Allegra Spender (Wentworth, Independent) Share this | Hansard source

Finding somewhere affordable to rent in Australia is near impossible. Nightly news bulletins across Australia filled with footage of rental inspections queued out of the doors and cities and regions are like. Data from CoreLogic shows that rents have increased by 8.5 per cent since last year alone and 33 per cent since 2021. Meanwhile, wages are rising at just over four per cent a year. In March 2024, PropTrack found that less than 40 per cent of advertised rentals were affordable for typical-income household.

The rental market is sometimes forgotten in the debate on housing affordability, with reports instead focusing on homeownership, but the reality is that a functional and affordable rental market is important for job movers, students and young people, temporary migrants and many more, including older women. This is not to mention that a high cost of renting pushes back homeownership for those who aspire to own their own homes. It also adds pressure to our inadequate public and social housing system. The most recent national data we have, from 2022, shows that 175,000 people are on the waitlist for social housing—a number that has undoubtably worsened as the private market has increased in price. To their credit, the government has introduced several policies that aim to use what levers the federal government has in the space. I supported measures such as the HAFF as I have supported measures to increase Commonwealth rent assistance, while noting that the increase did not go far enough.

The build-to-rent sector is a small-but-growing part of the Australian housing supply. EY have previously estimated that build-to-rent represents only about 0.2 per cent of the value of housing stock. This is compared to five per cent in the United Kingdom and 12 per cent in the US. Estimates suggest that it could grow to around three per cent of housing, with an additional 180,000 dwellings by 2028. At this point in our housing market, all options need to be on the table. This bill will increase the capital works reduction from four per cent to 2.5 per cent and reduce the final withholding tax on managed investment trusts from 30 per cent to 15 per cent for eligible build-to-rent developments. According to Hamilton Locke, this would bring withholding tax in line with commercial property as well as reduce the depreciation period by half. However, these conditions are subject to build-to-rent conditions, including a requirement for 10 per cent of homes to be available as affordable.

This bill is important, and I support the action taken, although I am cautious about an early celebration. The measures included need to form part of a package that makes the development and construction of housing in Australia more viable to investors. Tax settings alone will not lift our housing approvals and completion numbers that sit at record lows. We need to find ways to free up capacity in the broader construction sector to lower the input costs of development. According to the ABS, construction costs are actually up by 30 per cent on 2019 values. The Property Council has also warned that these measures to bring build-to-rent investments in line with other types of property are undermined by the mandated provision of affordable housing. Acknowledging the need for more affordable housing, the Property Council have advocated for a differentiated withholding tax of 10 per cent for affordable housing investment or for other forms of additional incentives to be applied.

This also highlights a current issue we have with the inconsistent definitions of affordable housing. In New South Wales, for example, affordable housing is defined as housing not requiring more than 30 per cent of income, which is often incongruous with how affordable rents are set based on a 20 to 25 per cent discount off the market rate. Even with this discount, supposedly affordable housing in my electorate of Wentworth is still well above what a low-income household could afford.

While I acknowledge the concerns of the Property Council and others, I am hesitant to vote against a bill that seeks to add to housing supply, as I'm hesitant to move amendments to adjust the investment attractiveness of BTR by removing provisions for affordable housing. I understand that a delicate balance needs to be struck between the provision of affordable housing and investment attractiveness, and I also understand that affordable housing does not work for every development proposal. But ultimately, with vacancies and housing approvals at their current levels, I'm not assured that the market will accommodate the needs of all renters under the current conditions. The government will, however, need to monitor the settings in this bill and adjust accordingly if the desired outcomes are not met.

Secondly, I'd like to talk about another key component of the bill: small business and, in particular, the $20,000 instant asset write-off for small businesses. I strongly support the measure, just as I was supportive of the same measure put forward last year that is still yet to pass this parliament. Small businesses are doing it tough, and I speak to many of these in my electorate and have very strong memories of running a number of smaller businesses myself and of the real struggles, to be honest, during periods of economic downturn and uncertainty, as you try to make sure that you can continue to provide employment for those that you employ but still try to meet the needs of your customers, which can vary, particularly in situations where there is economic uncertainty. You can see, in the numbers, the difficulties for small businesses. According to ASIC, the number of insolvencies has increased by 36.2 per cent since March last year. That is a huge rise. Measures such as this $20,000 instant asset write-off provide much-needed support to small business in hard times by making it easier for businesses to acquire or upgrade assets essential to their businesses, like a new car, a coffee machine or other infrastructure that they need.

But, when government makes promises in budgets that it's not able to meet, the business community loses faith, and I think that this, in the last budget, has been a really terrible example. I have been speaking to small-business owners recently who, until the past week, were unsure if the measures in the budget from last year would be passed in this financial year. It's 26 June today, and in the last month there was much uncertainty about whether these measures would be passed in this financial year. So people who listened to the budget announcement last year and said, 'Oh, great, I've got the instant asset write-off,' may have gone out there and purchased an asset, expecting to write it off—but not following the machinations of parliament, not realising that the legislation wasn't actually passed—and they're now dealing with that uncertainty.

Even if the legislation passes this week, the ABC reports that for many it will be too late to make the necessary purchase before the deadline. I think this is so wasteful, frankly, at a time of economic uncertainty and at a time when small businesses are doing it so hard, to not be able to deliver the outcomes that small businesses are expecting, relying on and taking the government's word on. I'm pleased to see that a deal has finally been struck to pass the previous year's bill, but the inability to do this before—they're literally sneaking it in before 30 June—really undermines the business community's confidence in government. I think the government must do better in this space. We must support our small businesses and give them much more certainty in their dealings with government so that they can feel certain that, when the government says that they're going to do something to support small business, it actually eventuates.

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