Q+A: Are we taxing housing like cigarettes?

Welcome to Fearing Greed Q&A, where we ask and answer questions about business, investing, economics, politics and more. I'm Sean Aylmer. Australia has a housing shortage and governments around the country agree we need to build a lot more homes. But despite the ambition, the pipeline remains under pressure. At the same time, the federal government has made significant changes to the tax treatment of property investment, including negative gearing, dropping negative gearing and changes to capital gains tax, aiming to make the system what they call fairer and encourage investment in new housing. But is it working? Mike Zorbas is CEO of the Property Council of Australia. Mike, welcome to Fear and Greed Q&A.

Thank you so much, Sean. Really appreciate the opportunity to speak with you.

Before we get to what the government's doing, everyone agrees there's a supply issue in Australia when it comes to housing. Why aren't we building more of them? Fantastic

question. I think they do now agree. And I think it's quite important and instructive to go back 30 years and say this national agreement, which has really come about through the National Cabinet, wasn't

always there.

In fact, as recently as Tony Abbott's time as Prime Minister. the message out of Canberra was that the states and territories should go alone on planning and on housing and really look after their own because that's where the legislation often sits for zoning and permitting of new projects. So what we've seen in the last, I'd say, seven or eight years, it really started in the back end of the Morrison government with Michael Sukkar as the Federal Housing Minister, is a greater interest in Canberra, particularly around unlocking the last mile to supply. How do you get All the right agency concurrences to get power and sewage and water into particularly new communities, communities often on the fringes of our cities where housing is most affordable. And that remains the most affordable band of all of these things. But when you flash forward to now, this federal government has been very ambitious about its housing targets, 1.2 million. It's a nice concrete number. It really does set the tone, set the bar for aspiration. And we are very supportive of those targets and think they are a smart thing to do. Whether or not we eventually get there, we'll know why the gaps are there in the different states and territories, because for once, we all agree on the numbers. And that agreement never existed in the preceding couple of decades. I can't tell you the number of times as a representative of of large organisations trying to get big projects approved that I would go in and have arguments with planning ministers about the exact size of their housing deficit. Now those conversations are in the rearview mirror. We know exactly what numbers we're chasing and that's extremely helpful. It helps focus the mind and it helps focus the ambition. But to go to your point, the fact is that a lot of people would say we are going to fall shy of those targets and we're going to fall shy of those targets for a The first is we tax housing like we tax cigarettes. Actually, cigarette taxation is at about 70%, but