2 September 2024

Housing in Australia is a disaster but public housing is not the solution

| David Murtagh
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public housing backyard

Nearly 500 public homes are currently under construction or in design in the ACT. This one was opened by Housing Minister Yvette Berry on 20 August. Photo: Yvette Berry Facebook.

Housing affordability is a crisis in Australia. For government, it is a wicked problem. It can’t be solved with virtue signalling or emotes to ‘do something’. We need to have some difficult conversations, but politics hates that. We want answers now.

With an election in October, politicians – actual and aspiring – have landed on public housing as the magic bullet.

The truth is, public housing won’t dent the housing crisis. We can’t afford it. Public housing is too expensive and more of it will only encourage demand for public housing by turning government into the landlord of choice. What’s worse is that candidates promoting this ‘solution’ know it won’t work.

It’s time you heard the reality about public housing.

What’s the problem we’re trying to solve?

It’s easy to spell out the problem about homelessness and the housing crisis affecting low-income Australians. It’s easy to identify the problem: houses cost too much, there aren’t enough, too many people can’t afford them.

But read the opinion pieces published across Region platforms again (Social Capital? This election, let’s fix market failure and Government can’t afford to turn its back on community sector in its time of need).

Notice something? They define the housing crisis in granular detail but stop short of explaining how much their solutions will cost.

Take Independent for Canberra’s Thomas Emerson in his oped When did we give up on fairness?

Emerson wrote: “Most of the Canberrans I’ve met on the campaign trail have a strong social conscience. They believe we should feed the hungry and house the homeless. They want to live in a fair society, but our public housing stock has decreased by almost nine per cent since 2011. During the same period, our population has grown by 30 per cent.”

He says we should first elect more Independents for Canberra candidates (of course!)

He wants more public housing, right? But he doesn’t tell you how much it would cost, although he casually references how much housing stock he thinks we need.

Housing ACT has about 12,000 dwellings on its books. So, if Emerson wants public housing to meet population growth, we would need 30 per cent more public housing.

Those extra 3600 homes (30 per cent of 12,000) would cost around $2 billion. At a minimum.

The ACT is wealthy, we can afford public housing, right? Nope

Not in 2024 with the current building regulations, the standard of public housing built in the ACT and the dire state of ACT finances.

Understand this: modern public housing is very modern. They aren’t the shoeboxes that were knocked down on Northbourne Avenue a few years ago.

Scroll through Minister for Housing and Suburban Development Yvette Berry’s Facebook feed and you’ll find multiple examples of new public housing, including this development she opened last week (20 August).

This is the quality of public housing being built in 2024 in the ACT. Would you live here for 25 per cent of your income?

Sustainability, housing choice, adaptability, energy efficiency, low-running cost and amenity are all important for housing – but at what cost?

So how much does it cost?

On average, public housing in the ACT costs anywhere between $500,000 to more than a million dollars per dwelling, based on ACT Government figures. Each home also costs the government about $10,000 a year to maintain. Even on the back of an envelope, the numbers get very scary, very fast when you realise what politicians are promising.

Of course, building costs have only risen since these estimates were calculated in the period 2019-20 to September 2022 and released in January 2023, so these are more than optimistic estimates.

public housing cost per dwelling table

Public housing cost per dwelling (Question on Notice tabled January 2023). Table: Housing ACT.

Unlike most, the ACT Greens are very open about the cost.

They want to build 10,000 public homes in 10 years and estimate the capital cost at $5 billion to $9.5 billion. Their maths is correct (based on $500,000 to $1 million per dwelling).

But that assumes land will be sold from the Suburban Land Agency from ACT Government releases to Housing ACT at a 50 per cent discount, so it could cost well over $9.5 billion.

Won’t building the homes solve the problem?

Not a chance.

We’re trying to help people in crisis. People in desperate need of a home.

The properties we’re building now will only fuel demand because the government will be the landlord of choice. Check out those photos again. Who wouldn’t want to get a home like that for 25 per cent of their income?

Income eligibility to access public housing is quite low (up to $71,000 a year for a family with two dependents).

This is where it gets brutal. As harsh as it sounds, taxpayers can’t afford to build million-dollar homes and charge about $340 a week rent (25 per cent of $71,000).

And then the $10,000 a year for maintenance and rates (Housing ACT pays rates to the ACT Government in a money-go-round).

And then there’s lifetime tenure.

Golden handcuffs?

In the ACT, public housing is not ‘temporary’.

Once you’re in public housing, you have tenancy for life. Why would you leave a million-dollar home when you’re paying 25 per cent of your income to enter the private rental market? That will only put more pressure on the waiting list.

And once a home is occupied, it’s off the market forever.

That’s the problem the ACT Government faced when they tried to relocate tenants to sell their property and reinvest the proceeds through the Growing and Renewing Public Housing Program.

There are more problems when it comes to construction in the ACT.

Where are the workers coming from?

If you’re looking to build or renovate, you better hope the government doesn’t try building an extra 1000 or more public houses a year because we don’t have the workforce.

In a good year, across the entire ACT, about 5000 new dwellings are built.

The Greens’ public housing target would increase that by 1000 a year (20 per cent more), and that’s before the Albanese Government’s Homes for Australia plan that promises “1.2 million new, well‑located homes by the end of the decade from today [1 July 2024]”.

According to the Master Builders Association, the industry’s biggest challenge is not having enough workers. The MBA estimates the ACT will need 7000 more construction workers by November 2026 to meet current targets.

So that raises two questions: where will the workers come from and, ironically, where would they live?

The ACT also doesn’t have the money. It would all be debt – in addition to other promises on our tab such as light rail, the theatre redevelopment, a new convention centre … You see the problem?

READ ALSO 270,000 cap on international students from next year

The housing crisis is a wicked problem. If it weren’t, it would have been solved already.

If you are a candidate and are promising to fix the issue with public housing, you need to answer some pretty horrid questions that governments have avoided for decades:

How many public houses are you planning to build? Where will they be built? At what density? How long will it take? Where will the workers come from? How will you decide who gets them? Will there be lifetime tenancy? How will you limit demand? At what standard will they be built? What taxes will you raise, or what services are you going to cut or how much are you prepared to borrow?

Kitchen in public housing

Public housing in Dickson. The new homes include a range of two-bedroom townhouses to four-bedroom units and meet a minimum six-star energy efficiency rating. Photo: Housing ACT.

The reality is that solving the housing crisis isn’t about choices – it’s about compromises.

Until candidates come clean, especially in light of everything else they promise to fix, they’re making promises they know they can’t keep, and to the men, women and children in need, that false promise is cruel.

Whatever the solution to this crisis is, it’s not public housing.

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ChrisinTurner5:44 pm 03 Sep 24

As of 2020, 78.7% of Singapore residents live in public housing. And please don’t forget the ACT government demolished hundreds of two-bedroom air-conditioned public apartments next to the Canberra Centre. Why?

So what’s the solution?
Given the international experience- countries that have high levels of investment in community housing have significantly lower levels of homelessness than countries that have low levels of investment.

This article is spot on. Good to see someone finally highlight the cost of public housing to ACT taxpayers. It is ridiculous that you get public housing for life. Public housing should be for the neediest for a short period. Once someone’s income reaches a certain level, they should be required to move out into the private rental market and give the property to someone more in need.
Maybe if this ACT Government repealed some of their anti-property investor legislation, i.e., rent caps, land tax, etc, more property investors would be more inclined to enter the market and therefore provide more properties to rent. More supply would reduce rents.

People need a low income to qualify and can be evicted when their income increases over a threshhold. I take no position on what those threshholds should be, but they exist.

Household “property investors” are not principal providers of new housing. They primarily compete for existing stock, driving up prices. Your proposal is a self-interested fallacy.

It is interesting how punitive measures and costs that govt deemed acceptable to be passed on to private landlords suddenly become unacceptable when govt becomes the landlord. Talk about equality under the law…..oops, I mean inequality under the law :l)

Also, never realised that someone can live in a modern public housing for life and pays only 25% of their income as rent. Wow, just wow. That is an eye opener.

It is just not worth investing and being a landlord in Canberra currently. Maybe a change of government and an improved & change of the current crap rental reforms could increase property investment which would be smart move with a new Liberal state government.
Otherwise, it is much smarter to place your hard-earned cash into properties in other states or just pump your super up to a higher amount.

Coffee-Time, so sorry to hear you cannot manage to gain from property rental in Canberra. Given those circumstances, it makes sense to invest elsewhere or in other vehicles, leaving the market to those who can. That is fair. Not every asset class or sub-class is suitable for every person.

If you consider further, that is actually how a market is supposed to work. Investment is always in a regulatory context and competent investors respond accordingly. Moaning about the context, that a government should change things to suit them, does not mark a competent investor. I have argued and will continue to argue that the current federal tax impacts are overly generous to private landlords. ACT rates and taxes are not generous to landlords but nor do they kill the market, and in the long term tax efficiency and equity are moving in the right direction..

devils_advocate10:02 am 02 Sep 24

@Coffee-Time

Yes it may seem that way, however if it’s any consolation all the anti-developer, anti-homeowner, anti-landlord, anti-investor policies will come home to roost in fairly short order.

You can’t tax your way to prosperity, and you can’t regulate prices – the market always wins.

Peter Wigley1:44 pm 01 Sep 24

There are quite a few questions about the veracity of this article, but one that screams “he has an agenda to kill public housing” is that he side steps the fact that once a public housing tenant’s income rises above the threshold to get the 25% of income rental benefit they have to pay market rent. And, the fact that there are investors (including very savvy superannuation fund managers) who want to put money into “build to rent” proposals would indicate that the government would be on a long term winner for all us taxpayers by investing in public housing.

If their income rises, shouldn’t they no longer be eligible for that property and pass it on to someone who falls below the income threshold – someone in greater need? The scenario you mentioned just removes more public housing from an already tiny pool. If you can pay market rent, shouldn’t you be in the market-rent market…. and not the public housing market? I’m curious now how many full market-rent payers there are while the waiting list grows.

The answer to the problem of a perceived public housing shortage is not to build more houses, but to tighten eligibility and to remove people from public housing once they are no longer eligible. Public housing should be for emergency or ongoing hardship, not an assumed lifetime entitlement.
I remember a certain Greens MLA justifying her occupation of public housing, until public opinion persuaded her otherwise. I also knew two senior very well paid public servants in public housing, while I as a first home buyer struggled to pay a rising mortgage, rising rates and rising home maintenance bills. No wonder they could afford annual overseas holidays.
When I questioned why my rates and taxes should subsidise their use of public housing I was astonished at their self serving hypocrisy.
So the crux of the public housing problem is exactly as written by the author:
“Once you’re in public housing, you have tenancy for life. Why would you leave a million-dollar home when you’re paying 25 per cent of your income to enter the private rental market? That will only put more pressure on the waiting list.”
Indeed.

Secure tenancy> oh no! How terrible Acton! Interesting that it doesn’t occur to you they could just build more, like we used to in this country. You got shafted by the banks and competitive sellers market to become an owner, so everyone else can too eh? A stronger ‘free rider’ argument can easily be made about people living in privately owned homes, and their unearned land value appreciation. One can either make public housing available to everyone like Singapore does, or tax away all land rent with a strong land value tax, or some combination.

James-T-Kirk11:23 am 30 Aug 24

If we really want reduced housing costs, lets lobby government to release land at zero dollars, with no land rates for a fixed period. Half the cost of a house seems to be the cost of the land – which is trickled out by the government at a rate to ensure costs stay high.

Good idea – should be restricted to ACT citizens who do not already own a home. The loss of revenue should be recovered via higher land value taxes levied on all property owners. Not having to pay for the land would slash the mortage required for a typical home.

Does the Defence Housing Australia provide a model?
As I understand it, DHA builds new houses and sells them on a lease-back arrangement to investors. The house is then sub-let to Defence members. DHA also leases and subleases existing houses owned by investors.
This scheme, if expanded, could provide a model to increase the public housing stock and encourage private investment in housing (harnessing rather than demonising private investment).
And, it is a sustainable scheme because the government can recoup the cost of building houses by selling them to investors. Investors have a guaranteed income, an undertaking by the government to maintain the property and, importantly, houses can be bought and sold without renters needing to move out.
I’m not across all of the details of the DHA system but it may provide at least a partial solution.

Incidental Tourist8:06 pm 30 Aug 24

DHA are much larger often detached houses typically rented from new to 10-15 years old being refurbished at the end of the lease and handed over to the owner. DHA is highly subsidised by Defence. Such scheme in public housings will result in increased costs. And then remember that public housing tenants and defence personal tenants are very different

Incidental Tourist8:44 am 30 Aug 24

“In ACT … a million-dollar home tenancy … is for life” and then on top of it ACT spends “$10,000 a year for maintenance and rates”. As insane as it may sound it is actually cheaper to grant these million dollar homes absolutely free to welfare recipients to save on rates and maintenance costs. This highlights the lunacy of Greens/Labor welfare housing policy. It traps their residents in golden welfare house for life demanding them never work and never pay their fair share of taxes.

Older public housings are granny flat size, we wasted tax money and land to build so few dwellings. And these public housings are more luxurious than my mortgaged apartment unit.

I don’t really want any more of my taxes giving lazy people a free ride.

… and I don’t want my taxes giving lazy landlords a free ride via negative gearing – but I have no choice.

Again, your financial illiteracy does not make claiming legitimate expenses as tax deductions a “free ride”. Not understanding this is probably why you don’t have properties to rent out. 🙂

@Ken M
It’s not about financial literacy – it’s about your hypocrisy. You are happy for a (legally) free handout of your tax dollars to landlords but not a free (and equally legal) handout to social security recipients. A drain on the public purse is a drain no matter how you look at it.

Again, it’s not a “free handout”, and you are either ignorant or wilfully lying. It’s a tax offset. The same way any other individual uses other work related expenses as an offset. The fact you are jealous that you can’t afford to do it is neither here nor there.

@Ken M
“… same way any other individual uses other work related expenses as an offset.”
Really? Given you are such a financial genius, perhaps you can explain to me how the interest on an investment property loan, is a work expense for an APS 6 in the earning of their public service salary? You can push your smokes and mirrors BS as much as you like – but at the end of the day it’s an ATO handout subsidised by other PAYG income tax payers.

Government subsidized rent seeker and unearned increment enthusiast Ken complains about others getting a free ride! A-grade hypocrisy! Keep digging Ken with those classy “stop being poor” retorts!

Well, you see JS, rental income is still assessed as income, so any expenses incurred to earn that income is able to be used to offset your taxable income.

There is your lesson in the most basic concepts of taxation.

Matthew Scott2:37 am 01 Sep 24

Being a landlord is no different than being a small business owner. You sell a service. The rent is your revenue. The interest, rates, land tax, maintenance etc are the costs of business. Like any business you claim the costs of doing business as a tax deduction. The only way you can be negatively geared is if you are making a loss – ie your costs exceed your revenue. That loss then reduces your taxable income and you might get a bit more back in your tax return. That’s a lot of effort for a “handout” from the ATO.

That’s an insult to small business owners. Most small business owners have to work pretty damn hard, in the process competing with others to produce valuable goods and services. Landlords leveraging capital to buy up houses others would simply buy and own isn’t meaningful or productive work, and doesn’t create any economic value. Lets see what Adam Smith wrote about landlords… “As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce”. “[Landlords] are the only one of the three orders whose revenue costs them neither labour nor care, but comes to them, as it were, of its own accord, and independent of any plan or project of their own. That indolence, which is the natural effect of the ease and security of their situation, renders them too often, not only ignorant, but incapable of that application of mind”.

@Ken M
And therein lies your hypocrisy. You are capable of understanding, even justifying, those who legally suck on the public teat to reduce their PAYG income tax, yet you baulk at those who are legally assessed as being entitled to draw welfare from the public purse. It’s all a drain on the public purse but you only want to fund those who meet your definition of entitlement.

Jealous communists who have no money are always amusing.

JS, you mean I don’t complain that the people who actually contribute the vast, vast majority to the PAYG system, are able to offset some of their earnings, and minimise it all being being leeched to fund people who contribute nothing and only ever take? Yeah, you’d be correct. I probably still paid more in tax each FY than you earned, even with those offsets.

@Ken M
“… the people who actually contribute the vast, vast majority to the PAYG system …”
Really – so those who are sucking on the public teat to fund their asset via negative gearing, pay the highest amount of PAYG tax do they? Do you have any verifiable facts to support that? Oh wait – facts are never something you let get in the way of your outrageous fabrications.

“… even with those offsets”
What offsets would they be? Didn’t you crow elsewhere that all of your investment properties are positively geared? Yeah right.

As for your tax bill? Well if its size helps you compensate for your other challenges, then happy for you to flaunt it. However, I’m very socially comfortable with the amount of income tax I paid – including a substantial portion of which was in the highest PAYG bracket.

Nevertheless, you keep on judging others who may have landed on rough times. The beauty of bigotry is that it doesn’t bring with it the burden of a social conscience.

I’ll tell you what is a drain, public servants getting more than the 11.5% super that the rest of us are getting. All tax payer dollars paying for that. Oh, but that’s OK isn’t it, especially if you are a public servant Just Saying. Defence staff used to get Doona Days. Is that still a thing that the tax payers are paying for?? What about maternity leave that public servants get, us in private enterprise have to use our annual leave, again, tax payer dollars. When you think about it, it’s all Swings and Roundabouts!!!!

Imagine being so ridiculous that you ask for a source for a well known fact. 10% of income earners pay over 50% of PAYG tax. Those are also most likely to be the people investing in property.

You can continue peddling the lie that negative gearing is some sort of handout, when the reality is that it is claiming legitimate expenses incurred to earn an income. You are just upset that you can’t do it.

@Bel J
Nice rant. Not sure what point you are making but well done you.

Oh and nope – not a current or former public servant. A self-funded retiree here- you know paid my taxes and am looking after myself because I can afford to do so.

@Ken M
“Those (10% of income earners?) are also most likely to be the people investing in property.”
Oh so a ‘most likely to be’ constitutes ‘a well know fact’ does it? Like I said you and facts are well known for not being close acquaintances.

“You are just upset that you can’t do it.”
Didn’t, and don’t, need to do it. Even after the ‘burden’ of not being able to avoid paying substantial PAYG income tax, still managed a very comfortable lifestyle – and still do in self-funded retirement.

You were here in these very pages recently Ken M. arguing for farmers in the ACT to be given extra rights and excluded from the ACT’s leasehold system. These farmers had been recompensed for the loss of their lands by the Commonwealth following formation of the ACT and over many years by various governments while paying no rent, contrary to their lease agreements. In the same breath, you deride public housing tenants as “freeloaders” for entering into the very same agreements with the government!

Your hypocrisy is astounding!

Ok, I’ll explain. My point is, a lot of us get something out of the tax payer. It might be family tax benefit, child care rebate, extra super, doona days, negative gearing, the dole. If you want to complain about one group getting something then you need to think about all of them. Understand? Or still confused. If so, I can’t help. PS, you also are capable of a nice rant!

Thumbs up, Correct.

Exactly! Perfectly said.

Yes, obviously those 10% are most likely to be the ones investing in real estate. The fact you even want to question that is amusing, JS. It’s certainly not the bottom 10% of earners buying million dollar assets. Is that red nose on too tight?

@Bel J
You should have actually read the thread to get context before going off on your rant, Bel J.

You would then have seen that my “objection” to negative gearing, was simply a counter to Ken M’s disdain for his “taxes giving lazy people a free ride”, i.e. those who are receiving legitimate public purse assistance.

Do I need to explain further or have you caught up on the story to date?

@Ken M
Oh OK – another of your “because I say so” facts … got it.

That’s right, JS. I can’t expect you to ever use common sense. I had momentarily forgot about your dire need to be told what to think.

@Ken M
“common sense”? … well one thing’s for sure – when it comes to you, sense definitely isn’t ‘common’.

Stay mad that your weird fantasy about claiming legutimate tax offsets isn’t free money, JS. 🤣

It will always be my money, that I have earned, and I’m just giving less of it to the government to waste on handouta for the lazy.

@Ken M
It’s not a fantasy to say that any payment from the public purse is a drain on government resources. Other PAYG payers are subsidising the tax return you get every year. “White collar welfare” is still welfare.

How hard is it for you to understand that it’s not a “payment from the public purse”, JS? It’s my money, that I have earned. I’m handing less of it over to the government by claiming legitimate expenses to offset my taxable income, before it hits the public purse.

This isn’t rocket science. You just don’t like the reality of it.

Who prints your money, Ken M?

Should unproductive economic distortions be corrected?

@Ken M
You are right, it isn’t rocket science. You pay weekly/fortnightly/monthly/whatever PAYG income tax on your “day job”. You also have a totally unrelated side gig of multiple investment properties that make a loss on the rent you receive. So it’s not enough for you to pay zero tax on that income (as happens with companies that make a loss), you then ask the government to give you a handout – via a return of some of the PAYG income tax you paid.

Either you have a unique and “special” arrangement with the ATO, whereby you don’t actually pay PAYG income tax (which goes into the public purse) or you can’t admit that negative gearing is about getting an after the financial year tax return – i.e. money coming back from the public purse.

Whether or not I like the reality is irrelevant. Nevertheless, the reality is, you get a handout from the ATO, which is, as I said, “white collar welfare”.

What’s the percentage of public housing in the ACT today like compared to what it was in the 60’s. 70’s and 80’s? I’ll bet its a lot smaller

Perhaps that’s a reason why it’s too expensive. Since the early 90’s a lot of older public housing was sold off but the money not re invested in public housing.

The costs being brought up here are they for contractors to maintain the houses or a team of government employees on the payroll?

Set aside 10-15% of all residential land area in every new suburb for public housing.

If the government becomes the preferred landlord then competition will drive rents down everywhere. That’s how the market works.

I 100% agree with Keiths point #3 on negative gearing

James-T-Kirk11:21 am 30 Aug 24

I can’t see the government getting in and really driving rates down – Rates are typically set to cover the cost of the mortgage over the place. Most landlords don’t rent at a lower rate that the mortgage they have to pay back (unless they are into negative gearing) – Reduce the negative gearing, and then there is no incentive for landlords to reduce rates.

More public housing is absolutely a possibility, as long as we tax payers are happy to pay higher taxes to support them. Is that what we *really* want?

To solve the problem. Firstly Public housing should have, at most, a lease of five years signed by the tenant. Further negotiations if the lease is to be extended. Again for no longer than five years.

Secondly demand should be less than availability. One way is to better monitor and restrict immigration. Perhaps we can use AI to vet the applicants.

Thirdly negative gearing should be reduced to only two properties as well as the family home, provided the family home is worth less than $1.6million, reviewed annually.

Fourthly there should be a definite consequence for those politicians and public servants caught corrupting the systems, loss of pension for instance.

Tempus Viator11:18 am 30 Aug 24

I’m not fully across negative gearing, but how do you negative gear a family home?

Matthew Scott2:40 am 01 Sep 24

You can’t because you don’t derive an income from it.

Public housing has always been the solution, and it still is today.

For 30 years, States/Territories have been shrinking and selling their (expensive and highly-attractive) housing stock, silently pushing the funding burden for housing of poor people onto the Australian Government’s welfare and social support system. Meanwhile, federal tax settings are deliberately set to create and inflate an entire asset class for Australians, just like superannuation. So less state-provided housing, amidst the shift to profit-based value-skyrocketing housing. It could only end one way.

And the steely determination of leaders to continually refer to a “housing shortage” only helps jack up home prices more, helping to prop up the asset class federally and distract people that it was the States/Territories that began shafting them decades ago.

I’d fault the author on relying on any figures the ACT Gub’mint provides on public housing – how much each dwelling costs to build ($500K is dishonest, you can build medium density apartments for under $400K), or what their repair/maintenance budgets are – I don’t believe a word Barr & Co say. One reason maintenance costs have “risen” is because many high-density sites have been sold, leaving a higher proportion of low density or detached dwellings. So of course, the “average maintenance cost per dwelling” is (allegedly) now $10K, but we also know ACT maintenance contracts are simultaneously overblown and underserviced. In the absence of any confidence in the ACT’s official numbers, I’d bet MY house that the true figures are (much) less.

The solution remains: the feds need to choke off the asset class (switch off negative gearing and write-offs) and include the family home in the pension test, LGAs need to limit “short stays” to 50 days a year, and juros need to stop shovelling money to politically-connected Tier 1 constructors for multi-billion dollar stadiums and tunnels, and return to providing infrastructure and services for the average person.

Tempus Viator11:22 am 30 Aug 24

As I try to understand this negative gearing topic, if you ‘switch off’ negative gearing, does that mean the government also misses out on the capital gain taxes?

Matthew Scott2:46 am 01 Sep 24

Negative gearing simply means that the landlord makes a loss on the investment, a loss they can claim against their taxable income. If you own a property outright – ie no mortgage – then unless your maintenance costs outstrip the rental income you are positively geared. You are making money which is then taxable income. Capital gains tax is the tax an investor pays on the proceeds you make from selling a property.

You got close there, Matthew Scott, while still avoiding a vital point.

Business expenses (from a side hustle presumably) are not deductible from employment income in a different business or the public service. Correspondingly, all expenses related to investment [property] are and should be deductible from that investment income; they should not be deductible from independent employment income, ‘negative gearing’.

Also, it is not necessary to own outright to be negatively geared. The question is total deductible expenses including mortgage expense.

Negative gearing is a taxpayer subsidy to landlords, of negligible social benefit. Losses are quarantined for capital gains tax and can as easily be quarantined for asset investment income.

Anthony Peterson10:20 am 29 Aug 24

It’s actually a very easy problem to solve once you kill a few sacred cows. Firstly, we must be happy for the prices of low to mid range house to drop substantially. I’m a home owner, and I’m happy for that. I will still have shelter at the price I agreed to pay. Secondly, 2 billion is affordable compared to projects like the light rail that don’t stack up against its own business case (at least for its transportation value). Thirdly, we could limit ownership to 2 dwellings, and relax a bunch of planning laws to allow caravans, tiny homes and off-grid homes in semi rural locations. And there’s many other things we could do as a Territory, let alone lobbying for changes in our taxation laws.

The authors skepticism of the governments ability to obtain land from SDA at a discount to market for public housing is baseless. It was recently pointed out by Jon Stanhope on CityNews that the profit margin on ACT land is forecast to be between 50-60% over the next 4 years based on the suburban land agency budget statement, and the indicative land release program. The Australian history of building public housing at scale in this country and in Singapore to this day proves the author is in denial. The author is vastly outnumbered by experts in agreement that more investment is needed in non-market, public housing. The question readers are left with is who is the author and why has he posted two pro private landlord articles in the space of a month on the RiotACT?

Stephen Saunders9:26 am 29 Aug 24

For two years, Albanese Labor has “pretended” to fix housing, and Bandt Greens have “pretended” to oppose them. On the one hand, Greens want a “two year rent freeze”. On the other, they say any reduction in immigration would be a “disgusting migrant-bashing race to the bottom”.

The reality is that, with generous tax breaks and massive migration, Australia is stuck long term with world-levels of rental and housing un-affordability. Consequences for fairness and equality are obvious. Bank of Mum and Dad wins.

Incidental Tourist9:14 am 29 Aug 24

Thank you for this candid article. There are indirect public housing costs – uncollected rates and land tax revenue by “recycling” rates paid by ACT Government to itself, lost revenue because of the 50% land sale discount, lost revenue of stamp duty and also the poverty trap. Many inside stories tell that public tenants are discouraged of earning more because they will loose cheap public housing. By earning more they won’t be able to afford market price.

The housing crisis has been manufactured by this Greens/Labor government since their 2011 tax reform because they collect more than half of its revenue from real estate taxes. So inevitably the real estate prices and rents must go up and the market supply is stiffened.

The only alternative is to undo such harmful tax burden and fire up market supply forces. If we want to solve housing crisis then tax on real estate has to go down. This cannot be done overnight. The first step is to reign on relentless government spending, freeze taxes, relax tenancy legislation and reduce red tape on new builds. Canberra Liberals and some independents like Belco party offer steps in this direction. Unfortunately ACT Labor have been in bed with Greens for too long. They shifted too far left and they become a part of the problem.

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