Michael Sukkar MP

Matter of Public Importance: Taxation and Housing

The housing minister studiously avoided the topic of this MPI. One wonders why she even bothered turning up, because the MPI refers to the threat to the tax treatment of negative gearing. We know the housing minister wants to avoid any difficult debates and discussions, because the cupboard is threadbare here on the government’s side with respect to any coherent housing policy or anything that would seek to help either first homebuyers or renters.

This is about Labor’s agenda to tax housing even more, and every time the Labor Party talk about taxing housing more by abolishing negative gearing and doubling capital gains tax, what they’re essentially saying to the Australian people is, ‘Housing needs to be taxed more.’ The logic of their argument is that if you tax it more, it will somehow be cheaper for people who are either buying or renting. Now that would be the first time in the history of tax policy that taxing something more leads to a cheaper price. In fact, all you need to do is ask the members of the government to reflect on excise policy in this country. Successive governments have made the decision, for health reasons, to decrease cigarette and tobacco consumption in this country. So what have they done? Successive governments have increased the tax on cigarettes, why? Because they want people to consume less of them.

Quite simply, if you tax housing more, fewer homes will be built. Higher taxes equals fewer homes. So every time the Labor Party talk about abolishing negative gearing for mums and dads and doubling capital gains tax just on housing—not abolishing the capital gains tax discount on other things but just abolishing it on housing—what they are saying is, ‘We want to tax housing more.’ We know from modelling undertaken by Deloitte Access Economics, through the Property Council, that that is the exact consequence of abolishing negative gearing and the capital gains tax discount on housing. Higher taxes and fewer homes equals higher rents.

It takes some sort of genius to come up with a policy that’s been rejected by the Australian people time and time again. In fact, it was even rejected by a former Labor government who tried this and, when it disastrously failed, backflipped and reinstated these tax settings. It takes a special sort of genius to go down this path again. This is a policy that will simultaneously tax mum-and-dad investors more, increase the rent for Australians who are already suffering crippling rent increases and through lower housing stock make it even more difficult to buy a home.

The shadow Treasurer, when he made his remarks in relation to this, highlighted the dichotomy here. On one hand, the Labor government want to abolish negative gearing and slash the capital gains tax discount for Australian mum-and-dad investors, therefore increasing the housing taxes for them. But simultaneously they want to reduce the amount of taxes that large investment funds pay, including many foreign investment funds, like Vanguard, Blackstone—big US funds. The question here is who owns Australia’s rental stock? A third of Australians, give or take, rent a home. Someone’s got to own those homes. There are millions of homes. Someone’s got to own them. At the moment, mum-and-dad investors own those homes. Australian mums and dads own overwhelmingly one property that they invest in for their future and the future of their children. Labor want to tax them out of existence so those homes are not owned by those mum-and-dad investors anymore. Instead the Labor government want them to be owned by large foreign funds who own tens of thousands of those properties to rent out to Australians.

Lower taxes for the foreign corporates and higher taxes for the mum-and-dad investors would be a disaster for this country and is not a vision that we share. This government is bereft of ideas. Sadly the housing minister, who was demoted from her former role, is a big part of the problem we are facing here because, on her watch, she ramped up migration to more than a million people in two years when we’re building fewer homes, and that’s why rents are rising. Shame on Labor.

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