RUBY:

So, Mike, I want to start with Peter Dutton's son, Harry.

Audio excerpt – Harry Dutton:

“I mean we’re saving like mad but it doesn’t look like we’ll get there in the near future but we’d love that to change.”

RUBY:

What did you think when you saw that press conference where we had the opposition leader's son talking about his struggles?

MIKE:

Well, I thought it was an effort to kind of humanise Dutton, I guess. I mean, Harry's 20, right? He's a second year apprentice. And so his inability to save enough to get into a house, it's a common story. And millions of other would-be homeowners might relate to it, except in one regard, which is, of course, that Harry Dutton's father is a very wealthy man due to his buying and selling of real estate.

RUBY:

Mike Seccombe is a reporter for The Saturday Paper.

He’s been watching closely as Peter Dutton has made the dream of home ownership for young Australians central to his campaign.

MIKE:

But it seemed to me that he failed to anticipate the obvious question when he trotted Harry out.

Audio excerpt – Reporter:

“You're doing pretty well yourself. Why won't you support him a bit and give him a little bit of help with getting his house?”

Audio excerpt – Peter Dutton:

“I haven't finished the excellent points I was making.”

MIKE:

So having failed to answer, quite a period of time elapsed, a better part of a day, and eventually, belatedly, on Tuesday. Dutton came out and conceded that he and his wife would at some stage give Harry and Harry's two siblings help to buy a home.

Audio excerpt – Peter Dutton:

“Dutton: And I think our households are no different to many households where we want our kids to work hard, to save and we'll help them with the deposit at some stage.”

MIKE:

Which is lucky for them because frankly under the housing policies that their father advocates, the cost of buying a home is only going to increase. On that, all the expert opinion is just overwhelming.

RUBY:

But it’s not just the Coalition’s housing policy set to drive up prices – experts agree Labor’s will too.

And with the majority of Australians either owning their own home – or paying one off – it seems that may be the point.

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RUBY:

From Schwartz Media. I’m Ruby Jones, this is 7am.

Today, national correspondent for The Saturday Paper Mike Seccombe – on what the major parties are offering on housing – and what it means for the housing crisis.

It’s Wednesday, April 23.

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RUBY:

So Mike, to begin with, can you just lay out for me what Peter Dutton has said about housing in this election campaign – and what we know about his plans?

MIKE:

Dutton was very clear about this in his budget reply speech last month. He promised, and I'm quoting him, I don't want young Australians locked out of the property market or having to rely on the bank of mum and dad.

Audio excerpt – Peter Dutton:

“I don't want young Australians locked out of the property market or having to rely on the bank of mum and dad. I want to see fewer Australians homeless and more Australians in homes.”

MIKE:

There are two aspects to the Coalition's policy. And when I spoke to the veteran independent economist Saul Eslake, he described it as a contender for the title of worst public policy of the 21st century. So that's how bad he thought it was.

The first part is called the Super Home Buyer Scheme, and this has been coalition policy for a while, and it would allow first home buyers access to up to 40% of their superannuation balance, up to a maximum of $50,000 to put towards a deposit. Leaving aside the impact that would have by allowing young people to raid their super and the impact it would have on their retirement, the measure would inevitably pump up prices, says Eslake.

And if I might quote him at some length, 60 years of history shows without any shadow of a doubt that anything that allows people to spend more on housing than they otherwise would, whether that's first homeowner grants, stamp duty concessions, mortgage guarantee schemes, shared equity schemes, lower interest rates, easier credit conditions, or tax breaks for property investors, anything that allows people to spend more than they other ways would, results in more expensive housing. So it just means more money chasing less housing. Essentially, you know, you... You have two sides to the housing equation. One is supply, one is demand. All of these sorts of things pump up demand and do nothing for supply.

RUBY:

Okay, and for it to work at all, Mike, young people would presumably have to actually have the super to be able to draw down. So how realistic is that?

MIKE:

Well, you make a very good point and I found tax office data, it's a few years old. In 2022, the median superannuation balance for a woman aged 30 to 34, you know, peak home buying sort of age group, was just $34,000. And for men of the same age, it was just a shade under $40,000, now bearing in mind that the coalition policy would only allow them to withdraw 40% of that nest egg, that would give a woman $13,730.80. And $15,980.40 for men.

RUBY:

Well, that's not gonna get you very far.

MIKE:

Not in today's housing market, you're quite right. And of course that was across all people. When you look at the data for people who are in rental accommodation, a quarter of them had balances of less than $6,000, which means they would only be able to pull $2,400 out of their super, which is essentially nothing in today's market.

Perhaps the only real redeeming feature to it, I suppose, is that it wouldn't cost taxpayers a lot. This would just allow people access to their own superannuation money. So that's a big aspect of this plan and it's quite different from the second aspect of the Coalition's plan. Which the opposition has estimated would cost taxpayers $1.25 billion over the first four years of its operation. And I've seen a number of commentators say it will probably cost a lot more than that.

RUBY:

Mm, right. Okay. And this is the scheme, Mike, where you can claim tax deductions for up to $650,000 of your mortgage. So tell me more about exactly how that would work and what economists are saying about its impact.

MIKE:

Right ok well this is the one that came pretty much out of a clear blue sky at Dutton's policy launch.

Audio excerpt – Peter Dutton:

“A coalition government will allow you to deduct interest payments on the first six hundred and fifty thousand dollars of a mortgage against your taxable income. We will allow these deductions for five years, provided you continue to live in that home for that period. This policy will be available to individuals with a taxable income of $175,000 or less and joint applicants earning a combined income of 250,000 dollars or less.”

MIKE:

Probably the most salient factor here is that this would also disproportionately benefit people who are doing better.

Going back to Saul Eslake, the way he sees this is one aspect of the coalition's policy, super for housing, allows people to put down bigger deposits, which in turn allows them to borrow more and pumps up the price of houses. The interest deductibility on mortgages allows people to borrow a lot more because it's the equivalent of a reduction in interest rates of roughly one third. So what's likely to happen is that the beneficiaries of this scheme will just bid up prices and make housing more expensive for everyone else.

It's hard to recall another policy that has been so comprehensively bagged as the first home buyer mortgage deductibility scheme. There were hit pieces all over the place about this. One professor of economics called it frankly terrible tax policy. Another said that it was incredibly administratively burdensome and if you wanted to just give people first home buyer grants then just give them first home buy grants. Brendan Coates from the Grattan Institute said he was frankly mystified about what compelled the Coalition to put this forward. When no serious housing policy expert had called for it, he called it nuts.

RUBY:

Coming up after the break - is Labor’s plan “nuts” as well?

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RUBY:

So, Mike, on the same weekend that the coalition announced this double whammy housing policy, Labor also announced their own. So tell me what is on offer from them.

MIKE:

What Anthony Albanese promised at the campaign launch was that if Labor were re-elected the government would allow all first home buyers, regardless of their income, to buy a home on just 5% deposit.

Audio excerpt – Anthony Albanese:

“Our 5% deposit plan will be open to every Australian looking to buy their first home. It will be available for homes valued all the way up to the average price in every city and region. And you won't have to pay a single dollar in mortgage insurance. Our Government will cover it.”

MIKE:

But the view is that just guaranteeing a lower deposit would encourage what one called imprudent borrowing. The fact that they know that the government will be covering them and they only have to stump up 5 per cent, buyers will probably once again bid up the prices of housing. When comparing the respective policies from the major parties, Saul Eslake told me, quote, while I don't like either of them, Labor's policy is less worse.

RUBY:

Right. Well, less worse is hardly an endorsement, Mike. In the debate though, last week, Anthony Albanese, he was arguing that Labor does have a policy to deal with supply. So it's not just about helping people get into the market, but it's also about broadening what is actually available. So tell me a bit about that plan to boost housing stock.

MIKE:

Actually both parties have plans that they say will increase supply, but let's start with Labor's because it's the bigger.

Labor's latest promise was to invest $10 billion in the form of grants and zero interest loans in partnership with state developers and the housing industry, and it claims that by supplying these funds that we'll see up to 100,000 new homes built and those homes would be reserved solely for first home buyers. Labor of course has a whole suite of other housing policies, you know, there's the Help to Buy scheme under which the government would take an equity stake of 40 per cent in first home purchases, it has a Build to Rent scheme which offers tax incentives to developers to provide affordable units and its $10 billion Housing Australia Future Fund which aims to build some 30,000 social and affordable homes.

On the coalition side, the big new promise was a $5 billion investment to go to local government to help with the supply of infrastructure like water and sewage and roads and so on for new housing developments, which it claims would help accelerate, was the word they used, the development of 500,000 homes.

So the point here is that both parties do have supply side measures as well as things that pump up demand. But what's really worth noting here is neither of the major parties is talking about reforming aspects of the tax system that have long been identified as contributing to the housing crisis. Such as negative gearing and the overly generous discount on capital gains tax for housing investors and stamp duties.

RUBY:

Yeah, I mean as far as the major parties are concerned that conversation seems to be definitively over for the time being but what about the crossbench? What do they have to say about that?

MIKE:

Well, this I think is really interesting. As the ACT independent Senator David Pocock told the ABC a week or so back, what the community, he said, was crying out for was a long-term vision.

Audio excerpt – David Pocock:

“We want a plan for this. We want to tackle the things that have been in the too hard basket for too long when it comes to our tax system.”

MIKE:

He itemised them. He said capital gains tax discounts, negative gearing, stamp duty. They were all things that, quote, we should be dealing with, he says.

Audio excerpt – David Pocock:

“The ones that actually makes a lot of sense I think given the politics and given the need to start to turn this ship around is to grandfather existing arrangements to then cap going forward negative gearing to one investment property, 70% of people only have one investment, that seems pretty fair, and then to reduce the capital gains tax discount to 25% for new bills, for new supply.”

MIKE:

Likewise, the Greens would limit negative gearing to one property and grandfather the capital gains. Tasmania's Jacqui Lambie would be a little more generous to landlords. She would allow maybe two or three negatively geared properties. And Allegra Spenda, who took the blue ribbon seat of Wentworth from the Liberals at the last election. Has actually produced possibly the most comprehensive analysis of what needs to change.

Audio excerpt – Allegra Spenda:

“We need to put tax reform on the table, just look at stamp duty. New South Wales Treasury says that we could increase home ownership by 6.6% in New South Wales if we replace stamp duty with land tax.”

MIKE:

Stamp duty is charged by the state and the general criticism of stamp duty is that it imposes a big transaction cost and that slows down the turnover of housing. So the idea is that, it should be replaced with a Land Tax which would remove the cost of buying a house but replace it with a long-term tax on actually living in that house. And so the theory is that if that were done, more of those empty nesters who are living in big houses once their kids have flown would be encouraged to sell up and buy something more suitable and there would be a round-robin of effects and as a result more people would be able to buy housing.

RUBY:

And so Mike, you have been paying very close attention to the housing debate in Australia for a long time now. You and I have had many conversations about it. What is your view now on why it is that neither major party really seems up to the task on this particular issue, an issue that really, I think almost every voter has a stake in at this point.

MIKE:

Well that's absolutely right and perhaps the first point here is that until a few decades ago home prices increased at roughly the same rate as wages right and then they decoupled and house prices took off. Part of the reason for that was various governments at state and Federal level pursued policies that pumped up demand. You know there were various generous first home owner grant schemes both state and Federal that put more money in the pockets of home buyers so they could bid against other home buyers. And there were also tax breaks, you know, that made housing attractive to investors. You know, it's notable, I think, that the real escalation in home prices coincided with a decision by the Howard government way back in 1999 to halve the capital gains tax. And John Howard famously celebrated the fact that they'd lit a rocket under house prices and said that no one had ever complained to him that the value of their home was going up. So while these dumb policies over decades have seen a large and growing number of people struggling to get into the housing market or locked out of the housing market. It's still the fact that an even larger group of people own or are paying off a house. And so, you know, the parties have been pandering to that majority, and that majority naturally enough wants to see the value of their asset increase.

RUBY:

Mike, thank you so much for your time.

MIKE:

Thank you.

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RUBY:

Also in the news today…
Both the prime minister and opposition leader have taken time out of their election campaign to mark the Pope’s passing at age 88.

Prime Minister Albanese attended an early morning mass in Melbourne yesterday, where he told the press the Pope will be quote “recorded in history as one of the most significant of all the holy fathers.”

Meanwhile Peter Dutton paid his respects at a mass held in St Mary’s Cathedral in Sydney. It’s estimated around 20% of the Australian population - just over 5 million people - are Catholic.

AND

More than 100 leaders from universities and colleges across the United States have denounced the Trump administration’s “unprecedented government overreach and political interference” within higher education.

The statement, published yesterday, comes after a campaign by the Trump administration against many universities, including Harvard.

Harvard University is the first school to sue the federal government – after president Trump threatened to freeze 2.3 billion dollars in university funding over its handling of anti-semitism on campus.

Harvard has previously rejected a list of demands by the Trump administration, labelling them over-reach.

I’m Ruby Jones, this is 7am. See you tomorrow.

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