Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Hansard source

by leave—I concur with the member for Banks in respect of the tabling of this report. I would also like to congratulate the Reserve Bank because, when they did appear before the committee, Dr Luci Ellis, an Assistant Governor of the Reserve Bank, appeared. The governor made the point that this was the first time that a female had appeared before the House of Representatives Standing Committee on Economics in the capacity of an Assistant Governor of the Reserve Bank. I think that is an important advance for economics and for women in the study of economics. It was great to see Dr Ellis in Parliament House only last week for the launch of a group associated with encouraging more women to get involved in economics.

In respect of the hearing, there was a broad discussion about the outlook for the international economy and the Australian economy. But, like all discussions with the Reserve Bank in recent times, the focus quickly turned to housing affordability. I thought it was instructive that the Reserve Bank governor, Dr Lowe, pointed to the fact that the bank was concerned about the low level of wages growth in Australia coupled with household debt at the moment.

The major factor contributing to household debt is the cost of housing, particularly in the Sydney, Melbourne and Brisbane markets, where house prices have gone through the roof. That, the governor pointed out, is having an effect on disposable income households. That, in turn, is having an effect on demand in our economy. The governor quite rightly made the point that, if we are going to increase and encourage long-term growth in the Australian economy, we need to get that level of demand and consumption in the economy up again.

In Labor's view, that means we need to tackle this issue of housing affordability and the fact that buying a house, for many, is becoming out of reach in Australia at the moment. That involves looking at the government incentives that exist around housing affordability. At the moment, if you are an investor, you get an unfair advantage compared to owner-occupiers in Australia if you go to buy a property. I provided some data to the Reserve Bank governor which indicated that the level of housing finance over the course of the last 30 years has basically reversed. It used to be 60 to 40 in favour of owner-occupiers. It is now heading the other way and going towards 60 to 40 in favour of investors compared to owner-occupiers. That data alone says that we have a problem in the incentives we are providing to people to buy investment properties. If someone goes along to an auction and they are seeking to negatively gear their eighth investment property, they get more support from the government at the moment than an owner-occupier seeking to buy their first property to live in. That is wrong. That is contributing to house-price growth in this country, which is making it unaffordable and leading to the household debt issue that is constraining demand. So, in Labor's view, unless you are tackling negative gearing, you are not fair dinkum about housing affordability.

These notions looking at how we increase supply are all very well, but you need to be tackling the two big issues of negative gearing and capital gains tax discounts. When the capital gains tax discount was introduced into the federal budget by former Treasurer Peter Costello it was unfunded. There was no measure to fund that over the longer term, and we are now paying the cost of that in terms of budget sustainability. They are the two issues that you need to look at if you are fair dinkum about housing affordability.

I thank the Reserve Bank governor and the deputy and assistant governors for once again appearing before the committee.

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