Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

Here we have, for the second time this week, legislation introduced by the government which purports to be about housing affordability and, in this case, housing tax integrity; but, of course, this is not the case. The Labor Party in this instance will not oppose the passage of the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017 through this House or the other house.

These bills are not objectionable, but what they are is ineffective. These bills are tinkering. These bills are just at the edges, a minor attempt, compared to what is necessary when it comes to reform of negative gearing, in particular. The government talks the big talk and the minister, Mr Tudge, who has just left, talks the big talk about housing affordability. He says that the government has a comprehensive plan and a big strategy, and this of course is errant nonsense. The government has a grab bag of measures, and these measures are amongst that grab bag. These bills seek to introduce three measures that were announced in the budget—disallowing the deduction of travel expenses for residential rental property, limiting plant and equipment deductions to outlays actually incurred by investors, and introducing an annual charge on foreign owners of under-utilised residential property. I will deal with each of these three measures in turn.

The government's big idea when it comes to negative gearing reform—the government's big agenda, their bold and aggressive approach to negative gearing—is not to reform it, limit it to new properties or make sure it's fit for purpose but to say you can't claim for tax purposes the travel cost to get to your holiday house or your rental property under negative gearing. That's it; that's all they've got! It is a joke. It will do nothing to make housing more affordable. We don't oppose it; in fact, we think it's serviceable. But, of course, our policy is to completely reform negative gearing and actually add substantial amounts to the budget over the forward estimates and the decade. What we are seeing here is the most minor of tinkering which will do nothing to impact on housing affordability. Often you have a mixture of investment housing and holiday houses, and there's nothing wrong with that. Landlords can visit their investment house and check on it. There's nothing wrong with that, and it shouldn't be tax deductible, but to suggest that this is part of a wideranging housing affordability policy is a sick joke. Those who are struggling to get into the housing market look at the government's agenda and say: 'Seriously? This is what you've got? You're going to abolish the tax deductibility of travel to investment properties and you think that helps me get into the property market?' Young people across the country will look at this and shake their heads, and well they might, because the government's agenda is devoid of anything substantial. If this is the best they've got then people are entitled to be very cynical.

The second measure involves limiting deductions for assets in residential premises, denying deductions for the decline in value of previously used depreciating assets used in gaining or producing assessable income from the use of residential premises for the purposes of residential accommodation. Again, this is minor tinkering. We don't object to it; we support it. We're all for ensuring that tax concessions are targeted. But they need to do much, much better than this. This is not a housing affordability measure. Treasury, in answer to a question on notice, said so. They said it's an integrity measure—an important thing, of course, but it does nothing to reduce the pressure on housing affordability.

The final measure in these cognate bills is the charging of foreign owners of residential property when the property is not occupied or genuinely available on the rental market for at least six months of the year. The government estimates this will generate $16.3 million over the forward estimates. That's it—$16.3 million. Again, we don't oppose this but we have a better plan. We announced in our housing affordability policy that what we would do is coordinate through COAG a nationally consistent vacant property tax. To be clear: we would not be seeking the revenue. The revenue would go to the states. But we think it should be done in a nationally consistent fashion. Some states have gone down this road. Victoria was the first to introduce a vacant property tax—and congratulations to Tim Pallas, who's a very good reforming Treasurer of Victoria, because we do think it's appropriate that there be a vacant property tax. If a property is held, for whatever reason, and is not being rented out or lived in, it's doing nothing for the social fabric or to help people into the housing market, so there should be a price signal, a disincentive to do that. But it shouldn't just be about foreign owners; this should apply regardless of ownership. There are varying reports as to the number of vacant properties, but it's a surprising number. Many people would be surprised at how many properties are held vacant. It's not a particularly economically rational thing to do but some people do it, so sending a price signal is important. But why is it limited to foreign owners? In other jurisdictions it's not limited to foreign owners. Other places have done this and haven't limited it to foreign owners.

It would make more sense to do this reform properly and work with the states cooperatively to coordinate a consistent rate. We should encourage states to take up a vacant property tax and have a consistent rate so that we don't have the regulatory disharmony of different rates but have one consistent rate across the country, with the revenue going to the states. Again, Treasury admitted in an answer to a question on notice that the states and territories weren't consulted in relation to this measure. It's also notable that the Treasury confirmed, in answer to a question on notice, that there wasn't a direct assumption about how many foreign owners of residential property would decide to make their properties available for rent as a result. No modelling—a theme emerges in the government's approach. So, again, this is really pretty ordinary tinkering on the part of the government.

As I mentioned, we will not be opposing these bills. But this is Clayton's reform. This is the reform that you have when you have to pretend to be reforming. You can just imagine the Prime Minister talking to the Treasurer and saying, 'We've got to have an announceable; we've got to have something we can announce.' They might have said, 'It doesn't have to be real, it doesn't actually have to have any impact, but we've got to have some measures that we can talk about in the budget, and then we can talk about our housing affordability plan.'

We haven't heard the Treasurer say much about these since the budget, and there's a good reason for that. These are just so minor and so tangential to the reform task that's necessary across the country that you would be surprised if he spent much time talking about them. I'll talk about our negative gearing reforms at any opportunity, as my colleagues know. My colleagues will talk about our negative gearing reforms at any opportunity, because they're all proud of them, as the Labor Party should be, because we're leading the debate; we're actually taking on the difficult issues. We know that not everybody agrees with us. Whenever you engage with sensible but big tax reform you're going to have people who are against it, who run a scare campaign or who don't like it in the context of their personal circumstances. But we're being honest with the Australian people about our agenda. We want to win the next election with a mandate to do big and important things—not the sort of tinkering we see from this government, which has run out of puff and run out of a reform agenda.

So, I move:

That all the words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill and related bill a second reading, the House notes that any housing affordability package that does not include reforms to negative gearing and capital gains tax is a sham".

And that's what it is. We have from this government a housing affordability package that is a sham. The Treasurer has a big lever at his disposable. That lever is negative gearing reform and capital gains tax reform. Does he pull on the lever? No, he doesn't. He casts around looking for something small that he can then use to pretend he has an agenda when it comes to housing affordability, and that's what we're seeing in this legislation today. Well, we'll get on with the job. We'll pull the big levers available to us to improve housing affordability for young people in particular—that is, reforming the most generous property investment tax concessions in the world that we have in Australia, putting a more level playing field in place for first home buyers, getting rid of the situation whereby we provide more support for people buying their fifth, sixth or seventh home than people receive to get their first home and making our budget fairer, making our tax system fairer and improving housing affordability—not this sort of pathetic tinkering that we're seeing from the government.

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