Marise Payne (NSW, Liberal Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I present the report of the Select Committee on Housing Affordability in Australia, A good house is hard to find: housing affordability in Australia, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

by leave—I move:

That the Senate take note of the report.

As this report’s title says, a good house is hard to find. By ‘good’ we mean ‘affordable’, not just in the narrow sense of the mortgage repayments or rent being manageable but in terms of its location affording its occupants reasonable access to work, schools, infrastructure and basic social amenities. The common measures of affordability show that these ‘good’ houses are indeed becoming harder to find. The average house cost about three to four times the average annual wage up to the 1980s but now costs more like seven years’ wages. A typical young family looking for their first home would find only about a third of houses affordable. This assumes that the family has an average income. Low-income earners now find there are many areas where they cannot afford any homes at all, and this is forcing some key workers into very long commutes to work.

A good house is harder to find for renters. There are more households in the private rental market suffering from housing stress than there are stressed home-buying households. Of course, suffering to the greatest degree are the 100,000 Australians estimated to be homeless.

The select committee held public hearings in all mainland capitals, not just in the central business districts but also in outer suburbs like Campbelltown, in New South Wales, and Narre Warren, in Victoria. Hearings were also held in regional centres such as Ballina, in New South Wales; Geelong, in Victoria; Launceston; and the very rapidly growing area of the Queensland Gold Coast. The most dire cases, though, of unaffordable housing we encountered were in the mining town of Karratha, in Western Australia, where we saw firsthand the quite extraordinary difficulties faced by people there who do not earn big salaries or have housing provided by their employers.

After several months of this committee process, and with the tabling of the report, it is now clear that there are no simple answers to the housing affordability problem. While recent rises in interest rates are making it somewhat harder for aspiring purchasers and putting pressures on recent buyers, the problem of housing affordability is more a structural one which has been increasing for many years—some would say for decades. The report describes a range of both supply and demand factors which have given rise to it.

Among the demand factors are rising incomes and strong population growth, greater availability of credit since financial deregulation, and, in a medium-term sense, lower interest rates and incentives in the taxation system. We have recommended the latter be addressed by the taxation system review panel. Among supply factors, on the other hand, there is a lack of skilled building workers, a lack of qualified planners and, in some cases, greatly excessive red tape impeding new land becoming available for housing. A further problem comes from stamp duties. They are quite simply an inefficient tax which impedes people moving to more appropriate housing. Furthermore, as they have not been indexed, they are a growing proportion of incomes.

As well as problems with the shortfall in the number of new houses becoming available, there is quite clearly a problem with the lack of diversity in new housing, and the committee received significant evidence on this matter almost everywhere we met for public hearings. All too often new developments seemed to comprise only large houses, perhaps with four bedrooms, two garage spaces and two bathrooms. It makes it very hard for low-income families to move into these areas and it makes some people take on much larger houses than they require at the time, with commensurately larger mortgages. Moreover, it also makes it hard for so-called empty-nesters to move to more suitable accommodation while they stay within their own communities, as so many wish to do, or for their children to live close by.

We have therefore supported in this report initiatives being taken by some governments to require new developments to have a range of housing types. The committee acknowledge that the government is currently introducing some new schemes. It is important, though, that housing measures add to the supply of housing, rather than just to demand. To this end, we have suggested that the First Home Owner Grant scheme should return to giving more support to the purchase of new rather than existing housing. As I mentioned earlier, the problem of affordable housing is not restricted to homebuyers. The report therefore recommends that more resources be provided for rental assistance and that its effectiveness be improved.

A number of recommendations in the report relate to increasing the supply of social housing provided by government and community organisations. One of the very heartening aspects of the inquiry was the good work being done by a significant number of community organisations in providing housing to those on low incomes. It is regrettable that the profile of residents of public housing has changed over recent years to cope with a much larger number of deinstitutionalised Australians and that, at the same time, public housing has not been supported with significant increased funding. As a result, it therefore has much less capacity to house low-income families who would, in the normal course of events, have hoped to be accommodated in public housing and who see a future for themselves perhaps in ultimately buying that house, as was the case decades ago. In the longer term, we have also received strong evidence that Australians are more likely to find good, affordable houses if the development of mid-sized regional cities is encouraged. The only way for that to happen, though, is for a sustained effort to be made by all tiers of government to improve infrastructure, including better transport links.

This select committee report, which I am very proud to have had the opportunity to work on, has a significantly large number of recommendations as well. It had terms of reference pertaining to housing affordability in relation to homeownership, but it became absolutely evident to committee members that, in the course of the proceedings, rental pressures, pressures in relation to social and community housing and other forms of support for those on much lower incomes in Australia were issues which we most certainly needed to consider as well, and I think we have done an effective job in examining those.

I want to thank all those who gave evidence to the inquiry and who provided submissions to the inquiry. We received, I think, over 100 submissions, many going to great depth and great detail, for which we are grateful. Because of the number of public hearings we held, we also had a large range of witnesses, some of whom had travelled a long distance—particularly those who met with us in Karratha in Western Australia. I also want to thank the committee secretariat, led by John Hawkins, which, at the same time as doing its other committee work, has carried the work of this select committee absolutely excellently, and I am very grateful for its professional support.

We have produced a unanimous report on housing affordability in Australia, and for that I thank all of my colleagues, who were a very important part of the committee’s considerations. In Australia, our problems of housing affordability have grown over a long period. I do not pretend that the report’s recommendations provide quick fixes. But in commending the report to the Senate, I do argue that it forms a basis on which to build longer term solutions so that Australians can find the homes to which they aspire.

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

I would also like to speak to this report, and I start by congratulating the secretariat and all the committee, particularly the chair, Senator Payne. As some senators would know, the issue of housing affordability is one that, over the years in this chamber, I have spoken about many times and asked many questions of the previous government and indeed of the new government since they have come in. It has been an immense frustration to me that the federal level—the national parliament—has not sufficiently engaged with such an absolutely crucial, fundamental issue as housing affordability. This report does do that. It achieves that. It is comprehensive and wide-ranging, and it makes a real effort to be balanced.

Many times in the past the issue of housing affordability has been treated as a political one as much as one that is a matter of serious social and economic significance. This report and this inquiry could have gone the same way. The terms of reference, to be frank, were framed in a way that meant that it could have been used just as a vehicle for a narrow political point-scoring, state-bashing exercise. It is a real credit to the chair and the committee that it did not do that but has managed to acknowledge the wider issues—very many—that contribute to the serious problem of housing affordability, recognising the complexity of the issues and seeking to provide a wide-ranging and balanced report with a full suite of recommendations addressing all of the factors that contribute to housing affordability. It is still a matter of frustration to me that the previous government—the coalition, when they were in government—did not engage terribly constructively with this issue, despite housing affordability worsening seriously over that period of time. But we should focus on where things are at now and look at the opportunity that this report provides.

I have provided some additional comments and proposals to the committee’s overall report and recommendations, but I do support all of the recommendations that are there. I think it is very valuable that they are unanimous. A number of those recommendations address issues that I have certainly spoken about a number of times and many people in the community have spoken about for many years. In many respects my views have simply been a reflection of the concerns I have continued to hear over the years. I do think there are a few areas where it would be good to go further. I say that not just to try and always go a little further than everybody else but really because I think it needs to be recognised just how urgent and serious this issue is.

This report contains some really good proposals—not only long-term proposals but also some medium-term proposals—which I think, if they are all adopted, will go a long way. A recommendation that I think is very important is that the tax review process that the federal government has set up include examining the impacts of negative gearing, capital gains tax discounts and the land tax exemption—areas, I might say, that were proposed to be examined by the Productivity Commission, amongst others, some years ago but which the previous Treasurer, Mr Costello, refused to act on. I really hope that this time, particularly as it is a unanimous recommendation from this committee, the federal government adopts that recommendation and actually reviews those tax measures.

I also call for the government to review the capital gains tax exemption on the family home. This area was raised by a number of witnesses. Almost inevitably when I raised that area with witnesses in questions they would say, ‘Ideally, it would be good to look at this capital gains tax exemption, but politically it is never going to happen.’ Probably they are right that politically it is never going to happen. But, when you are putting forward an examination of the issues and the causes behind the housing affordability crisis, I do not think you should censor yourself in that way. I think that it is worth putting it forward, not least because—as the report demonstrates—there is very unclear data about just how much the capital gains tax exemption on the family home costs. To me, it is bizarre that we have this major measure and yet very little effort has been made at Treasury level to examine and nail down what the actual cost is as a tax expenditure.

The report contains an estimate that the capital gains tax exemption on the family home costs $20 billion a year. Contrast that to the amount spent through the Commonwealth-State Housing Agreement, which is about $1 billion a year, and rent assistance at the moment is $2.2 billion a year. So we have this massive amount of forgone revenue. It is clearly regressive. It clearly benefits those who are better off—at best, it is neutral—and quite possibly contributes to part of the reason that housing affordability is a problem. In my view, it is time to look at curtailing that tax break. At the very least, it should be examined by the review. In saying that, I should acknowledge that it was a proud boast of the Democrats for many years that we played a key role in bringing in that exemption—and, in hindsight, I do not think it is a good outcome. I would also say, though, that clearly other factors of the tax system, like negative gearing and the way it interrelates with the capital gains tax discount—both things the Democrats did oppose—also play a role and they should be examined.

I also think that, whilst the report recommends some modifications of the first home owners grant, it is appropriate for that to go further. This grant should be about trying to assist people who could not otherwise afford a home to buy one. It should not assist people who have plenty of money to get a slightly better home than they would otherwise buy. It is a significant amount of money and it should be targeted at affordability. I think it should be capped or means tested or perhaps only apply for houses that are below a certain value.

Senator Payne pointed out the role of private tenancy, and I very much appreciate the fact that the committee examined some of the issues relating to that. I think there is a real case for stronger tenancy laws to give people more security of tenure. It is in the private rental sector that the worst pain is currently being felt with regard to housing affordability, and that unfortunately also links to people who have the least security, in most cases, over their home. Those are state matters, it has to be said, but, now that we are finally taking a national approach on these issues, that is an area that should get more focus.

I again congratulate the committee. I think it is a crucial issue, and I am glad to see it getting further attention across all parties at a national level. I do hope the new federal government takes on board these recommendations in the spirit in which the committee has put them forward and considers them urgently—which is an approach to Senate committee reports that has not always happened in the past. I hope it does in the future.

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

It is a real pleasure to be able to work together in this place to come up with some recommendations that will go before us as a parliament—not just us as a government—to look at such an important issue as housing affordability. I want to pay particular credit to the way that the Senate Select Committee on Housing Affordability was able to operate and the way that people were prepared to cooperate during the process. I know it has been a particularly difficult and busy time for many members of the Senate, and we were constantly juggling time frames and calendars to allow us to continue to operate. I want to thank the other members of the committee for allowing that to occur and for the respect that was shown to people’s requirements in that process. With Senator Hutchins, we were able to share the workload for the government in this process and we were able to meet with an amazing range of people across the country.

We had the privilege of working and meeting with people who felt that it was important to come and talk to the Senate about the issues of housing affordability. We heard from a whole range of people—people who were in the development area, people who were in the construction area, people who worked in community housing, people who were seeking some support as they were making decisions about what was the right way for them to proceed in this area, and finance providers. We are blessed—and I use the term ‘blessed’ quite deliberately—by the range of the academic researchers that we have in this country in every state. What made me particularly pleased was that the amount of research that is currently being done across the area shows that there are people with amazing knowledge and commitment and the intent that they will be able to use their knowledge, their academic ability and their research facilities to come up with solutions to the housing issues not only in Australia but also across the world, through the various research bodies. That gave us the confidence that, within our community, there are people prepared to work on this issue, people who are generous with their time and with their professional knowledge and who are also prepared to cooperate.

There are many recommendations, and I really encourage people to read the report. It is a big one. Do not be intimidated by the size. It looks a bit like a house brick, but do not be intimidated by the size or the number of recommendations—look at the value of the issue. One of the major recommendations was to look at further research. That is something that I am bringing to the attention of this chamber and the government. This is an area where the research must be maintained. The knowledge is there and the experience is there, and we need to develop genuine processes and guidance for us to move into the future.

Other people have mentioned the particular things that jumped out for them. I know Senator Siewert and other members of the committee were particularly taken with the area of community housing. I am sure that they will mention that, so I will not go into that area, though I think we will take the opportunity at other times in this place to continue our discussion of this issue. Whilst the original terms of reference looked particularly at the issues of housing, land and affordability, what came out of the range of evidence before us was the experience of people who were looking at addressing housing needs and housing availability in innovative ways and not always through the traditional models.

The model of people purchasing a house and staying in that home until they retired or moved on was mentioned consistently throughout the evidence. What we found through our evidence was that there are various models of appropriate housing. The term ‘appropriate’ came up across the board. It is not just about matching people with a house; it is actually about looking at people’s needs and their differences and coming up with appropriate models to ensure that people have dignity, respect and choice. This widens the discussion from just housing affordability. We need to ensure that people have options regarding the kind of housing that is available. That goes back to working with land developers and through the maze of different state and local government rules and regulations. A significant part of the report looks at the areas of regulation and cost. Looking at those costing areas was one of the key terms of reference for our group. When you do take the time to read the report, there is very valuable information there about how the costings are arrived at, the different trends in costings and what makes up the variation in housing affordability across our country.

No-one can run away from the point that it is more expensive to access appropriate housing now than it has been in the past. That is a given. But we cannot just let that lie without assessing exactly what those expenses are made up of and what alternatives there could be. We as a government can work effectively with the range of people who are interested in bringing their expertise to this discussion and break down those traditional models to ensure that people have choice. We need to have a look at that particularly valuable word ‘appropriate’. That is not a judgement. That is something that we can work to achieve. Your housing needs at different times in your life will vary, but the most important thing is that, in Australia, we as the government accept that people will need support to be able to make effective choices.

The Australian government has made a commitment, and it has been reinforced in the report. The budget announcement of $2.2 billion for new investments is a very valuable start to that process. We did look in some detail at the Housing Affordability Fund. I think the fact that the government has come up with a budget initiative called a Housing Affordability Fund indicates that there is a need that has been identified, and we will work towards that. What this Housing Affordability Fund—the $512 million—will do is get people involved in looking at a variety of ways that people can move into effective housing and how housing can be made genuinely affordable. ‘Affordable’ does not mean cheap; ‘affordable’ means something that you can make decisions about in your budget and be able to plan to achieve a housing solution.

The National Rental Affordability Scheme was not particularly part of our terms of reference, but we cannot have a discussion about housing in this country without looking at the issues around rental. For many people in Australia, rental housing will be their choice and it will be the best choice for them. I think sometimes there is a bit of a cultural cringe around that issue, and we talked about this idea in the committee at length. People who for various reasons have chosen to rent may well be made to feel then that they have somehow failed and that, despite their achievements through their work or providing help to their families, because they are in the rental market, they have not been successful. I think that is one of the myths we did explode in this process. There are people who will require affordable rental housing, and they range from people who have special needs all the way to people who make choices within their budget about the role of renting.

I am very pleased that our committee looked at the role of public and social housing. I understand that the terminology has now changed. What in my past life I had been led to believe was considered public housing is now talked about as social housing. But there is no doubt that there was agreement that there needs to be a major overhaul of our social housing, and that responsibility must be shared. This is an area where state governments, the federal government and, in some places, local governments will need to work together to ensure that social housing is well planned, effective consultation takes place with the people who are using it and there is a plan for the future. You do not make these plans on a 10-year basis; you make them for a lifetime. One of the things we will learn is how that is to happen.

There was significant discussion in the committee about the availability of land. I do not think anyone who was on the committee will ever look at land in the same way again. I know that now, as a result of these hearings, when I am moving through parts of Australia I am looking around at land costs and the cost of infrastructure and debating who will be able to put that land through most effectively. I hope I move through this stage of my career; nonetheless, I think it has been very valuable.

Ruth Webber (WA, Australian Labor Party) Share this | Link to this | Hansard source

Senator Webber interjecting—

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I know that Senator Webber and Senator Murray will be pleased that I had to learn a bit about economics in this process, and I am working through it. The need is something that we can all agree on. How, in fact, the land will be made available is something that we can move towards. The National Housing Supply Research Council will work to improve the evidence base for housing policy. As I said at the beginning of my short comments, this issue of evidence and research is something that we all agreed must be a key plank of where we go into the future. The whole area of first home saver accounts will come up in discussion in the future. (Time expired)

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

Housing is a basic human right and, as such, I very much enjoyed working on the Senate Select Committee on Housing Affordability in Australia and looking at the extremely important issue of barriers to home ownership. When the Senate passed the motion referring the issue of housing affordability to the committee, I think some of the senators on that committee thought it would just be about housing ownership—that is, housing affordability equated to housing ownership. What is very clear from this inquiry is that, in many cities across Australia, people are facing a crisis not only in housing ownership but also in private rental—particularly in my home state of Western Australia. We need to take a comprehensive and integrated approach to housing so that we address affordability for both home ownership and rental. We need to make sure that we have a balance there. The Greens are certainly concerned about this issue, and I have made some additional comments in relation to it in the committee’s report.

While the Greens support the report, we are concerned about the influence that the first home owners grant might have on the types of homes that are bought and how that would then impact on rental affordability. The Greens have put forward a further recommendation to look at the first home owners grant as well as means testing and capping the cost of a house on which you can apply for a first home owners grant.

The shining light that came out of this inquiry, which Senator Moore also referred to, is the work being done by the community housing sector. At every place the committee went to in Australia, we found excellent examples of the community housing sector finding innovative solutions to our housing crisis—in particular, with its focus on how to provide low-cost housing to the most disadvantaged. We found through the inquiry that the states, in particular, and the Commonwealth have not been investing to the degree necessary in what used to be called public housing—which is now called social housing. People who would normally have been accommodated in social housing are no longer being so accommodated, and they are facing a real crisis in finding reliable, appropriate and affordable accommodation.

Instead of looking at ownership, we need to look at security of tenure. The things that we put onto housing in terms of the social benefits that it provides—such as financial security, stability of social networks, engagement and connectivity to community—are actually supplied through security of tenure. Governments at local, state and federal levels need to take on board the concept of security of tenure and ensure that it is supplied to people who are trying to find accommodation. Community housing organisations are looking at investing in this area and want to ensure that there is security of tenure.

Another issue that came up during the hearing was credit and its availability. People are getting into trouble with credit because they will do anything to pay their home loan. While we are not yet seeing a huge number of home repossessions, community organisations that provide emergency relief report that there is a massive increase in the number of people seeking emergency relief and financial counselling. I think this is an indication that people are starting to move into financial crisis, but they are doing everything they can to keep paying their mortgage. This situation will require a review of access to credit and advice provided to people who want to access credit. People are putting their home loans on their credit cards and are building a massive amount of debt as a result. (Time expired)