Tuesday, February 21, 2017

Federal Budget Watch - housing affordability front and centre?

When Malcolm Turnbull became the 29th Prime Minister of Australia he promised that his will be "a thoroughly liberal government, committed to freedom, the individual and the market". His newly appointed Deputy, Julie Bishop, gave a hat-tip to Robert Menzies and the values that he instilled within the Liberal Party. We might assume this means placing a strong focus on home-ownership as a means of delivering social cohesion.

PM Malcolm Turnbull and Deputy Leader Julie Bishop
fronting the media on September 15th 2015
At the time we wondered what this would mean for housing policy, asking here on the Brown Couch:
So will a government lead by Turnbull and Bishop get back to work on the dream of a home-owning Australia, and wind back the tax incentives that are producing instead this nation of landlords? Or will they continue along the path their predecessors have set, and maintain that the only thing standing between you and liberation from the dogbox is a good job that pays good money?
In the fifteen or so months that have followed we've made progress from the "do nothing" days of the inquiry that made no recommendations to the appointment of an Assistant to the Treasurer on Housing Affordability, so things are looking good. Michael Sukkar, Member for the Melbourne seat of Deakin, was given the post in late January 2017. He's wasted no time in getting caught up on the basics, with reports today suggesting he views a strong economy as a key housing affordability measure, as this allows Australians to access highly paid jobs which is the first step to home-ownership.

New Assistant Minister to the Treasurer Michael Sukkar has been
tasked with solving Australia's housing affordability crisis
Aside from opening him up to the kinds of criticism his former colleague Joe Hockey copped for being a bit out of touch, this brings him more-or-less up to speed. But it's worth looking back over some of the other things he's said since taking the junior Ministerial position.

On January 24th he said there is no silver bullet that will solve Australia's housing affordability problem, and that:
(There will be a) multi-faceted approach that pulls the levers we can and assists the state governments to pull the levers that they can...
Which is as good a place as any to start.

The following day he spoke on RN Drive and explained that these levers would not include negative gearing and capital gains tax discounts, as they are not housing affordability measures. Further, he said that if we did make changes to negative gearing rents would go up all over the country. "We know that for a fact", he said. (We're not so sure about that, as we've argued many times, but we'll have to come back to that part of this discussion another time.)

More recently Mr Sukkar has been drawn into discussion about whether the Government would or would not countenance changes to capital gains tax discounts in the next Federal Budget. This was reported in The Australian yesterday as follows:
Mr Sukkar said there would be “a number of interrelated measures” in the budget and it was impossible to say at this stage what would be included in the final policy. 
“In some respects many of those will hang together, complement one another, and we’re not in a position yet to outline what exactly that is,” he told Sky News. 
“We are very serious about tackling this issue.” 
Asked if changes to capital gains were in the mix, Mr Sukkar would not say. 
“In answering that question, the basic point to make is we as a government have sought not to increase taxes. We think that increasing taxes on investment inevitably leads to less investment,” he said.“Having said that there are many ideas that are in the embryonic stage, as we speak, and we’re many months away from the budget.”
This follows reports from Fairfax late last week:
"The Treasurer and I have been methodically consulting with colleagues and developing policies that will help address housing affordability in our major cities. Addressing this issue will be a major priority in the next budget," he said.
"We [state and federal governments] all accept that addressing supply-side issues in the housing market is the primary issue in housing affordability and cannot be addressed by the federal government without the support and consent of state and territory governments."
None of this suggests he's made the very clear links between housing affordability and the culture of fear that resonates through our private rental markets. But no doubt the Assistant Minister to the Treasurer will be drawn into more conversations between now and budget night in early May, and we look forward to seeing what else he and the Treasurer might come up with.

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