Andrew Bartlett (Queensland, Australian Democrats) Share this | Link to this | Hansard source

My question is to the Leader of the Government in the Senate, Senator Minchin. Does the minister accept that there is a crisis in housing affordability in Australia? Does the government accept that there are very significant increases in the cost of renting a home in the private rental market which are causing serious financial stress to a growing number of Australians in many regional cities and towns as well as in the capital cities? Does the minister accept that interest rate rises harm not just people with mortgages but also many people in the private rental market? What is the federal government planning to do to alleviate the serious and growing financial stress faced by many people who have to rent their own home?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

The government is obviously concerned to ensure that the maximum number of Australians have access to affordable housing, and that is why our economic policies are geared to ensure that we have the maximum number of people in employment—because it is critical that people have the prospect of employment to enable them to afford rents—and that we keep inflation low. I referred earlier to the CommSec analysis of prices and wages between 2002 and 2007 and I draw attention to the fact that overall the average wage has grown by 25 per cent, whereas the consumer price index has increased by 14 per cent, meaning everybody’s real wages are higher. I point to the fact that, while the average wage has risen by 25 per cent, average rents have risen by 14½ per cent; therefore, the capacity to pay high rents is greater because of the higher wages. I know this was not exactly the question but, even in relation to mortgage repayments, with an average wage rise of $850 a month in the last five years, repayments on the average home loan have risen by $740 a month, some $110 less than the increase in average wages.

The issue with rental housing accommodation comes back to basic principles of supply and demand. We have seen that government intervention in this area has got to be very critically judged. The previous Labor government, I think, experimented with the abolition or winding back of negative gearing, believing that it was a bad thing. What happened? There was a drought in investment in rental properties. We have pledged to maintain—and I think I can acknowledge that the Labor Party has also—current negative gearing arrangements because we believe it is critical that policy settings ensure that there is the incentive to invest in rental properties. It may be that there are other measures that the government can take to ensure that there are adequate incentives to invest. One of the phenomenons of the marketplace in recent years has been that, because of the rise in the cost of housing with the demand for housing, the returns on rental accommodation have fallen. That has reduced the incentive to invest in rental accommodation and has made it harder for people to find rental properties. You have to ensure that your policy settings are such that there is the incentive to invest in rental properties.

This also goes to the wider issue of the supply of housing in the Australian market. While the federal government has got to have its policy settings right in terms of controlling inflation, maximising job opportunities and maximising the incentives to invest, it is important that other levels of government also play their part in ensuring an adequate supply of land for housing and incentives at their own level for people to invest in rental properties, and that they play their part in public housing. Senator Scullion commented earlier today about the issue of housing availability for low-income people supplied through public housing. It is critical that state and local governments play their part in ensuring that their policy settings are such that low-income housing and rental housing is clearly available. We believe that state Labor governments should be making more land available for housing. We believe that they need to examine their own levels of state taxes and charges, planning charges and infrastructure charges that all go to increasing the cost of housing and, therefore, making it more difficult for low-income people to have access to affordable housing. We do not deny there may be other things which we can contemplate that may be able to be put in place to increase the incentive to invest in rental housing. (Time expired)

Andrew Bartlett (Queensland, Australian Democrats) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. To focus my question and to go to the point that the minister was perhaps about to enunciate: does the minister accept that many people in the private rental market are facing much higher costs now in many cities and towns around Australia? Will the government do anything to help those people in the private rental market who are facing much higher financial costs?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

Yes, I think I did concede that rents have risen and that this is of course of considerable concern to low-income earners. That partly flows through from the supply and demand equation with respect to housing. The housing market is such that demand is exceeding supply. That is forcing up prices, and that flows through to rents. But I did point out that, on average, over the last five years wages have risen somewhat faster than have rents, so the capacity to pay those higher rents is greater because average wages have risen as a result of the policies we have put in place. As I say, it is critically important that we keep policies in place to ensure that we maximise job opportunities so that low-income earners have access to employment, to enable them to pay the rent, and to ensure that we maximise the incentives to invest in rental housing.