Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

I rise to speak on the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017. I'm pleased to speak on this legislation because housing affordability is a very serious issue. We have a housing affordability crisis in this country and have had for a number of years. As a serious issue, it requires our serious attention. It requires a real, effective, comprehensive and serious policy response from this chamber and this parliament. While the Greens will be supporting this legislation before us tonight, let me say very clearly that this is not an effective, comprehensive, serious policy response to a critical issue for so many Australians, particularly young Australians who may never get to buy their own home, and who certainly feel that's the case at the moment, and particularly for a number of struggling low-income Australians for whom also the thought of owning their own home is still a dream. This is fiddling around the edges—that is the best term I can come up with. Nevertheless, we'll be supporting it.

This is a very good opportunity for all of us to debate in here tonight what an effective and comprehensive plan would look like. As luck would have it, I happen to have one in front of me, and it's called The Greens housing plan—everyone needs a home. You may have heard me at Senate estimates, every chance I get, asking the Treasury secretary and the departments what they're doing about housing affordability. I'm very pleased to have been part of a party that over the years has led on a national discussion about a comprehensive plan to fix this issue. But all it's going to take is a spine and some political courage to tackle these issues. I do feel that we've come some way in recent years. I remember in 2013 the Greens discussing internally, amongst ourselves, a policy to scrap negative gearing and capital gains tax. Although we implemented that policy, it was considered a politically risky thing to do. Nevertheless we did it. Having had Labor fall across the line and adopt the same policy as us has been very pleasing. I'm glad that Senator Gallagher outlined that Labor are looking at changing at least the perverse incentives in place in this country that don't give us a level playing field, that make it extremely difficult for young Australians and lower income Australians to compete with wealthy investors who own multiple properties and who go to auctions and bid up property prices. We've seen a housing bubble in this country, and I got the Treasury secretary, Mr Fraser, to admit it was a bubble when I brandished an avocado—it was a shameless prop that I took to Senate estimates but it got his attention and the attention of the Treasury and the media about what our Treasury was going to do to tackle this issue. All it took was an avocado. I don't want to give the false impression that we have made progress when we haven't, but we are at least having a debate about a measure to tackle part of the negative gearing incentive, which we should be removing. There's still a long way to go.

The purpose of the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 is to amend the Income Tax Assessment Act 1997. We will 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, and we're planning to deny income tax deductions for the declining value of previously used depreciation assets used in producing assessable income from the use of residential premises as residential accommodation. In addition, the housing tax bill amends 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, and we'll be imposing a vacancy fee as a tax when this legislation passes this place.

What evidence have we got before us that we do have a housing affordability crisis in this country? Even though our Treasury haven't put together comprehensive research, even metrics they can measure or benchmarks they can assess this issue against, we know from speaking to young Australians in our electorate that this is a serious issue for them. I'm looking forward to hearing the contributions of our new senator from Queensland, Senator Bartlett, and of our new senator from Western Australia, Senator Steele-John, who is going to be talking about the specific effect on young Australians of housing affordability and the crisis that we have around this country.

But one set of data that we do have is the Household, Income and Labour Dynamics in Australia survey, commonly referred to as the HILDA. Someone pressed the emergency button when this was released. This data was only released a few months ago. It is a five-year survey and is the best data that we have on the dynamics around housing affordability in this country. It looks at a lot of the key issues that we should be assessing in our policy responses. The picture that it painted was very troubling indeed, especially for young Australians. It said:

As documented in the 2016 edition of this report, home ownership has been declining in Australia for some years now. This decline has been particularly concentrated among young adults.

In 2014 approximately 25 per cent of men and women aged 18 to 39 were homeowners. That's down from nearly 36 per cent in 2002. So, over 12 years, home ownership amongst that category of Australians has fallen by nearly a third; it is nearly a third less than it was in 2002. There is a lot of data in the 2017 report about why that is the case. It said:

The decline in home ownership primarily occurred between 2002 and 2006 and between 2010 and 2014. This pattern is very much consistent with movements in house prices as measured by the Australian Bureau of Statistics over the 2002 to 2014 period, with house price growth particularly strong in the mid-2000s and since 2012.

So there is a high correlation between rising house prices and a collapse in home ownership amongst young Australians.

In the HILDA survey they go further than highlighting a correlation; they draw qualitative assessments about causation. They talk about the recent decline in home ownership amongst those aged between 18 to 39 as being a very important economic and social issue for this country, and go on to explain the dire consequences of the impact to our economy if we don't fix this. They clearly say the broad pattern is that home ownership is greater the higher your income. The most striking comparison is the large decline for the second lowest quartile. In 2002, 37 per cent of people aged between 18 to 39 who were in this quartile were homeowners, but this fell in 2014 to 16 per cent. So it halved over that time period of 12 years—half as many young Australians had home ownership in that quartile. The survey went on to say that it's worse in Sydney and Melbourne—something that we probably could have drawn from our own anecdotal conclusions about housing prices—and it talked about debt and the problem with indebtedness, especially for young Australians in these categories of income. It said:

Home owners aged18 to 39 are likely to be particularly susceptible to rising debt in an environment of rising house prices, since most are relatively new entrants to the housing market.

And it went on to explore that in some detail.

We have a situation in our country where the number of young Australians owning their own house has fallen by a third in 12 years, because of the boom that we've seen in housing prices. Why do we have perverse incentives in this country that give investors tax deductions? The Australian taxpayer is actually giving deductions to wealthy investors and wealthy Australians to buy their second, third, fourth, fifth, sixth or seventh investment property in some cases. We've all have seen the TV programs encouraging flippers and investors to get into the market. But what have we done to actually help those who may never have their dream of owning their own home?

I asked Mr John Fraser, the Treasury secretary, a different question about wages growth only a few weeks ago at Senate estimates. I wasn't expecting the answer that I got from the Treasury secretary. I said to him that there seems to be a global crisis, which is particularly evident here in Australia, and that there are a lot of theories around why workers aren't necessarily pushing for higher wages. There were discussions about technology changes and international labour competing with them in the markets—things that were making workers reticent to push for pay rises. The question I asked the Treasury secretary was:

It makes sense to me that, following the GFC, businesses would be concerned about credit risk and these kind of things. From a workers' point of view, and collectively from a union's point of view, who may represent workers, what is going on in terms of the decoupling of wages growth and high employment numbers?

He said:

I will pass to Dr Grant, who's written some very good stuff on this. From my own point of view, because of the higher levels of debt—

household debt—

people are more concerned about job security than may have been the case in the past.

That's all he said. I thought that was very telling—that the Treasury secretary was saying that that is one of the reasons that we've got a problem with wages growth in this country. The Treasury's introduction to estimates highlighted it as one of the key issues that we need to address. It has underperformed relative to expectations. No-one's quite sure when we're going to have a wages breakout in this country and we're going to see workers' wages rising in line with corporate profits, but here's the Treasury secretary saying household indebtedness is one of the key issues why workers are reticent to push for pay rises. In other words, he's saying that household debt is a key issue for job security and insecurity in this country. That's the conclusion I draw from this, which I think is a pretty reasonable conclusion to draw.

We have ABS data on high vacancy rates. Following the 2016 census, in relation to the number of houses that were apparently empty, it was reported that in Australia 200,000 more homes were sitting empty than a decade ago. New figures show that, despite the country grappling with a housing supply shortage that is pushing the cost of a first home beyond many of our residents, especially young Australians, we have nearly 200,000 houses that don't have people in them. On the night of the 2016 census 1,039,874 dwellings were empty—11.2 per cent of all Australian dwellings. That's extraordinary, when we have a housing supply crisis in this country. I wonder how many of those would be held by investors. My guess—and I didn't actually follow it up—is that a lot would be held by investors.

So what do we do about this occupancy problem? What do we do about the fact that investors are pushing up housing prices and outcompeting young and low-income Australians who want to own their first home? Our comprehensive package is actually fairly simple, if we had the courage. We'd remove negative gearing and capital gains tax concessions and, while we're fixing an economic problem that goes to the heart of inequality in this country, we would raise tens of billions of dollars in revenue to help pay for schools and hospitals. It's a no-brainer. Rather than charging foreign investors a meagre fee, which is what this bill does, why don't we have a comprehensive plan to swap what is, I think, undoubtedly the most inefficient and hated of all taxes, stamp duty, and swap it for a broad-based land tax? It is one of the most efficient and popular taxes. We did this in the ACT. The Greens have suggested this and a way forward on how to do it, whereby the federal government would loan the states to compensate them for a loss of revenue in an off-balance sheet transaction. It would be self-funding by 2030 and it would lead to what we believe would be a comprehensive change in behaviour.

Don't just take it from the Greens. I am proud that we have led this debate for a number of years now, but the Productivity Commission, which are not always an organisation that agree with the Greens, recently put out a paper where they dealt with this same issue. Before I get to what their paper said, I will talk about a question I put them at estimates about their report on land tax and swapping stamp duty for land tax, because they thought that that wasn't a bad thing to consider. I can't read their full response, but at the end of it Mr Harris said:

We see, from time to time, a lot of fiddling at the margin with propositions around how to make first home buyers' lives easier—

'a lot of fiddling at the margin'—

which appear substantially to just drive up the price of property rather than deal directly with the issue.

What we were proposing was substantive. I encourage anyone who wants to read the productivity review to read pages 28 to 31. There is a summary there of a shift from stamp duties to taxes based on land value, and why this would be really good for the country and why this would help tackle many issues, including the housing affordability crisis in this country. That's one comprehensive policy that the Greens have put forward. While I'm at it—Mr Fraser again—Treasury's paper Re:think, on pages 23 and 25, also raises the possibility of a broader based discussion around broad-based land taxes, such as municipal rates, and how they have a low economic cost (and they bundle municipal rates and land tax in the same category in their analysis) and why it actually might be worth exploring this policy outcome.

I'm also pleased to announce that when we released our policy on swapping stamp duty for land tax—may I say, years after we had been campaigning on getting rid of taxpayer funded concessions for the wealthy in this country, like negative gearing and capital gains tax concessions—we got a good rap from many journalists and many economists. I will read out some comments from Peter Martin, who we all know in here, who is a very good economist and very well-respected writer. He says:

… the government will have an opportunity to actually do something that will last; something far more important, and more transformative, than the apparently doomed plan to cut the rate of company tax.

He then says:

It's an idea from the Greens, but that's a plus. It gives it a good chance of getting through the Senate.

There's no doubt about what's the worst tax in Australia, and no doubt about the best bang-for-your-buck tax swap—

which is swapping stamp duty for a broad-based land tax. He goes on to say:

It means that a stamp duty for land tax swap could boost the economy by a massive 82c for each dollar swapped. There's no bigger benefit imaginable from rejigging tax.

We all know—and I especially know, as an economist—that models are useful for helping to make decisions. They don't always dial down to the exact detail, nevertheless we're talking about billions of dollars in productivity gains from this policy alone. Of course, we've had all of that fully costed by the Parliamentary Budget Office.

To summarise, we'll be supporting these measures tonight, but let's not kid ourselves: this is not any attempt at a holistic approach to tackling the crisis in this country, especially for young Australians, of housing affordability. There's a role for government in our lives, a role for correcting market failures. Let's take away the perverse incentives that have been in place now for a number of years that give property investors a chance to use taxpayer funded concessions to buy more properties while young Australians who are struggling on the lowest income brackets are paying their tax. They don't get the same taxpayer concessions. They don't have the same opportunities to go into the market. Let's fix this. Let's get on with holistic reform.