CGT discount, apply a discount to negative gearing deductions, or change grandfathering arrangements for CGT (see Rec 14 & 17c) In May 2015, the House of Representatives Standing Committee on Economics started an Inquiry into Home Ownership. Almost two years later the announcement was made that the Inquiry had made no recommendations whatsoever. In 2017, a Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established. Hearings into banking misconduct began on 13 March. Effect of inflated housing prices on the greater economy Diverting capital away from the rest of the economy Increased residential housing costs can cause excessive lending to the residential housing sector, at the expense of businesses. This can lead to "a banking system which allocated capital away from the most productive areas of the economy — business — is ultimately bad for growth, bad for competition, bad for jobs, bad for business and in the end, bad for Australia." Research conducted in overseas markets confirms that "in areas with high housing appreciation, banks increase the amount of mortgage lending and decrease the amount of commercial lending as a fraction of their total assets. This allocation results in firms receiving reduced loan amounts, paying higher interest rates, and reducing investment." Mortgage and rent stress Increased housing prices and therefore increased borrowings can lead to difficulty in meeting housing payments. According to Ratings agency Standard & Poor's (S&P), "Arrears for sub-prime loans backing RMBS [residential mortgage-backed securities] jumped 126 basis points to 11.45 per cent" Australian specific market factors The Australian market had several features either singly or together are not typical in other housing markets, being; Very constricted land supply and extremely onerous planning approval processes Unusually high stamp duties High proportion of variable rate mortgage loans compares to past housing bubbles outside of Australia, making borrowers more vulnerable to rising interest rates Income Tax relief through negative gearing Social security (Centrelink) that offers payment including rent assistance that is calculated on the amount of rent paid Only recourse loans One of the most highly urbanised populations Large areas of rural and remote Australia can not secure loans from banks against land in those areas. Timeline 1980s–2009 1985: Australian government quarantines interest expenses, so that interest can only be claimed against rental income, not other income. 1987: Negative gearing is reintroduced. 1998 : The ABS changed the CPI calculation from a cost of