2016-02-23
Senator LUDLAM (Western Australia—Co-Deputy Leader of the Australian Greens) (14:15): My question is to the Minister for Finance, representing whoever is in charge of developing the coalition's tax policies today. Minister, there are 44,000 young people and children who are homeless in this country today. Last night it was reported that there are children as young as two weeks old sleeping rough on Perth's city streets and there are more than 200,000 people on the social housing waiting list. An entire generation has been priced out of housing affordability. Last year the Parliamentary Budget Office estimated that the combined loss of revenue from negative gearing and capital gains tax exemptions over the forward estimates was more than $22 billion. How does the government justify leaving these massive incentives for property speculation in place when housing affordability is at such crisis levels for so many Australians?
Senator CORMANN (Western Australia—Minister for Finance, Deputy Leader of the Government in the Senate and Special Minister of State) (14:16): I thank Senator Ludlam for that question. The Australian government wants every Australian to have the best possible opportunity to get ahead, and that is of course why we are working so hard to strengthen growth, to create more jobs and to create the best possible opportunity for every single Australian to get ahead. When it comes to housing affordability that is a very important issue, and of course we want all young Australians to be able to afford their own home—of course we do. The way to ensure housing affordability at a time when prices go up because there is stronger demand than supply in the market is by increasing the level of supply. And there are a whole range of things that will need to be done in relation to this, and the Commonwealth and state and territory governments are focused on these areas of public policy.
To suggest, as Senator Ludlam seems to be suggesting, that the sort of approach that Labor is proposing would be the way to address it is entirely false. We reject that. To make the sort of change to negative gearing so called that Labor is suggesting would push up the cost of rental accommodation, it would push up the cost of rentals, and it would drive down property values in the established property market and it would drive down property values across the board, and that is not a policy that we support.
The Greens are quite entitled as part of their longstanding coalition with Labor to pursue increased taxes on middle-income earners across Australia—on the police officers, nurses and teachers that are taking advantage of the opportunity to invest in residential property and to deduct the cost incurred in generating income from that investment from that income before it is taxed. That is the way the system currently works. If Labor and the Greens want to go to the Australian people in their usual coalition and sell that sort of policy, good luck to you.
Senator LUDLAM (Western Australia—Co-Deputy Leader of the Australian Greens) (14:18): Mr President, I ask a supplementary question. According to Moody's ratings agency and respected economists such as Saul Eslake, estimates are in the public domain that negative gearing adds nine per cent or around $44,000 to the price of a home. Could you explain, as finance minister, how it is economically or socially defensible to leave negative gearing and capital gains tax exemptions in place when it is so well understood that these huge taxpayer funded incentives for property speculation are artificially inflating home prices?
Senator CORMANN (Western Australia—Minister for Finance, Deputy Leader of the Government in the Senate and Special Minister of State) (14:18): I do not accept the premise of the question that Senator Ludlam puts there. What is colloquially described as negative gearing is a very simple and very important principle in our tax system, and that is when you generate an income you are able to deduct the costs in generating that income from that gross income in order to determine your taxable income.
Senator Wong interjecting—
Senator CORMANN: I can see that Senator Wong, who, instead of focusing on cutting expenditure and controlling expenditure, is always looking for an opportunity to increase taxes on middle-income Australians.
Senator Wong: You're spending more than I ever did!
The PRESIDENT: Order!
Senator CORMANN: I can see that she is in there, right on cue, wanting to support the Greens—
Senator Whish-Wilson: Mr President, I rise on a point of order in relation to relevance. The minister has not answered the question. He is talking about Senator Wong. He has not come anywhere near answering the question. I ask you to direct him to please answer the question.
The PRESIDENT: Thank you, Senator Whish-Wilson. The minister did say he rejected the premise of the question upfront and did address some of the elements of the question. Minister.
Senator CORMANN: Thank you very much, Mr President. Obviously, if tax arrangements were changed in the way that Senator Ludlam seems to be suggesting, it would make investment in private rental accommodation less attractive. It would reduce the supply of private rental accommodation. It would increase the cost of private rental accommodation along the way, and that is not something that we consider to be in the public interest.
Senator LUDLAM (Western Australia—Co-Deputy Leader of the Australian Greens) (14:20): Mr President, I ask a further supplementary question. This is extremely instructive. Does the minister propose to engage in a rational and fact based way with proposals to transfer the huge taxpayer funded incentives for property speculation into genuinely affordable housing supply, whether it be emergency accommodation for the homeless, a rebooted rental affordability scheme, a housing supply bonds issue or direct investment in the community and public housing sectors? Do you intend to bring any such policies to the public debate, or will you continue to leave it up to the Greens? (Time expired)
Senator CORMANN (Western Australia—Minister for Finance, Deputy Leader of the Government in the Senate and Special Minister of State) (14:21): Senator Ludlam is entitled to his opinions. Opinions are not fact. Obviously, all of us in the lead-up to the next election will be putting forward our respective policies, and it will be a matter for the Australian people to determine which policies they support.