With reports that an affordable housing fund will be slashed in the May budget, one homelessness agency has come up with its own plan -- slash negative gearing, worth billions each year in tax deductions, and funnel that cash to the public housing sector.
The Australian reported earlier this month that the National Housing Affordability Agreement, a $1.3 billion a year social housing plan, was on the chopping block because public housing stocks have actually reduced since the plan was born 2009. The Council to Homeless Persons, said the government should be looking at winding back negative gearing provisions rather than housing agreements if the goal was to provide affordable homes.
"Negative gearing and capital gains costs about $11 billion per annum and have failed to deliver affordable private rental. So using the Government's rationale, we should be scrapping those mechanisms," the Council to Homeless Persons said in a statement, in sharing data about exactly how much negative gearing costs Australia.
In 2013-14, the Australian Tax Office reported $11.7 billion in rental deductions claimed nationwide. This included $151 million in cleaning expenses, $122 million for gardening and lawn mowing, $40 million on stationery and telephone expenses, and $302 million in travel expenses.
"Stationery, in the age of digital communication. And cleaning costs, when tenants are already required to clean the property when they vacate," the CHP said.
Kate Colvin, the CHP's acting CEO, said the government was wrong in ruling out changes to negative gearing while putting housing funding under the spotlight.
"It's ironic that much bigger numbers in tax deductions, ten times the NHAA funding, have themselves failed to deliver affordable housing and inflated house prices, making housing more out of reach of lower income households," she told The Huffington Post Australia.
"The changes to those tax settings have been overruled while they're going to do some unspecified reform of an important housing agreement."
Colvin said negative gearing made housing very attractive to middle and high income people, "crowding out" lower paid workers from home ownership and forcing them into rentals. Ironically, she said social housing was important in this case because it is sometimes the only option for low-income workers who cannot buy or even rent homes in the private market.
"We have the situation where there's fierce competition for the cheapest properties in the market, and homelessness is the effect of those who miss out, people on low incomes," she said.
"The government is criticising one policy lever it has completely under-invested in, but doing nothing about policy reform or curtailing a greater form of expenditure [negative gearing] which is making the problem worse."
"The highest pressure point in the rental market for low income households is trying to find somewhere they can afford. There's not adequate investment from government, and tax settings work against provision of housing in that market. That money [from rental deductions] could be redirected to more direct government investment, more money in an affordable housing agreement, but also putting stricter policies on tax deductions."
Colvin urged the government to not scrap or reduce the NHAA, saying social housing was still crucially important in modern Australia.
"It's a very long-standing agreement with 320,000 houses. It has not been a failure, it's a critical part of our housing market that stands between people being housed and an absolute tsunami of homelessness on our streets," she said.
"Without it, we'd see homelessness at levels hard to imagine. The private rental market has no place for those households, they've been competed out of the private market. There's 200,000 households on public housing waitlists, maybe in the private market or crowding in with another family. A separate fund is needed to increase the public housing stock overall."