Kimberley Kitching (Victoria, Australian Labor Party) Share this | Hansard source

I was going to talk tonight about the Prime Minister, who in recent times has been inclined to resort to rather immature name-calling, and that meant I could talk about things such as his suboptiMAL performance, his abysMAL and cataclysMAL turn as Prime Minister, which has been rather disMAL, as we all can see. I could mention his MALfeasance over such investments in Star Mining and the Solomon Islands forestry logging scandal with which he was involved. While the Prime Minister is inclined to resort to distraction from the problems of his government, I'm going to talk about something that is quite serious.

On this side of the chamber, we believe that we need to encourage investment in housing, and tonight I want to talk about an issue which is of great concern to many people in my home state of Victoria: the shortage of affordable rental properties, particularly in the inner city areas. We tend to think now of the inner cities as inhabited exclusively by wealthy yuppies and hipsters, but this is far from true. There are still low-income people in these areas, including many students and other young people who have just moved out of home and aren't ready to think yet about home ownership.

These people rely on the availability of houses and apartments at affordable rents which are close to public transport and to their places of work and study. We have seen in recent years a decline in this type of rental accommodation in inner-city areas and an increase in rents to the point where many of these people cannot afford to rent. According to data collected by the Department of Health and Human Services, the availability of affordable rental housing for low-income earners in Victoria is at the lowest level since 2000. In 2007, 30 per cent of rental properties in inner Melbourne were classed as affordable, but now it is less than 10 per cent. In 2012, the National Housing Supply Council projected that the national housing shortfall would increase to 490,000 dwellings by 2021.

Since 2000, rents in Melbourne have risen, on average, by 110 per cent while average incomes have risen by only 75 per cent. It shows a widening gap between incomes and the cost of renting. Although the inner suburbs are generally wealthier than outer areas, this conceals a large number of low-income people who struggle to find affordable accommodation. If you are a student at RMIT, it is not much use to you that rents are fairly low in Melton or Broadmeadows.

Federal Labor has shown we are prepared to take bold steps to address Australia's housing situation. The most important of these is Bill Shorten's commitment to wind back negative gearing. Negative gearing provides tax incentives for investors and speculators to put money into residential property, inflating prices and making it harder for young families to afford a first home. This has the effect of pushing these people into the rental market, reducing supply and driving up rents for those who need to rent, particularly in inner-city areas. The evidence for that is clear. In the 20 years to 2014, the proportion of households owning their home outright fell from 43 per cent to 30 per cent, while the proportion renting from private landlords rose from 18 per cent to 25 per cent. Negative gearing costs the Commonwealth about $10 billion a year, nearly all of which goes to upper-income earners. It diverts investment into unproductive, speculative housing investment.

The Henry tax review said the tax advantages from borrowing to invest in a rental property leads to investors taking on too much debt and distorts the rental property market. The National Housing Supply Council estimates there is a shortage of 540,000 rental properties that are both affordable and available. This is partly because many properties, which would be affordable for low-income people were they available, are in fact occupied by people on higher incomes who have been shut out of the home-buying market by the effects of negative gearing. The Hawke government did abolish negative gearing in 1985 but, unfortunately, decided to reinstate it in 1987. Now, 30 years later, Labor has again committed to ending this harmful and unnecessary tax break for property investors.

Contrary to some claims, the temporary ending of negative gearing didn't lead to a rise in rents. In 2015, the ABC's fact checkers found that Treasurer Joe Hockey's claims about this were incorrect. Rents rose in Sydney and Perth but fell in Adelaide and Brisbane, while not changing a great deal in Melbourne. All these changes were due to local market factors, not the abolition of negative gearing. Why then do I now argue that abolishing negative gearing would ease the pressure on the rental market in inner Melbourne? Because many of the people now renting in these areas would much rather be buying a home but can't afford to. Negative gearing inflates property prices by encouraging speculative money into the market. (Time expired)