Labor is trying again to push its “Help to Buy” housing scheme back to parliament in the week of October 7, even though a Senate vote delayed consideration of the bill until November.
The move is Labor’s attempt to pressure the Greens into supporting its inadequate policy.
All Labor’s housing policies are back-handed subsidies for property developers and banks, instead of genuine attempts to help those suffering under the worst housing crisis in generations.
But its Help to Buy scheme would only allow up to 10,000 people a year to access a shared equity scheme: the government would pay for part of the mortgage and then “own” part of the house.
At best, the scheme would be helping a tiny number of people, could push participants into mortgage stress and could contribute to pushing up house prices.
A similar scheme in NSW failed, when only a tiny proportion of eligible spots were taken.
The Greens are pushing for several policies that would make a material difference to people’s lives. These include rent controls, more public housing, reforming the pro-investor taxation measures and the establishment of a public developer.
A Guardian/Essential poll, published on October 8, showed huge support for such measures: 70% supported government-imposed price caps on rent, groceries and power bills.
This, along with increasing taxes on big corporations, was the most popular proposed reform canvassed by the poll.
The poll found 50% support for reducing “tax breaks like negative gearing for property investors”. Only 16% opposed such changes, with 33% neither supporting nor opposing.
This reflects that negative gearing, a tax arrangement that allows investors to make a loss on their investment and claim this as a tax deduction — which largely benefits large investors, but also helps smaller investors and is a cost to all other taxpayers — is poorly understood.
Greens housing spokesperson Max Chandler-Mather put this into perspective at an October 4 campaign event for Mandy Nolan, the party’s federal candidate for the Northern Rivers.
He estimated that the Greens’ proposed public developer could “build 610,000 homes” and “completely transform millions of people’s lives”.
The cost would be “just $40 billion, after taking into account rental and sales income” over 10 years. “By comparison, Labor wants to spend $176 billion in tax handouts to property investors through negative gearing and the capital gains tax discount.”
The Sydney Morning Herald reported on September 25 that Labor was considering changes to negative gearing and/or the capital gains tax concession.
However, Prime Minister Anthony Albanese has since hosed down that suggestion, claiming the government fears changes to negative gearing would reduce housing “supply” and thereby drive up house prices.
To support his argument, Albanese cited a 2019 Deloitte paper, commissioned by the Property Council Australia, which found that Labor’s now-abandoned promise to reform negative gearing would marginally reduce housing supply by 0.4% over 10 years.
However, the same paper found that house prices would be 4.6% lower over the same period, because property investors would have less incentive to outbid people wanting to buy a home to live in.
Labor’s concerns about “housing supply” are thus revealed to be disingenuous.