It is a great honour to rise to speak tonight about this report that I had some time on as a committee member. I also want to recognise your efforts, Mr Acting Deputy President, as the Deputy Chair on this inquiry.
I also would like to pay tribute to the secretariat staff and Dr Kathleen Dermody and Dr Sean Turner. They do stellar work under immense pressure at the moment. To get a report out of this quality and scope in the time available is a great credit to them.
I do want to start, though, by correcting what I believe are a few mischaracterisations from the previous speaker, Senator Ludlam. I think if, perhaps, the people listening tonight just took away his speech they would come away with the impression that the government has referred issues of homelessness and people living on the streets to a taxation white paper. That is exactly not the case. It is precisely not the case, because, as the good senator would know, through you, Mr Acting Deputy President, on 23 March this year the government announced that it would extend the National Partnership Agreement on Homelessness for two years. In previous budgets it has only been extended for one year, including in the last budget of the former Labor government. But we have made the decision, we have listened to the sector and we have extended that for two years to give them certainty for that period and funded it to the extent of $230 million to be matched by state and territory governments. So it is absolutely not true that the government is not taking action on homelessness.
It is true that the broader issues about land supply and the correct planning of cities, as the senator raised, are very important issues that we do think need to be resolved through a federation process, and I will tell you why I especially have that view, and I think coalition senators in this report have that view. I believe we did have an approach under the Rudd government, in particular, of trying to do things unilaterally in this space, of trying to have the Commonwealth government step in with a major cities reform unit, with a National Rental Affordability Scheme. The approach that the Commonwealth knows best, we will come in and fix the problems of affordable housing and planning in cities was an absolute disaster. The problems with that rental affordability scheme are well catalogued. It was not particularly well targeted. It just shows the error of thinking that we, here in Canberra, know best and know how to tell states and territories how to do their job. If we were to repeat those mistakes, if we were to repeat history, we would only repeat the errors of that government, we would only lead to more fragmentation in this sector. We would not solve the underlying problem, which is to do this in a coordinated way, and that has to happen through a COAG process and/or through the broader reform of the federation.
I want spend the rest of my time in this contribution focusing on this issue of negative gearing because it is the one that I think is most important here. I think we can make it very clear that on this side of the chamber we do not stand for increased taxes. We want to promote investment in our community. We do not want to foreshadow making changes to longstanding taxation arrangements that would create fear and uncertainty for investors in this country, because we have had negative gearing for decades. We have had a tax assessment act since the 1930s that has allowed legitimate deductions for business investment in this country. That framework that allows for legitimate deductions against income—you earn income from an investment, you are allowed to deduct the costs of earning that income—has been in place since we had income tax in this country. To say that that system is somehow responsible for the increase in prices we have seen in the last 10 to 15 years and the consequent reduction in affordability is just nonsense. It is total nonsense. It does not stack up with the data. We have had negative gearing for much longer than that period, so somebody needs to explain how, suddenly, the investors in this country woke up, apparently 10 or 15 years ago, and said: ‘Well, because we have negative gearing—we didn’t realise it for decades before—but now we’re gonna bid more at auctions and all those things.’ It just does not stack up. That is wrong.
Another thing that I think Senator Ludlam got wrong was that somehow there is some problem with tax deductions flowing to high-income earners or people with high wealth. We have a progressive tax system. I support a progressive tax system. The very fact we have a progressive tax system is going to mean that people—
Senator Ludlam: “For income.”
Yes, for income, Senator Ludlam! So, if you are going to have deductions from income, where are those deductions going to flow to? Where are their values going to flow to most greatly? It is going to flow to those people that are taxed more greatly. Who is taxed more greatly in this country? High-income earners. That is who is taxed more, so they are going to get more deductions. Of course they are going to. That is how the system works. If the Greens have a different proposal, if they do not want to have a progressive income tax system, if they want a flat income tax system, fine, let’s put that on the table. But that is not the system we have.
I also want to finish by saying that I have never seen a workable proposal to change this system. There are proposals going around at the moment that we could somehow quarantine negative gearing to new houses or to new investors. But how does that work? If I build a house and land package now and I get the deduction because this is a new house, then in a year or two’s time I want to sell that house to some other person, do they lose the negative gearing? Do they lose the tax deductions? That will never happen. People look forward when they are investing and, because of that, that will affect their investment decisions now, and I, on this side of the chamber, stand for investors in this nation. I think that people who want to invest in our housing, invest in businesses, invest in their future should be supported and should not be denigrated by our parliament, because it is only through that investment in capital that we are going to get the economic growth and returns that will continue to make this a very prosperous country that can provide generous benefits, particularly to those who are homeless.
