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FOR – Matters of Urgency — Housing

Claire Chandler

The Senate will now consider the proposal from Senator David Pocock, which has also been circulated and is shown on the Dynamic Red. Is consideration of the proposal supported?

More than the number of senators required by the standing orders having risen in their places—

With the concurrence of the Senate, the clerks will set the clock in line with the informal arrangements made by the whips.

David Pocock

I move:

That, in the opinion of the Senate, the following is a matter of urgency:

The need for more government action to tackle the root causes of housing unaffordability, including capital gains tax discounts and unlimited negative gearing on investment properties, planning and net migration.

We rightly hear much talk in this place about cost of living, with Australians across the country feeling the pinch. Heading into Christmas, they're worried about paying the rent or paying the mortgage, let alone what they're going to do with their loved ones over the Christmas and New Year festive season. The thing that we don't hear enough about, in my opinion, is the link between housing and cost of living.

We've got to start having a more frank and open conversation about housing in this country. I think we need to go back to the big picture: what is housing for? Is housing a human right that everyone in our community should be able to afford? Everyone should be able to have a safe roof over their head, which then enables other things, like being able to have a stable job and family life, attend school and all those things. Or is housing primarily an investment vehicle? Yes, some people can afford to buy a home, but we've set our tax system up to incentivise investment in housing to build wealth. Clearly, if you look at the system now, it's not working for Australians, but it's working as designed. It is working exactly as designed—to incentivise investment in property, above treating housing as something that everyone in our communities should be able to afford.

What I'm hearing from people, even people who've made very good money out of the housing market, is that they have grave concerns about the direction that we're heading in. They may have made money, but they're now looking at their kids or grandkids: what are the prospects for them? I think we're facing a generation of young people who are rightly angry about the situation and who are demanding that people in this place, who can change this, do something now. We look at house prices now that are seven to eight times household incomes. From the fifties to the eighties, they were closer to three or four times. Monthly repayments on a $750,000 mortgage have now increased by over $1,800 since interest rates began to rise. We see that, as housing prices have gone up and up, more and more people are renting, and for longer—almost one-third of the population. This is by design. We need to have the discussion around tax in this country when it comes to investment properties.

The capital gains tax discount cost the budget around $4.7 billion last financial year. The PBO forecasts that in a decade's time that will increase to $7.7 billion. Negative gearing modelling from the PBO shows that, at a cash rate of 2.85 per cent, negative gearing will cost the budget $12.7 billion in forgone revenue between 2023 and 2033. To add insult to injury, the PBO estimates that 39 per cent of negative gearing benefits go to people earning the top 10 per cent of income.

This is having real consequences in our communities. We talk about social cohesion. We talk about income and wealth inequality. We need to do something about housing in this country, and we're not going to do it unless the major parties are actually willing to listen to people and engage in this and get away from the outrageous politics that we've seen around things like negative gearing. There are sensible ways to start turning this around, including by capping the number of properties that can be negatively geared. All the solutions are out there, and there are millions of Australians urging us, willing us, to engage in this and deliver for people. Deliver a fairer system that will create the Australia we want.

Linda Reynolds

At the last election, I well recall some people saying, 'Why don't we give those opposite, the other mob, a go, because, really, how bad could they be and how bad could they make things in a single term?' Sadly for Australians, but particularly for Western Australians, they keep exceeding expectations on every front. For Western Australians, with 12 interest rate rises under that mob opposite, the average mortgage holder is paying an extra $24,000 a year in mortgage repayments. Workers are paying 15 per cent more income tax. At the same time, real wages have gone backwards by over five per cent in disposable income. That is the worst in the OECD.

Clearly Australians are not better off. But there is a national housing crisis. The last Labor budget committed to allowing 1.5 million people to migrate to Australia over the next five years. That's fine if there is somewhere for them to stay and to live and they are not taking housing and rental stock away from people who are already living here. Under their policies, what has happened? National rental affordability is the lowest in three decades, with a median income household, now earning $105,000, able to afford only 13 per cent of properties on the rental market. So people earning $100,000 a year or over can afford only 13 per cent of the very miserly amount of stock available.

In Western Australia the situation is worse. In WA the median house rent has increased from $500 to $600 in the last year. This is on top of all of the other cost-of-living burdens that those opposite have placed on their households. All the while, the cost for owner-occupiers purchasing their homes has increased by 10.4 per cent in one year under those opposite. Shockingly, people in Perth under two Labor governments, federal and state, now require an annual gross income of $136,000 to be able to afford a median home. That is a $46,000 increase from April last year alone under those opposite and their policies. At below one per cent, WA has the tightest rental market of any state, equal at the moment with South Australia.

The Cook Labor government is making a bad situation worse. Somehow, with all the billions of dollars they've spent on housing, these geniuses have managed to have less social housing stock available, with 35,000 people on the waiting list. (Time expired)

Tim Ayres

I appreciate Senator Pocock's interest in this matter and listened to his contribution with interest. I want to acknowledge and thank him for his support over the term of this parliament for practical measures to support better housing outcomes, including his support for the Housing Affordability Future Fund.

It was extraordinary, though, to listen to Senator Reynolds's contribution. When asked to seriously consider what the measures are in relation to increasing the housing stock, it was the stock standard political attack. It underlines what the problem is with this opposition. They have not paused for a second to reflect on how bad a government they were. They've not internalised that message about how bad the Morrison government was on a whole lot of fronts, particularly economic ones, how little progress was made and how bad a Prime Minister Mr Morrison actually was, corrupting the processes of the federal government, including multiple ministries and an absurd bunyip-aristocracy attempt to pervert the processes of government in his own interests. Indeed, there's been no reflection on her own performance.

What I would say about Senator Pocock's proposition is that there are a series of lines of effort that are required from the Commonwealth and then from the states, ideally in cooperation between the Commonwealth and the states. The first and most important, in my view, goes to the supply of housing. That is structurally dealing with the challenges in affordable housing for low- and middle-income Australians by approaching the question of supply. Then there is a series of questions that go to planning, much of which are formally within the province of the states but which, again, in this government's view and in my view, should be the subject of cooperation between the Commonwealth and the states, particularly where Commonwealth funding is engaged in these broader supply efforts. Then there are issues around the supply of labour and skills in the construction industry and making sure that our skills match the requirements of building the homes that we need to build. That is, indeed, an enormous task. Despite the language from what passes for a federal opposition, it will require attending to our skilled migration settings and fixing up the smoking ruin of the skilled migration program that was left by the previous government.

This motion asks us to consider the tax questions. Some of those that have been drawn to the attention of the Senate are within the province of the Commonwealth government, but there are issues around stamp duty and a range of other charges and levies that the states have. I would say two things in relation to the tax question. Firstly, this government, both in opposition and in government, has been very clear about its position in relation to capital gains tax exemptions and negative gearing. There will not be changes in relation to those questions. We will not change our approach on that issue.

The second more substantial policy point, though, is that it is, I think, possible to argue that the taxation settings have been part of the rise in house prices over time, but it is also possible to argue that the removal or adjustment of those measures would have no positive impact on the ill that we are trying to solve. It sounds like a big argument. It sounds like a big proposition—'All you have to do is do these reforms.' But, in fact, they would have a series of perverse impacts on the challenges that we are trying to solve. That is why this government is focused on housing supply and why it rejects the notion that the kind of tax changes suggested by Senator Pocock will be adopted by the government. (Time expired)

Nick McKim

The Greens will support Senator Pocock's motion, but I want to be clear that, from the Greens viewpoint, migrants and migration should never be used as a scapegoat for successive governments' failure to ensure that everyone in this country has a home. Neither should migrants or migration be used as an excuse for the fact that not everyone in this country has a place to call a home. This government and successive governments from the neo-liberal parties in this place have abjectly failed to address the plight of the hundreds of thousands, arguably millions, of Australians who have been crushed under the oppressive weight of spiking house prices and spiralling rents. The policies of the Labor and Liberal parties in this place result in multiple billions of dollars every year being diverted out of the public purse into the already overflowing pockets of property speculators and property investors. That is via mechanisms such as those Senator Ayres just referred to—negative gearing and the capital gains tax discount.

I don't have time to address the absurdity of Senator Ayres's argument in favour of keeping those massive multiple billions of dollars' worth of concessions to property speculators while so many thousands of Australians are sleeping rough on the street because I want to talk here about the Labor Party's so-called solution to the housing crisis, the Help to Buy scheme, which is a half-hearted band-aid over a gaping wound. Incrementalism is not going to solve the problem. The Housing Australia Future Fund was incrementalism until the Greens used their balance of power in the Senate to get $3 billion extra, and we are prepared to do the same on the Help to Buy scheme.

Dave Sharma

This is not my first speech. I thank Senator David Pocock for raising the important issue of homeownership, because Australia is a homeownership society. The ability to raise a family depends on homeownership, the likelihood of retiring in security depends on home ownership and people's engagement with community depends on homeownership. Homeowners are struggling right now not only because of the record number of rises in interest rates that we've seen under the Labor government, which means that someone with an average mortgage of $750,000 pays $2,000 more a month, but because house prices have sky-rocketed over the last decade and a half. Today, someone on a median household disposable income can only afford 13 per cent of homes in the market.

Why is this? I think it is fundamentally a supply-side issue. We are simply not building enough new homes quickly enough or cheaply enough to meet demand. In my own state of New South Wales we need to be building 55,000 new dwellings per year to meet demand. We haven't managed to do that in the past decade and a half. A comparable housing project that takes six months to get approved in Brisbane and takes 12 months to get approved in Melbourne takes 36 months to get approved in Sydney. Undoubtedly, without seeking to politicise this, this is being exacerbated by migration levels that are much higher than we have experienced in Australia. Half a million people have arrived in Australia over the past year, which is pushing rents up and making housing affordability more scarce.

We need to focus on what we can do to unlock supply, on what we can do to encourage states and local governments to accelerate land releases, to expedite planning approval and to lessen some of the compliance and red tape that currently exists in the construction industry, so we can get more houses built and on line more quickly and cheaply and get more houses for Australians.

Long debate text truncated.

Summary

Date and time: 6:16 PM on 2023-12-06
Senator Pocock's vote: Aye
Total number of "aye" votes: 10
Total number of "no" votes: 25
Total number of abstentions: 41

Adapted from information made available by theyvoteforyou.org.au