Tim Watts (Gellibrand, Australian Labor Party) Share this | Hansard source

For many young Australians today, the dream of homeownership feels completely out of reach. I speak with them every day in my electorate in Melbourne's west. A generation of young Australians have watched property prices break away from wages. They are a generation who, no matter how much they save, see property prices growing faster than the deposit they need to get a foot on the property ladder. They are a generation who wonder how they can afford to live near their jobs and near their families. They are a generation who have been failed by this government.

Unfortunately, the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017 and the First Home Super Saver Tax Bill 2017, which are before the House today, represent a continuation of this failure. Labor does not support them. They won't improve housing affordability, because they duck the main problems in our housing market in favour of a grab bag of bandaid solutions. This represents, it's fair to say, progress of a kind on the part of the government. At least the Turnbull government is no longer actively denying there's a housing affordability problem in this country or telling young Australians that they need to just get a good job that pays well in order to break into the property market. The first bill does seem to show that the government at least understand that they have a political problem with housing affordability—it being named the 'reducing pressure on housing affordability measures bill'. It's a bit of a giveaway in this respect. But the measures in this bill are little more than a fig leaf for a lack of real action on this front. There's a long way to go before young Australians will see a comprehensive plan to deal with the pressure on housing affordability from their government.

We should say from the outset of this debate that we have a housing affordability crisis in Australia today. For 25- to 34-year-olds, only four in 10 own a home today, compared to six in 10 who owned a home in 1982. It's a big change that has consequences throughout the housing market for first home buyers, renters, people in public housing and, indeed, the homeless. It's a problem that is being felt particularly acutely in Melbourne. The Demographia International Housing Affordability Survey: 2017 found that Melbourne was the sixth least affordable city in the world. Current ABS statistics show that Melbourne's median house price has risen to a record $880,902—an increase of more than $100,000. The Grattan Institute has found that housing prices have increased by over 40 per cent over the past five years. If you already own your home, particularly if you bought it 20 years ago, this is all to the good; for everyone else, though, this has big implications. By the end of last year, 37 per cent of average disposable income would be taken up by the monthly mortgage repayments on a median priced home, after a 25 per cent deposit had been put down. That's 20 percentage points higher than the equivalent call on disposable income in 1997. In Melbourne, 35 per cent of families are suffering from rental stress. Ten years ago, around one in three rental properties in Melbourne was considered to be affordable for a struggling family, according to the Department of Health and Human Services. Today, just 5.7 per cent of rental properties are considered to be affordable for these families. The impact on the number of Australians who live in homelessness is obvious.

These market conditions demonstrate just how lazy it is to bash generation Y Australians in this debate, to blame them for their inability to break into this market. All too often, young people's aspiration for homeownership is met with condescension from their government and from far too many people in our general community. They're frequently told that, if they want a house, they should stop eating smashed avocado on toast or stop buying take-away coffee. To put down a deposit on a typical house in Footscray, in my electorate, you would need to forgo about 38,000 coffees or 150 years worth of weekly smashed avo brunches. It's a nonsense. According to the Australian Bureau of Statistics, generation Y already spends less on food and recreation and much more on housing than their predecessors, their equivalent generation, did in 1989. That is hardly surprising, given that they also confront an employment market with the lowest wage growth on record and very high rates of youth unemployment. If they were lucky enough to go to university, young Australians today also carry debt repayments for their higher education that are orders of magnitude higher than the debt faced by previous generations.

We should be clear: this isn't a morality play of lazy young people refusing to make the same sacrifices that previous generations did to break into the housing market. Instead, young Australians are confronting a housing market that is structurally different from the one that confronted their parents and indeed their grandparents. There are a number of reasons why Australia's housing market has evolved in this way, but one reason is the fact that the Turnbull government continues to insist on giving a tax break to people buying their second, third, fourth or fifth investment property but nothing to young Aussies trying to buy their first home. These tax breaks cost the budget $10 billion a year, and almost half of the benefit goes to the highest 10 per cent of income earners. More than 90 per cent of the lending for property investment of this kind goes into purchases of existing housing stock, so it doesn't even increase the stock of housing in the market in a significant way. It has helped growth in property prices outstrip growth in people's incomes in a way that the current prevailing low interest rates can never offset. It has empowered a new investor class in our housing market that has muscled first home buyers out of the market. As a result, home ownership is at a 60-year low and the proportion of first home buyers in the market fell to a record low of just 13 per cent in July 2016, before moving up slightly in the last quarter, thanks to stamp duty concessions for first home buyers given by the Victorian and New South Wales state governments.

There are a number of things that governments should be doing to respond to these changes in a holistic way. The federal Labor Party released a comprehensive housing affordability policy before the last federal election. We committed to reforming negative gearing and the capital gains tax concessions for property; limiting direct borrowing by self-managed superannuation funds; facilitating a COAG process to introduce a uniform vacant property tax across all major cities; increasing foreign investor fees and penalties; establishing a bond aggregator to increase investment in affordable housing; boosting homelessness support for vulnerable Australians; getting better results from the National Affordable Housing Agreement; and, finally, re-establishing the National Housing Supply Council and reinstating a minister for housing.

Our reforms to negative gearing would limit future negative gearing concessions to new housing stock, and we would reduce the capital gains tax discount from 50 per cent to 25 per cent. These are responsible changes that would moderate the growth in housing prices and target tax concessions to where we need them—for investment in new housing stock, increasing supply. Indeed, the McKell Institute estimated that a 10 per cent increase in construction as a result of these changes would lead to up to 18,500 new homes being constructed per year. It's a smart, responsible policy that backs in young Australians wanting to buy their first home.

In this changed housing market governments also need to do more for the larger number of Australians who will be spending a longer time in the rental market. That is why I was very pleased to see the Andrews Labor government's recent package of reforms to make renting fairer in Victoria. This package gives tenants more rights, longer leases and smaller and fairer bonds. The Victorian government has committed to banning rental bidding, a practice where potential tenants are asked to bid against each other for the privilege of renting a property. Rental increases will only be allowed on an annual basis, to deliver financial stability for long-term renters. Landlords will no longer be able to force tenants to vacate their leases for 'no specified reason'. Renters will be given basic human dignities, like the right to own a pet unless there's a good reason for the landlord to deny them consent for a particular property. Renters will also be given the right to make minor modifications to rental properties, like installing hooks for picture frames, and when tenants are forced to make urgent repairs to the property landlords will be required to reimburse them more quickly. Bonds will be capped at one month's rent where the rent is twice the median rent, and bonds will be required to be released to tenants more quickly at the end of tenancies when there has been no dispute lodged by the landlord. These are important reforms that strike a new bargain for renters in the radically changed new structure of the modern housing market in Australia.

Housing should not be thought of as just another investment category. It's a foundation of human dignity. While successive governments have created a situation in which property investors have been given an unfair advantage in the market over people seeking a home for their family, it's important in this context that government provides these basic protections for people who are unable to buy their own home and are forced to rent for increasingly long periods of time.

Federal Labor's changes to the tax treatment of property and Victorian Labor's fair renting reforms are the kind of holistic approaches that we need to address the housing affordability crisis. The bills before the House, on the other hand, are little more than ineffective bandaids. The so-called First Home Super Saver Scheme will do nothing to tackle housing affordability. What it will do is undermine Australia's world-class superannuation scheme, in a further attack on the future of young Australians. The government's plan on this front would mean that first home savers who make voluntary contributions into the superannuation scheme for their retirement could then withdraw these contributions, up to certain limits, and an amount of associated earnings for the purpose of purchasing their first home. Concessional tax treatment would apply to amounts that are withdrawn for this purpose under the scheme. The effect of this intervention on housing affordability would just be to pour further fuel on the housing market. Anything that first home buyers will be able to pull out of this scheme for a deposit to increase their bidding potential in the auction market will quickly be factored into the price of properties for sale on the market.

The other measure in this bill is about contributing the proceeds of downsizing to superannuation. The government proposes to allow people aged 65 or over to make a non-concessional contribution of up to $300,000 from the proceeds of selling their home. These contributions would be exempt from the age test, the work test and the $1.6 million balance test for non-concessional superannuation contributions. There's nothing wrong with this in principle and, if the government were to split this measure away from the First Home Super Saver Scheme measure, we'd be open to considering this measure. Indeed, in the 2013-14 budget there was a pilot program that had the aim of doing just this, trialling a means test exemption for age pension recipients who were downsizing from a family home for their retirement, freeing up that housing stock for young families who need that space for their new young children. Up to $200,000 in proceeds would have been put into a fund in which would have been exempt from the pension's means test for up to 10 years. But of course this short-sighted government axed this pilot program. So it's back to have another crack at the same issue in the bill before the House today. This proposal would be worth taking more seriously if it tackled related issues to this downsizing question, issues like the age pension income test, asset tests and stamp duty issues taken together. But as it stands this measure will have a minor impact on addressing the housing affordability crisis in Australia.

What's needed to tackle the housing affordability crisis in Australia is leadership. We need recognition of the scale of the problem and its causes. We need a government that's willing to go in to bat for young Australians and recognise the legitimacy of their aspirations for homeownership. We need a government with the vision required to outline a policy alternative that over time will create a new structure and a new bargain for young Australians trying to break into the housing market. We need to reconceptualise the way we think about housing. For too long housing has been a topic of reality TV shows and a topic of investment speculation rather than the foundation stone of human dignity, particularly the dignity of families living in our communities. We should not countenance a tax system that privileges property investors—some of them may be property speculators—over young families trying to build some financial stability and some home life stability for their young families.

This is an intergenerational inequality issue. If we want to have equity between the generations, we need to ensure the latest generation coming up the ladder aren't being kicked off—aren't being prevented from climbing aboard the property ladder that previous generations in Australia climbed aboard. In the past, homeownership has been the great Australian dream. It has been the foundation for families to invest in the new generation, to invest in the children coming up behind them and give them that stability of home life and that financial stability they need to thrive and reach their full potential. We need to get back to that. We need to address the housing affordability crisis in a holistic, comprehensive way, and, unfortunately, the bills before the House do not do that.

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