THE Greens are standing out against the bipartisan consensus that tax cuts are needed for middle and lower income earners. They are ruling out supporting all the budget’s tax relief, and say they are also opposed […]
LABOR will promise to ban direct borrowing by self-managed superannuation funds, as part of a housing affordability policy released on Friday to pre-empt the government’s package in next month’s budget.This “limited recourse borrowing” – where a creditor has limited claims on the loan if there is a default – has increased from about A$2.5 billion in 2012 to more than $24 billion. Almost all of it is in residential or commercial property.
The Financial System Inquiry in 2014 recommended restoring the prohibition that had been lifted in 2007. It warned that “further growth in superannuation funds’ direct borrowing would, over time, increase risk in the financial system”.
Among other measures, a Shorten government would double the screening fees on foreign investment and financial penalties that apply to foreign investment in residential real estate. Foreign investment purchases nearly tripled over the three years to 2014-15. Labor says the higher fees and penalties would “help level the playing field between first home buyers and property speculators”.
The centrepiece of Labor’s housing policy remains the changes to negative gearing and the capital gains tax discount that Labor took to the election, but the latest package surrounds those with several other initiatives.The opposition announcement comes as the government’s expenditure review committee struggles to stitch together a credible package, and after a much-publicised split among ministers over whether first home buyers should be able to use their superannuation for housing. Malcolm Turnbull last week apparently ruled that option out.
Labor says its package would see the construction of more than 55,000 new homes over three years and increase employment by 25,000 new jobs per year.
Labor would establish a Council of Australian Governments process to achieve a more efficient and uniform vacant property tax across the main cities.
It would provide $88 million over two years for a new Safe Housing Fund for transitional accommodation for victims of domestic violence, vulnerable young people, and older women at risk of homelessness. This would restore cuts made by the Coalition in the 2014 budget.
It would also work with state governments to get better outcomes in the National Affordable Housing Agreement. And it would establish a bond aggregator to increase investment in affordable housing – something the government is moving towards.
Labor would also re-establish the national Housing Supply Council and reinstate a minister for housing, the policy says.
It says that “any housing affordability package that doesn’t involve reforms to negative gearing and the capital gains tax discount is a sham”.
“Demand for housing is being turbo-charged by unfair, unsustainable and distortionary tax concessions for investors.” Labor’s longstanding policy is to limit future negative gearing to new housing and reduce the capital gains tax discount from 50% to 25%.
Labor says the super funds’ ban “will prevent the unnecessary buildup of risk in Australia’s superannuation system, reduce future calls on the aged pension as a result of a less diversified superannuation system and make the financial system more resilient in the face of potential economic shocks”.
It says that although foreign purchases in residential real estate account for a relatively small amount of overall annual purchases, the amount has grown by 275% in the three years to 2014-15.
Under the Labor policy, from July 1, 2019, the foreign investment application fee would go from $5,000 to $10,000 for a property up to $1 million; from $10,100 to $20,200 for one between $1 million and $2 million, and from $20,300 to $40,600 for one between $2 million and $3 million.
For foreign buyers who acquired dwellings without approval, the criminal penalty would be increased to $270,000, and $1.35 million for a company.