Lobbyists and commentators weigh in on Housing Minister’s “to-do” list

As part of a ministerial and cabinet reshuffle to reset and prepare for the next election, Prime Minister Anthony Albanese has moved Clare O’Neil from Home Affairs and Cybersecurity to the Housing and Homelessness portfolio.

It’s an interesting appointment, given Ms O’Neil’s background.

Who is Clare O’Neil?

The Member for Hotham in Melbourne’s south-eastern suburbs is a former mayor. 

In fact, when she was elected mayor of the City of Greater Dandenong in 2004 at the age of only 23, she became the youngest female mayor in Australian history.

Clare O’Neil also worked as a management consultant with McKinsey & Company and studied public policy as a Fulbright Scholar at Harvard Kennedy School in the United States.

Nine years ago, as a new federal backbencher, Ms O’Neil wrote a book with fellow Labor MP Tim Watts called “Two Futures: Australia at a Critical Moment”, which considered, among other things, what could be done to reduce inequality in Australia by the year 2040.

“We need to increase the supply of affordable housing in our cities, help voters understand the links between higher-density urban development and housing affordability, and make a massive investment in public transport so that more parts of our cities are great places to live,” O’Neil and Watts wrote.

“And we need to wind back negative gearing.” 

“It’s a tax break for investors that keeps house prices artificially high, young people out of the property market, and grows the wealth of the already wealthy.”

However, after Labor’s two defeats under Bill Shorten in 2016 and 2019, where winding back negative gearing was taken to the electorate as part of the policy platform, it’s pretty clear the Albanese government and the new Housing Minister would be loath to touch the tax break.

Property Council of Australia

Clare O’Neil’s appointment sparked an immediate response from the Property Council of Australia, urging her to “focus on quick wins” ahead of the Federal election.

Congratulating the Minister on her appointment, the Property Council’s CEO Mike Zorbas said there were five key “levers” Ms O’Neil could pull to help achieve the National Housing Accord target of constructing 1.2 million affordable and well-located homes in Australia over the next five years.

They are:

1. 1. A funding boost on so-called “last-mile infrastructure” so states and local governments can unlock more land for new homes.
   2. More construction labour to fill huge skills gaps across the country
   3. Better access to housing credit for young first-home buyers to ensure “mortgages are not just for the rich” 
   4. Policies and tax breaks to support more Build-to-Rent housing
   5. Policy support on tax, targets and planning to prioritise more purpose-built student accommodation and more retirement living developments

The Property Council believes Australia will currently fall around 300,000 homes short of the 1.2 million homes target if its 5 “levers” aren’t enacted. 

Housing Industry Association

The Housing Industry Association said the appointment of Clare O’Neil marked the chance for “policy reset” on housing.

“The current agenda is in danger of being too narrow and does not sufficiently go to the heart of the problem of fixing housing supply for future generations,” according to the organisation’s Managing Director Jocelyn Martin.

Ms Martin seemed to imply too much of the government’s attention had been taken up with a concentration on social and affordable housing, which “only make up a small part of the big picture that is housing in Australia.”

“The majority of the government’s 1.2 million homes target will need to be homes for the private market,” she said.

“This is crucial to bring house prices and rentals down.”

Alan Kohler

Both of those bits of “free advice” for Clare O’Neil are hardly surprising, with both organisations pushing solutions that would benefit their members.

The Property Council represents big developers, including those promoting Build-to-Rent projects and specialised student and retirement accommodation, while the Housing Industry Association tends to represent smaller residential builders and their suppliers. 

So perhaps the most interesting independent advice for the new minister comes from ABC Finance Commentator Alan Kohler, who recently penned a short book on Australia’s housing crisis.

In his column in The New Daily, Alan Kohler suggested no less than 18 suggestions for Clare O’Neil’s “to-do” list:

1. 1. Rethink/reduce zoning windfall taxes
   2. Create a uniform national infrastructure levy on new housing that equals half the cost of the infrastructure
   3. Consider a temporary GST holiday for affordable housing construction
   4. Impose uniform national tax on developers sitting on approved projects
   5. Remove stamp duty surcharges on foreign investors in housing
   6. Remove stamp duty for downsizers buying their last home
   7. Increase depreciation allowance for residential buildings
   8. Reconsider changes to the National Construction Code
   9. Make it easier for migrant tradespeople to work here
   10. Get APRA (the bank regulator) to remove the current 3% buffer for bank loans
   11. Create and Australian “Fannie Mae” for 30-year fixed-rate mortgages
   12. Publish immigration data with housing approvals
   13. Reduce capital gains discount to 25%
   14. Allow negative gearing on new dwellings only
   15. Impose uniform national levy on short-term rentals
   16. Allow Housing Australia to issue government-backed bonds to boost the Housing Australia Future Fund
   17. Give NHSAC (National Housing Supply and Affordability Council) a budget for staff to study and report on housing demand/supply
   18. Create a uniform national tenancy code that includes 10-year leases.

A lot of these suggestions are extremely sensible, especially numbers 1,6,9,10,12 and 15.

A few are fanciful, like getting governments to reduce the 50% capital gains discount to 25% or set up a whole new institution like America’s “Fannie Mae” (its formal title is the Federal National Mortgage Association) to provide long-term, low-interest, government-backed loans to people wanting a home mortgage. 

However, Alan Kohler’s list doesn’t include what’s perhaps the single biggest impediment to more housing in Australia - the huge federal, state and council tax imposts on housing.

The Property Council estimates 30-40% of the cost of a new dwelling in Australia is made up of taxes.

As Alan Kohler himself says, “That’s the sort of taxation that’s imposed on something the government is trying to discourage, like smoking.”

CoreLogic’s Research Director Tim Lawless recently estimated that 55.5% of Victoria’s state tax income comes from property in one way or another, so the idea of governments giving up their addiction to property taxes anytime soon is fanciful. 

And until that happens, there will probably be a housing shortage in Australia.

Clare O’Neil certainly has her work cut out.