Inquiry into housing say’s nothing is wrong?
There is little doubt the Turnbull government thought they were ‘smart’ for releasing the lower house economic committee’s report into housing ownership on a Friday in mid-December (after all, know one will notice right?). Well we are determined to ensure that aspiring first home buyers across the nation know the facts.
The 20 month inquiry, which was launched by former treasurer Joe Hockey, before being paused and then re-opened by current treasurer Scott Morrison, was possibly designed by the Government as a smokescreen for the election period, as the Coalition was keen to been seen as both concerned about housing affordability and actually doing something about it. Of deep concern however is that after 20 months and thousands in taxpayers money, the inquiry failed to come up with one single recommendation into housing.
- The reported noted that housing trends are mostly in line with historical averages (that is there is no housing affordability problems above normal rates)
- Housing should be left to the States to figure out, as it is not a policy area that the federal Government should be concerned with (other than to encourage and foster more land release in parts of the country where demand is stronger than supply).
The 20 month inquiry failed to come up with one suggestion to improve housing affordability
Parts of the inquiry we agree with
- Supply should be increased in areas where supply is not meeting demand. We believe that additional supply can help in terms of decreasing the size of future property price gains.
Parts of the inquiry we disagree with
- That there isn’t actual a problem. The report appears to have focused on property prices and people’s ability to afford mortgage repayments. While we may not have a housing bubble and low interest rates are helping people with loan repayments, the real issue of concern is that new people cannot enter the housing market because the deposit (+ cost) required to enter the housing market is at a record high never seen before. There is plenty of evidence showing first home buyer activity is down. In case of any doubts though John Daley, the CEO of Grattan Institute, took to Twitter on Friday to show a concerning graph that no one can deny:
— John Daley (@JohnDaley_) December 16, 2016
- That it is a problem for the States to solve, not the federal Government: We believe that housing affordability is an issue that the federal and State governments need to work together on.
What can the federal Government do?
“The government refuses to admit there’s a problem, let alone take any steps to make housing more affordable” said Greens MP Adam Bandt in a statement on Friday.
“The fact that the Government doesn’t think it is a federal policy area is very concerning” said FHBA co-founder Taj Singh, echoing federal MP Adam Bandt. “Our 5 point plan on housing affordability we created back in 2015 highlights three significant ways housing affordability for future generations can be addressed in a healthy manner by the federal Government”. The other two points are for the State governments to consider.
Yesterday we took to Twitter to re-launch our petition (campaign) to save the great Australian dream for current & future generations (#SaveGreatAustralianDream).
— FHBA (@fhba_com_au) December 18, 2016
The three points the federal Government should consider from the 5 point plan (in summary) are:
- Reduce ‘interest costs’ deductibility on existing dwelling purchases/investments from 100% deductible to 50% deductible, whilst retaining 100% deductibility on new dwelling purchases.
- Introduce a tier scaled CGT (Capital Gains Tax) discount system so investors don’t receive a full 50% discount until after 36 months..
- Reintroduce the First Home Savers Account with enhanced features such as an ability to salary sacrifice pre-tax wages and no tax on investment earnings
“Everyone knows that negative gearing and CGT are directly impacting the ability for new young Australian families to enter the housing market. These are direct tax incentives that the federal Government has full control over. It is time they were wound back without being completely removed. This will create a more equal housing market going forward” said fellow FHBA co-founder Daniel Cohen.
To see the 5 point plan in full and to sign the petition visit our campaign on change.org.
First Home Buyers Australia