As the budget countdown approaches, what do voters want on housing reform?

While 2016’s federal budget was all about securing Australia’s innovative future, there’s little doubt this year’s national economic blueprint will focus on a framework to tackle the explosive issue of housing affordability.

This week has seen stakeholders from all corners weighing in. The Property Council of Australia (PCA) has released a 10-point plan of priorities, pleading with the government not to play with negative gearing.

It insists the any reforms should aim to “do no harm”, warning the government against any changes that would place new taxes on foreign investment or result in “regulatory creep”. Instead, it advocates for low-deposit home loans and “cranking up supply”, which it says will lead to more young entrants being able to access the market.

However, the latest Newspoll figures from The Australian suggest the electorate might not be so opposed to reducing tax breaks for property investors. Fifty-four percent of voters surveyed this week said they supported changes to negative gearing, and the gap between the two sides of politics on this issue is 5%, with 52% of Coalition voters supporting a change, while 57% of Labor voters are on board.

Support for changes to tax breaks is strongest among young voters, with 56% of 18-34 year olds in favour of curbing tax concessions.

There are two weeks before the government hands down its 2017 Budget, and economists continue to fight it out over which policies are likely to work. Here are three key areas of contention.

Supply and incentives 

Two key parts of the debate surround how to increase overall supply to match demand, and how to encourage behaviour so more housing becomes available to first home buyers. Treasurer Scott Morrison’s anticipated so-called “cradle-to-grave” plan is predicted to include policies to remove barriers for housing supply and encouraging family home owners to downsize homes by removing costs associated with this.

Tax breaks to retirees would look to encourage Australians to sell up family homes and free up properties for younger families and individuals to bid on. This move is supported by the Property Council of Australia, which is lobbying for the change on the basis that more needs to be done to encourage “purpose built” housing for retirees across the country.

The PCA goes as far as to say this policy change would ease the burden on aged care services by creating a drive for more smaller apartment and retirement-village style properties, at the same time as traditional family homes would be vacated for new buyers.

However, not everyone sees increasing supply as a move that will ultimately make housing more affordable. While Prime Minister Malcolm Turnbull has said this month creating housing supply has always been a key priority of his government, economist Lindsay David questioned whether supply is the key this week, telling the ABC houses are actually being built at a faster rate than population growth in Sydney and Melbourne, yet prices are still sky-high.

Superannuation 

The size of a the deposit required for first home buyers, particularly in the nation’s major cities, has seen politicians look at deploying other forms of capital into the housing market — and superannuation is one controversial option. Earlier this month Sky News reported the Coalition was feuding over a policy to allow first home buyers to use part of their superannuation to buy their first home, by diverting a portion of their retirement savings into housing, should ever see the light of day.

Newspoll figures suggest voters are more lukewarm on this suggestion than negative gearing reforms, although again younger voters hold the most support for the idea. Fifty-two percent of 18-34 year olds want to be able to access super to buy property, while 49% of those surveyed this week were opposed to the idea.

Labor, negative gearing and capital gains tax 

The exact form of the Coalition’s housing affordability package is still unclear, but we do know the alternative: Labor has unveiled seven steps under its “positive plan for housing affordability”, including putting restrictions on borrowing through self-managed superannuation funds for property, and tougher limits on foreign investment.

The obvious divide between the parties on this issue is whether tax structures like capital gains tax concessions and negative gearing need to be touched in order to secure long-term results.

In 2016, Labor first unveiled its housing affordability strategy with a pledge to restrict negative gearing to only new properties, while cutting the capital gains tax discount from 50% to 25% for the sale of a home.

At the time, Shadow Treasurer Chris Bowen said the current situation in the housing sector was not sustainable given the budgetary pressures the country was facing.

This idea has been echoed by the Opposition Leader in recent weeks, who has insisted the affordability issue cannot be addressed without changing concessions.

“Our housing reforms are about providing a level playing field so first home owners are not facing unfair competition from people who are seeking to buy a house for taxation purposes or other purposes,” Shorten told The Project last week.

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