Question time – Housing Affordability

September 24, 2014

Senator DAY (South Australia) (14:38): My question is to the Minister for Finance, Senator Cormann. I refer to current debates about high house prices and, in particular, the push by some for more government intervention on home lending rules, negative gearing, capital gains tax, foreign investment in real estate et cetera. My home state of South Australia created the first state land management agency, the South Australian Land Commission, the primary aim of which was: ‘The provision of land to those members of the community who do not have large financial resources.’ Further, the act made clear that the Land Commission: ‘shall not conduct its business with a view to making a profit.’ Is the minister aware that state and territory land management agencies made almost $600 million in profit from land sales in the last reporting year and South Australia’s land management agency profiteered more per capita than any other state in the Commonwealth?

Senator CORMANN (Western Australia—Minister for Finance) (14:39): I thank Senator Day for that question. I also thank him for and congratulate him on his strong advocacy in support of stronger economic growth, opportunities and self-reliance for South Australia, because along with Liberal members and senators from South Australia—

Opposition senators interjecting— The PRESIDENT: Order on my left!

Senator CORMANN: and all of us on this side, Senator Day understands that the best way to create more opportunity for people in South Australia, and, indeed, around Australia, to get ahead is by driving policies for stronger economic growth.

I say to Senator Day that I was not aware of the precise figures that he mentioned, though I am aware of the broader issue of course. But, having said that, I am not at all surprised that in South Australia the profiteering, as Senator Day refers to it, is the largest around Australia, because of course South Australia has had a bad Labor government over an extended period of time, and the state Labor government in South Australia, in the bad tradition of state Labor governments and federal Labor governments, has made a mess of the budget, has not been able to live within its means and is always casting around for more cash. Arguably, the state of affairs in South Australia is the worst that it has been since the collapse of the State Bank of South Australia in the period of a previous state Labor government.

So what I would say to Senator Day in relation to the substantive issue that he has raised is that the most fundamental cause of declining housing affordability is that the supply of housing has not kept pace with the strong growth in demand in recent years. I am aware, for example, that growth in private dwellings in South Australia has been relatively low against similar growth in other states. Data from the National Housing Supply Council shows that dwelling growth by percentage is almost a third lower than the national growth average over the decade between 2001 and 2011, and previous Housing Industry Association data has also shown that land values in Adelaide had been around 40 per cent of— (Time expired)

Senator DAY (South Australia) (14:42): Mr President, I ask a supplementary question. There is an economic activity gap in South Australia and in the nation as a whole which, Treasury officials tell me, could be solved by meeting the shortfall of some 50,000 housing starts per annum. Housing affordability was once my home state’s principal competitive advantage. Does the minister agree that housing construction would fill the national and South Australian activity gap and South Australia’s GST shortfall?

Senator CORMANN (Western Australia—Minister for Finance) (14:42): I thank Senator Day for that supplementary question. What I agree is that, as a government, at a federal level, we need to continue to implement the policies necessary to build a stronger, more prosperous economy where everyone can get ahead. Those of us on this side of the chamber all want to see stronger economic growth in South Australia—as we want to see stronger economic growth in all states across Australia—because that is the only way that we can ensure that all Australians, wherever they live, have the best possible opportunity to get ahead. As I was saying previously, Housing Industry Association data has shown that land values in Adelaide were around 40 per cent of new house prices in the early to mid nineties and declined over the subsequent decade, but those land costs rose significantly from 2003 onwards, which of course supports the proposition that Senator Day just put.

States and territories have responsibility for housing supply. This includes regulation of zoning, planning, and development, and the release of government-owned land for housing. Improving housing supply is primarily about— (Time expired)

Senator DAY (South Australia) (14:43): Mr President, I ask a further supplementary question. Does the minister agree that the Australian economy has been distorted by plummeting housing starts caused by high entry-level prices as a result of state government price-gouging? If so, what can the government do about it?

Senator CORMANN (Western Australia—Minister for Finance) (14:43): Let me firstly say that of course we would not want to see state governments—

Opposition senators interjecting— The PRESIDENT: Order on my left!

Senator CORMANN: price-gouging in this space, because, to the extent that it occurs, it obviously does not help with ensuring housing affordability. There have been a number of reviews over recent years that have found that restrictive planning controls and inefficient development assessment processes at the state or territory level reduce the efficiency of the housing market and add to the cost of housing. Indeed, the housing supply and affordability reform council—

Opposition senators interjecting—

The PRESIDENT: Order on my left! I cannot hear the answer, let alone Senator Day.

Senator CORMANN: I really do not understand why those on the Labor side are jumping up and down like this. I would have thought there was bipartisan support in this chamber and indeed support right across the chamber for better access to affordable housing. The Housing supply and affordability reform report, which was released by the Council of Australian Governments under the previous government in 2013, made a series of recommendations about what the states should do in terms of removing development barriers, including minimum block size requirements, deeming development applications— (Time expired)