Dean Smith (WA, Liberal Party) Share this | Hansard source

This afternoon, in the brief time that is available to me, let me just outline to you how my approach to tackling this issue. It is important that we get some expert opinion onto the public record with regard to the issue of housing affordability and, in particular, what it means for young people. So in a few moments I want to reflect on a recent contribution that the assistant governor of the RBA Luci Ellis made at a recent conference in Melbourne.

In addition to that I think it is important—I am sure Senator Whish-Wilson will make some remarks in these respects—to consider those macro trends happening across the Australian economy that are affecting housing affordability. Senator Whish-Wilson, you can probably guess three of them, but let me help you: the population growth we have experienced, the interstate migration we are experiencing and, of course, those issues of supply which deal with land release and which deal with some of the poor construction activity we saw in decades past. I want to give people a degree of confidence that they can trust the Turnbull coalition government to tackle this issue.

It was a familiar poor shot by Senator Cameron, who was again resorting to a personality attack, going after Senator Paterson's very honest and frank contribution. It was revealing that Senator Cameron did not seek to correct the record of the rumour that is circulating around this Senate. I do not know if you have heard it, Senator Whish-Wilson. It is that Senator Cameron, a senator for New South Wales, might soon find himself a senator for Tasmania. How else could you explain Senator Cameron's purchase of a $1.5 million property in Hobart? How else could you explain it unless the Labor senator for New South Wales was planning to be a Labor senator for Tasmania? Why else would he go and buy a $1.5 million property in Hobart? I have not heard that from Senator Cameron. Let me make that very clear: I have not heard it from Senator Cameron. If it is not true I am sure he will correct the record. I am sure if it is not $1.5 million he will tell us it is $1 million or $2 million. But it is up to Senator Cameron to correct the record.

It is refreshing that we had the Australian Greens come into the Australian Senate this afternoon to talk about low taxes and about removing taxes. As Senator Paterson's contribution alluded, if they could do that across the broad brush of economic activity that would be a great advantage. We might even see a more credible Australian Greens if they could argue for reduced taxes and, by extension, reduced government spending across a whole variety of economic activity in the Australian economy. Of course, what we know is that what the Greens would like to take away with one tax cut they would like to improve with another tax hike.

I just want to reflect on an article of 25 November 2016. Senator Whish-Wilson, you probably know it well. It is Phillip Coorey's article about the Greens plan to introduce an inheritance tax. For all those people listening to the broadcast this afternoon, no matter where you live, you will not be untouched by the Greens inheritance tax. Let's just briefly share with those people listening to the broadcast what the Phil Coorey article said. It begins by saying:

Greens leader Richard Di Natale will up the ante on the taxation of investment property by recommending his party adopt as policy the imposition of death taxes on real estate.

It goes on to say, 'Senator Di Natale will flag imposing an "inheritance tax" on properties in which the owner was not the occupant.'

This is the Phil Coorey article of November 2016 headed, 'Greens recommend death taxes for investors.' The article goes on to say:

In his speech to the Greens national conference, Senator Di Natale will badge it as a measure to help address growing housing inequality. While he is realistic enough to accept the idea will not be readily embraced by the political mainstream—

One hundred per cent correct; well done!

he will point out it was the Greens who first proposed—

other tax cut arrangements with regard to housing issues. Then there is a quote from Senator Di Natale:

"I know this is a difficult issue but as a society, it's a conversation we have to have if we want to tackle the kind of soaring income inequality … "

This is the danger. We have what is a very, very important and genuine concern in the community around the issue of housing availability and affordability, and then we have ideas been prosecuted by the Greens that are ill-conceived, ill-thought out and not consistent. They might, in actual fact, be the gateway for worse policies like inheritance taxes and death taxes. Just a suggestion, if I may, Senator Whish-Wilson: if the Greens want to establish a bit more credibility in the community, you might want to rule out things like death taxes and inheritance taxes, because they sure do send a shiver up the spines of ordinary Australian families.

I just want, in the time that is available to me, to reflect on the comments that were made by Luci Ellis, the assistant governor of the economic division at the Reserve Bank of Australia. She made these comments at the Australasian Housing Researchers Conference in February of this year. These are fresh reflections on the issue of housing affordability. These are reflections from an expert no less than the assistant governor of the Reserve Bank of Australia. Quoting from the Illawarra Mercury, let me just share what Luci Ellis had to say at that conference. Luci Ellis was reflecting on some of the issues that exist around housing affordability and the issue around housing supply, and made some very interesting observations about young people, which is an important element of the MPI we are dealing with this afternoon. The article says:

While the proportion of 25 to 34 year olds owning the home they lived in had fallen from around 60 per cent to around 50 per cent since the 1970s, this wasn't necessarily a cause for concern.

Then a quote from Luci Ellis:

"Most of the decline happened by the early 1990s, before the big increase in housing prices relative to incomes," she said. "What changed during that earlier period was that people started partnering and settling down later in life."

Ownership rates for young people declined partly because "many people wait to settle down before they buy a home".

"By saying this, I am not suggesting that people should not worry about whether households can achieve their desired housing tenure," she said. "I am suggesting that the situation is more complex than would be suggested by a single-minded focus on a single metric of affordability such as median housing prices."

In summary, Luci Ellis, the Assistant Governor of the RBA, is making a very important point: these issues happen in the context of broader demographic changes—those that we are living through and those that might have happened prior to us coming to this party. I think she makes a very interesting point where she starts to discuss what I think is a critical issue, and that is the issue around loan-to-valuation ratios. In that regard, as reported in the Illawarra Mercury, Luci Ellis says:

So it's surprising that as housing prices have risen, the loan-to-valuation ratio hasn't shifted up over time. One reason might be that more borrowers are getting help from friends and family to accumulate the deposit. Careful analysis of data shows that the share of first home buyers receiving that help has been increasing over the decades, but actually remains low.

In researching for this contribution this afternoon, I think the comments that Luci Ellis made at the Australasian Housing Researchers Conference in Melbourne on 16 February 2017 are very enlightening. We cannot hide from the fact that this issue is not immune from the broader demographic trends that are happening across our community.