The plan is to do nothing, and continue to advantage wealthy property investors over everyone else, writes Greens Senator Lee Rhiannon.
Treasurer Scott Morrison claims that any attempt to wind back negative gearing would be a setback to renters. Clearly, that is a smoke screen. The Turnbull government is busy trying to distract from their own failure to touch some of the biggest policy levers available to them to address housing affordability.
The Treasurer restated his point blank refusal to touch tax breaks that benefit property investors in a speech to the Australian Housing and Urban Research Institute earlier this week. He noted that “one in five police officers” negatively gear their investments. He did not explain why we should defend a policy that is fuelling our housing crisis just because it favours some police.
We can only assume it was a deliberate distraction from the fact that about half the benefit of negative gearing goes to the top 10 per cent of income earners. And there aren’t many beat police in that high income bracket.
Thanks to Freedom of Information requests, we know that the federal government modelled the impact of changing the capital gains tax in February 2016 – but they refuse to release the results. Since that modelling was done, median house prices in Sydney have risen by $110,000.
Home ownership is now less than 30 per cent for people between 25 and 34 years of age. Young people have the second-lowest rate of home ownership out of nine developed nations. Our house price to wage ratio is among the worst in the world.
These developments are casting doubt on the viability of the great Australian dream.
Our first response should not be to ask how we can revive the Australian dream of home ownership, but how we can honour our commitment to provide adequate housing for all. That commitment is contained in Article 25 of the Universal Declaration of Human Rights, as part of our right to an adequate standard of living.
The chance of the Turnbull government acting on this responsibility is nil. Property developers have donated millions of dollars to both the Liberal and National parties. With Liberal held electorates benefiting most from these investor tax breaks, survival at the next election will be paramount for Prime Minister Malcolm Turnbull and the Treasurer.
The great desire of Australians to own one’s own home is a post Second World War phenomenon. Ironically its roots do not lie with a market approach to housing but with the successful Commonwealth-State Housing Agreements that kicked off in 1945, providing hundreds of thousands of homes. As many as one in five new homes were built by state and federal governments and 50 per cent were allocated to returning veterans.
This scheme was weakened by successive Coalition and Labor governments over the years. The introduction of negative gearing in 1985 by the Hawke/Keating government and the introduction of the capital gains tax discount by the Howard government in 1999 were the most significant changes that shifted the policy settings for housing. It went from a principally public good to a commodity that could deliver handsome returns for those already in the property market.
Labor justified the scheme at the time by arguing that negative gearing would stimulate the economy via the construction industry and drastically reduce the need for governments to supply housing stock.
The reality is that vested interests and property speculators have had a field day at the expense of those seeking a home. Negative gearing and the capital gains tax discount have made our market more insecure for renters and squeezed out people seeking a home.
Ending these tax breaks is an essential step in ending the commodification of housing and pushing governments to adopt policies that recognise and deliver on housing as a human right.
However, rather than ending the tax breaks to help reduce housing prices and free up more homes for owner occupiers, the Coalition’s housing ‘plan’ is an ongoing exercise in blame shifting.
The Treasurer has made out that the cause of escalating house prices is due simply to a lack of supply, which allows the federal government to lay the problem at the feet of state governments.
The Turnbull government’s “forget Sydney, try Tamworth” approach is another example of blame-shifting. They have used it to tell young people to leave major cities and to dog-whistle about migrants driving up house prices.
Young people are being told to “get rich parents”, “get a highly paid job”, and raid their retirement savings.
Morrison has all but ruled out any change to laws that favour investors over first home buyers. Australians of all ages who live with housing insecurity or who are already homeless have no hope of accessing affordable, secure homes under what will be in the 2017 budget.
The experience of countries with economies similar to ours illustrates that housing policy can be set to significantly expand public and community housing while still encouraging private ownership for those who can participate in the market effectively.
While we have governments locked into the commodity view of housing, the number of people living on the streets and in insecure housing will climb. This is what the Turnbull government is imposing on Australia.
With investors and developers, the natural constituency of the Liberal and National parties, reaping profits under the current market-based approach to housing, there is no incentive for the Turnbull government to modify or remove negative gearing or significantly reform the capital gains tax discount.
Since the Liberal-Nationals came into government they have stood by as house prices climbed 58 per cent in Sydney, and they have watched on as thousands of young people gave up hope of ever owning a home.
This week, Treasurer Morrison confirmed that they will continue to allow tax concessions to supercharge the housing market, and called it a plan.
If we want a housing system that delivers for the public good then it is clear we need to change the government. The Turnbull-Morrison housing plan is no plan at all.