Jim Chalmers (Rankin, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

I thank the chamber for the opportunity to speak in support of the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Near-new Dwelling Interests) Bill 2019. But in doing so, the shadow housing minister, the member for Blaxland, who is at the table as well, and I say that we don't think these bills or indeed this government are doing enough to improve housing affordability in this country.

The Australian dream of owning a place you can call your own obviously isn't a reality for all Australians; it's out of reach for too many people, and particularly young people, and I'd invite the House to consider these 10 facts. First, the percentage of Australians who own their own home has dropped to its lowest level since Robert Menzies was Prime Minister back in the 1960s. Second, the cost of housing continues to rise as wages continue to stagnate. Third, house prices in our major cities have gone up by over 15 per cent in the last five years. Fourth, prices in Melbourne have gone up by 30 per cent and prices in Sydney have gone up by 20 per cent over that period. Fifth, it can take a typical household more than 10 years to save a 20 per cent deposit. Sixth, the household debt to income ratio has skyrocketed to almost 200 per cent, which is the highest it has ever been. Seventh, the number of Australians behind in their mortgage today is at its greatest level since the global financial crisis. Eighth, over one million low-income households are in financial housing stress and over 40 per cent of low-income households renting in Australia are suffering rental stress. Ninth, there are more homeless Australians than ever before. And, tenth, with forecasts of continuing double-digit price increases in Sydney and Melbourne at the same time as the RBA expects wages to continue to stagnate, this problem is actually expected to get worse, not better.

Housing affordability is a massive issue. It's an intergenerational issue. It's a key issue for our community, for our country and for governments at all levels. But while Australians are struggling, this government has no comprehensive plan to deal with it. It has no plan to fix the floundering economy, no plan to lift wages and no plan to seriously address housing affordability, which has gotten worse on its watch. That's why I move:

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

"whilst not declining to give the bill a second reading, the House notes that under this Government, housing affordability has gotten worse, and as a result:

(1) the percentage of Australians who own their own home has dropped to its lowest level since Robert Menzies was Prime Minister back in the 1960s;

(2) the number of Australians behind in their mortgage payments is at its highest level since the global financial crisis;

(3) the Australian Institute of Health and Welfare has shown that in 2017–18 over one million low income households were in financial housing stress and that 43.1 per cent of low income households renting in Australia were suffering rental stress; and

(4) there are more homeless Australians than ever before".

The government's management of these bills has been nothing short of a debacle. Those opposite announced these measures in the 2017 budget—more than 2½ years ago. Two and a half years have passed and the government still hasn't implemented them. They've had to fix mistake after mistake after mistake, including some that we identified from this side of the House, during that time. There are members of the government who think this whole bill is a mistake. With regard to the removal of the capital gains tax exemption, our old mate the member for Fadden was reported as saying:

Sometimes things get announced and don't get progressed and it's just best to leave it that way.

Regarding the detail of the bills, there are really four main parts to the measures in the bills. They remove the entitlement to the CGT main residence exemption for foreign residents, they clarify the application of the principal asset test, they provide a capital gains tax incentive for investment in affordable housing and they enable a reconciliation payment for near-new dwelling certificates. During that 2½-year period, but particularly when it was first announced, there have been some legitimate concerns raised by the community. Representing a big Kiwi community in South-East Queensland, I know New Zealand citizens living in Australia were especially concerned that they would be negatively affected. On top of that, Australians living abroad—there is something like 100,000 Australians living or working offshore—have been concerned they'd be impacted by the changes. These criticisms of the bills were a factor in the government waiting until after the election to bring these proposed changes to the House.

Another big factor is the fact that there have been improvements made to the bill, and we welcome those. The original bill had some substantial flaws. These changes will have the effect of lessening the impact, particularly on Australian expats overseas and New Zealanders living here in Australia. We were pleased that we could advocate on behalf of both of those groups and to help get the outcome that is now in these bills, which have been changed from what was first proposed in the budget of 2017. The government has also moved to make arrangements for certain life events, new amendments which allow foreign residents to still access the main-residence exemption when they've had particular life events, such as divorce, death, terminal illness—all of those sorts of difficult issues. I want to congratulate my predecessor in this gig the member for McMahon, and also the member for Fenner, for fighting hard for so many of these positive changes which are being implemented in this bill. The government has also extended the transition period until the middle of next year. That's a good thing because it has relieved some of the uncertainty for taxpayers overseas. These are good developments. They make what was a bad bill in 2017 a better bill and something that we are able to support.

As I said earlier, the Australian dream of owning your own place isn't a reality for too many Australians, particularly young Australians. Too many people think that a home of their own is simply out of reach. I think it is fair to say that, although we are supporting these bills and although there are welcome steps in these bills, nobody should pretend that they will fix the lack of affordable housing in this country or have a significant impact on housing affordability. The details of the bills are all in the memoranda, so I won't go through them in too much detail, but I will flag a couple of concerns with the aspect of the bill which goes to the CGT arrangements for affordable housing. We are not convinced that it will actually add to the amount of housing. We're worried it may just cause more churn. There are other issues that we have raised over the last couple of years that we think still apply, and we note that the National Affordable Housing Consortium has said that the increase in the discount from 50 to 60 per cent is grossly inadequate to drive investment. So we support the bills, but we don't think they will be game changers when it comes to housing affordability.

There are couple of other important points that I want to raise because they are very closely related. When we talk about housing affordability, yes, it goes to tax arrangements and, yes, it goes to the incentives in the system, the provision and public housing. All of these things are important, but there are two things that don't get talked about enough by those opposite when they talk about housing affordability.

The first one is stagnant wages. One of the reasons why we have record household debt, one of the reasons why we have substantial mortgage stress is that wages in this country are stagnant. The Reserve Bank deputy governor did a terrific job yesterday of laying out what we're up against. He said that over the last seven years or so—so largely the life of those opposite in government—low wages growth in this country has become the 'new normal', in the Reserve Bank deputy governor's words. Feeble, weak wages growth has become a feature of the economic mismanagement of those opposite. If the Australian people want to know whether this is deliberate or accidental, I refer them to the finance minister's views, publicly expressed, that slower wages growth is a deliberate design feature of the government's economic policy framework. So for all of those Australians who feel with some justification that no matter how hard they work they just can't keep up with the cost of child care or electricity or servicing the mortgage, as we see in so much of the data, those Australians should know that the finance minister and, indeed, the cabinet of the Morrison government want it to be that way. This stagnant wages growth is a deliberate design feature, in the finance minister's own words. Wages growth under this government is actually the weakest it's been under any government. In the most recent data, which came out in the last week or two, we saw that wages growth had slowed even further. This is a big problem, and the fact that people's wages are not keeping up with the cost of living, that it's harder and harder to service the mortgage or to pay the rent is related to the issue of housing affordability. That's an important consideration which barely gets a mention by those opposite when they talk about housing affordability.

The second related point goes to monetary policy. The Reserve Bank governor last night gave a speech about unconventional monetary policy and quantitative easing. As he has said repeatedly, there is not enough effort being put into fiscal policy—the efforts of the government in the budget—to boost an economy which has been floundering and which has deteriorated even since the election.

The point we make about the governor's speech is that he wouldn't even be needing to contemplate these quite extreme monetary policy measures if the government was doing a good job managing the economy. If the government was doing its job managing the economy in the interests of workers and pensioners, we wouldn't have a Reserve Bank that has already had to cut interest rates to record lows—to a quarter of what they were during the GFC. We would haven't the Reserve Bank contemplating quantitative easing if the government was doing its job and coming to the table with a measured, proportionate and responsible fiscal policy to not only help the Australian economy and boost the Australian economy but, more importantly, help the workers, pensioners and families who make up our society. That's another important issue here, when we talk about housing affordability.

We have got interest rates at 75 basis points, the lowest they've ever been—a quarter of what they were during the GFC. The real risk there is that the effectiveness of those low interest rates is diminishing over time. Monetary policy can't do the heavy lifting that it could do when rates were higher, so we've got a real problem here: a government that won't come to the table and a Reserve Bank running out of runway when it comes to monetary policy and contemplating quantitative easing. The real risk here is that, as official rates get lower and lower, asset prices get puffed up, which at the same time as not stimulating enough demand in the economy makes houses more unaffordable. Plus, it's hard on savers who are relying on interest—a substantial chunk of the population for whom savings is an important part of the way they provide for themselves and for their loved ones. That's a substantial issue which deserves more discussion as we debate these bills in this House.

In summary, we support the bills. We don't think they will be a silver bullet. We think they are worthy of support, with the improvements that have been made since we have been arguing for them. But there is a problem of housing affordability in this country, and it has many facets. It impacts particularly on the young, but not just the young. It is a function of stagnant wages and what the Reserve Bank has had to do to boost the economy in the absence of a government that has any plan to boost an economy which has deteriorated on its watch.

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