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Fiscal Treasury Group on housing and the axing of the Housing Supply Council

Estimates & Committees
Scott Ludlam 21 Nov 2013

Senator LUDLAM: Did the Prime Minister axe the National Housing Supply Council at the same time that he bowled over a whole heap of other non-statutory advisory bodies? Who made the decision to knock that over? Was Treasury consulted before that council was abolished?

Mr Ray: The government made the decision.

Senator LUDLAM: The government made a decision. Do you advise the government or was your advice sought before that decision was made?

Mr Ray: We were involved in providing advice on this issue.

Senator LUDLAM: Okay, you were. Was your advice consistent with the decision that was taken?

Mr Ray: That goes to what our advice was.

Senator LUDLAM: It is always worth a try. Kevin Andrews was quoting National Housing Supply Council figures a week before the Prime Minister took an axe to it. Treasury retained responsibility for housing supply and, presumably, for tax policies as it relates to the property sector. Where will you be getting your specialist advice from, now that that group has been abolished?

Mr Ray: It will depend on the particular questions that we are investigating. We would get it from a range of sources.

Senator LUDLAM: Like what? Let us take it back to first principles. Do you believe that the National Housing Supply Council provided a valuable non-partisan, apolitical set of expert advice on the housing market?

Mr Ray: I do not think it really matters what I believe. The government has taken a decision.
Senator LUDLAM: The government sure has. You are aware that this decision was condemned by groups as diverse as the Property Council, Housing Industry Association and Master Builders, Real Estate Institute of Australia, UDIA, Residential Development Council Urban Task Force Planning Institute, Shelter Australia, and the Australian Greens. It is rare that you would get all of those groups on the same page. Are you aware of a single stakeholder in the field who thinks that it is a good idea to knock over this advisory council?
Ms Croke: Not that we are have been advised of.

Mr Ray: I do not think we have been watching it to be honest. So therefore the fact that we might not be aware, I would not read anything into it.

Senator LUDLAM: You were not interested in the reaction of people right across the property sector from top to bottom?

Mr Ray: The decision was taken and announced, and-

Senator LUDLAM: Senator Sinodinos, maybe it is a bit unfair to levy these questions to those who have to carry out these decisions. Are you aware from a government level of any stakeholders anywhere in the country who support that decision?

Senator Sinodinos: I have not looked specifically at the circumstances of that-

Senator LUDLAM: Could I ask you to take that on notice, Minister?

Senator Sinodinos: Sure. The only other point I would make is that governments sometimes have to make hard decisions even in the face of stakeholders who may want something retained, but prioritisation is part of the art of government.

Senator LUDLAM: Yes, indeed it is. I certainly could not disagree with you on that. How much money did you save knocking this expert body over?

Ms Croke: On a per annum basis, the council's budget was around $700,000.

Senator LUDLAM: So you saved $700,000 knocking over this expert body for which you were justifiably condemned and you will lose about $80 million a year in dividends when you knock the Clean Energy Finance Corporation over. Could I propose that you choose not to abolish the CEFC and that pays roughly a hundredfold for what you are about to lose?

Senator Sinodinos: Can I propose that you go back and replay the 2013 election and maybe you will get a different result?

Senator LUDLAM: Might get to do that in Western Australia in March. We may well get a different result.

Senator Sinodinos: I am not sure it is going to change the policy at the federal level, Senator.

Senator LUDLAM: Does the social policy division in Treasury still exist?

Mr Ray: Yes.

Senator LUDLAM: Will it maintain a focus on housing and urban development? Would that be one of your sources of advice?

Ms Croke: We will still have a housing and homelessness focus, working with the parliamentary secretary who has housing supply in his remit.

Senator LUDLAM: Yes. Just remind me who that is, because the portfolio has been splattered all over the place.

Ms Croke: Steven Ciobo is the parliamentary secretary to Treasury.

Senator Sinodinos: I think it has been carved up quite expertly and logically, actually.

Senator LUDLAM: Oh, could you point me to who the housing minister is?

Senator Sinodinos: What, within the government?

Senator LUDLAM: Yes.

Senator Sinodinos: That is within the social services portfolio from memory.

Senator LUDLAM: So there is no housing minister, is there?

Senator Sinodinos: No, not specifically. We have gone to a much simpler structure, as you know.

Senator LUDLAM: Abolishing things certainly makes them simpler. So, the PM has said:

Many of these non-statutory bodies have outlived their original purpose or are not focused on the Government's policy priorities. So does that mean housing supply is not a government policy priority? Is that a reasonable rendering of that statement?

Senator Sinodinos: No, it is not, because among other things we have reintroduced the Australian Building Construction Commission-

Senator LUDLAM: Oh, please do not do that to this conversation.

Senator Sinodinos: Its purpose will be to reduce building and construction costs, and actually promote cheaper and more affordable supply of housing and other construction.

Senator LUDLAM: By attacking unions. I cannot believe you just did that. That is beneath you, Senator Sinodinos.

Senator Sinodinos: As a minister, nothing is beneath me, I don't think.

Senator LUDLAM: Now we have that on the record.

Senator Sinodinos: You asked me about policy; I gave you a policy.

Senator WONG: Senator, did you say that as a minister nothing is beneath you?

Senator LUDLAM: He did. Hansard has that.

Senator WONG: That is somewhat indicative of the attitude-and the arrogance, I have to say-that we see-

CHAIR: Senator Wong, you do not have the call.

Senator WONG: Seriously, I thought you were a bit better. I really did.

CHAIR: Senator Ludlam, are you questioning still on the National Housing Supply Council?

Senator LUDLAM: I have got a couple more.

CHAIR: I have got some questions on that as well.

Senator LUDLAM: I will keep it simple. Will the 2013 National Housing Supply Council status supply report-in my office, and I believe within government and opposition, these reports are quite well used. The council was on the point of releasing the 2013 edition; will that still go ahead? What happens to that research and data, because it is going to go cold.

Ms Croke: There are three chapters that have been drafted, and they will become available on the Treasury website.

Senator LUDLAM: When?

Ms Croke: Within the next couple of weeks.

Senator LUDLAM: At least I commend that if something good comes out of the wreckage. How many chapters was the report meant to contain if it had been completed?

Ms Croke: I am not sure; I would have to take that on notice.

Senator LUDLAM: Will somebody else take up a state of supply report or are we just going to be stumbling around in the dark?

Ms Croke: It is not apparent at the moment that someone would take-

Senator LUDLAM: This is the policy equivalent of poking both your eyes out, and now we all have to watch you stumbling around knocking things over. Where will your specialist advice come from, specifically relating to housing supply? There is a rental gap in this country at the moment of 539,000 properties, more than half a million. From where will we draw these figures from now on?

Senator Sinodinos: I just mentioned before, if you are trying to deal with supply, you have to have practical policies. I mentioned one policy we are already undertaking.

Senator LUDLAM: Understood. So if I want to-

Senator Sinodinos: In consultation with the states, we will be looking at things like land planning and other laws as well; to reduce red tape, reduce costs.

Senator LUDLAM: If I want to know what the rental supply gap is, I need to go talk to the Australian Building and Construction Commission from here on in? Is that what you are telling us?
Senator Sinodinos: I think what will happen is that, from time to time as advice is required on specific issues, we will draw on the appropriate advice; whether, in cases like this, the advice will now be housed more in the department, or as necessary get specialist advice from outside.
Senator LUDLAM: What was the Treasurer's response-I am happy to take a political answer-to the Grattan Institute report released in October that found homeowners and investors profit from government outlays worth $36 billion a year?

Mr Ray: What was our response?

Senator LUDLAM: Yes. Was there any response?

Senator Sinodinos: Are you asking what the Treasurer's response was or what Treasury's response was?

Senator LUDLAM: I will ask either, since I have you both here. Maybe, Senator Sinodinis, you first. The report was widely canvassed and commented on. The Greens made comment; I believe the ALP made comment. Did the government make any response?

Senator Sinodinos: And the report canvassed what again?

Senator LUDLAM: It was a report by the Grattan Institute, released this October just gone, that found homeowners and investors profit from government outlays worth $36 billion a year, and that those benefits are heavily concentrated at the wealthy end of the property market. It is low-income taxpayers subsidising high-
income property investors.

Senator Sinodinos: Are you talking about negative gearing and all that sort of stuff?

Senator LUDLAM: Not just negative gearing. There was capital gains tax, negative gearing; there was stuff in there around some state policies, like first home owner grants and so on.

Mr Ray: We are aware of that Grattan Institute report, as we are of a lot of the work that the Grattan Institute does. It is not for us to have a response. But I think as a general rule we need to be careful to take partial pieces of the government's budget in terms of its distributional impact. You can do that. It is a fair thing to do. But a better thing to do is to look at it in the aggregate and ABS do that each year with a lag. I think the latest available fiscal incidence analysis is for 2009-10. What that shows is that, at the aggregate level, the 40 per cent of highest income households-the redistribution of income from them to the lower-

Senator LUDLAM: No, this is not about redistribution of income; this is about redistribution of assets and asset wealth, not about income. That is the great lie that I think is being perpetrated on people. The report recommends re-examining, for example-not abolishing but putting on the table and re-examining-negative gearing and CGT discounts, and a number of other things relating to tenancy laws and so on. Mr Hockey had made some quite encouraging comments in the run-up to the last federal election about his broad tax review. Are those two Commonwealth tax measures likely to be in the mix, or have they been quarantined?

Senator Sinodinos: We have no plans to do anything on that front. But the white paper on tax reform is going to be a public process, and it is open to you to make a submission if you like.

Senator LUDLAM: Good. But I won't be wasting my time? You haven't ruled out any changes?

Mr Ray: The terms of reference for that process has not been finalised yet.

Senator LUDLAM: This is just for me. I am trying to get a sense of if the government has already ruled out changes or is it worth people making-

Senator Sinodinos: We have not contemplated any changes, and that is where we stand.

Senator LUDLAM: Yes. You haven't yet. That is presumably why you are undertaking this process.
Senator Sinodinos: As Mr Ray said, the terms of reference will be out, but it is a public process, you can put up a submission. That is the whole point of having a public process.


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