Tax reform needed to curb homelessness: Vinnies CEO

It means that for every 10,000 people counted on census night just over 45 Australians were without a proper roof over their heads.

Some were sleeping in improvised dwellings like tents. Others were staying with friends or making do in over-crowded houses.

Michael Perusco is the new CEO of the St Vincent de Paul Society of New South Wales. He used to be with the Sacred Heart Mission in Victoria and was also with the Department of the Prime Minister and Cabinet in Canberra.

He believes tax changes are essential to free up more housing.

Michael Perusco the housing crisis you say is not getting better. Why?

MICHAEL PERUSCO: Oh look Tony it’s certainly getting worse. What we’ve seen over the last decade is that housing prices have increased by 150 per cent yet incomes have gone up by a third of that.

In terms of rents we’ve seen an increase in rents of 50 per cent over the last five years while incomes have gone up by only 20 per cent.

And low income Australians are bearing the brunt of this housing crisis.

TONY EASTLEY: But we’ve seen housing crises before. Rental prices have gone up. Why should the homelessness rate be so bad now?

MICHAEL PERUSCO: Well what we’ve got is a housing market that doesn’t work and doesn’t provide safe and affordable accommodations for people who are leaving homelessness.

So for instance we run a range of crisis accommodation services across New South Wales at the St Vincent de Paul Society. Now crisis accommodation provides people with an opportunity to get back on their feet with a bit of support.

At the time that people exit that accommodation what we find is that there are very limited housing options. So people are often going into temporary accommodation, they’re going into accommodation that’s not affordable, sometimes unsafe and also not close to jobs and transport.

Listen to MP3 of this story (minutes)ALTERNATE WMA VERSION | MP3 DOWNLOAD

TONY EASTLEY: You say the issue has been largely ignored by both sides of politics. What do you want different parties within politics to do about it?

MICHAEL PERUSCO: Look I think that we’ve got a housing system that doesn’t work. It doesn’t deliver for everyone. At the moment we’ve got a market, a housing market that produces significant benefits for a small number in the community, and that’s largely as a result of the tax incentives that are provided, while at the same time driving others further into poverty. So what we believe is that there needs to be fundamental reform, root and branch reform…

TONY EASTLEY: What do you mean fundamental reform?

MICHAEL PERUSCO: So I think there’s a couple of aspects to it. Firstly we need to look at the tax incentives that are provided. So currently there’s six to $7 billion a year of tax incentives provided in terms of negative gearing and concessions in capital gains tax on property.

Now is that the best way in which to spend funds to get an affordable housing market? And the answer is no. What we find is those tax incentives are pushing up house prices. We really need to look at those subsidies and change the way in which they’re provided.

TONY EASTLEY: The Government would argue that that money is being spent on housing which is built and which is ultimately rented and that in itself is benefiting the community.

MICHAEL PERUSCO: What we know is that 92 per cent of the negative gearing subsidy goes to existing properties, not to new properties. So it is not true to say that providing that level of subsidy goes to boosting the supply of affordable housing.

TONY EASTLEY: And the properties are not the sort of properties likely to be taken up by homeless people.

MICHAEL PERUSCO: They are certainly at the higher end of the market.

TONY EASTLEY: What do you do with the tax reform then? How would you like to see that money spent?

MICHAEL PERUSCO: I think there is an opportunity to look at the way in which you target the current incentives that are provided.

So one option is to increase the incentives for investing in new property, investing in affordable property that can be accessed by people experiencing homelessness and people doing it tough.

So in that way we’re paying a subsidy that is resulting in a more affordable housing market.