Scrapping investor handouts could fund half a million social homes and bring down housing costs
22/01/2024
Amidst a historic cost-of-living crisis, Everybody’s Home is calling on the federal government to scrap tax concessions for property investors and build social housing across Australia.
The call follows the campaign’s release of Written Off, a report showing that housing affordability has crashed because the government is subsidising the private market instead of directly building homes.
The report shows:
- The budget is expected to lose almost a quarter of a trillion dollars (~$228 billion) to negative gearing and capital gains tax concessions between 2010-33
- The cost of investor tax breaks over the next decade could build more than half a million (549,301) social homes
- Tax breaks for investors have outstripped federal spending on social housing by at least five times
- In 1982, the government spent about $164 per person on public and community housing. By 2022, that number shrunk to $61.
Everybody’s Home spokesperson Maiy Azize said: “In the midst of a major cost-of-living crisis, the federal government is spending record amounts on housing to line the pockets of investors. That has made renting and buying homes more expensive than ever.
“Tax handouts for investors will be a quarter of a trillion dollar mistake if the government doesn’t change tack. Giving money to investors is a choice. If the government wants to make housing more affordable and fairer for all Australians, it can choose to put money into homes instead of investor profits.
“The government must scrap negative gearing and capital gains tax concessions, and use the revenue savings to build hundreds of thousands of social homes. This would help end Australia’s massive social housing shortfall, and help reach the goal of another one million social homes within the next 20 years.
“Federal governments have walked away from supplying social housing. Instead they have prioritised the profits of property investors, pushed up the cost of housing, and made wealth inequality worse.
“The government must take action to make housing affordable. We’re calling on them to use this week’s talks to abolish unfair tax handouts and build the homes we need.”
Example: To show how much support is going into the private rental market, we have created a hypothetical scenario based on average figures.
Jane is a pensioner who rents from a private landlord. She has been on a waiting list for social housing for six years.
She receives the full rate of Commonwealth Rent Assistance (CRA), $184.80 per fortnight. Like half of all CRA recipients, she remains in rental stress after getting the payment.
The total cost of CRA payments to Jane will be $4,804.80 over the year.
Jane’s landlord Michael claims negative gearing tax deductions each year. He will receive a benefit of $13,810 from these deductions in 2023-24.
When he sells his investment, he will be eligible for a Capital Gains Tax discount. That discount is worth $10,200 for 2023-24.
This year, Jane’s home and Michael’s investment is expected to cost the federal budget $28,814.80 in direct payments and forgone revenue.