Tuesday, 30 May 2023

Housing affordability

Brad ROWSWELL (Sandringham) (14:11): My question is to the Treasurer: will the Treasurer guarantee that rents will not increase because of the government’s land tax hike on low-value investment properties?

Tim PALLAS (Werribee – Treasurer, Minister for Industrial Relations, Minister for Trade and Investment) (14:11): I thank the member for his question. Certainly this government has recognised that throughout the pandemic there was a lot of distress within the community – distress that actually required government action. We have put $31.5 billion into rebuilding this community and making sure that communities remained whole and that businesses were in a position to take the opportunities of the economic upswing. The changes that we have put in place are measured, modest and targeted to those areas where there is a capacity to pay within the economy. To be very clear, over the last 10 years property prices have appreciated by 84 per cent on average, and that really does tell us that there has been a great capacity to pay for certain landowners. On a property value, for example, of $650,000 – with capital improvement value let us call it $1.3 million – that equates to about $75,000 per year in capital appreciation, capital gains. Certainly as a government we recognise that we need to –

James Newbury: On a point of order, Speaker, standing order 58 requires the Treasurer to be direct, and the question asked whether or not the Treasurer would guarantee that rents would not increase because of his new tax. I would ask you to bring him back to that question.

The SPEAKER: I ask the Manager of Opposition Business not to repeat the question in his points of order. The Treasurer was being relevant to the question.

Tim PALLAS: Thanks very much. It does give me a bit of clarity. I was not entirely sure what the question was, but now that I have heard it, I intend to respond to it. At the risk of taking the Shadow Treasurer through market economics 101, I will make the basic point that the price of rental accommodation –

Members interjecting.

The SPEAKER: The member for Gippsland South is warned.

Tim PALLAS: is a consequence of the issue of supply and demand. At the moment of course, with rental accommodation in the metropolitan Melbourne market running at about 1.2 per cent vacancy, clearly we are in a position where it is a landlords market. And who as a consequence is suffering – well, it is tenants. Ultimately, from our perspective, we recognise that there is little capacity for pass on through pricing. And why is that? Well, if you look at essentially two comparable properties, both of the same value, both of the same quality, one with a mortgage on it, one without, they are not offered to the market at different prices because it is not the owner of the property who dictates the price, it is the market that dictates the price. I hope that this opportunity to be taken through market economics has enlightened the member.

Brad ROWSWELL (Sandringham) (14:15): Does the Treasurer support the Greens’ proposal for a cap on rents?

Members interjecting.

The SPEAKER: Order! The member for Eureka is warned.

Tim PALLAS (Werribee – Treasurer, Minister for Industrial Relations, Minister for Trade and Investment) (14:15): So the blue–green alliance is in full display. I want to remind the member that this side of the house voted against the suggestion that we should be looking at that. Certainly from our perspective putting a freeze on prices would massively distort the market, as I have said publicly.