Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

In speaking before the debate was adjourned yesterday, I ran through the significant issues that are facing Australians in relation to housing—those Australians who seek to buy and also those Australians in the private rental market. I emphasised in my earlier remarks that, despite the focus so frequently being on housing issues in capital cities and housing affordability in capital cities, in fact these issues are also critical in many of our regions. Certainly in my home state of New South Wales, the coastal regions—both the north coast and southern New South Wales—are subject to some very particular pressures, which I'm keenly aware of as a duty senator for both Cowper and Gilmore.

What's required is not a narrow series of tax integrity measures, worthy as the measures in this bill may be. What's actually required is a concerted, serious, nationally led effort to address housing affordability. If we are unable to pursue that, we will continue to see more and more Australians under very significant housing stress. It starts with home ownership and a recognition that the proportion of people who own their home has declined, from 42 per cent back in 1995 to just 31 per cent now, and the proportion of people who have a mortgage continues to climb. The proportion of people who are renting has increased over the last 20 years—it's up from 26 per cent to 31 per cent—and people are renting for longer and longer periods.

The way that housing is organised in Australia has changed dramatically in the last 20 years. It is essentially a consequence of housing prices becoming higher and higher, putting pressure on housing costs for those who rent and those who have bought. It's also putting pressure on homelessness. We continue to see unacceptably high rates of homelessness, and I made remarks earlier in the debate about the impact of homelessness in one city in New South Wales, in Coffs Harbour, and the very direct impacts that service providers in that city have reported to me.

In that context, it's been incredibly disappointing that the government have failed to act in any serious way about this, despite the fact we are now into their fifth year of what they like to call 'governing'. By contrast, Labor have taken this incredibly seriously; we have gone to election after election with a serious plan to restore housing affordability. We're not naive about how difficult that is. The inflation of housing prices in the private rental market and the residual and unaddressed demand for social housing means that there is a very, very big hill to climb to tackle this problem, but that shouldn't deter us from trying. In fact, it should mean that the measures we put in place are robust and proportionate to the scale of the challenge.

The No. 1 thing that we've put forward is to reform negative gearing and capital gains tax concessions. I've lost count of the number of times young people have approached me and told me of attending auction after auction after auction and walking out disappointed each time. They're going home on a Saturday afternoon and realising that yet again they have been outbid, not by someone who wants to live in the house but by someone who wants to acquire that home as an investment. Now there's nothing wrong with seeking to acquire a home as an investment, but the kicker is this: when you've got a first home buyer and an investor walking into an auction room, there is an enormous tax advantage allocated to the person who is investing. It's just not right. There is something very, very wrong about a tax system that privileges the investor over the young person, the young couple, perhaps a young family, seeking to buy a home to live in. There is something very, very wrong about that.

That's why we have proposed a reform to negative gearing. Of course, we will continue to allow negative gearing concessions to be applied to new housing. If there are tax concessions in the marketplace, they should be applied to make sure that new housing supply is brought on. But for tax concessions to continue to apply to investors to allow them to participate in this churn of properties in the private market, bidding up asset prices higher and higher and higher, is wrong. We think it's a waste of public money, we think it's unfair and we think it has very significant social consequences as fewer and fewer Australians are able to enter the housing market.

We also seek to limit direct borrowing by self-managed superannuation funds. We do that for a range of reasons, not least of which is our very great concern that limited recourse borrowing in self-managed superannuation funds presents very great risks to the individuals whose money is invested in those funds. Limited recourse borrowing in that sector has absolutely exploded. It was just $2½ billion in 2012. It's now $24 billion. That is an incredible rate of growth in self-managed super funds; it is an 860 per cent increase. It has real risks for the super system, but it creates real problems in the housing market because what it means is that these tax-advantaged vehicles are piling into the property market and crowding out first home buyers. Our intention is to place some limits on this. We will adopt the recommendation of the Financial System Inquiry—a recommendation that the government has chosen to ignore—and we will restore the prohibition on direct borrowing by superannuation funds. We do that because, unlike those on the other side, we actually think that this is a challenge that we need to take seriously.

Neither of those things is necessarily popular. It's always risky going to the public and saying, 'We intend to change taxation arrangements.' I've had many conversations with people who have come to me and said, 'This is not fair,' or, 'That's not fair', and we know there are many people who are presently taking advantage of some of these arrangements. But we have to face up to facts. These privileged arrangements for people who are already in possession of substantial assets are working to exclude people who are not from gaining assets themselves, and it's not right. We can't continue like this, and we are seeing the consequences in the falling numbers of young people who are able to buy their own home.

Of course, we also need to look at social housing. It's a very great shame that the government has abolished so many of the mechanisms that the previous Labor government had in place to consider the supply of housing overall. One of the things we are very interested in doing is looking at how we can increase investment in affordable housing, because the community housing sector has real potential to play a much greater role in providing affordable housing for people on a range of incomes at the lower end of the spectrum. But the trick here is ensuring that they're able to access finance. These are often organisations that are of a modest scale, and it's difficult for them to obtain finance even when they've got a very good business case for building new housing that can provide reasonable returns.

We will establish a bond aggregator that will assist community housing providers to access cheaper finance for new, affordable rental housing. The purpose of the bond aggregator is to be able to source funds from the wholesale market on behalf of the community housing providers. We'll do that by issuing bonds to private investors. This has been immensely successful in the United Kingdom. Their Housing Finance Corporation has lent to about 152 housing associations, and their goal is to deliver up to 30,000 new affordable rental homes.

We need substantial, meaningful intervention from government in the housing market. We need leadership, we need a minister for housing and we need a government with the courage to take on this most difficult challenge.

Mitch Fifield (Victoria, Liberal Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

As there are no other colleagues seeking the call, I will sum up and thank colleagues who have contributed to the debate on the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 and the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017.

As a government, we are committed to ensuring that home ownership is achievable for Australians and that they have access to secure, stable and affordable housing across the spectrum. The changes contained in these bills are part of the government's 2017-18 budget package to reduce pressure on housing affordability. Two of the measures will improve the integrity of Australia's tax system by better targeting tax deductions relating to residential investment properties. The other measure aims to increase the availability of foreign-owned residential real estate. The vacancy charge will support the government's foreign investment regime, which seeks to increase the number of houses available for Australians to live in. I commend these bills to the Senate.

Question agreed to.

Bills read a second time.