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

I speak on the bill before us, which is a taxation laws amendment bill relating to housing tax integrity. As has already been indicated, the Greens will be supporting this bill. But I want to take the opportunity to reflect further, for the information of the Senate and in particular on behalf of the people of Queensland, on some of the underlying issues that this bill, in only a very small part, seeks to address. I would remind the Senate that this legislation seeks to make a very small move to deal with one aspect of the tax laws relating to negatively geared property. It also implements a vacancy tax on properties owned by foreign investors. From the Greens' point of view, and from my point of view in Queensland, even a minor tightening up of negative gearing is a good thing. But this is very much a matter of tinkering at the edges of a massive problem that has been highlighted over and over again.

Not surprisingly, as somebody who came back into this chamber yesterday after a nearly 10-year break, I have had cause to reflect on some of the things that have changed and some of the things that seem very much the same. It was indeed over 10 years ago in this place—28 March 2007, to be precise—that I moved as a matter of urgency in this chamber the need to develop an affordable housing strategy, because of the massive crisis in housing affordability for people seeking to buy a home and people renting their own home. That was a crisis 10 years ago. It's worth noting that the issue for that matter of urgency was urgent 10 years ago, but other parties in the Senate voted against that proposal to develop an affordable housing strategy. If it was urgent 10 years ago, as it undoubtedly was, it is twice as urgent now, but the lack of action has been astonishing at both federal and state level.

The area of negative gearing in particular is one that has been flagged time and time again, so much so that the Hawke government in its very early days, back in the 1980s, recognised this and abolished it before caving in to the political power—the donations and the money—of the developer lobby. It passed this chamber at the time with the support of the Australian Democrats, but was then reversed by decision of the Labor government, who didn't have the courage to follow through on it. Ever since that time, that running sore has caused continuing, growing failure in the housing market in this country, because, under the Labor Party and the Liberal and National parties at state and federal level, housing policy has in effect been privatised. Perhaps alongside access to food, access to safe, secure, affordable stable housing has to be one of the most basic human rights every Australian could have, yet that has basically been contracted out to the market—a perfect case of profits being put before people.

One of the very last things I was part of when I was in this chamber last time around, in 2008, was a select committee inquiry set up by this Senate into affordable housing. It was chaired by Senator Marise Payne, who I'm pleased to see is still in this chamber in a more senior role with the current government, and produced a series of recommendations. My current colleague Senator Rachel Siewert was also part of that inquiry. That inquiry recommended that there needed to be a significant, proper review of the tax treatment of negative gearing, of the capital gains tax discount for people who are property investors and of capital gains tax exemptions for residential property, yet 10 years later we've had no action at federal level in regard to these taxation measures until this very small action just now.

At state government level in a number of states, under both Liberal and Labor governments, the massive impact of property developer donations and the property developer industry more broadly is notorious, so much so that the one area where we've had advancement in political donation reform has been the banning of political donations from property developers in New South Wales, and in my own state of Queensland just in the last month or so as a result of yet another scandal at local government level and of an inquiry into that by the Crime and Corruption Commission, which recommended banning donations from property developers to political parties at local government level. I would acknowledge that the state Labor government accepted that recommendation and sought to expand it to political parties at state level, not just for local government, but it then decided to call an early election before legislating to bring the ban into place.

This legislation—a minor incremental tightening of what let's not forget is a massive tax break for property investors in the area of negative gearing—is a small, welcome development. Negative gearing is clearly massively regressive. It costs tens of billions of dollars of foregone revenue that could otherwise be invested directly into affordable housing. This is the approach that the Greens propose, and it is the approach the Queensland Greens have explicitly proposed in this coming state election—that is, to put a massive direct investment of funds into building affordable housing for the public, for public and community housing, straight away. The money can be raised, it can be provided, particularly if you have state and federal governments working together.

Similarly, the vacancy tax that's proposed here on properties owned by foreign investors—it's a step forward of sorts. Certainly a vacancy tax is a great idea, but it should apply to all investor-owned properties, not just those from abroad. In effect, we've got this government trying to use this measure to blame somebody else again. They're trying to blame overseas investors for their own failures in housing. My own state of Queensland is facing a housing crisis. Hundreds of thousands of Queenslanders are homeless, are on the social housing waiting list, are facing severe mortgage stress or are completely locked out of the housing market altogether. People are having to pay significant rents under a tenancy law regime where they do not have security over their own home and can be forced to move at quite short notice, with no control over the place they call home. Meanwhile, the wealthy few are allowed to have their houses remain vacant. We have a situation where there are more vacant houses today in my own city of Brisbane than there are homeless people across the entire state of Queensland. Those homeless people don't really care if that vacant house is owned by a property investor who lives overseas or a property investor who lives next door. They care that the house is vacant at a time when we have 20,000 Queenslanders who are homeless and 29,000 people on the social housing waiting list.

Tightening up negative gearing, slightly, and introducing a constricted vacancy tax are good things as far as they go, but with this bill we see the government tinkering around the edges rather than taking meaningful action that will get to the systemic problems that have been embedded and allowed to grow worse and worse with the massive market failure in this most fundamental area of social policy. Tonight there will be tens of thousands of Queenslanders sleeping rough, camping in their cars, couch surfing—and they all deserve better. They deserve a government, they deserve politicians and they deserve political parties that are committed to putting people before profit.

To this end, the Queensland Greens have outlined a bold vision for the state election that's happening the weekend after this—voting is already happening in that election—to ensure every Queenslander has a home and that meaningfully addresses the failures of the housing market, which has failed for everybody except for property developers and investors. We need to make affordable housing and the provision of housing for everybody the Medicare of the 21st century. In the same way that we recognise we need to have governments and policies and legislation that ensures that all Queenslanders, all Australians, can access education, can access health care, we recognise they also should be able to access an affordable, safe, secure home. The Queensland Greens would see the establishment of a new Queensland housing trust dedicated to this goal. Within the first 10 years, that trust would invest $60 billion to finance the construction of 200,000 affordable homes and, based on the jobs figures of the Queensland Housing Strategy, would produce more than 16,000 jobs at the same time as producing affordable housing for so many Queenslanders to move into—those 29,000 people who are currently on the waiting list, many of them who have been on that list for years.

The Greens' Queensland housing trust would be supplemented with revenue from our proposed increases to mining royalties under our fair share plan and through the introduction of a tax on all deliberately vacant properties, not just on those who have investors from abroad. This would combine to provide a $10 billion boost during the first 10 years of construction. The Greens are proposing investment in beautiful, sustainable homes where people can live with dignity. I saw in the newspaper in my hometown of Brisbane, in The Sunday Mail, that apparently this was a source of horror: apparently providing beautiful, well-planned, affordable housing for everybody in Queensland was some East German Cold War nightmare. It might have something to do with the fact that it's not just the two political parties of the establishment who rely so much on the real estate industry and property developers; perhaps the corporate media's desperate reliance on money and advertising from the property industry and from the real estate industry might also be a reason they're so keen to be a mouthpiece for the Property Council.

The Greens are interested in being a voice for everyday Queenslanders, particularly those Queenslanders who are waiting for safe, secure and affordable housing, those who are having to choose between being able to pay the rent or put food on the table, and those who aren't sure whether they're going to be evicted from their home at the end of the year or whether they have long-term security of tenure in their homes. That is why the Greens have also proposed significant reforms to the tenancy laws in my home state of Queensland: to provide that security of tenure.

It takes me back to those times 10 years ago when I was in this chamber repeatedly asking the government of the day, and Senator Minchin who was the Leader of the Government in the Senate at the time—I think he was the Minister for Finance—about this issue of affordable housing. I asked what the federal government was going to do about it. Timeand time again his only answer—his answer No. 1—was to blame the states. That's a pretty standard approach for federal governments on most things. His second one was: 'Well, we keep interest rates low. That's the way you deliver affordable housing.' That has been shown to be economically illiterate. We have recently had the lowest interest rates in Australia year after year. It used to be a stick that the Liberal government used to beat the Labor Party and others over—that somehow there would always be lower interest rates under a Liberal government, as though this would deliver affordable housing. We've now had lower interest rates again for years and the housing affordability crisis is worse than ever.

The so-called economic logic behind the so-called good economic managers of the coalition government is once again shown to be a complete facade and as hollow as their words. It also showed a total lack of concern, or even probably awareness, of the huge number of Australians—the huge number of Queenslanders—who rent their own home. I am one of those people. Certainly, it's not something that anybody should feel the need to try and hide. It is something that many, many people do for all sorts of reasons, but it is a reality of the situation that our laws in all states to varying degrees are very much biased towards the property owner and against the private tenant. That is another reason why the Greens, both in this chamber at the federal level and in state parliaments around the country, have pushed for the strengthening of the rights of tenants under tenancy law. It's an example of why it is so important to have Greens in state parliaments: to be able to push the envelope, and to be able to push the other parties and whoever's in government at the time to go further and act to address the problems of the communities that elect us here.

We've just heard a number of wonderful, heartwarming speeches about Senator Lambie. It's a matter of some disappointment to me that, just as I've got here—unfortunately, at least for the moment—she's gone. One of the key themes of what people said about Senator Lambie was that, as just one person here, through her commitment to push on an issue strongly and consistently and with integrity, passion and belief she was able to get shift across pretty much the entire political spectrum. That is a classic example of how electing even just one Green into the Queensland parliament would massively shift the dynamic in that parliament. That would help to get these issues on the agenda, to get advances in tenancy law reform and to get governments to go back to having a direct responsibility for investing in providing affordable housing for the entire community, rather than, in effect, privatising it and handing it to the market, in an area where the market has failed.

Part of the reason the market has failed is not just that the rules have been rorted to benefit the property developers and the property industry, who provide so many big donations to the coffers of the two parties of the political establishment, but also that the market itself has been savagely distorted over many years by these federal tax measures. It's been distorted for decades because of negative gearing, and then that distortion got turbocharged at the end of last century by the capital gains tax discount—which, unfortunately, the Labor Party supported at the time to enable it to come into being, because it would not have got through this chamber without the support of the then Labor opposition. Those two tax measures, along with the capital gains tax exemption for residential property, have combined to create a massive market distortion, alongside a set of rules that are already basically biased towards the investor and towards the well-off.

It is time—in fact, it is well past time—that we had political parties and political representatives who will once again put forward credible, costed policies that will get quick action to address the housing affordability crisis. As I said at the start, it's a crisis that's been in place for a long period of time, and it's simply got worse and worse and worse.

The measures in this bill, whilst welcome, really do not go anywhere near the heart of the problem, even in regard to the distortion in our tax regime. We certainly are not seeing from any other political party at state level the sort of policy that the Greens are putting forward: a significant, major, direct, immediate investment in building housing infrastructure for the community, for the public, to address those massive housing waiting lists. It would get people off the streets, end homelessness and produce significant numbers of jobs as well as providing infrastructure for everybody. That is the vision the Greens have for the future. It's the vision the Greens are putting forward to the Queensland election. If we can get good legislative change at federal level alongside it, we really can make the housing affordability crisis a thing of the past.

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

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

Leave granted.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Senator Payne interjecting—

Senator Cash interjecting—

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

Senator Payne interjecting—

Senator Cash interjecting—

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

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

Scott Ryan (President, Special Minister of State) Share this | Link to this | Hansard source

Senator Steele-John, if you would like to commence your contribution you can be in continuation after question time.

Jordon Steele-John (WA, Australian Greens) Share this | Link to this | Hansard source

I would, Mr President. This is not my first speech. Mr President, I would like to congratulate you on the assumption of your role as President and wish you well in that role in the future.

I wish to speak this afternoon in relation to the housing crisis which is gripping our country and hope that I would maybe get to speak to it before—

Scott Ryan (President, Special Minister of State) Share this | Link to this | Hansard source

Order! Senator Steele-John, you will be in continuation when the debate resumes.

Debate interrupted.