The federal government’s housing affordability package is a “sham”, Labor’s Chris Bowen says, and the measures set out in the 2017 budget will simply drive up prices.
Mr Bowen, in his budget reply speech at the National Press Club on Wednesday, will slam the Coalition for quietly raising Australia’s debt ceiling to $600 billion on budget day and forecasting gross debt could hit $725 billion.
After the Coalition won government in 2013 it promised to stop gross debt reaching the forecast level of $667 billion.
The budget also forecast that the more important net debt figure will rise to 20 per cent of GDP. This is low by international standards but high by Australian standards and “not since World War II has net debt been that high”, Mr Bowen will argue.
The shadow treasurer will argue that wage growth forecasts of up to to 3.75 per cent, which underpin revenue, are unrealistic and “yet the budget also continues to include unrealistic forecasts which help underpin the return to surplus”.
But it is Mr Bowen’s attack on the government’s housing package, which comes after the Coalition signalled housing affordability would be a centrepiece of the economic document, that will probably resonate with voters.
“Budget speculation tells us that they contemplated acting. I always doubted that they would. They didn’t because they lack the courage. Without reform to negative gearing and capital gains tax, the government’s package, and I don’t use the word lightly, is a sham,” he will say, according to speech notes.
“Most of the measures are unobjectionable. Ineffective, but unobjectionable. One, however, is highly objectionable. We know the government dabbled with all sorts of hare-brained plans to allow access to superannuation.
“Without negative gearing and supply-side reform, if it has any impact at all, it will simply drive up prices.”
Treasurer Scott Morrison’s second budget contained a series of measures, including tax incentives for retirees to downsize, a tax on vacant investment properties, a tightening of negative gearing travel perks, a cap on new properties that can be bought by foreigners and a new first home super saver scheme.
But it did not – after much internal debate – reduce capital gains tax discounts or tackle negative gearing.
The super scheme allows first home buyers to put up to $30,000 extra into their super, enjoy the favourable tax treatment, and then withdraw it to use as a partial house deposit.
Labor has said it will oppose this measure.
The shadow treasurer will also demand the government “stop lying about NDIS funding”, saying the former Labor government had fully funded the disability insurance scheme.
In fact, when Labor left office a $302 million saving measure linked to retirement incomes, designed to help fund the NDIS, had not been passed by the Parliament and was dropped by the Abbott government.
This is a relatively small portion of the $10.8 billion annual cost to the Commonwealth of the NDIS by 2019-20; but this $302 million sum, plus other savings the current government says Labor has counted twice, leave an overall shortfall of $3.8 billion in funding in 2019-20.
The Treasury has estimated the NDIS is underfunded by nearly $56 billion over 10 years, and a 0.5 per cent rise in the Medicare Levy was announced in the budget, raising $3.9 billion a year from July 2019, to help meet this shortfall.
Also on Tuesday, Mr Morrison said sections of of new housing developments in Sydney and Melbourne should be reserved for first home buyers and affordable housing, in a proposal that goes beyond the federal budget.
“It is a real problem that in so many parts of our city here in Sydney and Melbourne, as well, that the people who teach our kids, look after us in the hospital and keep our streets safe actually often find it hard to live in the same community.”
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