Ian Narev, the head of the Commonwealth Bank, has admitted it is getting harder for Australians to buy homes near where they work.
But he has questioned what “housing affordability” actually means, suggesting he thinks the housing debate is laden with confusion.
“Does it mean that somebody should be able to buy a house in South Yarra, which I’m looking at at the moment from a hotel room?” he told the ABC’s Fran Kelly on Friday.
“I think the key is that people should all have the ability to live near where they can work with meaningful jobs and create good lives for themselves and for their families ... and that is getting tougher.”
The political debate over negative gearing and the capital gains tax discount flared in Canberra this week, after a detailed report surfaced in the Australian Financial Review indicating that the Turnbull government was looking at curbing the 50% capital gains tax concession for property investors – which would be a major about-face.
Malcolm Turnbull moved to shut down the story during question time on Thursday, eventually categorically ruling out making any adjustments to either capital gains tax or negative gearing. But he did admit that officials may have modelled some CGT changes recently.
The Liberal backbencher John Alexander, who has been leading an internal push on housing affordability, told Guardian Australia that negative gearing and CGT ought to be reformed.
The government was also reminded that a range of experts – including the IMF, the former treasury secretary Ken Henry, the economist Saul Eslake, even the Business Council of Australia – have been urging it to make considerable reforms for years.
Narev told the ABC on Friday that the Turnbull government should not be ruling out individual policies such as negative gearing.
He said housing policy was complicated and any solution to the housing affordability problem would need an “integrated” approach that accounted for supply-side and demand-side pressures.
But the priority ought to be a “good discussion” about housing supply and infrastructure, he said.
“That’s the only way you are going to get sustainable change in the housing market in Australia,” he said.
“Our number one goal across all government should be the discussion about how to stimulate that kind of supply activity, then beyond that yes there is appropriate debate about policies but they’ve all got to work together.
“We should be looking at the whole of the housing system which is important to Australia, and complicated, and looking at how a collection of policies could work together so that ordinary everyday Australians like all of us can actually do better in housing affordability.”
But he cautioned against introducing measures to curb foreign investors, which he called “blunt instruments.”
ABC host Fran Kelly had asked him about a new tax on foreign investors in the Canadian city of Vancouver, that has pushed prices down around 3-4%, with property sale volumes tumbling more than 40%.
“Do you live in fear of that happening in response to a government change like this?” Kelly asked.
Narev replied: “We need to be careful about what might happen in a market when any policy changes ... it’s very difficult to draw any good precedent to say what would happen if you change a tax policy.
“That’s part of why this thinking [about housing affordability] all needs to be done as an integrated picture, because the housing market has been going up sharply in parts of Australia, in other parts it hasn’t been. They all act differently.
“And these sorts of policies ... are pretty blunt instruments, and people react pretty quickly to them.”
Narev was asked if he was concerned that around half of the new home loans being issued in Australia are going to investors.
“We are very happy from a credit-risk perspective, but we understand the concerns our regulators have about the rate of growth and we’re going to make sure we work within the benchmarks they’ve set for us,” he said.
He said the CBA would soon release its report on the scandal surrounding its insurance arm, Comminsure.
A joint Fairfax-ABC investigation last year reported CommInsure employees were denying claims from heart attack victims, despite evidence their claims were legitimate.
Months later, Narev admitted in bank hearings that no employees had been sacked over the scandal.
“There are certainly individuals who we know enough about that have had discussions with them, have had some consequences related to remuneration,” he told the House of Representatives economics committee in October.
“At this stage we have not had individuals terminated as a result of this because we have not seen the need to do that.”
Narev said on Friday that he did not think the banking industry needed to undergo another inquiry, but if the Greens were successful in establishing a parliamentary commission of inquiry he would participate if required.
“We believe in being accountable, being visible, and being transparent,” he said.
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