Speech: Housing Affordability
Senator RHIANNON (New South Wales) (19:37): It is a week since Treasurer Joe Hockey said: 'If housing was unaffordable in Sydney nobody would be buying it.' This disastrous bit of ad libbing from the Treasurer gives us a useful insight into exactly how out of touch with reality he is. The latest Fairfax Ipsos poll, released a few days ago, shows that 80 per cent of Sydneysiders believe that housing in Sydney is unaffordable-80 per cent!-and just three per cent believe that local housing in Sydney is 'very affordable'. In 1985, the median price for a house in Sydney was $73,000; in 2015, the median price of a Sydney house has risen to a staggering $914,000-that is 11 times average household earnings. Over that time, the housing-price-to-income ratio in Sydney has grown from 3.4 to 11.4. Over the past two years, Sydney house prices have shot up at rates five times those of wage growth. Wage growth is declining, making it more and more difficult for first-home buyers to save for a mortgage deposit. Last year the Demographia International Housing Affordability Survey ranked Sydney as the third-least affordable city in the world. That is why this housing issue is so critical.
This week in parliament, my colleague, Senator Scott Ludlam, asked the coalition why negative gearing and capital gains tax reform was sorely missing from the government's tax review and, on Latelineon Monday night, Senator Cormann was challenged again on this very point-here was another example of a coalition spokesperson peddling myths on negative gearing and capital gains tax reform. Over and over, government representatives have repeated the lie that ending negative gearing will push up rents. The data and analysis on this is readily available to the government. They know that that is not the case. There is a long list of economists, unions and independent social support groups in favour of reform-the OECD, the IMF, the Australia Institute, the Grattan Institute, the Australian Housing and Urban Research Institute, ACOSS, the Australian Workers Union, the Tenants' Union of NSW, Homelessness Australia, and the Salvation Army. Saul Eslake, a chief economist at Bank of America Merrill Lynch, has described the case for ending negative gearing for new investors as 'very compelling'. Mr Eslake has also discredited some of the main lies being told about negative gearing; among them, that it would raise rents. The facts on the problems with negative gearing are not hard to find. But there was the Treasurer, suggesting to the Australian people that if they want to break into the property market-a market which has swollen enormously-they simply need to 'get a good job that pays good money'. It is an astonishing display of ignorance from a man with a hefty personal investment property portfolio and with a taxable income in the 99th percentile of taxpayers, who lives in the third-least affordable city in the world. To borrow a phrase from The Sydney Morning Herald, I would ask Mr Hockey to take a look at the 'dark side of the boom'.
Sydney house prices are racing ahead of wage growth. People working full-time on the minimum wage are priced out of the rental market in 99.9 percent of Sydney suburbs. Home to roughly 4.85 million people of varied incomes, skills and backgrounds, Sydney is a dynamic, diverse city. We need to cater to-and care for-the full spectrum of people required to run a city; not just its upper echelons. If lower and medium income earners are forced out of the housing market, they obviously will move, the rental market will continue to expand, and Sydney will be worse off, in every sense of the word.
The Australian Greens have put forward our plan to tackle this problem. We do not believe that those living on low and middle incomes should be made to subsidise the property investments of others. The Greens have costed our negative gearing reform proposals, and we have identified $4 billion in savings which could be put towards affordable housing supply. This revenue could fund the construction of 7,000 new homes for the homeless by 2020 and 7,500 new social housing dwellings over the forward estimates. And for those of you who are not from Sydney, when you are in Sydney next: walk through Belmore Park; walk around some of our public spaces. You will see large numbers of tents. Tent cities are growing up in our city because of this serious crisis. Negative gearing is costly, inefficient, and inequitable. Honest coalition MPs must know this. If the Treasurer does not agree on the damaging impacts of negative gearing, we invite him-and other sceptics-to join an evidence-based debate. It is time the Abbott government reviewed the tax arrangements for property investment in order to improve housing affordability for first-home buyers, and to provide housing for those on social and public housing waiting lists and for those sleeping on our streets.