Last night, Labor leader Bill Shorten appeared on ABC’s Q&A program where he was asked the following question about housing affordability:
DAMIAN DAMJANOVSKI asked: Mr Shorten – I am a 31 year old who has done all the things that I was meant to do, studied in a public school, worked since I was 14 and 9 months, never taken a cent in government handouts, paid all my taxes, started an entrepreneurial business, employed a team of 20 staff, my question is simple – why is it, that neither your party nor the coalition is listening to the most pressing demand of most Aussies – the ability to afford to buy a home in the city I live in and love? Something that remains out of reach for myself, and most of the people I know.
Here is Shorten’s answer:
“We want to create a level playing field for people that are buying their first home with investors that are funded by taxpayer funded subsidies. Now the issue of housing prices isn’t just about negative gearing, okay let’s be clear. Land supply plays a factor. Whether or not you have a job plays a factor. The presence of overseas buyers plays a factor… Negative gearing and CGT discounts play a factor too. So we are looking at one of the strands of reform…
I don’t believe as a nation that we should be subsidising that form of activity [negative gearing] over other choices… The beauty of what we are proposing is that: 1) it is not restrospective, so if you currently negatively gear, there is no change… 2) You will still be able to do it for new housing; and 3) It will no longer be available after 31 July 2017 for existing housing. And what that means is that when you are bidding for a house, Mr Turnbull loves to say there will be less bidders. There might be a couple of less bidders, but the point about it is that there will still be competition for housing prices, so it’s not going to ruin the housing market. What it will do is reduce the heat in an overheated housing market”…
You will still be able to negatively gear if we get elected except for new housing… So if you want that form of investment, it’s still there for you for your retirement. Secondly, if you have currently invested under the current rules, there is no change. So there are actually no losers. It’s a prospective change… You can still invest in housing, you just can’t get a tax deduction for it. Property is still a good buy… Property is still going to be valuable. All I am saying is that every taxpayer that goes to work and pays taxes will no longer be required to subsidise those people who seek to claim a tax deduction from negative gearing for housing. This is not the end of the world…
I believe that our policy will mean that housing prices won’t grow so fast. But I don’t believe that this is going to affect in a downward way the price of houses….
For thirty years political parties have been told that if you touch negative gearing you will be out on your ear because the property industry will stop it… They are hanging on to a taxpayer subsidy that every one of you is contributing to. But what I don’t believe is right is that this nation, when you look at what we give in the form of tax concessions, tax subsidies on negative gearing and CGT discount, is spending more at the Commonwealth level than we are on childcare or higher education. What priority is that?..
My party is giving first home buyers a chance to compete on a more level playing field so that you can get your first home… The dream of Australia is not as Mr Turnbull says – the right to claim a tax deduction. The dream of Australia is to ensure that your kids can grow up to buy their first home…”
Good for what it’s worth. And much better than anything from the Turnbull Government, which has ruled-out reform altogether.
My main quibble is that Shorten identifies land supply as an issue for affordability, but has done nothing about it. Why not give the states incentive payments to release land, relax planning, and build housing-related infrastructure? Where is the engagement on this issue?
Neither parties have released a comprehensive national housing policy addressing both the demand-side and supply-side factors destroying housing affordability.
