Housing Strategy
FAQ
1. What about Public Housing?
In theory this would greatly reduce the need for public housing. Since public housing is a state matter the expectation is that - with significantly reduced demand - the states could handle it according to their own specific situations without overt federal interference.
However, Government would continue to build public housing as needed. There is no intent to absolve the government of this responsibility but the planning for any federally directed public housing construction should become the remit of the National Strategic Housing Body.
This strategy does not address public housing simply because the focus here is to resolve the principle systemic issues, and that process doesn’t really have anything to do with the level of funding and support for public housing.
2. Why not just Remove the CGT Discount?
CGT and its discount is quite simple really as tax frameworks go, it simply leaves more cash in the investor's pocket after the sale. In that way, it does serve as an encouragement to invest in assets - and so the theory goes that if you take it away, people might find more tax-friendly investment opportunities elsewhere.
However, especially for the non-sophisticated investor, the expectation is that removing the discount won't aggressively change investment behaviour. Most of the complex investment structures are not available to non-sophisticated investors; the majority of the population who either buys shares, houses, or both.
As CGT and the discount applies evenly. Frankly, the middle class are going to invest in something. Short of leaving their savings in bank accounts, they're going to have to invest in something which is subject to CGT.
High net worth individuals have more options and a battalion of advisors to help them, but for Steve and Sally with their rental property in Henley Beach and their portfolio of Westpac shares, it is expected that axing the discount will just collect more tax money rather than lead to a mass abandonment of investment property. Especially when share markets are sluggish and the drivers for housing price increases are not addressed.
Scrapping the CGT discount is an ideological decision regarding whether you believe the money is better off in the hands of investors or recouped by the government. It does not address the problem.