Views from the house

HOUSING sits down with federal Housing Minister Michael Sukkar to talk about home ownership and affordability, and the federal government’s plans for housing in the new decade.

Author

Laura Valic

Q: As the federal Housing Minister what are your goals for the next two years?

MS: The Morrison Government is dedicated to supporting the ambitions of Australians who want to own their own home, which in doing so, delivers a firm foundation for family and economic stability with the social benefits that inevitably flow.

The residential construction sector is a key driver of the Australian economy as a creator of jobs and economic growth, with a strong multiplier effect that boosts other sectors such as retail and manufacturing. We are starting to see construction activity pick up and are dedicated to working with the sector to break ground on projects sooner. 

Therefore, my goal for this term of government is to work with the states and territories to remove development bottlenecks to increase supply and improve housing affordability, as well as supporting first home buyers to get into the property market sooner.

Q: How does your role differentiate from the federal Social Housing Minister?

MS: As Minister for Housing and Assistant Treasurer, I am responsible for the development of policies that increase housing supply and affordability across the Treasury and Department of Social Services portfolios. This necessarily includes the taxation arrangement as they apply to investors and developers. I am also responsible for implementing our key election commitment, the First Home Loan Deposit Scheme.

Included in this work is the responsibility for the National Housing Finance and Investment Corporation and the Australian Housing and Urban Research Institute.

My colleagues, Senator Anne Ruston, the Minister for Families and Social Services, and Assistant Minister Luke Howarth, are focused on other matters along the housing spectrum including social and community housing.

This comprehensive portfolio structure is a clear demonstration of the Prime Minister’s understanding of just how important the housing sector is to the economy.

 

 
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Housing Minister Michael Sukkar

Q: Is addressing the nation’s housing affordability issues a priority for the federal government?

MS: Absolutely. In my view there has been a perfect storm of rising state taxes and regulatory costs, population growth, and cumbersome and unresponsive planning rules, which have restricted supply and have led to the overall decline of housing affordability in Australia. 

Due to the unique nature of our Federation, the direct role for the Commonwealth in addressing the predominant issues with housing affordability, particularly housing supply, is limited. However, I see the role of the Commonwealth as one of targeted intervention, such as with first home buyers and reform led by example and co-ordination.

Q: How do you propose to bring the states together to create solutions for housing affordability?

MS: The Morrison Government will use all possible levers to encourage states and territories to undertake the politically difficult, but necessary, reforms to increase housing supply and make housing more affordable. We recognise that different parts of Australia are being affected by population change in different ways and therefore it is important that population planning and management is informed by the needs of local communities. 

Importantly, the Commonwealth and the states and territories have agreed to progress a National Population and Planning Framework. This framework is the first of its kind in Australia and represents another important step in ensuring all levels of government come together to better plan for Australia’s future population. The framework also supports the government’s Population Plan which maintains the liveability of our big cities, while supporting the growth of our smaller cities and regions, and it will be driven by better data. 

Our new Centre for Population will work closely with the states and territories, academics and think tanks in order to share data, research, ideas and expertise on population. This research will give us a better understanding of the distribution of our population and the role policy can play – factors which influence where people choose to live, both now and into the future, and how policy impacts those decisions.

Q: What plans do you have to generate more affordable housing in the private sector for first home buyers?

MS: By creating the right incentives we have helped thousands of first home buyers enter the market.

In the past year, the share of first home buyers has risen back up to above average levels, with around 110,000 Australians buying their first home – the highest level since 2009.

The Morrison Government’s recently launched First Home Loan Deposit Scheme is also making a big difference.

The Scheme provides a guarantee that allows eligible first home buyers to purchase a home with a deposit of as little as five per cent.

The Scheme supports up to 10,000 loans each financial year, and since its commencement on 1 January 2020, thousands of Australians have engaged with lenders to secure a guaranteed loan to help them get into a home sooner.

The First Home Loan Deposit Scheme also compliments the Government’s longstanding First Home Super Saver scheme, which all prospective first home buyers can access, that provides a tax cut for their home deposit savings.

First home savers are able to voluntarily contribute up to $30,000, or $60,000 for couples, to their superannuation, including through salary sacrifice arrangements, over and above their compulsory superannuation contributions, to build their first home deposit faster.

The First Home Super Saver scheme provides the ability to accelerate savings by at least 30 per cent, and is working, having helped over 8,000 first home buyers to date.

 

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My goal for this term of government is to work with the states and territories to remove development bottlenecks to increase supply and improve housing affordability

Q: What measures would you propose to create better land supply for increasing more private housing?

MS: First, we will lead by example. While the states have far greater land holdings which can be opened up for development, we are releasing suitable Commonwealth land, including Defence land, for private housing development. 

The Commonwealth has announced the sale of the Bulimba Barracks, a 20-hectare site in Brisbane, which will unlock the development of up to 800 new dwellings, and we are also divesting 127 hectares of surplus Defence land in Maribyrnong, which, once remediated, is capable of sustaining the development of between 3000 and 6000 dwellings. 

It is unacceptable that the supply of new housing is so badly constrained by planning and regulatory bottlenecks. As I have said, the federal government will use all possible levers to encourage states and territories to undertake this task, and since becoming Minister for Housing, we have demonstrated our willingness to support such actions. 

For example, the federal government recently waived Tasmania’s historic public housing debt, totalling $230 million, as a result of the Tasmanian Government’s commitment to implement a state-wide planning scheme, which will unquestionably promote greater housing supply in Tasmania. 

We are investing $1 billion in local infrastructure to unlock new housing supply, in partnership with local councils through the National Housing Infrastructure Facility. The Morrison Government is also tackling the impact of increasing population in congested cities and backing smaller cities and regions looking for greater growth to secure their economic future. We are reducing the cap on our migration program, building the infrastructure and delivering the services Australians need, and planning for more evenly distributed population growth. 

These changes are focused on easing population pressures in our biggest cities, while ensuring regional communities are given a much needed boost.


Q: Housing is the second most heavily taxed sector of the economy. Has the government considered reducing the tax on housing to improve affordability for Australians?

MS: We agree that housing is very heavily taxed, and it may shock Australians to learn that the biggest cost to building a new dwelling is the state tax and regulatory cost component. At the state and territory level, residential property is subject to a number of other taxes that other investment vehicles are not, including land tax and stamp duty, one of the least efficient taxes in Australia’s tax system. 

In fact, the Centre for International Economics’ modelling shows 50 per cent of the cost of a new house and land package in Sydney can be attributed to taxes and regulatory costs. Melbourne is estimated to be 37 per cent and Brisbane 32 per cent. 

And, undoubtedly, it is the purchaser who absorbs the vast majority of these costs. While there is limited scope for the Commonwealth in this area, I will certainly be encouraging the states to do their bit to reduce the tax burden on buyers.

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It is black and white, abolishing negative gearing and raising capital gains tax affects housing supply which in turn reduces housing affordability

 

Q: What are the government’s plans in relation to negative gearing and capital gains tax arrangements?

MS: At the last election the Coalition committed to not abolish negative gearing or raise capital gains, nor raise any property tax on Australian residents, and that’s what we will deliver. It is black and white, abolishing negative gearing and raising capital gains tax affects housing supply which in turn reduces housing affordability.

I believe Australians should be able to aspire to own their own home. For most individuals and families, their home is the largest and most important asset they will own. 1.3 million Australians use negative gearing for an investment home, with around two thirds of those having taxable incomes less than $80,000 a year.

It beggars belief that Labor Members have indicated their party is still predisposed to reviving their failed negative gearing and capital gains tax policies so resoundingly rejected by Australians at the last election. Labor has simply not learnt that when you target homeowners and property investors by proposing to double capital gains tax and abolish negative gearing, you make it harder for Australians to get into a home of their own, and that is something the Morrison Government will not do. 

Q: Australia’s building industry workforce is ageing and there’s a short supply of skilled labour. What plans does the government have to attract and retain workers so our housing stock levels meet the needs of our growing population?

MS: The Coalition Government is committed to ensuring Australians have the right skills for the workforce of today and the future and is funding skills through a number of different components.

In 2019–20 alone, we are investing over $3 billion in VET and the Government’s $585 million Skills Package is a significant investment that will strengthen Australia’s already world class VET sector. 

The Government has also implemented an Additional Identified Skills Shortage Payment to increase support for apprentices and boost the supply of skilled workers in occupations experiencing national skill shortages including carpenters and joiners, plumbers, bricklayers and stonemasons, and plasterers. 

Since the Government was re-elected, we have working towards our commitment to train an additional 80,000 apprentices and trainees over the next five years by reinstating employment incentive programs regrettably cut by the previous Labor government. 

 

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