Wednesday, March 30, 2016

Current Tax Settings Lead to Empty Houses!

At the last census there were nearly 120,000 empty dwellings in the greater Sydney region. When combined with under-utilised dwellings, such as those let out as short-term accommodation, the total number reaches 230,000 in Sydney, and 238,000 in Melbourne. These empty dwellings could more than account for the present supply shortfall in housing!

The question is why are these homes are being left vacant when they could command the highest prices or rents, given they are concentrated in central parts of all our metropolitan areas? The answer is that dominant driver of negative gearing is where the capital gain is the main objective rather than the rental yield. On the urban fringe, where there is less expectation of capital gains, there are much lower rates of empty dwellings.

The current tax settings are driving a mismatch between the supply of housing and housing need. This is exacerbating inequalities experienced in our major cities, driving unaffordability in central, well connected and serviced parts of the city. This is not the fault of the planning system, as property developers would have us believe. The situation is likely to have worsened since the last census in 2011 as more housing is being delivered precisely in the locations where there appears to be a concentration of homes standing empty, where supply is being driven by a desire for capital gain not rental yield.

Labor’s policy, addressing this crucial issue of housing affordability will make speculative investment to obtain capital gains less lucrative by reducing the capital gains tax concession from 50% to 25% for all assets purchased after 1 July 2017. This will stem the speculative investment in property that has raised house prices and lowered more productive investment. Negative gearing and capital gains tax exemptions for investors have been a dead weight on the ability to create more housing affordability.
Despite the strong economic arguments behind this reform the Liberal Government has chosen to embark on a scare campaign embracing a Chicken Little approach. A far cry from Malcolm Turnbull saying in his 2005 tax paper, that the capital gains tax discount along with negative gearing was a “sheltering tax haven” that is “skewing national investment away from wealth-creating pursuits, towards housing”, and has caused a “property bubble”.

Monday, March 7, 2016

Report Indicates Pentridge Tower Should Be Scuttled

An independent research report released today by the Australian Population Research Institute (TAPRI), ‘Sydney and Melbourne Housing Affordability Crisis: No End in Sight’, has highlighted the flawed approach to housing development currently pursued in Wills, where the main preoccupation of urban planning in relation to the Pentridge Prison site and other activity centre locations is for high rise apartment development. The report finds that such high-rise apartments remain unaffordable to most people and they are unsuitable for younger persons establishing or raising families.

Urban planners have consistently underestimated the proportion of new households over the period to 2022 that will be family households. Not only are record high housing prices driving down levels of home ownership amongst younger persons, but years of ill-conceived housing policy assumptions have resulted in a supply of housing unsuited to raising families.

The report’s findings are particularly relevant to the federal electorate of Wills, in stressing that the “greatest need for additional dwellings is from new young households and recently-arrived migrant households”, not simply for ageing one and two person households as falsely assumed by professional planners to date. 

Official Victorian government population projections for the City of Moreland show that the municipality’s population is not expected to age dramatically. In light of this research, the 19 storey Pentridge tower and other high-rise apartment proposals for Moreland should be scuttled, and planners should turn their minds to retaining family friendly housing in Wills.

The report also vindicates Labor’s pledge to abolish negative gearing tax concessions on new housing. Based on an analysis of housing markets in Melbourne and Sydney, the researchers concluded that rampant house prices, together with continued high net overseas migration, over an extended period have disenfranchised a growing proportion of the younger generation from home ownership. The report’s authors specifically criticised Prime Minister Malcolm Turnbull’s opposition to Labor’s negative gearing reforms as “monumental insensitivity to the growing catastrophe flowing from record high housing prices for the next generation of home owners.”

Wednesday, March 2, 2016

20 Years in Federal Parliament

Today I clock up 20 years in this House. It is a great honour to serve here, and in an age of the 24/7 media cycle and a cultural tendency to chew politicians up and spit them out, a remarkable honour to serve for 20 years.

George Bernard Shaw said the reasonable man adapts himself to suit the world, while the unreasonable man insists on trying to change the world to suit him, therefore all progress depends on the unreasonable man. For much of my political career I have been in this sense unreasonable.

I couldn't have done this without support. I want to thank the voters of Wills who have stuck with me in good times and in bad. I want to thank my partner Kerry and my children Ben and Naomi, my father Allan and other family members.

I want to thank my office staff – Mimi Tamburrino, Tim Hamilton, Mark O'Brien, Julie Ryan, Cate Hall, Nosrat Hosseini, and many others who have served over the past two decades.

I want to thank the Labor Party members and volunteers in Wills – families like the Hosseini family, the Ouaida family, Angelo Koutouleas, Oscar and Alan Yildiz, Gino Iannazzo and Vic Guarino and so many others.

I want to thank the Trade Union Movement – Ged Kearney and Dave Oliver from the ACTU, Ben Davis and his team at the AWU, Tony Sheldon and his team at the TWU, Glenn Thompson and the Manufacturing Workers Union, Earl Setches at the Plumbers, Dave Noonan at the CFMEU, the Institute of Marine and Power Engineers and many more.

And I want to thank some business leaders too for their support and encouragement – Dick Smith, Graham Turner and Geoff Harris from Flight Centre, Robert Rio from Rio Industrial, Hugh Middendorp from Middendorp Electrical amongst others. To all of you thank you, for the chance to do this.