Katy Gallagher (ACT, Australian Labor Party) Share this | Link to 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.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to 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.

Jane Hume (Victoria, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on the government measures to improve housing tax integrity, the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017. The Turnbull coalition government is committed to improving housing affordability for all Australians and ensuring that investors, both from Australia and from abroad, cannot abuse our tax system and claim tax deductions that are inappropriate or invalid. Indeed, this bill goes to the core of the government's budget announcements highlighting our commitment to reduce pressure on housing affordability. The Turnbull coalition government is committed to ensuring that all Australians have an opportunity to own an Australian home. These measures are designed to make that more accessible.

As many senators in this chamber and members in the other place have said before, there is something uniquely Australian about the idea and the ideal of home ownership. This is by no means a 21st century phenomenon. Considering the Australian housing affordability crisis is part of the lexicon of commentators, academics and politicians, I think it is worth bearing in mind the historical context of how we reached this place. I read recently something that suggested that Australians' obsession for home ownership began at the turn of the 20th century when Australian houses not only housed people but also fed them. While other countries would place their farmland just outside town centres, Australians grew their food in their backyards, and so saw the rise of the quarter-acre block, a truly Australian phenomenon. This was very significant during wartime in particular when there was rationing.

Postwar there was a new challenge, and that was the scourge of communism. During the Cold War home ownership was actually seen as a way to quell revolutionary tendencies. People with mortgages, jobs, families and responsibilities tend not to be the type of people who want to storm the Winter Palace. The waves of postwar migrants who came to Australia saw home ownership as an opportunity that wasn't available in Britain and Europe. By the mid-1970s home ownership in Australia had reached a high point of about 70 to 75 per cent. Financial deregulation in the 1980s changed things up again. It saw the levelling of the playing field between owner-occupiers and investors. Of course the system had been geared around those owner-occupiers. With 17 per cent interest rates and the recession we had to have in the early 1990s seared on people's brains, and on their bank balances in particular, and only a nascent compulsory retirement saving system at that stage, the moment property markets started to rise faster than inflation investors came back into the market, attracted by the idea of being landlords. So housing moved beyond becoming sort of a democratic ideal. Its value then was seen in dollars as well as in dreams.

These sorts of seismic shifts we have seen in the Australian housing market have brought us to where we are today. Home ownership is still very much part of the Australian dream, and the Turnbull government recognises this. It recognises that there is a part for the government to play in assisting Australians to realise this dream. I hate to ever admit that Senator Whish-Wilson is right about anything, but this time he in fact is. The measures detailed in these bills at hand are only one small part of the solution, but they are a very important part. They form a very important part of a greater suite of policy measures designed to ease the burden of housing affordability.

These measures also reinforce the Turnbull coalition government's commitment to removing significant abuses of the tax system. There are three significant measures in these bills that, for the benefit of the chamber, I would like to examine in more detail. While no-one on my side of politics would deny the right of businesses and individuals to legitimately claim on their tax return expenses incurred, it is always incumbent upon the government to ensure that the tax code adequately reflects the reasonable and legitimate degree to which these deductions are accessed. Inappropriate use of tax deductions is essentially tantamount to stealing from the public purse. We have said many times in this place that this is a government that realises the imperative of budget repair to this nation's future economic prosperity. We are committed to ensuring that all taxpayers contribute fairly. There are some deductions that are simply inappropriate and are currently being used to game the system. For instance, travel that is essentially a leisure trip shouldn't be considered wholly tax deductible simply on account of a single viewing of a potential investment property. To claim such a deduction is entirely inappropriate. The phrase used so often in this chamber is, 'It doesn't pass the pub test.' As such, the bills before the chamber tonight go straight to the heart of addressing such abuses of tax deductions for residential property investment.

The Australian Taxation Office has identified areas which constitute excessive and incorrect claims for travel expenses, and it now falls to the government to take a comprehensive and considered approach to clarifying and legislating rules around what actually constitutes excessive and incorrect claims, and to spell out to both current and potential residential real estate investors what is and is not an appropriate deduction. By employing a comprehensive approach, as demonstrated in this legislation, the government goes part of the way to meeting our budget night commitments to strengthen the residential investment property domain as well as ensure a fairer tax system for all.

From 1 July 2017, travel deductions for an individual investor with residential investment properties, including travel costs associated with inspecting and maintaining properties, will no longer be deductible. This denial of deductible status will limit the excessive and inappropriate claims and will send a very strong message that residential property investor status does not confer special privileges. The tax system is not there for people to pay for holidays by claiming travel costs as a rental expense. As the Assistant Minister to the Treasurer, the Hon. Michael Sukkar MP, outlined in his speech to the other place on 7 September this year:

The existing law allows deductions for travel relating to income produced or gained from residential investment properties. When a property is used for a mixed purpose, such as a holiday home and rental; or where the travel is for a mixed purpose, such as travelling to maintain an investment property and simultaneously go on a family holiday; travel expenses need to be split between income-producing and private purposes.

The problem here is there has been widespread abuse around excessive travel expense claims relating to residential investment properties.

As a result of these changes, travel costs for individual investors inspecting and maintaining residential investment properties will no longer be deductible.

For the sake of clarity, it's important to note that the government understands that third parties, such as real estate agents, may inevitably from time to time need to provide property management services, and of course these activities will remain deductible expenses. These measures are in no way an assault on the nature of our tax deduction expenses, which allows for a reasonable deduction of expenses incurred in earning an assessable income.

Other inappropriate deductions also fall within the net of this legislation. Depreciation is another area of ambiguity that is potentially open to abuse. The tax system currently creates opportunities for plant and equipment to be depreciated by not one but multiple owners of a property, in excess of their actual value. Both previous and subsequent owners of a property can make deductions on the same pieces of plant and equipment. According to the Australian Taxation Office, abuses of residential investment tax deductions for depreciation are very widespread. The legislation before the chamber tonight specifically targets plant and equipment depreciation deductions for investors in residential properties, limiting depreciation claims only to assets that have not been previously used—that is, assets not previously claimed upon by the previous purchaser.

Depreciation is a very important accounting concept for residential investors, and, claimed appropriately, it recognises the allocation of cost of an asset over its useful life. But, in residential property investment, we must consider the use of such deductions on such things as dishwashers or air-conditioning systems, claimed not once to their actual value but well in excess of the asset's actual value, by multiple successive owners of the same property. So you can see how the changes proposed to deal with this interpretation of successive ownership and depreciation will actually improve the integrity of the tax system. Importantly, too, however—and I think this is an extremely salient issue—this means that investors who have purchased a newly-built residential investment property are not, in fact, disadvantaged when no other person has claimed a depreciation deduction.

So, while it may seem on face value to be a purely administrative amendment, I cannot overemphasise the importance of these measures. The government knows that part of the equation to ease the burden of housing affordability is to encourage investment and growth in the market for new residential property—not existing but new residential property. The measures specified in this bill ensure that deductions for assets in residential investment properties are consistently and fairly treated.

The other major component of these measures is the so-called ghost tax, where a penalty is raised on foreign owners of properties who leave their properties vacant. I had no idea how common this was, but apparently 11.2 per cent of houses on census night were recorded as unoccupied. That is one in 10 properties. I find that quite extraordinary. That's more than one million dwellings. In a period of apparent housing crisis, such a statistic is, indeed, startling. So, once again, the Turnbull coalition government has listened to public concerns and is taking appropriate action. This year's budget papers announced:

To discourage foreign investors from buying residential properties and leaving these vacant, the Government will now charge foreign owners of residential properties an annual charge if the property is not occupied or available to rent for at least six months in each year.

…   …   …

Where a foreign-owned residential property is left vacant for more than six months in a year, a charge will be levied on the foreign owner equivalent to the foreign investment application fee which was paid at the time of application.

The new charge builds on the Government's existing foreign investment regime which seeks to increase the number of houses available for Australians to live in. The charge provides a financial incentive for the foreign owner to make their property available on the rental market if they do not intend to reside there.

This regime, the ghost tax, will be ably administered by the ATO, the Australian Taxation Office, and is expected not only to increase the number of homes available to Australians who wish to rent but also to generate revenue of over $20 million over the forward estimates. That's a very significant contribution to budget repair. This is clearly a supply-side measure and it will also effectively increase the available housing stock.

The Turnbull coalition government understands Australia's housing affordability issues. It has deep dived into this issue, and this is just one component of a suite of measures. Housing affordability is not something that has occurred overnight. It's occurred through a series of economic phenomenon and political decisions, many of which have been fundamental to the prosperity of our nation over many, many decades, but some have had unintended consequences. Australia's housing affordability issues are not something that can be fixed with easy answers, a glib response or ill-considered or populist policy that will inevitably create a cure that is potentially far worse than the symptoms. Also, it is not a universal phenomenon; it is something that occurs far more in our capital cities and, in particular, in Sydney and in Melbourne. It is not a nationwide issue. No-one has yet articulated what the objective of a successful housing affordability policy looks like. There is a reason for this. The reason for this is that the answer is different for everyone on the continuum—and the continuum is what is so important here. The continuum starts with homelessness, and it moves beyond homelessness to social housing, beyond social housing to first home buyers, on to investors, to downsizers and eventually those moving into aged care. This is the spectrum of housing affordability. A successful housing affordability solution looks different to those in Sydney and Melbourne than to those in Adelaide or Hobart, and it looks very different to those in Shepparton or Moree. While the answer is very different to everyone, it remains an important issue to thousands of Australians.

The government is targeting the whole of the housing spectrum. As the federal Treasurer, the Hon. Scott Morrison, said in his budget address in May:

There are no silver bullets to make housing more affordable. But by adopting a comprehensive approach, by working together, by understanding the spectrum of housing needs, we can make a difference.

There is so much more to this issue than just a knee-jerk reaction on capital gains tax or negative gearing. There is so much more than just dealing with homelessness or just dealing with social housing or just dealing with first home buyers and the demand side of the equation. There are no silver bullets. Most importantly, there is no city-centric solution; it has to be a solution that covers the regional areas as well and covers things like decentralisation of services and infrastructure investment. The measures that have been outlined in the legislation tonight go some way to addressing the issue of housing affordability. It is one part of a much broader suite of policy objectives.

I can only implore my colleagues opposite and on the crossbench—and I was very pleased to hear Senator Whish-Wilson's support for these measures tonight—to support the legislation. Housing accessibility and affordability, as well as a fairer tax system, are truly important matters for this chamber to consider. It is not just one issue—not just first home buyers, not just homelessness, not just social housing, not just downsizing. It's so important to address the whole spectrum of housing affordability issues. I urge my colleagues opposite to consider this legislation seriously and support these changes that have been put to the chamber tonight.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I must say, having to implore those opposite to reach a saving of $16.3 million beggars belief. This legislation, the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017, is an absolutely minuscule contribution to dealing with any housing issue. It goes nowhere near dealing with the problems that young families have. It goes nowhere near dealing with the problem of first home buyers having to front up against wealthy investors. It goes nowhere near that. Labor will support this, but it's more out of pity for a government that just does not get it, a government that does not understand the issues facing young people trying to get into a home, never mind those at the bottom of the housing market, who can't access social housing, who can't access public housing, who are left on the street every night in this country—105,000 at the last census. We will see far more when the most recent census announces the homeless figures in this country. Senator Hume tries to paint this as a core aspect of the budget—$16.3 million over the forward estimates. What would that buy? It might buy a couple of houses in the eastern suburbs of Sydney. That's about all. It's not going to help families in this country.

What Labor is proposing is to deal with the fundamental issue of disadvantage: capital gains tax and negative gearing allowing wealthy investors to outbid young couples trying to buy their first home in this country. What we are proposing would deliver $32.1 billion over 10 years and $565 million over the forward estimates. That is $32.1 billion currently going to wealthy investors predominantly to outbid young people trying to get into their first home. That's where Labor sees the core issues. Senator Hume stands here and talks about the coalition being committed to improving housing affordability. 'This is the core of the budget plan on housing affordability,' says Senator Hume—$16.3 million, an absolute pittance. For any senator to get up here and say that this is a really good thing on housing affordability shows just how out of touch the Turnbull government is, not only on housing affordability but on living standards for the working people of this country. To give us a little lecture about the quarter acre block—I don't think there are many quarter acre blocks left around where I live, in the lower Blue Mountains, or out in the western suburbs of Sydney. They're all getting chopped up by investors to make more money for builders, more money for investors and more money for those that fund the coalition's re-election campaigns.

Senator Hume talked about the scourge of communism—what a load of rot we have just heard! If this government were really interested in dealing with housing affordability, it would adopt the policy that we have said the alternate government—I think the next government—will implement: negative gearing and capital gains tax changes. Senator Hume talked about this being an important part of the suite of policy measures. What did the experts on this in the Grattan Institute say about the coalition's housing policies? They said that you would need an electron microscope to see any difference from all of their housing policies combined, including this one on housing affordability. The government just doesn't get it; it just doesn't understand. And the reason that they are so supportive of continuing the rort that is negative gearing and capital gains tax is that most of the money goes to Liberal electorates—to wealthy professionals and high-end income earners. That's where this money goes to. I say, and Labor says, that that $32.1 billion is better off in government funds, being spent on the issues that are important for the working class in this country, instead of continuing the inequality in this country that this type of policy delivers, the policy supported by the coalition.

Senator Hume talked about the imperative of budget repair. Well, the budget has gone out of control under this mob. They have not improved the budget one iota. They just live in fantasy land on the other side of this chamber. The Turnbull government are so out of touch, so arrogant, so unconcerned about the real issues that face Australians. They say that they're sending a strong message that people can't pay for their holidays by this change that they're proposing. We agree. But don't stand here and say that $16.3 million over the forward estimates is some fantastic gain, some fantastic fix for those who can't afford to ever think about buying a home in this country. She spoke about the ATO. One of the first things that the government did was cut the funding for the ATO. They cut the funding for the tax office so that their wealthy mates who put the money into their election coffers can continue to rip the tax system off in this country. What a pathetic rabble of a government this lot are. Senator Hume said that they understand the issues. Well, if this is how they understand the issues—and this is what she calls deep diving in to fix the problem—this is just complete nonsense. And they said they're going to target the whole continuum, meaning that they're going to deal with public housing, social housing, rent, private rentals, helping people to buy a home. This will not make a mark on that.

We think that this is appropriate to do this, but, as I've said, we do it more out of pity for a government that's completely lost its way. We will support these. But, if you really want to know what's going on, go out and talk to young people that are fronting up at auctions in the majority of the major cities around this country and see what they would think of this. My view is they would not think much of it at all. Go out and talk to the young couples that are moving down the housing chain for rentals so that they can try and afford to put a deposit together. As they move down that housing continuum, as Senator Hume talks about, they are pushing the working poor and pushing social security recipients out of housing at the bottom and onto the streets. That's what is happening under the government—a government that in the budget made all these proposals about how they were going to reconstitute the national housing agreement. They renamed it, they have met with the states and they are delivering nothing on reform. We're nearly at the end of the year. From May till now, they have not delivered one agreement with the states on how to deal with housing affordability or the crisis that is there for young people and many older people getting into housing.

What did they do? In the first budget, supported by every one of the Liberals that are over there who were in the chamber at the time of the first Liberal budget, they took $44 million a year out of support for emergency housing for disadvantaged people. They took that money out and made sure that women threatened with domestic violence would get less access to support, comfort and security. That was their first thing. We didn't hear Senator Hume talk about that. We didn't hear her talk about that first Liberal budget. We didn't hear her say anything about the austerity budget that was going to rip away security and support from some of the poorest people in this country but hand over $65 billion in tax cuts to multinational corporations and businesses, including the banks, which are making massive profits and sacking thousands of workers. Did we hear anything about that from Senator Hume? Not a word.

Let me tell you about the other area that many working people in this country depend on to ever be able to access their own home or even to be able to afford rental accommodation—the growth area for accommodation in this country—and that is access to penalty rates. I needed my penalty rates to be able to buy my first house. If I hadn't had access to penalty rates, I would never ever have been able to get on the housing ladder. My penalty rates and my capacity to have a decent job with a decent union that provided decent rights on the job gave me the capacity to access the first house that I ever bought. But this mob want to cut penalty rates. They support cuts to the penalty rates of 700,000 Australian workers, most of whom are the working poor, the real battlers, and those that need their penalty rates to actually put food on the table and a roof over their heads. We never heard anything about that from Senator Hume.

If we're really talking about doing something in relation to housing and homelessness and housing affordability, we are saying, 'Yes, we'll cop this—this miniscule proposition. We'll cop it. We'll support it.' But what we are saying is that you actually need to do something about negative gearing and capital gains tax. You also need to do more than mouth off, which is basically what the government have done about doing anything more substantive. What we are saying is that we will deal with negative gearing, we will deal with capital gains tax and we will also make sure that there is a plan in place to try to increase housing stock in this country. The Productivity Commission recently came out with a report that said that one of the ways that you can deal with in regard to housing is to give people in public housing a choice. We have a situation where 4.4 per cent of housing in this country is public housing and social housing. How can anyone ever get choice if that's the level of public housing and social housing that we have in this country? It's a nonsense.

In Glasgow, where I come from, I was brought up in what were called the prefabs. In Scotland, they were basically big caravans without wheels. That was the transitional housing after the war until a major government investment went into housing. They were stinking hot in the summer—and it does happen in Scotland; now and again you it gets hot—and freezing cold in the winter, which was most of the time. I can tell you that that is not the way forward. We need decent housing. We need environmentally sustainable housing. We need to do what the UK government's doing. It is a conservative government that is looking at how it can increase the stock of public and social housing. It has undertaken what's called the Farmer review. The Farmer review is looking at how they can actually create an industry in the UK with fabricated off-site homes of high quality and high environmental sustainability, create jobs and make it cheaper to build quality homes and erect them around the country. They need to look at these issues rather than trying to come in here and say that $16.3 million over the forward estimates is a great example of the coalition doing something about housing. It is absolute nonsense.

The coalition refuse to reform negative gearing and capital gains tax. They closed the National Rental Affordability Scheme that provided 38,000 new affordable housing units and was on track to achieve its target of 50,000. They scrapped the first home saver accounts scheme, which was helping people save for their first home, and they're trying to put a copycat proposal in this non-delivery of their budget proposals. They closed their ears and their eyes to the growing evidence of a housing affordability crisis by abolishing the National Housing Supply Council, and the Prime Minister's Council on Homelessness. That is their record on the other side with housing and homelessness—absolutely pathetic: a pathetic government, a pathetic budget, a pathetic response to housing and homelessness. They cut $44 million a year out of capital funding for homelessness services. That meant that young kids, coming out of home care, ended up on the streets, and that is why the NGOs are telling me that one of the key issues that has to be dealt with is young people coming out of home care, especially young women, ending up on the street and being groomed by some of the hard-heads out there. It's absolutely ridiculous. They cut out $44 million a year. Older women who end up with no superannuation, lose their husband and have nowhere to live have nowhere to go on housing and homelessness under this government.

The speeches those opposite were making a couple of years ago suggested that this was not a federal government responsibility; it was the states' responsibility. But Labor sees putting a roof over people's head as a fundamental responsibility of a federal government. That's why we will have a housing minister, that's why we will have someone there dealing with the states in a proper way. That's why we will reform the housing agreement nationally and why we will be saying to state governments and local governments that inclusionary zoning should be considered. If the business community is going to make squillions out of housing, some of it must go back into housing for the poorer people in this country. This mob do not have a clue. They think that two or three or four per cent inclusionary zoning will fix it. They think a bond aggregator without further government support will fix it. They have rocks in their head, they are an absolute rabble and they just don't get it.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

In a way, the legislation before us today converts our income tax into a turnover tax and our capital gains tax into a wealth tax. It is also set to extract about $800 million extra from taxpayers over the next four years. It's the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017. As the name suggests, the government is moving towards a turnover tax and a wealth tax for those individuals who do the reprehensible act of investing in housing. Under standard income tax rules, travel to and from a residential property investment that is owned for the purpose of generating assessable income is deductible. But it won't be once this bill passes. By denying deductions, this bill is effectively making people pay tax on their turnover instead of their income. Turnover taxes are a terrible idea, even worse than income taxation, but the government is going ahead regardless.

Travel costs to generate assessable income may also form part of the cost base of the residential property investment under standard capital gains tax rules. This ensures that capital gains tax is on the gains, not the entire value of the capital. But once this bill passes it will no longer be possible to include these travel costs in the cost base, so for the affected people capital gains tax will move more towards a tax on the entire capital—in other words, a wealth tax. Wealth taxes are a terrible idea, even worse than capital gains taxation, but the government is going ahead regardless. But wait, there's more. Under standard income tax rules the decline in the value of previously used depreciating assets used to earn assessable income is deductible, but, under this bill, if you are earning assessable income by investing in residential property, you will now be denied these deductions. This is a further step away from income taxation towards a turnover tax. All of this will shift investment away from residential property, and rents will go up as a result. This is pure folly. The government's willingness to remove standard tax features just to attack individual investors in residential property begs the question: what is stopping the government from going completely anti investment and completely anti rental housing and scrapping negative gearing for investment in residential property?

This bill demonstrates, once again, that the coalition and Labor are cut from the same cloth, and the small policy differences they maintain are mostly for show. In any case, housing affordability is a state issue. Labor or Liberal, the Commonwealth government should not be pretending it has any role to play.

Before I finish, don't let me forget that this teeming chamber of reasoned debate and insight is also debating a second bill, the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017. This bill introduces a tax on foreign owners of residential real estate whenever the property is not occupied or genuinely available for rent for six months in a year. It is an example of government micromanagement and intrusion—telling property owners what do with the property they own. Protection of property rights is the most important function of any government. Yet, here we have this government seriously eroding them. Even worse, much of the revenue generated from this new tax will be eaten up by the cost of administering the tax. With nonsense policies like this we're on the road to Venezuela, getting closer with each sitting day of parliament. I condemn these bills to this near empty chamber.

Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

You would be surprised if I didn't say it was an absolute delight to rise tonight 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 be following Senator Leyonhjelm. I'm not sure I share his negative outlook on this legislation; I tend to think these are positive steps in the right direction. I'm not sure I would agree, either, with Senator Cameron's characterisation of Senator Hume's contribution: that this bill was the be-all and end-all of dealing with the issue of housing affordability—which, of course, is a significant issue. No-one in this place can deny it. No-one in this place has to struggle with it either, frankly. All of us are on in excess of $200,000 a year, and I hope the seven people listening across the country don't forget that fact: anyone who has made a contribution to this debate is doing very well out of the taxpayer, thank you very much. So for us to sit here and lecture one another on housing affordability is a bit rich, I suppose. But those of us who do get out into the community and listen to those we seek to represent would, hopefully, have an understanding of the problems we face when it comes to ensuring that we have a supply of affordable housing that is accessible to those in the community who need it, in all parts of the country.

It's not a simple issue. It's not one that can be dealt with by one pull of a policy lever and then hopefully it's all okay tomorrow. I don't think it is as simple as has been made out by previous contributions in this debate, and it's something that we need to take very seriously. In reflecting on what I was going to say tonight in my contribution, I had a bit of a look at the previous considerations of Senate committees on the particular issue of housing affordability. In the last parliament, the Economics References Committee considered this very issue. It published a report entitled Out of reach? The Australian housing affordability challenge, which aptly set out some of the challenges that are faced. That report states:

… no single measure can capture the diversity of Australian experiences of housing affordability … most indicators point toward a deterioration of affordability in recent decades. This decline is keenly felt by a broad array of people, including people wanting to become homeowners, renters and people living in community and public housing. Homelessness, meanwhile, is a tremendously complex problem, and it would be reductive to suggest it is simply a corollary of housing affordability and nothing more besides. Nonetheless … poor housing affordability creates pressures throughout the housing system …

I think that's an important point for us to take on board as we consider what is, as this report states, a very complex issue. To suggest it is simple, to suggest that we can just fix it by tweaking one set of tax arrangements or creating an incentive for affordable housing to the exclusion of any other policy measure, is naive, to be frank. So I think the report in that sense is a very helpful one to consider before moving to exactly what's being talked about in the bills we are considering today.

The Treasury Laws Amendment (Housing Tax Integrity) Bill 2017, the principal bill that we are considering tonight, at its heart, is about housing affordability. In the Australian way of life, having access to housing and housing that you can afford is fundamental to wellbeing. To be able to provide shelter for your family and for yourself, to ensure good health, and to be warm in winter and cool in summer and the like is so incredibly important. Having access to those things, either by way of home ownership or being a renter, is so incredibly important.

Home ownership, or having access to reasonable standards of accommodation at an affordable level, is a driver of social and economic opportunities in this country. We all know it. I heard Senator Cameron in his contribution —and I'm sure I'll refer to this a little later on—refer to getting onto the housing ladder when he was talking about the need for penalty rates. When he bought his first home, he needed that money to afford that property. That's the reality of home ownership in this country and has been for time immemorial. People buy homes, and—hopefully, for anyone who does so—they increase in value. That is what we want so that that increased value can be translated into assets that we can realise the value of and we can invest in something else—a smaller home, a holiday, things like that. That's what we do with home ownership. We save for the future to pay for our kids' education, to pay for the things we need in life. It is about those social and economic opportunities, which are really a part of the Australian dream that we often talk about in this place.

The need to deal with the rising cost of housing across the country has long been talked about. My home state of Tasmania, particularly the southern half, with the city of Hobart, is no exemption. If I look at some of the recent examples of housing prices in the city of Hobart, various real estate agents, including representatives of the Real Estate Institute of Tasmania, have talked about the fact that, although a decade or even five years ago, houses rarely reached the $1 million or $1.5 million mark, it's now quite common to see houses selling for that price or well in excess of it. In recent years, one house in our little city of Hobart, which has a population not far in excess of 250,000, sold for $6½ million and another one for $8 million. They are record-breaking prices and they are certainly outliers, but it indicates that, when the market is hot, the prices go up. That has a flow-on to the other parts of the market which are more within the reach of most of the people that occupy this chamber.

In her contribution a little earlier, Senator Hume did talk about the government's plan to try and tackle this matter, and the bills that we have before us today are just part of that. It's not the whole thing, as Senator Cameron tried to characterise it as; it is just part of it. We also need to look at increasing the supply of affordable housing, which is something that many states and territories, if not all of them, are doing ardently. State and territory governments, who have responsibility for social housing and for many of the policies that relate to the supply of housing in each of their jurisdictions, are looking after this policy as well.

I know it was acknowledged by previous speakers in this debate that it is a matter that comes up at ministers meetings or COAG meetings. We can't ignore that. To assume in this debate that housing affordability is purely the domain of the federal government is naive and just plain wrong. It is a priority for this government. I'm sure it is also a priority for all Australians—particularly for those of us who have children who I hope will be growing up in this country—to be able to access affordable housing, to make sure that their kids can live, as I referred to before, the Australian dream, and to have a home with a yard and whatever else they need to raise their kids. That's what we need to be able to provide for.

The bill itself, as has been referred to by previous contributors in this debate, has a couple of measures that will go some way to dealing with this issue. First of all it will limit foreign ownership in new developments—in other words, there will effectively be a cap. We will see foreign ownership in new developments being limited through a 50 per cent cap on the number of properties that can be sold to foreign investors through developer pre-approvals and as a condition on New Dwelling Exemption Certificates for new property developments where an application was made after budget night. We are talking about reserving the supply of new houses, with at least half the level being made available to local buyers, preventing them going, as seems to be the popular belief for the most part, to foreign investors.

There is also, as I heard Senator Hume talking about earlier on, the penalty for properties being left vacant. I think that is an important step in addressing the matter relating to the cost of rentals in this country. An annual charge of at least $5,000 on foreign owners of residential real estate will be applied where Australian residential property is not occupied or genuinely available on the rental market for at least six months of the year. The measure is designed to free up more dwellings for Australian renters, and this measure builds on the government's existing foreign investment regime by seeking to increase the number of houses available for Australians to live in. These are just two parts of the bill, with the other one being the tightening of tax rules to reduce the use of the current taxation arrangements to the advantage of some property owners. This will ensure that we actually receive revenue on these investments, which can then go towards investment in essential services across this country.

I will just briefly go back to the Tasmanian experience and look at some recent reports from the last 12 months—the year of 2017—about what's been going on in Tasmania. I think we'd all have to agree that Tasmania is probably one of the more affordable states when it comes to housing, notwithstanding the two examples I gave earlier on. Saul Eslake, who is a respected economist that some of you may be familiar with, has commentated on this issue. He said on 24 June 2017 that 'Tasmania is now getting net migration from the mainland after a period of out-migration' and pointed to the issue of housing affordability as one of the things that is attracting people to Tasmania. Obviously people will make decisions about where they live and the occupations they pursue based on how affordable buying a house is.

Real estate agents in Tasmania are increasingly noticing that young families are moving back, drawn by affordable housing. 'It's happening more over the last 12 months', said Ant Manton from Ray White real estate in Tasmania. He pointed to the markets in Melbourne and Sydney as being factors that are driving people out of these mainland major cities to places like Tasmania, which I think is a great thing. That, in turn, has a flow-on effect for places like the state of Tasmania. Let's reflect on home prices in Tasmania. In Hobart, for instance, home prices jumped 5.8 per cent to the year ending 31 May of this year to a median of $350,000, while Sydney and Melbourne each added more than 11 per cent, with medians of $872,300 and $665,000 respectively, as reported by CoreLogic. These are significant differences in the affordability of housing in this country.

It takes me to another point I want to make in relation to this debate—that is, reflecting on the difference in housing prices between major metro cities on the mainland and the prices we have in Tasmania. There has been a lot of discussion about trying to attract people to these regional cities and regional communities. Part of that, of course, is the decentralisation process being undertaken. It was being led by the former senator and former minister—a very good minister too—Fiona Nash. It is about getting Public Service agencies out of Canberra and into our regional communities. I would think that, for many of the people who work in these agencies, it would be a great thing to be able to unlock the value of your home here in Canberra, Sydney or Melbourne and head out to somewhere beautiful like Hobart and invest probably one-fifth of the price and snare yourself a five-bedroom mansion down on the waterfront somewhere.

Reflecting further on some of the experiences in Tasmania more recently: on 3 November it was reported that Tasmania is breaking records with regard to the housing market. It passed $4 billion for one year of sales in the state. The interesting thing about this article, which appeared on news.com.au and also in The Mercury newspaper in Hobart, was that first home buyers purchased 220 properties, at the median price of $275,000, and they remain steady at 13 per cent of the market. There were only 13 sales to foreign investors, blowing out of the water this notion that all of our properties are being snapped up by foreign investors. The majority of homes sold to interstate buyers were to interstate buyers moving to Tasmania to live, not to investors who wanted to buy a home to rent out and to prop up their bank balances, as those opposite would claim. Vacancy rates in the rental market continue to tighten, with Hobart now at historical lows below two per cent. Of course, that does lead to the problem we've talked about previously—the affordability of rental properties in Tasmania.

I do just want to briefly touch on what the Tasmanian government is doing with regard to housing affordability. Every state and territory does have its own housing affordability strategy and programs that address this issue. In Tasmania, their strategy is a significant one. It is a 10-year strategy which will improve access in all sectors of the housing market. It runs from 2015—so it has been going for two years—until 2025. It's supported by an action plan which provides $73½ million over a number of years. It will see 1,600 vulnerable Tasmanian households housed. It is supported by the construction of 900 new homes. It is a significant number for a small state the size of Tasmania. Of course, that policy, that action plan and that strategy have all been developed after exhaustive consultation with stakeholders, social services, peak groups and those who actually need the services as well. I commend the Tasmanian government for the various initiatives they have, including the home-share initiative, which will develop 250 homes for people on low to moderate incomes. The Streets Ahead incentive program is a deposit incentive program, offering $12,000 to people looking to purchase Tasmanian dwellings. There are supply initiatives where we are seeing nearly 30 homes developed by private developers. And there are community housing stock leverage programs which will see 172 new homes in addition to 31 upgraded homes. That's just the tip of the iceberg in the little old state of Tasmania.

I will reflect briefly on the contributions made by a couple of others in this debate. I was listening to what both Senator Gallagher and Senator Cameron had to say about the issue of housing affordability. It seems to be that it's all care and no responsibility in opposition. I heard Senator Gallagher say that this government has had five years to fix it and, 'You've just got to do it.' The last time I checked, those in opposition have a responsibility to provide serious policies that would help to address issues that this nation faces. I didn't hear one utterance from either Senator Gallagher or Senator Cameron on how they would deal with these issues. All they want to do is stand on the sidelines and throw stones. They don't actually want to be constructive. They don't want to talk about ways and measures that might tangibly and properly improve the situation we face as a country when it comes to housing affordability. They, we can't forget, are the aspiring government. They are the people who want to be on this side of the chamber, and they owe it to the Australian people to provide and explain their policies and be subject to the scrutiny that the government is.

One thing that we did hear was mention of a minister for housing. I'm not a firm believer in creating new bureaucracies or new ministries just to solve a problem—in fact, quite the opposite. The last time I checked, if you went out onto the main street of any of the towns I represent, the creation of a new political position or a new ministry would not inspire anyone, and it certainly won't fix the problems that our country faces. The centrepiece for the Labor policy seems to be the creation of this new minister for housing. I look forward to seeing what this new minister for housing would ever do if, one day, this mob ever got into government.

I go back to my starting point: the position of privilege that most of the people in this chamber occupy. All of us are on a good income and many of us in this place own multiple properties. So it is interesting to listen to Senator Cameron talk about the working-class individuals, the people who really struggle. I don't know how many homes Senator Cameron owns. I know he has one in New South Wales and a very, very nice one in Hobart.

Louise Pratt (WA, Australian Labor Party, Shadow Parliamentary Secretary for the Environment, Climate Change and Water) Share this | Link to this | Hansard source

I think that was two.

Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Two; he may have more. In fact, on his register of interests entry I think there are more, but I'm not going to go into that now.

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

Oh!

Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

And I don't know how many you have, Senator Dastyari. But the point is this: it's great to hear people talk about how important it is to solve this issue and how awful those who haven't solved it are, but, when you consider the position of privilege we all live in, it's a bit rich to just throw stones the way Senator Cameron has been. As I said, I didn't hear anything by way of an alternative, other than the creation of a new portfolio for the ministry of housing, which I think is ridiculous, although I did have a look at Labor's Positive plan to help housing affordability and I did see this:

… Labor has been working and acting. In March 2015 Labor held a Housing Affordability Roundtable.

I love a good roundtable. It's good to talk. It's good to get through the issues. But it does matter where the rubber hits the road and where action actually comes to the fore and, again, I'm not seeing any of that.

I don't think there's much more to say other than I looked at the Greens' policy, The Greens housing plan: everyone needs a home, which says it is going to generate $51 billion of economic returns to the nation. It is two pages long and there is not much in it. This is an important issue and it is disappointing to hear the lack of substance from those on the other side of the chamber. I commend the bills to the House.

Debate adjourned.