social Services) Share this | Hansard source

I thank the member for her question and I note her great interest in this area. Perhaps the starting point to answering that question is to note something that is probably not known very broadly. That is that the Commonwealth government spends $6 billion annually on housing and homelessness, including Commonwealth rent assistance of $4.4 billion per year.

We have established a working group with assistance that has been led by the Assistant Minister to the Treasurer, the member for Mitchell. We are looking at the way in which we can cooperatively work with the states. The short answer to the question from the member is that this must be a process about investigating the supply side of the market. It is a very complex, multicausal issue, but ultimately you cannot affect rental affordability and housing affordability without affecting the supply side of the market. We have representatives from the New South Wales, Victorian and Western Australian governments helping to look at the way we are spending money and the way in which they are spending money, but it must address the supply side of the market.

In fact, we think the supply side is important and that is what members opposite used to think was important. It is precisely because supply is critical to housing and rental affordability that members opposite developed NRAS, the National Rental Affordability Scheme. At least that had the virtue of tackling supply, which is the problem. It did not work very well—unless, of course, you are a university trying to attract a foreign student—but at least it had the virtue of looking at the supply side of the market.

What we have here is a situation where Labor used to think that by looking at the supply side of the market they would make a difference. Now they think you can improve housing and rental affordability by placing a tax increase on the demand for established homes. We have heard some quotes from the BIS document today. But I would just like to quote a different document—not a political document, not from anyone involved in politics whatsoever. Two New South Wales academics wrote a great article called 'Price and efficiency effects of taxes and subsidies'. Keep in mind that what Labor are proposing is a tax rake on investor-owned properties, an increased tax on rental incomes. These two academics modelled a 10 per cent tax increase on rental incomes. This is modelling, by the way, member for Fraser; you can explain it to the rest of the caucus. They found that that 10 per cent tax increase on rental incomes causes investor demand for housing to fall: 'Given that investors own 30 per cent of dwellings, and a price elasticity of demand in home owner markets of minus one, the price for houses will fall by three per cent. To recover the 10 per cent increase in costs, investors raise rents by seven per cent and pay three per cent less for properties.' (Time expired)

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