Xenophon sees the light on housing, Budget

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ScreenHunter_4056 Sep. 08 12.02

By Leith van Onselen

After being smashed from pillar to post over his hare-brained scheme to allow first home buyers to access their superannuation savings to pay a house deposit (see here, here and here), independent Senator for South Australia, Nick Xenophon, has seemingly abandoned that proposal and produced a sensible list of alternative measures to fix the Budget, including ‘abolishing’ negative gearing and making superannuation concessions fairer. From News.com.au:

This Budget is regressive. It hurts the needy while protecting the greedy…

So how should we repair the Budget bottom line? Well, let’s start with superannuation. According to the Australia Institute, in 2015/16 the richest 5 per cent of Australians will benefit from $15 billion in superannuation tax concessions. These people don’t need a hand-out. Claw that back. It’s a no-brainer.

And while you are at it, why not tweak negative gearing to encourage affordable new housing. It’s crazy to have a blanket tax code that rewards debt over equity.

The Grattan Institute estimates that $2 billion could be saved if negative gearing was slowly phased out. In the interests of full disclosure, I should say that a phasing out of negative gearing would impact on me personally, given the four properties I own. But if it means a balanced budget and a more affordable housing market for young Australians to enter into, then that is a price I am very willing to pay…

As the Baby Boomers retire things will get harder for the fewer and fewer people left in the workforce to support them…

[But] the real solution is to take more money from the people who won’t even miss it.

Xenophon also proposes shifting the funds earmarked for paid parental leave into childcare, as well as cutting back funding for defence.

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Overall, it’s a good effort by Xenophon – certainly much better (and fairer) than the Budget measures put forward in the May Budget.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.