The federal government is spending $6.8 billion each year to fix housing affordability for renters but the problem is getting worse, not better, according to Treasurer Scott Morrison.
And while the overall rate of home ownership in Australia fell from 71 per cent to 67 per cent between 2002 and 2014, young people are being hit hardest by soaring house prices in Sydney and Melbourne, in particular, and are being forced out of the housing market.
For 25 to 34 -year-olds in this period, home ownership rates fell by nearly 10 percentage points to less than 30 per cent and for 35 to 44-year-olds, it fell by more than 10 points to 52.4 per cent.
In a scene-setting pre-budget speech on Monday, Mr Morrison will argue that Labor's proposal to pare back negative gearing tax breaks will not help Australians looking to buy their first home - and it will drive up the cost of renting.
Instead, the Treasurer will say that mum and dad investors form the backbone of Australia's rental market and that "disrupting negative gearing would not come without a cost, especially to renters, let alone the wider economic impacts ... this would not be good news for the 30 per cent of Australian households who rent".
With the May 9 budget rapidly approaching, Mr Morrison will signal the federal government could establish an Affordable Housing Finance Corporation that would use a so-called "bond aggregator" model to kick-start tens of millions of dollars in investment in community and social housing around Australia.
Such a body would complement, not replace, the investment in rental stock by mum and dad investors and help keep housing affordable for people who rent.
A 2016 COAG report on the National Affordable Housing Agreement struck by the Rudd government in 2009, said the number of Australians in rental stress had risen, not fallen, the number of homeless people had risen, and there was no evidence that more Indigenous Australians own their own homes.
At the same time, public housing waiting lists have ballooned from 177,700 to 187,000 people. This is despite the federal government spending $6.8 billion annually on affordable housing programs and the states spending another $5 billion a year.
The address in Melbourne is the second major speech by Mr Morrison to focus on the housing market.
In October last year, he put state governments on notice to increase supply for first home buyers.
But this speech to the Australian Housing and Urban Research Institute focuses on people who rent, and the massive shortage of affordable housing for Australia's least well-off.
Mr Morrison will say, according to his speech notes, that "progress must be made boosting and diversifying supply of rental stock. This is particularly necessary for lower income households.
"Our private rental stock is owned by mums and dads. Figures to be released later this week show 2 million taxpayers in Australia have an interest in a residential investment property. Seventy-two per cent own just one property and 90 per cent own no more than two.
"Just over 1.3 million of these taxpayers negatively gear their investments, including 58,000 teachers and one in five police officers. Two-thirds of those taxpayers who negatively gear their investments have a taxable income of $80,000 or less."
Rather than change Australia's negative gearing tax rules, Mr Morrison will point to the success of the Housing Finance Corporation in Britain, which has provided more than ??5 billion ($8.2 billion) in loans for affordable housing.
Therefore, the Australian government "is establishing a taskforce to look at harnessing large-scale private investment through a bond aggregator concept. The bond aggregator would issue bonds to the market, and on-lend these funds to community housing providers - allowing them to access cheaper and longer-term finance."
This bond aggregator would help ensure a greater supply of affordable housing is available to rent.
To help would-be first home buyers, Mr Morrison will again argue that state governments must release more land and increase the supply to the market.
"One budget will not turn these issues around in isolation, but we can make a start. There are no single or easy solutions and the payback is achieved in some cases over a generation - not an electoral or budget cycle," he will say.
"Others have sought to oversimplify the issue by promising Australians they would all be able to buy the house they wanted at the price they can afford by changing one tax. It's not only wrong and dangerous policy, it's cynical and cruel."
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