Intergenerational housing worries - ABC NewsRadio





SUBJECT/S: Housing affordability; Family Tax Benefit cuts

MARIUS BENSON: Andrew Leigh, is it worth Labor considering an end to negative gearing? Or is that just in that never, ever to-be-touched basket politically?

SHADOW ASSISTANT TREASURER ANDREW LEIGH: Marius, negative gearing is an issue that was actively considered by the Henry tax review in 2009 and they recommended change. It’s an issue which the government's tax discussion paper, a few months ago, also suggested might usefully be looked at. You'd expect a responsible opposition to be looking carefully into this, particularly given where the budget is. But Chris Bowen has laid out clear parameters. We certainly wouldn't do anything that would disadvantage existing owners, and we'd have a careful mind to making sure that there's new housing supply coming into the market. 

BENSON: You have the door, then, open to change?

LEIGH: We've got a housing discussion paper out for consultation from stakeholders, industry groups and academics. We'll be looking to see what feedback they come back with.

BENSON: Do you agree with the economist Saul Eslake when he says the current increase in house prices is not just an economic issue, but is socially destructive?

LEIGH: I'm certainly concerned about the intergenerational impact of rising house prices. I'd hate to be in an Australia where your only chance of breaking into the property market is whether or not your parents had property. Frankly, that was the state of affairs for many centuries gone by when we had essentially a caste system in advanced countries and if your parents didn't have wealth, you couldn't get wealth. We need to make sure that people on modest means can put money away and eventually be able to buy a piece of property. At the moment, we've got house price to household income ratios sitting above four. They've risen pretty substantially over recent years. So you've got to be concerned about the impact that has in locking young Australians out of the housing market.

BENSON: Is that where we are now? A caste system that means intergenerational property inheritance is the only way to property?

LEIGH: I don't think so. But I'm very concerned about inequality and social mobility. One of the ways in which you can boost social mobility is making sure people have access to a home of their own. Australia has relatively high house prices relative to income, we have the Treasury secretary saying that there is a housing bubble, and yet you've got the Prime Minister belting out more of his outrageous attack lines in response rather than providing Australians with what they want: a carefully considered conversation about how we can improve housing affordability.

BENSON: But is that about all you can do, have a conversation, express concern? Is there really much governments can do to affect house prices?

LEIGH: There's certainly work that can be done on the supply side, and in making sure that government policies don't cause a problem on the demand side. That's why Labor has held its housing affordability roundtable – work spearheaded by Jan McLucas and Chris Bowen – and it's why we're actively questioning the Prime Minister about the comments of his top economic adviser, who says that there's a housing bubble in Sydney. We're concerned about the impact that has, and we're concerned when we see the home ownership rate dropping for 25 to 34 year olds in recent Censuses. That's something that ought to worry all policymakers.

BENSON: Can I go to another policy area which is the family tax benefit cuts that the government introduced in its first budget in May last year. They're still stranded in the Senate, the government is now talking to crossbenchers in the hope of getting them through in the context of the 2015 Budget. Any prospect of support from Labor on that?

LEIGH: Marius, these cuts bite deep for single income families, and particularly for sole parent families. If you look at a sole parent with two school-aged kids, under this government someone on just $60,000 could lose $6,000. To take away 10 per cent of the disposable income of some of the poorest Australians is unconscionable. Labor is not supporting those changes and we believe there are fairer approaches, such as fair taxation of multinationals and fair taxation of high end superannuation.

BENSON: Andrew Leigh, thank you very much.

LEIGH: Thank you, Marius. 



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