Andrew Bartlett (Queensland, Australian Democrats) Share this | Hansard source

As Senator Humphries alluded to in his contribution, I have circulated an amendment. I move:

Omit paragraph (a), substitute:

(a)

condemns the Howard Government and the state and territory Labor Governments for their failure to address the widely acknowledged affordability crisis in Australia’s rental and home ownership markets; and

This is an important debate that we are having today. Obviously, there is political point-scoring going on, as there always is in many of these debates—particularly when there are mixed responsibilities between state and territory governments and the federal government. That always seems to provide an opportunity for people to blame-shift and finger-point. But the issue of housing affordability is an absolutely crucial one. For that reason, I am very pleased that the debate has been brought on today. I do not believe it is one that has had enough attention at national level.

My amendment goes to the first part of the motion moved by a Labor senator from Victoria, Senator Carr, which:

... condemns the Howard Government for its failure to address the widely acknowledge affordability crisis in Australia’s rental and home ownership markets ...

I agree with that: there has not been enough done to address the affordability crisis. But that blame has to be shared with the state and territory governments. For that reason, my amendment includes the state and territory Labor governments in that condemnation for failing to do enough to address housing affordability. We all acknowledge that there is a housing affordability crisis—anybody who is being honest does. Given that housing is a shared responsibility between state and federal governments, it is therefore appropriate that the blame should be shared for not enough being done about it.

The second part of the motion calls on the federal government to show leadership on the issue. That is a part that I agree with, because one of the problems that I believe we face is that there is not enough national leadership on the issue from and not enough national ownership of the issue by the federal government. There is too much of a willingness to push away overall responsibility and to just say: ‘We do our bit at the federal level with interest rates and with the funding for the Commonwealth-State Housing Agreement or rent assistance. All the other bits are the responsibility of the states and all of those bits are the reasons why things have become unaffordable.’ It is simply not logical to do that.

I remind the Senate and the public that housing affordability became such a sufficiently serious issue nationally that the federal Treasurer felt the need to act decisively, and his way of acting decisively to address a matter that was seen as a major problem nationally was to call an inquiry. That got it off the front pages. He called a Productivity Commission inquiry into housing affordability—at least with regard to first-home owners—and then went on with other things.

The problem was that when the Productivity Commission inquiry came down with its report—and the Productivity Commission is hardly a radical left-leaning body; it is a very dry, economically driven and conservative body—that report contained recommendations that applied to the federal government as well as to the state governments. The federal Treasurer must be condemned for his response to that report. Not surprisingly, he wholeheartedly agreed with the recommendations from the Productivity Commission that called on the states to do things like drop stamp duties, deal with matters to do with land release strategies and deal with matters to do with developer charges. The Treasurer was all in favour of strong action on those things, because the states need to be doing something about it. But every single recommendation from the Productivity Commission that went to the federal government level he rejected. That is a clear sign of a failure of nerve, a failure of courage and a failure of leadership in these areas.

There was a recommendation to ‘review those aspects of the personal income tax regime that may have recently contributed to excessive investment in rental housing’, including the capital gains tax provisions and the restrictions on negative gearing. The federal government and the Treasurer rejected that recommendation to examine the impacts of those taxation arrangements on housing affordability. The Treasurer even made the extraordinary statement that there was no conclusive evidence that the tax system has had a significant impact on house prices—quite an extraordinary statement from somebody who tries to profess to be economically literate, as the Treasurer does—despite the key finding from that Productivity Commission report:

Interactions between negative gearing, ‘capital works’ deductions, post-1999 capital gains provisions and marginal income tax rates have lent impetus to investment demand during the housing boom.

That of course lent impetus to the very significant rise in housing prices and the housing affordability crisis. The Treasurer just put on his blinkers and refused to see the obvious truth there. Another recommendation was:

A national public inquiry should be established to examine the housing needs of low income households across Australia, including in Indigenous communities, and the nature and extent of assistance to help meet those needs.

The government did not want that. It did not want a national inquiry to look at the problem holistically, because it does not want to reinforce any perception or belief that this is a federal government responsibility, that it is anything that it should take national leadership on. The continuing calls from people in the housing sector—not only the non-government sector but also the housing industry organisations and the property industry—for a national housing strategy have continued to be ignored by this government.

Other recommendations in the report included examining better targeting of the First Home Owners Scheme. Even that was rejected by the federal government. The fact that a significant proportion of the First Home Owners Scheme goes to higher income earners—the people who are most likely to be going into the housing market anyway—rather than being targeted to lower income earners means not only that it is not applying efficiently but also that, in its own way, it could be contributing to the increase in housing prices.

We have a strange mindset in Australia—or it certainly appears strange to me—where we continually see reported in the mainstream media that, when housing prices goes up, it is seen to be a good thing. Obviously, it is a good thing if you are an investor, but investors are a minority in Australia—though a sizeable minority—with fewer than 20 per cent of people having investments in housing. That is far more, I might say, than many comparable countries like the US or Canada—another reason to point to the tax mix in Australia and the way that encourages investment in housing rather than investment in other more productive areas of the economy.

For the vast majority of people, particularly those who are less well off—the battlers whom this government likes to pretend it has concerns about—it is a very bad thing when the price of housing goes up. But somehow or other, whenever housing prices dip, it is seen, and reported continually, as a bad thing. I recognise that there is a lot of interconnectedness, that the housing and construction industries and all those things feed into economic growth and it is not all black and white, but I do think we need to shift away from a mindset, which is continually reinforced, that somehow continually increasing housing prices is a good thing.

I point to an earlier report of the Productivity Commission’s predecessor, the Industry Commission, which in some ways had a reputation for being even more economically dry than the Productivity Commission. The Industry Commission’s 1993 report on public housing still has a lot of validity today. The very first line of that report said, ‘Housing is a basic human need.’ I think we often forget that when we are looking at housing issues. That should be our starting point when we debate housing and consider housing policy. That is why it should be a national issue and that is why there should be a national housing agenda. It is a basic human need that is not being adequately provided and is not adequately available to many Australians.

I would go further than that and say that it is a basic human right. If we look at all of the other issues that we debate in this place about education, health, employment and all sorts of things, I think they all stem from that starting point of secure, affordable, appropriate housing for people. If you cannot afford housing near where the jobs are, it is harder to get the jobs or you have to spend a lot more time travelling to and from those jobs. If you cannot afford housing near where good-quality education, hospitals and health services are, again, it impedes your chances to have the same opportunities as other Australians. There is also the issue of adequately sized housing. As we all know, that is a big issue in Indigenous communities. The housing crisis there is not only about the number of houses per se but also about the higher number of people who have to live in the houses, because there are not enough houses. That overcrowding certainly provides a basis for many of the other problems that we often talk about with regard to Indigenous communities. So housing is a fundamental right.

I must say in the context of this motion and the amendment that I moved to include the state and territory Labor governments that I perhaps should have amended the motion further to condemn not only the federal government but also Labor at a federal level for their contribution to this crisis. Labor have raised the issue from time to time, and I commend Senator Carr for doing so today, and I think the previous shadow minister, Mr Albanese, when he was covering housing areas, did a reasonable job. But the fact is that major components of the key factors that I mentioned as contributing to the housing affordability crisis at a federal level—the tax mix, particularly the capital gains tax deductions—were supported by the ALP.

The capital gains tax deductions were a key driver of the massive flood of what I would say is overinvestment in the housing market, driving the price of housing out of the reach of first home buyers and lower income earners. That very clearly stemmed from the capital gains tax changes in 1999—changes that categorically and massively benefited the highest income earners in Australia. The changes occurred only because the Labor Party went with them. The Democrats copped an enormous flogging for supporting the GST. I did not support it myself but enough of us did for it to pass. People have their views about how fair or appropriate that was, but if anybody wants to condemn a tax change that was massively tilted towards the highest income earners then it should be that capital gains tax change that was supported by the Labor Party.

That was done in exchange for a promise that was never delivered on. This government not delivering on its promises is hardly newsworthy. Nonetheless, it was done in exchange for a promise to review the taxation treatment of trusts. That never occurred, so we had the massive windfall for the highest income earners and then no action on another area that clearly is a loophole that is exploited by many people who are also high-income earners. It was a double bonus for the top end and, because of its flow-on impacts, particularly in areas like housing, it was a big whack around the ears and a big negative for the lower end.

It is a similar situation with negative gearing. It is quite clear from both major parties in this place that negative gearing is a no-go zone; nobody will touch it. I am not saying that negative gearing should be abolished. To some extent I think it is so entrenched now in people’s investment decisions that it is very hard to touch. But I do think it can be constrained, I think it can be quarantined and I think it can be restricted in ways that would not unfairly advantage people who have invested on the basis of its availability but would at least constrain its clearly distorting effect on the housing market.

The fact is that we spend, in effect, by forgone revenue, more by a long way on tax expenditures on negative gearing than we do each year on the Commonwealth-State Housing Agreement. We provide far more in tax breaks for higher income earners, who can afford to invest in housing, than we provide in housing assistance to lower income earners. Even rent assistance, which obviously is targeted at welfare recipients, I understand now costs more each year than the Commonwealth-State Housing Agreement. I remind senators of the findings of the Industry Commission way back in 1993 that the provision of public housing is a cost-effective way to meet government housing objectives. It is actually more efficient than the very poorly targeted spraying of rent assistance in the private sector. There is plenty of evidence to show that, in part at least, that contributes to driving rents up and basically subsidises investors and landlords rather than assisting tenants.

Public housing funding is a far more efficient way to deliver housing outcomes, yet we are not seeing the increase in public housing stock that we should be. I remind the Senate of the annual report for 2003-04 on the Housing Assistance Act that has only recently been tabled. It takes a long time for these reports to appear in the parliament. It shows that the total number of dwellings has been declining nationally. It is going up in some states and down in others, but the total housing stock is going down, including public housing, community housing, crisis accommodation and Indigenous rental housing. So, in an area that is an efficient way of delivering, we are seeing a reduction in the total availability in the community.

We are seeing a genuine crisis in housing affordability. The Urban Development Institute of Australia released a report just last month highlighting a $100,000 gap between household earnings and the cost of an average home. They believe that it needs somebody—a minister for housing affordability—dedicated to focusing on that. I think there are roles for state governments to do more. Stamp duty, in particular, certainly has a distorting impact in some areas. But there is no doubt that we need a national approach to the housing strategy and that that must include examining the factors at a national level that can drive up housing unaffordability.

This is not just a matter of the housing cycle and the normal peaks and troughs in the price of housing. It is clear in the evidence from the Productivity Commission report that the latest spike, the big increase in housing prices, is outside the normal cyclical nature of the housing market. That has to be addressed. There is no point in calling an inquiry, spending all those resources and having a body go around and absorb all the evidence, listening to people who deal with this issue on a day-to-day basis—there is a lot of expertise and a lot of work being done by everybody else except the federal government in this area—and then ignoring the findings. The findings are quite clear. The Productivity Commission is a very conservative economic body and its findings are quite clear with regard to this.

The statistics are also quite clear: average mortgage payments have risen significantly, despite all the talk about low interest rates. I do not dispute that, although at a global level Australia’s interest rates are quite high by comparison. Obviously, it is better to have them where they are now than to have them at 17 per cent. Despite that, interest rates have to be counterbalanced with the other factors which the federal government is also responsible for which have pushed up house prices. They have meant that average mortgage payments have risen, and risen significantly, even with much lower interest rates.

The number of first home buyers has dropped significantly, which means that fewer people are able to afford to take that first step. If you can get into the housing market, if you are able to get yourself established and buy a home and pay it off, then you are doing well. But more and more people are not able to manage that and that is creating a divided society and a much bigger problem with the haves and the have-nots. The average house price relative to income has almost doubled in recent years. That is a serious problem. It is leading to a significant and growing divide in our community. People can use all sorts of statistics to talk about whether the gap between rich and poor is getting bigger. If you look at net income, it is arguable that it is not. But, if you look at it in terms of overall wealth, it is beyond dispute. The gap between the haves and the have-nots is growing very significantly from year to year. The big driver of that is housing prices. The haves, who have property, who have housing, are doing fine and those who do not are being left further behind.

That is why this is a national issue. That is why the federal government and the state governments should be condemned for not doing more to address it—other than just blaming each other. It is also why federal Labor should stand condemned for continually playing their part in the increase in the cost of housing and continually avoiding some of the hard decisions that are needed. That is what we need, otherwise more Australians will be left out and more Australians will not be able to afford what, let us remember, should be a basic human right: simple, affordable, appropriate, secure housing.