Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Hansard source

In speaking on the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Bill 2017, can I say that I support the amendment moved by the member for McMahon in this place yesterday. This legislation is the government's shallow response to the housing affordability crisis that exists throughout Australia and has existed now for some years. It contains two measures. Firstly, the First Home Super Saver Scheme, whereby a person can downsize their home, if they're 65 years or over, and place some $300,000 into their superannuation account. The other measure is the one dealing with the super scheme whereby a person can put money from their income additionally into super and then use that money to purchase their home. As the member for McMahon has quite rightly pointed out, if the two measures were split Labor would not oppose the downsizing measure. But the measure relating to the First Home Super Saver Scheme is one that we don't support.

The great Australian dream of homeownership is rapidly fading away for most Australians. To put that into some perspective, in 1970 in Sydney the average house price was around $18,700. In Adelaide, my home city, it was $11,900. Today in Sydney the average home price is $1.1 million and in Adelaide it's $436,000. The average wage in 1970 across Australia was somewhere between $5,000 and $6,000. Today it's $78,000. So we have a situation where the average wage has gone up around 15 times since 1970, whereas housing prices have gone up some 60 times over the same period in Sydney and 36 times over that period in Adelaide. Regardless of whether it's 36 times or 60 times, housing prices have gone up many more times than the average wage increase over that period. Understandably and logically, it's becoming more and more difficult for a person to buy their own home.

That has been reflected in other statistics that are also available. We saw in a report only yesterday in The Age by Clancy Yeates that Australian house prices have risen on average 8.1 per cent a year, for a cumulative rise of 6,556 per cent over a 56-year period. The 2016 census shows that some 31 per cent of Australians own their home outright. Some 34 to 35 per cent are in the process of paying off their home—that is, they have a mortgage over it. So between 65 and 66 per cent of Australians are either owning their home or paying it off. In 1966, 50 years earlier, 71.4 per cent of Australians either owned their own home or were paying it off. We have seen a reduction of around six per cent over that period. Six per cent may not sound like much, but it's actually quite significant. It's been on the decline pretty much ever since, and it continues to fall. I suspect it will start to fall at even greater rates in the years ahead unless governments address this issue through sensible policies that will have some effect.

As I pointed out earlier, housing prices continue to rise. In the last five years alone, housing prices have increased by 35 per cent. Notably—and I found this statistic very interesting—the highest home ownership rates in the world are in China, where 90 per cent of the population own their home, and in Russia, where 87 per cent of people own their own home. I thought that was quite interesting given that neither is what we would refer to as a capitalist country. A fifth of households with a mortgage are now paying more than 30 per cent of their income on their repayments, and that in turn is causing housing stress. When we go back to the people who are currently in the process of owning their own home because they have a mortgage on it—they've taken out a loan and are repaying it—one-fifth of them are now also under financial stress and finding it difficult to continue to pay off their mortgage. That should be of real concern, because if those people cannot pay off their home they will be left even worse off, because they will probably make a loss out of the investment they've made in their home.

Not only are housing affordability and higher house prices lowering home ownership rates in Australia. Because prices are at such a high level in comparison with incomes in Australia, when people want to rent a home, because they cannot afford to buy one, they're also faced with excessively high rental charges. The rental charges have to reflect the cost of the house in the first instance, and people who invest in homes want a return on their investment that is commensurate with returns they might get if they put their money elsewhere. Higher housing prices not only mean that people cannot afford to buy a house but mean that many people are no longer able to afford the rent that is being charged for them to have a roof over their head.

I said earlier on that housing prices are continuing to rise. I understand that as at the end of June the mean housing price across Australia was $679,000. That's an enormous amount of money for an average income earner to try to raise or to pay off if they're able to put a deposit down and get a loan. Not surprisingly, because of that mean housing price we now have some 105,000 people who are homeless. They can't afford to buy a home or even to rent a home. I don't have the figures for 2016, because I believe they haven't been released as yet, but my expectation is that the figure could be even higher than 105,000. Were it not for the fact that so many young people are living with their parents because they cannot afford to buy their own home or pay rent, the figure would be much worse. We're seeing the trend where young people are not leaving home when they reach 21 or 18—in fact, many of them are staying with their parents well into their 30s—because they cannot afford to live outside of their parents' home.

There are several factors for the housing stress and the homelessness, and pricing is one. But one of the others is that there has undoubtedly also been a reduction in public housing across the country. In 1991 public housing peaked. Some seven per cent of the housing was public housing, or social housing. In 2016 the figure was 4.2 per cent—just over half of what it was in 1991. We've seen state governments selling off public housing in order to pay down debt, but as they sell off public housing, of course, the people who are in desperate need have nowhere to go. I want to refer to a report put out by the St Vincent de Paul Society only last year. I will quote a passage from their report that talks about the crisis I've been referring to. The report says:

A measure of the housing crisis is the number of people around the country on waiting lists for social housing: 217,000 families in 2014. Moreover, for those several million Australians on Centrelink benefits, only 1 per cent of private rental properties are affordable. Reflecting this, more than 157,000 households in Australia are paying over 50 per cent of their income in rent, and therefore live in severely unaffordable housing. The most recent estimate is that there are 875,000 households in Australia that are experiencing housing stress.

The report goes on to say:

As at 2011-2012, 90 per cent of government expenditure on housing policies (direct expenditure and tax concessions such as capital gains tax exemptions) was received by homeowners (about $36 billion each year) and residential property investors ($6.8 billion). This compares to federal and state/territory governments spending around $5 billion on social housing.

So, we have nearly $43 billion being rebated in the form of tax concessions to investors in residential property, compared with only $5 billion going back into social housing from the state governments.

Therein lies the real problem. There is a housing affordability crisis in Australia, and public housing is unable to even meet the crisis we're facing. And the Turnbull government's response is to do two things, as I pointed out at the beginning of this debate—that is, to use super funds to help people get into housing and to allow people to downsize once they reach the age of 65. Those measures are not adequate and will not address the real problems we face. Time will tell, but I'm reasonably confident that they will not address the serious crisis in housing affordability in this country.

This is a coalition government that comes from years of never having truly been committed to the superannuation process in this country. We saw that they opposed superannuation when it was introduced into law and into society by Labor. But more recently we saw this coalition government freeze the contributions at 9.5 per cent until, I believe, the year 2021. The people they're saying might benefit from the scheme are being asked to put money into superannuation where they will get a tax benefit so they can then take it out with perhaps some of their other contributions and put it into housing.

The truth of the matter is that people cannot afford to put extra money into super in the first place. The people we're trying to help and who need help are the very people who are at the low-income end and do not have spare money to put into their super fund. But if they are fortunate enough to do so, and they can access that fund, it will mean that they will have a lower return on their fund when they reach retirement years, because they will have had less money in it. So they will lose out at the end of the process. The truth also is that most Australians aspire to two things in their life. Yes, to own a home has been one of the great Australian dreams. But the second has been to have a reasonable retirement, some stability in retirement—something they can look forward to. What we're saying, as the member for McMahon quite rightly pointed out in his own contribution to this debate, is that the government is saying to Australians: 'You can have one or the other, but you cannot have both. Either you can have a home and no retirement, or you can have retirement but no home, but you cannot have both.' And that is on the assumption that all the rules relating to the assets test and so on that relate to home ownership and entitlement to pensions and other concessions when one reaches retirement don't change between now and the years ahead. It's very likely that, having taken the steps the government wants people to take right now, the rules will in turn be changed years down the track, which will mean that they've made their decisions to no avail, because they will lose out in other ways.

Lastly, it is true that many factors have contributed to rising house prices in this country. But undoubtedly, and as the St Vincent de Paul Society report highlights, negative gearing and capital gains tax discounts have added considerably to the price of houses in Australia. This government refuses to address that issue. Labor has put forward some sensible policies that have been supported by independent analysts demonstrating that those policies will make a difference to housing prices. Yet this government refuses to concede what is an obvious and glaring contributor to the high prices in this country by refusing to tackle the negative gearing associated with investment in housing. And it refuses to do anything about the discounts that apply to capital gains tax when people do invest in housing. There are better measures than this, and the government should have the courage to face up to them and do what it knows is right.

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