Sam Dastyari (NSW, Australian Labor Party) Share this | Hansard source

I seek leave to speak again on the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 and a related bill. I was in the process of making my remarks earlier and obviously was interrupted by a series of events to do with the resignation of Senator Lambie. As such, I think I may have technically already spoken once. I wasn't in a position to continue.

Leave granted.

I rise to speak on the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 and the Foreign Acquisitions and Takeover Fees Imposition Amendment (Vacancy Fees) Bill 2017. I am pleased to say on behalf of the opposition that we will be supporting these pieces of legislation. We're certainly not going to stand in the way of these bills. But we're also not under any kind of real illusion about just how little these measures will do for housing affordability.

Housing affordability is a huge issue, if not the No. 1 issue, for a generation of young Australians. A generation of young Australians rightly feel that they have been excluded from the Australian housing market, and it's incumbent on government to realise the psychological impact that this has had on this generation of young Australians. There is something fundamental about Australian identity that comes with owning your own home. It's part of our nature. It's part of our culture. While people will point to Europe and other places where homeownership rates and home occupancy rates have been a lot lower, they're actually looking at a culture that is very different in relation to housing. It is a culture that relates much more to people investing in longer term rental arrangements. We don't have that in Australia, and we've never had that in Australia. While it's great to look at some of the European examples, the reality is that that is actually pointing to a cultural phenomenon that is very alien to a lot of Australians out there.

When you look at what's really happened with property prices in a place like Sydney—and across the country but, I think, in particular in Sydney—you realise there is this disadvantage that's there because of the fundamental issue of capital gains tax and negative gearing, which is at the heart of these problems. I accept that this has been an incredibly difficult issue to deal with in politics. It's always difficult to look at taking away an entitlement that people have. In the Labor Party policy proposal, it's not a retrospective policy; it will only be a prospective policy. I note that other parties—and I note the Greens are here in the chamber—have a version of this that looks at some retrospectivity as well. I acknowledge that that is a very hard thing to do.

There are a lot of people who have chosen to invest in property as their form of superannuation. Without drawing stereotypes, there has certainly also been a very cultural element to this in places like Sydney where the migrant communities, like the migrant communities that I'm proud to represent, have over many years chosen to invest in property as a bricks-and-mortar type investment as opposed to things like shares and other types of equities that, frankly, probably don't have that kind of certainty culturally that property does. So you end up with a situation where many people have chosen to buy a second or a third property, occasionally for their child—for one of their children as they grow up—or to give them a steady source of income in their retirement. As the value of these properties has skyrocketed in our major cities, it has created a scenario where a lot of people are very wealthy largely on paper rather than in reality.

I note that in the part of Sydney that I live in, in the inner west of Sydney, we have seen property prices in double-digit growth year after year after year. Now, what that really creates is two classes of people: those who are in the market and those who are outside. Those who are outside the market, unfortunately, when prices are what they are, don't have the ability to buy in. That creates a real second-class scenario for a lot of them. Frankly, it worries me that a generation of my peers, and certainly the generation that comes after mine, won't be able to buy in the Sydney market if they aren't fortunate enough to have wealthy parents. I note this isn't a phenomenon unique to Sydney. The data seems to demonstrate that parts of Sydney and Sydney as a city as a whole, perhaps, has this worse than anywhere else in the country. But I know it's the same story in many major cities and also in many towns, especially those regional towns that have seen a boom-bust property cycle related to short-term massive increases in economic activity, such as the mining boom.

Labor have a more comprehensive proposal than what's been outlined in this bill, although we're not opposing this bill, and that's a capital gains tax and negative gearing policy that would deliver $32.1 billion over 10 years and $565 million over the forward estimates. But let's be clear: this isn't just a revenue-raising measure, though there is a revenue-raising component to it. It's about creating a cultural shift in how we deal with property and what we do with property as a nation. It's about changing the incentives. The Labor Party policy, by not being retrospective, accepts that those who have entered into this market in good faith doing the right thing, with their own savings, should not be punished for the decisions they've made. But prospectively, unless you're purchasing new property to try and create some growth in that space, it shouldn't be and it doesn't need to be retrospective.

Housing affordability is deteriorating in Australia's major cities. In 2012, which is only five years ago, Sydney's ratio of median house prices to median gross household incomes was 6.7 times and Melbourne's was 6.5 times. I want to touch on those figures a bit, because the enormity of them might be lost. In 2012—again, five years ago—prices were already skyrocketing out of control and the ratio of median gross annual income to median house prices was 6.7 times in Sydney and 6.5 times in Melbourne. In June 2017—five years later—that ratio sat at 9.1 times for Sydney and 7.5 times for Melbourne. That is a spectacular growth in property prices that those who are in the market, and those in the market with several properties, are able to benefit from but those who are outside of the market are more and more likely to be forever excluded from it.

Since 2012, over the past five years, median dwelling prices in Sydney have increased by 60 per cent and Melbourne prices have increased by 30 per cent. I don't need to tell you that when you relate that to a figure like inflation, you see just how phenomenal those increases have been. Meanwhile, Sydney household incomes are only 18.4 per cent higher and Melbourne household incomes have increased by only 13 per cent. I don't want to be Sydney and Melbourne specific—most other capital cities have seen some change in housing affordability over the five to 10 years based on that metric—but it does appear to be Sydney and Melbourne that have really seen this happen the most.

There are those who argue, validly, that there is a supply problem that has created some of the housing affordability challenges. There is, or has been, certainly, a supply problem when it comes to land release, nimbyism and people deciding to restrict the growth of properties and property development, particularly in areas close to train stations and closer to the cities where people tend to want to purchase. But that alone is not the problem. There are problems of both supply and demand. I know—through my experiences and the experiences of friends and colleagues, many of whom are in their mid-30s, trying to break into the housing market—the horror stories of people spending weekend after weekend going to auctions, only to be outbid by a property developer, foreign investor or property investor who has access to capital that they don't have.

To put that in perspective: when the median price in Sydney is a million dollars, it means you need to have a deposit of about $100,000 just to get started—that's assuming you can make repayments on a million-dollar property. It means you have to have two very, very good incomes or one extremely extraordinary income—but normally two very, very good incomes—just to make the repayments. Park that for a moment. You will need a $100,000 deposit—usually you are looking at LVR rates, loan-to-value-ratio rates, of 90 per cent. You will probably need some form of mortgage insurance if you don't have 80 per cent, if you only have 90 per cent. On top of that, you will have to find your stamp duty and your up-front payments of $20,000 or $30,000, and your mortgage insurance can be another $20,000. All of a sudden, you are having to bring to the table somewhere between $100,000 and $150,000 just to be able to buy a million-dollar property, which is the median property price in a city like Sydney.

What does that mean? It means that those who are very fortunate to have access to capital—be it because they have wealthy parents or parents who may not be wealthy in terms of liquid income but have property they can borrow against—can borrow against, say, their parents' property or a relative's property to look at those kinds of rates. It means that a generation of people who don't have that, can't. And that only relates to those people who already have access to the market. I worry about all of those who don't have access to the market, who don't have the ability to reach out, who don't have the ability to buy in and who don't have the incredibly deep pockets that are needed.

We're very fortunate here. Those of us in the Senate have a take-home income somewhere around $200,000 a year, which is extraordinary by average Australian standards. But for people who are living in a household with two teachers or two nurses or two public servants—people who make an incredible contribution to our society—what we're really saying is that they will be locked out of cities like Sydney, Melbourne, Brisbane or Hobart. Darwin has had some incredible property price growth in recent years and certainly Perth has too, although I note that the rate of growth has cooled off as we come to the end of the mining boom.

Housing affordability is a barbecue stopper at the moment in Australian politics, because it is about the future. It is about our children and about their ability to participate, to be part of this. Part of the challenge of this is a tax system—and it has been a bipartisan approach; it hasn't been something that just Labor has done or just the Liberals have done—that has encouraged property investment, and investment in property has now skewed the market. Fifty per cent of the benefits of negative gearing go to the top 10 per cent of income earners, and 70 per cent of the benefits of capital gains tax concessions go to the top 10 per cent of income earners. Again, we're not saying that these people have done anything wrong. They haven't. They've played by the rules. They've followed the rules. What we are saying is that the rules here are unfair. The rules need to change. Frankly, it's time for the set of rules we have to be reformed and updated.

The measures in the bills we have before us in the Senate, announced by the government in this year's budget, disallow the deduction of travel expenses for residential rental property, limit plant and equipment depreciation to outlays actually incurred by investors, and introduce an annual charge on foreign owners of underutilised residential property. These are really good changes. These are good pieces of legislation. What we on this side of the chamber are saying is that we cannot stop at just these measures. We have to go further. We have to do more than what these measures are able to achieve.

It would be remiss of me not to note that there is no place in New South Wales that has experienced the challenges of increasing property prices more than the area of Bennelong in Sydney. Nowhere is the pain of first home buyers felt more than in the seat of Bennelong in Sydney. This is a seat in Australia where almost 40 per cent of the population have a university degree—15 percentage points higher than the rest of the state or country. This is a seat where 34 per cent of the population are professionals. Yet the 2016 census tells us that 36 per cent of dwellings there are rented—a full five percentage points higher than the national average. Bennelong's households are where mortgages and rents are more than 30 per cent higher than the national average. Let me run that figure again: Bennelong's households are where mortgages and rents are more than 30 per higher than the national average. The aspirational of Bennelong is a great example of Australians struggling with the housing affordability crisis.

Fortunately—what are the chances?—the people of Bennelong now have a real option, a real choice.

Senator Payne interjecting—

Senator Cash interjecting—

They have a real choice. I understand, Mr President, how petrified those opposite are. I understand how scared they are.

Senator Payne interjecting—

Senator Cash interjecting—

I understand that the former Premier of New South Wales petrifies them. I understand. I get it! I get how scared they must be. It must be frightening.

The people of Bennelong have a real choice. The people of Bennelong have a popular former Labor Premier who is going to stand up and fight for these residents who have been forgotten, who have been ignored. While those on the other side of the chamber are doing their dirty deals with One Nation up there in Northern Queensland, we will be in Sydney highlighting that a proper, multicultural society can only be able to— (Time expired)