Greens, Property Council battle over negative gearing, housing crisis

A plan to wind back negative gearing and axe capital gains tax would mean less houses get built when they’re most needed, the head of the property council has said.

Greens housing and homeless spokesman Max Chandler Mather debated Property Council Mike Zorbas on the housing crisis at the National Press Club. Picture: NCA NewsWire / Martin Ollman

The Greens’ housing spokesman and the head of the Property Council have clashed over negative gearing in a lively debate on the country’s housing crisis.

At the National Press Club on Wednesday, Max Chandler-Mather laid out the Greens’ first major election policy, putting forward a plan for a public property developer to build 360,000 new homes over five years that could be bought and rented from the government at a below-market price.

To afford the plan – costed by the Parliamentary Budget Office to have a $27bn impact on the underlying cash balance over the decade – the government would wind back negative gearing and scrap capital gains tax concessions.

The Greens have long fought for the abolition of tax discounts for multiple-property owners, and have threatened to block Labor’s Help to Buy shared equity scheme unless they commit to taking action on negative gearing and capital gains tax concessions, which the government has ruled out.

But Mike Zorbas, chief executive of the Property Council of Australia, warned that without negative gearing, already low supply rates would dry up further.

“There’s no question that if you remove it, and we did the modelling, you knock out four per cent of the supply of new housing straight away,” he said.

Greens’ housing spokesman Max Chandler Mather debated Property Council chief executive Mike Zorbas on the housing crisis on Wednesday. Picture: NCA NewsWire / Martin Ollman

Mr Chandler-Mather, one of only a handful of parliamentarians who rent, decried the unfair property system that pushed house prices for would-be first-home buyers further and further out of reach.

He said the Howard government’s introduction of the capital gains discount, combined with negative gearing, had “turbocharged house prices, by putting billions of dollars in government tax handouts in the pockets of property investors to use that money to massively up the price of housing”.

“We know that since the capital gains tax discount was introduced, house prices have skyrocketed. In fact every year since that was introduced, house prices went up almost three times that of wages,” he said.

Mr Chandler Mather announced the Greens’ housing policy for the next election. Picture: NCA NewsWire / Martin Ollman

Mr Chandler-Mather warned that “tinkering around the edges” would do little to solve the “serious crisis”, and governments could not afford not to listen to the third of the country that rents.

“There’s a lot of people like me around this country that aren’t in parliament, young renters – angry and upset with the political class that has me sitting here as a renter debating the head of the Property Council about solving the housing crisis,” he said.

“I think over the next few years, the entire political class is going to find out what happens when you ignore that one third of this country is getting screwed over by a housing system that funnels billions of dollars into the people that don’t need it right now.”

Under the Greens’ policy, 30 per cent of the homes could be bought for cost price, and when sold can only be sold back to the government for cost price plus CPI.

The remaining stock would be rented, with rents tied to household income, and a portion dedicate for low income earners.

Based on costings by the PBO, the average renter using the Greens program would save $5200 a year on rent, and the average first-home buyer purchasing one of the homes would save $260,000 compared with average market prices.

The pair had different ideas on aspects of housing policy. Picture: NCA NewsWire / Martin Ollman

Mr Chandler-Mather said the point of the announcement was not about pushing Labor against the wall in a hypothetical post-election scenario, but was instead about proving the government “could, and should do this”.

“Not only do we have the money in the budget to fund it, not only do we have the example in the past of where it has worked, we also have countries around the world (where it has worked),” he said.

Asked about the plan during a separate press conference, Treasurer Jim Chalmers said the Greens’ idea was a pipedream.

“It’s easy enough for them to write press releases with big numbers attached to it. They don’t know how to implement anything, and they never have to make any work … We’ve got a broad and ambitious housing policy,” he said.

Mr Zorbas said the Greens proposal wouldn’t work. Picture: NCA NewsWire / Martin Ollman

The Greens’ proposal hinges on the creation of a new federal department, which Mr Zorbas was quick to criticise.

“I don’t think anyone has ever sold a housing crisis by adding another government agency,” he said.

Mr Zorbas used his speech to call for federal and state and territory governments to work closer together in order to solve the housing crisis.

“(An) unprecedented era of partnership is needed across parliaments – not just national, not just premiers, treasurers and planning ministers, but all parliamentarians with industry and the property sector to fix our cities and solve the structural causes of the housing crisis,” he said.

“Let’s give solving the housing crisis a crack together.”