In case you missed the 7th Rental Affordability Snapshot, here's a few of the headlines. We analysed a record 75,410 private rentals that were advertised over the weekend of 2-3 April and assessed them for affordability for 14 different household types, ranging from a single person on Youth Allowance to a couple both on the minimum wage with two children. As always we factored in all government benefits and tax concessions the household would be due to receive, such as Commonwealth Rental Assistance and Family Tax Benefits.
The findings were, as in previous years, stark. There was not one place out of the 75,410 that was affordable for a single person living on Youth Allowance. The numbers were similarly bleak for a single person on Newstart – nine places across the whole country were affordable.
In addition to the nationally aggregated numbers and the individual regional reports, we have for the last few years aggregated the regional and metropolitan data. When we started it was thought that regional prices would be more affordable. However, any easement is slight. For example, a single person living on the aged pension and seeking a private rental in a regional area would find less than 4% of the available properties affordable. This situation gets worse when you realise that for a single person, we consider for the purposes of the Snapshot, that a room in a share house is suitable. Hardly what many of us would want when we retire. The single person on the minimum wage is little better off - just over 5% of available properties would be affordable.
All the data makes sobering reading and the upshot of it is that if you are on government benefits, if you are on the minimum wage, if you are single, the private rental market is going to be a very difficult place for you to live.
The issues of education, employment, health and housing are almost a four part chicken and egg syndrome; which comes first? Where should government's start in order to maximise the wellbeing of their citizens? Which will guarantee or underpin the others?
While housing doesn't guarantee employment, it is very hard to hold down a job without somewhere to live. And good housing may not preclude poor health outcomes, but it is hard to maintain good physical and mental health without secure and appropriate housing. Housing is what we constantly hear stands between our client's current situation and a decent life. Housing is the bedrock of family life. It does seem that while there are various policy entry points to the circle of wellbeing if housing isn't in place, the others will struggle. Housing is the foundation of these building blocks. So how can we be at a point where housing is out of reach for people on government benefits and low wages?
In a wonderful article for The Guardian based on the Snapshot, Greg Jericho points out the rise in rental costs have far outstripped inflation and therefore wages and pensions; benefits are not even linked to inflation, leaving people on those even further behind. Public housing stock is falling and the overall population is growing. In fact, the Housing Supply Commission estimates there is a housing shortfall of 500,000 dwellings.
This is our 7th year of the national Snapshot and it has been interesting to observe the changes in the national conversation. Seven years ago our recommendations about negative gearing were never the source of questions in media interviews. Gradually over the years there has grown a greater openness when we describe negative gearing and capital gains tax as welfare benefits to the rich that should have conditions attached.
Housing is a complex issue requiring continued and coordinated input from each level of government, market and the not for profit sector. However in this federal election year, with the fading opportunity of tax reform, the commonwealth tax levers of negative gearing and capital gains tax look like a very good place to both reclaim some income and better target housing activity.
The combined effects of negative gearing where losses are socialised - paid for by the whole community via tax concessions - and capital gains tax, where the tax obligation of the gain can be halved thus privatising the gain, has created a perverse expectation of wealth development through real estate. And yet these policies do not seem to have increased suitable affordable housing for the tax payers who are subsidising them. In Anglicare Australia’s submission to the Henry Review into Tax Reform, we stated that income should be taxed at the same rate however it be earned. Whether via a wage or property sales. The 50% discount in capital gains tax goes directly against this very simple and egalitarian principle.
Each year in the numerous media interviews that follow the Rental Affordability Snapshot, I'm asked, "what's new, what's different this year?"
What is different this election year is that each of the major parties has at least discussed negative gearing, even if (in the case of the Coalition) to then reject changes. It is no longer the sacred cow of housing policy and we should keep talking about it whatever the outcome of this election. The vocal vested interests talking against changes are sounding shriller and more self-interested. The tide is turning and it is time that this cow is put out to pasture.