Katy Gallagher (ACT, Australian Labor Party) Share this | Hansard source

Thank you, Mr President, and can I also extend my congratulations on your new appointment today. Labor will not oppose the passage through the parliament of the Treasury Laws Amendment (Housing Tax Integrity) Bill and the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017. The Parliamentary Library does a very helpful report on all bills that come before this chamber. The report on these bills states that their purpose is to do three things: firstly, to ensure that travel expenditure incurred in gaining or producing assessable income from residential premises is not deductible and not recognised in the cost base of the property for capital gains tax purposes; secondly, to deny income tax deductions for the declining value of 'previously used' depreciating assets used in producing assessable income from the use of residential premises as residential accommodation; and, thirdly, to amend the Foreign Acquisitions and Takeovers Act 1975 to provide that an annual vacancy fee is payable by foreign owners of residential real estate where property is not occupied or genuinely available on the rental market for at least six months in a 12-month period.

The government indicated at budget time that these measures were their crackdown on negative gearing in relation to the two aspects I have already mentioned and that the measures were about reducing pressure on housing affordability. Whilst I've said we won't oppose these bills through the parliament, we certainly don't believe that these measures, in isolation of a broader housing response, will reduce the pressure on housing affordability that is needed, particularly in certain markets. It's typical of the Orwellian way the government likes to operate that these measures are being put together in a bill and put forward as initiatives to reduce pressure on housing affordability. I don't think anyone should operate under the illusion that these measures will do that. This government, which has now been in power for five years, has failed to have a minister responsible for housing, has failed to have a housing strategy, has failed to renegotiate a national housing agreement and has failed in any way to respond to the genuine pressures that are affecting particularly those on lower incomes, those who are renting and those who are struggling to enter the housing market to deal with some of the distortions that we have seen in recent years.

In contrast, from opposition, Labor has put forward—reconfirmed by Senator Cameron as the shadow minister responsible and the leader this year—a comprehensive plan to deal with pressure on housing affordability, including genuine reform of negative gearing. We are not dealing at the fringes but actually reforming negative gearing and the capital gains tax discount as a central focus of our policy. I think it's genuinely understood, even by the government, that any housing affordability package that does not deal with these concessions in a serious way—where the majority of those benefits, those tax concessions, that revenue forgone, are going to high-income earners—is a sham. We know that 50 per cent of the benefit of negative gearing goes to the top 10 per cent of income earners and that 70 per cent of the benefit of capital gains tax concessions goes to the top 10 per cent of income earners. This is where action needs to be taken, and it's not just the Labor Party saying this; there is strong support across groups with expertise in housing and with expertise in tax. Prominent senior economists in this country understand this. The government's own financial systems inquiry drew attention to this. It is not just the Labor Party saying this.

These bills seek to introduce three measures that the government announced in the budget, which I alluded to: disallowing the deduction of travel expenses for residential rental property, limiting plant and equipment deductions to outlays actually incurred by investors, and introducing an annual charge on foreign owners of underutilised residential property. The reform to these arrangements is the reform that you do when you're not really serious about the reform that needs to be done. The government, in this bill, proposes to disallow deductions for travel expenses related to inspecting, maintaining or collecting rent for a residential property. The amendments also do not affect deductions for travel expenditure incurred in carrying on a business of providing property management services. The government estimates this will raise $540 million over the forward estimates.

We're all for ensuring that tax concessions are targeted. I don't think anyone would suggest that Labor haven't been very vocal in this debate—in fact, leading the debate, particularly in relation to negative gearing. But this is not a housing affordability measure. In fact, Treasury in answer to a question on notice about this even said so. It said this was a tax integrity measure, which is an important thing on its own, but this is an acknowledgement from those who have been involved in drafting this bill and advising government that this measure is not something that will reduce pressure on housing affordability.

The second measure involves limiting deductions for assets in residential premises, denying deductions for the decline in the value of previously used depreciating assets used in gaining or producing assessable income from the use of residential premises for the purposes of residential accommodation. The government estimates that this will raise $260 million over the forward estimates. Again, as I said on the previous measure, we are absolutely here for the debate and for supporting ensuring that tax concessions are targeted. That's why we've been arguing for genuine reform on negative gearing. But this on its own, limiting deductions, is not a housing affordability measure. Again, Treasury also accepted in an answer to a question on notice that this is an integrity measure.

The government estimates that the third measure, the charge on foreign owners of residential property where the property is not occupied or genuinely available on the rental market for at least six months per year, will generate $16.3 million in revenue over the forward estimates. Again, we don't have any objection to this measure. After all, as part of our plan for housing affordability in the announcements which were made earlier this year, we announced we could facilitate a COAG process to introduce a uniform vacant property tax across all major cities. It's notable that Treasury admitted in an answer to a question on notice that the states and territories were not consulted in relation to this measure. This appears to be the style and practice of this government. We've seen it play out recently, with the government introducing legislation around the national housing agreement that they've put before the parliament without seeking to legislate an agreement that was previously negotiated through COAG or through housing ministers for agreement by COAG. States and territories were not consulted on that either. That would raise the issue of whether the Commonwealth is actually serious about reaching national agreements on areas of such importance, particularly when it relates to some of our community's most vulnerable citizens in relation to homelessness and in relation to the provision of public housing, or social housing, when this is the approach that it's taken. Treasury also confirmed in that answer to the question on notice that there wasn't a direct assumption about how many foreign owners of residential properties would decide to make their properties available to rent. So that is something that is clearly unknown, and perhaps we'll need to wait for this legislation to be amended and to watch it in operation.

I think everyone in this chamber knows that Australia is in the midst of a housing affordability and homelessness crisis. House prices in many major cities have skyrocketed, home ownership rates have plummeted and many vulnerable Australians have limited or no access to housing. The housing crisis is only getting worse. Since the government came to office in September 2013, capital city house prices have soared by 30 per cent, with increases of nearly 50 per cent in Sydney and over 30 per cent in Melbourne. Home ownership is at a 60-year low, and home ownership rates for 25- to 34-year-olds have collapsed from around 60 per cent to less than 40 per cent in the last 30 years. Rental stress is also on the rise, with the proportion of low-income households experiencing rental stress now at more than 40 per cent.

That great Australian dream of home ownership has really turned into a nightmare for many, and it has done so on this government's watch. In stark contrast to the approach that the government has taken, the Labor Party, from opposition, has been the only one genuinely engaged on the reforms and the cooperation needed nationally to tackle this and to ensure that, despite the varied nature of the pressures on particular housing markets—and they are different across the country—we have a suite of policies that look to improve housing affordability, increase financial stability, reduce homelessness and, at the same time, boost jobs. This is all work that has been done from opposition. Indeed, if I were the government, I would be looking at some of these, because these are definitely areas where they will need to move, and should move.

Top of the list is to reform negative gearing and capital gains tax concessions. This is a big area of expenditure and revenue forgone to the budget and it's growing exponentially. The large part of that concession is going to high-income earners, often to very high-income earners. We've also outlined a plan to limit direct borrowing by self-managed super funds for property. This is another area that returns some savings to the budget. We've talked about facilitating a COAG process to introduce the uniform vacant property tax across all cities. That's in recognition of the fact that not one level of government can solve the pressures that we're seeing on housing, the provision of housing and the affordability of housing. It is something that is going to have to be worked on through COAG. It is something that will have to be dealt with through council-level government, state and territory governments and the Commonwealth government, because every level of government has a lever available to it that, if coordinated, could significantly reduce pressures and be localised to the pressures in individual regions.

A focus for Labor is very much on how to ensure that there's increased investment in affordable housing, and I'm sure my colleague Senator Cameron will talk more about this when he speaks in this debate. This is an issue that Labor, when last in government, worked hard at, with policies which were very successful, like NRAS, the National Rental Affordability Scheme. If you talk to people who are operating those properties now they will tell you that the fact that it was just cut off and stopped sent a big shock to those who were considering investing in Australian affordable housing supply. It seems that even good ideas get ripped up when governments change. But there does need to be some way of ensuring there is increased investment in affordable housing. I see the government have come lately to this, once they'd ripped up NRAS and taken away all the infrastructure that was actually investing in this type of housing. They are trying to rework it and recreate a system that will deliver it. I know that Senator Cameron has been doing a lot of work around a bond aggregator, and this forms part of our policy.

Regarding homelessness support, the fact that the homelessness agreement has been rolled over for one year at a time creates enormous uncertainty. I know the government likes to blame former Labor governments for everything. We see you do it on absolutely every area of policy, but at some point you have to accept that this is the fifth year you've been in government and you are responsible, and the fact is that homelessness services have been going cap in hand every year without any certainty of funding from this government. In fact, not only is there no certainty of funding but funding has also been cut, because the capital infrastructure funding that was to have gone along with that homelessness agreement was cut, which meant that homelessness services couldn't invest in the extra capacity that they needed to deliver extra services. That is something that we have already announced that we would provide more funding for. That situation needs to be sorted, but the approach being taken by this government, essentially to bully the states and territories by putting legislation into the House and presumably passing it without any discussion with the states and territories, who have a key responsibility in funding public housing and ensuring an adequate supply of affordable housing product, is testament to this government's inability to deliver on anything that requires cooperation. We agree that there need to be better results from the National Affordable Housing Agreement. There is a lot of money that goes into that agreement from federal taxpayer dollars, and there should be more accountability for how that money is spent and what it actually delivers.

The other area we need to focus on—and, again, this is something that housing and finance stakeholders have talked about—is getting the National Housing Supply Council back in place, to have a body that's responsible for monitoring housing supply and for making recommendations to government. Since it was abolished, the data is lacking, the planning is lacking, the recommendations aren't there. Reinstating a minister for housing—there's a novel idea. How about we have a federal housing minister that actually takes responsibility for this area of government? It's clear that whilst it's shared across portfolios—and it might be the Treasurer who is actually in charge of it, but there are other ministers who come and go, depending on what area they're talking about—it means there is no coordination and there is no leadership within the cabinet, with the sole focus on a national housing strategy. That's what is needed. It's needed to look at not only the taxation arrangements around owner-occupier but how you work with states to deliver adequate supply whilst you're looking at the taxation arrangements. It's about looking at what's happening for renters across Australia—the growing population of families and individuals who will be renters for a long period of time, if not for life. It's about having a look at how that works nationally. There's no focus on that and no leadership on it at all. Looking at how we deal with the constant demands that are faced in the homelessness sector is another area that needs a genuine focus from this government.

But for five years they have been denying there actually is a problem or denying that they have to do something about the problem, or blaming the problem on the previous Labor government or blaming it on the states and territories. At some point, you have to accept that it's the responsibility of a Commonwealth government to have a housing strategy—to have a housing policy, perhaps—and, we would argue, to have a housing minister. Without it, we're going to see these continued minor efforts to tinker at the edges to make it look like you can stand up and say you've got a bill that's actually doing something, especially if you name it as 'this is a bill to reduce pressure on housing affordability,' even if it does nothing of the sort—even if it's a tax integrity measure. I doubt that any of these three changes are going to make one bit of difference for someone saving for a housing deposit at this point in time. I don't think they will have to save any less money to get into the housing market. For someone who is trying to move from renting to owning a house, I don't think this will make the slightest bit of difference.

As I said at the beginning, Labor is not going to stand in the way of the bill—the tax integrity measure. We're supportive of it. It will raise a small amount of money across the forward estimates to assist with budget repair. But Labor is very, very cynical that this bill will do anything to reduce pressure on housing affordability.