House debates

Tuesday, 16 September 2008

Ministerial Statements

Housing Affordability

3:52 pm

Photo of Tanya PlibersekTanya Plibersek (Sydney, Australian Labor Party, Minister for Housing) Share this | | Hansard source

by leave—A decent house with stability of tenure is a very basic need, but unfortunately over the last 12 years it has become more in the nature of an aspiration, a source of stress and an unrealised hope that is out of the reach of many. Let us just take a minute to remind ourselves of the housing situation of many of our fellow citizens. There are 105,000 Australians on any given night who are homeless—unable to afford to live in a house. That number increased between 2001 and 2006 despite increased wealth in the economy. Then there are 1.1 million low- and moderate-income earners in housing stress who are paying more than 30 per cent of their total income on rent or their mortgage which does not leave them with enough money to live a decent life. This includes many who are living with the daily strain of mortgage stress—people who earned enough money to buy a house in the first place, but for whom 10 interest rate rises have made home ownership a financial struggle.

It was clear to the Labor Party in opposition that there was a huge problem with housing affordability and that the problem was not merely cyclical, or solvable by the market over time, as the former government claimed. It was clear to us that it was both socially and economically irresponsible to ignore the plight of the hundreds of thousands of Australians who were either locked out of home ownership or locked into paying large slabs of their income on mortgages—or, even worse, locked out of a house altogether. It was socially irresponsible, even heartless, because of the numbers of Australians who through no fault of their own were forced to endure very high levels of stress just to keep a roof over their head. And it is economically irresponsible because rising housing costs are contributing to inflation and undermine labour market mobility.

So we decided in opposition to get together the best minds in the country on all matters housing and hold a housing affordability summit. Kevin Rudd, Wayne Swan and many other colleagues joined with me to hear economists such as Saul Eslake, developers such as Harry Triguboff, industry representatives such as the Property Council of Australia and the Housing Industry Association, and developers such as Lend Lease to hear about solutions. There are solutions but none of them will work overnight. All of them involve new, complex ideas and careful policy development, and all involve a certain level of risk. Clearly something had to be done. The Howard government had dropped the ball—had clearly decided that housing was something that they had no time or commitment to do anything about. There were some clear policy solutions that came out of the Housing Affordability Summit, and we made a commitment to the Australian people to introduce them. In the 10 months we have been in office we have been doing exactly that.

Yesterday, the Prime Minister and I launched the Housing Affordability Fund. The fund addresses the barriers to the development of new housing. Early on, $30 million was set aside from the HAF to progress the rollout of electronic development assessment. These funds will bring a 19th century system of paper based processing into the 21st century, with important gains in the efficiency of our development assessment process. The Housing Affordability Fund tackles two major impediments to housing supply—holding costs which result from planning delays, and the impact of infrastructure charges. The Housing Affordability Fund will give local councils the chance to improve housing affordability in their communities. It is all about local solutions for local communities. Applications opened yesterday. I know there are a lot of local councils out there, as well as developers, who are gearing up to apply. I would encourage them all to get a copy of the guidelines and start preparing their submissions. This is because there is a huge, unmet need for more affordable homes to be built in many communities around Australia.

The Housing Affordability Fund has been welcomed by local councils and industry alike. An Australian Local Government Association representative said yesterday:

We are pleased that funding can be made available to help councils facilitate affordable housing projects.

We are particularly grateful that the Australian Government are prepared to fund community infrastructure related to HAF projects.

I am particularly pleased this funding is available, as it has been a long time since the federal government was prepared to acknowledge that housing costs were spiralling out of control, and that this is something the government can affect.

The Housing Affordability Fund is not a one-way street: councils will be expected to implement more efficient planning processes and to work in collaboration with builders and developers to cut out red tape that adds to the costs of building. The government’s most important criterion when assessing projects, whether under the National Rental Affordability Scheme or the Housing Affordability Fund, will be value for money. In making decisions about applications for grants under the Housing Affordability Fund, the government will be asking how much new home buyers will save in return for government funds. This is all about leveraging the benefits of competition—getting the greatest public benefit from the best ideas in the community.

The government expects funding will be sought for a wide range of projects. Some will involve planning reform across a whole local government area, which will deliver modest savings to all future home buyers across the jurisdiction. Others will fund specific pieces of local infrastructure, which will deliver larger savings to a defined number of lots. Just as no two communities are the same, this is not a one-size-fits-all policy that imposes a certain way of improving housing affordability for any communities. We are explicitly inviting local communities, through their councils, to put forward innovative projects that need some federal assistance in order to be realised. There are many exciting ideas that have simply had to be shelved for years, as the former government was not interested in assisting low- and middle-income families to achieve their dream of home ownership.

I am pleased to inform the House that industry are right behind the government’s plan. For example, Caryn Kakas, the Executive Director of the Residential Development Council, said yesterday:

The Housing Affordability Fund is strongly focused on achieving systemic cost reductions and the guidelines encourage best practice in local government in respect of residential development assessments and planning processes.

Housing Affordability Fund funding has the potential to improve development processes and should have long lasting, long-term benefits … which can achieve cost reductions not only across one development, but also across entire local government areas, regions or whole states if taken on in a cooperative manner …

Wilhelm Harnisch, the Chief Executive Officer of the Master Builders Association, said:

The HAF is a welcome return of the Commonwealth into this vital part of the Australian social fabric and the economy. There has been a decade of policy neglect in addressing the supply side barriers and the HAF is supported by industry as a first and vital step in redressing this area of policy neglect.

The Housing Affordability Fund is just one of the $2.2 billion worth of housing commitments contained in the last budget. The government has also established the National Rental Affordability Scheme. This scheme will provide tax incentives to help build 50,000 new homes to be rented to low- and moderate-income earners at 20 per cent below market rent. This scheme is a direct response to the group that is under greatest pressure in our community—long-term renters on low and moderate incomes.

The first call for expressions of interest closed on 4 September—less than 10 months after winning government. I am extremely pleased that industry and the not-for-profit sector have applied for over 12,000 incentives. We have applications with start dates spread over the next three years that will make a practical difference for low and moderate income earners stuck in the private rental market. These applications are currently being assessed and I look forward to being able to announce the successful applicants. The government will call for two more rounds under the National Rental Affordability Scheme this financial year. I look forward to continued strong interest.

From 1 October onwards, the government will also deliver on its commitment to establish first home saver accounts. First home saver accounts offer young Australians a major incentive to save for a home. This is an innovative policy to encourage long-term saving rather than short-term spending by our young people, with a huge funding commitment by the Australian government. Major banks and a large number of smaller providers have already indicated their intention to provide these accounts, which will be open for business next month. I would encourage all members of this House to inform young people living in their electorates that they have the chance to receive government support to start saving for their first home through this exciting government scheme.

The government was elected to tackle the problem of housing affordability. Over the last 10 months we have taken that mandate seriously and delivered on our commitments. There are no overnight solutions in this area. There are no silver bullets. But with innovative ideas soundly implemented we can lighten the burden of housing unaffordability for struggling households.

I ask leave of the House to move a motion to enable the member for Farrer to speak for nine minutes.

Leave granted.

I move:

That so much of the standing and sessional orders be suspended as would prevent the member for Farrer speaking for a period not exceeding nine minutes.

Question agreed to.

4:02 pm

Photo of Sussan LeySussan Ley (Farrer, Liberal Party, Shadow Minister for Housing) Share this | | Hansard source

I thank the Minister for Housing for providing me with a copy of her statement to enable me to prepare a response. I welcome the government’s initiative in yesterday launching the Housing Affordability Fund—for, I think, the third time—and making some statements in connection with housing affordability. I noticed on the Labor Party’s website that the joint media release has the Prime Minister and Mr Peter Garrett, the Minister for the Environment, Heritage and the Arts, whose face is looking at me instead of that of the Minister for Housing. So that might be something that needs to be corrected. I wondered if it was appropriate that the member for Kingsford Smith had a song called A Drop in the Ocean. Really, that is the theme that I want to pursue in connection with the initiatives that we have before us today. They are well-intentioned, but they are effectively a drop in the ocean.

The government likes to say that 10 interest rate rises in a row have meant that housing affordability has worsened. Of course, if you are a mortgage holder, 10 interest rate rises certainly have not helped. It is true that it is getting harder to meet the commitments on a home loan. In 2000, the monthly repayment on a loan for a median house was $1,330 a month. In 2007, that figure increased by 117 per cent to $2,892 a month. But that increase is not all due to interest rate rises; they are only part of the story. There has been a massive increase in the price of housing in our capital cities. Since 2000, the Australia-wide average for the price of a house has increased from $204,000 to nearly $400,000. That is a 95 per cent increase in the cost of a home. I disagree with many of the minister’s statements. Low interest rates—and I agree they have been raised in recent times—have nevertheless given many Australians the chance to own the type of home that they never dreamed of owning. They have had the income, lifestyle and security that their parents, aunts, uncles and probably grandchildren will ever dream of.

The most important thing for a person paying a mortgage is that they have a job and have confidence in their future. We hear that development applications are down. That suggests to me that there is a loss of confidence in the economy and in the management by the Prime Minister. Statements that are made in connection with the Housing Affordability Fund, quite frankly, confuse me. The Minister for Housing says people will save $10,000 on the price of a new home. The Prime Minister says people will save $20,000 as a homeowner. When you look at something called the Housing Affordability Fund, perhaps you imagine that it is accessible to ordinary people or first home owners. In fact, that is not the case. That is not necessarily a bad thing, but I must emphasise that the Housing Affordability Fund is only open to applications by local and state governments. I want to know whether a failed state, such as New South Wales, is going to be applying to the Housing Affordability Fund to build infrastructure such as roads, sewerage, parklands or even public transport infrastructure—infrastructure that it should, by rights, be providing to its own citizens but clearly has not been for some time now.

I have spoken many times about the strong population growth and the demands for new housing that have placed increased pressure on the delivery of this infrastructure. In a number of instances, many in New South Wales—which, of course, is my home state and that of the minister—this critical infrastructure has fallen to local government and state governments, but over time they have received less funding for the implementation. So I am not surprised that the minister quotes local government as being pleased that this initiative is in place. Of course they are. Their own state, which is bankrupt, is not able to provide the infrastructure that they as local governments feel obliged to provide for their citizens.

The minister quoted the executive director of the Residential Development Council, who said, of the Housing Affordability Fund:

… the guidelines encourage best practice in local government in respect of residential development assessments and planning processes.

But I say that there should already be best practice in local government in respect of residential development assessments and planning processes. I do not see why the federal government has to provide what is effectively a slush fund for state governments to dip into to do the things that they should be doing anyway.

If you are out there as a developer, a local council or someone concerned in this industry, you get sick of the federal-state argy-bargy and you say, ‘I don’t care which level of government should provide it, but we need the resources, we need the money and we need the infrastructure because we need to increase the supply of housing.’ Local governments are looking towards their own communities to raise the necessary funding to pay for infrastructure for future generations—infrastructure that should be provided by their own state governments. This is shocking. It is the case that state and local governments have relied on residential property for taxation revenue for far too long and, to a degree, that is distorting the market and distorting the situation. Those in state government may say, ‘We have a narrow base from which to raise our revenue. We have got payroll tax and we have got residential property. We have not got much choice but to use residential property.’ But please remember the GST. It was introduced in 2000. In that year New South Wales received $7 billion approximately in GST revenue. A mere eight years later it is receiving $13 billion in GST revenue. Rather than saying that states do not have enough money to do these things, there has to be some rigour in the system and some demand from the federal government through COAG and the housing group to say to state governments, ‘No, we are not going to provide you with what is effectively a very small fry slush fund for you to do the things you should be doing anyway and for you to revamp your planning and development processes, which are shocking.’ As the minister says, the holding costs are excessive, things are not being done quickly enough and people are waiting. That costs money. The time it takes to develop new land is unnecessarily slow, while people are waiting for houses. Some rigour needs to be applied here and the state governments need to be asked to do what they have constitutional responsibility for.

There are a couple of other things about the Housing Affordability Fund. There is nothing to prevent millionaires benefiting from the Housing Affordability Fund. There does not seem to be anything in the guidelines that require houses to be sold to people with a mortgage, let alone owner-occupiers. Presumably, landlords could buy these houses and rent them out at market rates, potentially pocketing a windfall gain in rental income. If this is not going to reduce the house price generally, what would stop the owners who have received subsidised housing under the Housing Affordability Fund from receiving a windfall capital gain when the house is sold? It is a big ask to expect any price reduction from this slush fund to have a trickle-down effect to other new houses, let alone to established houses, which comprise the vast bulk of transactions. It is tinkering around the edges—a drop in the ocean—but it is well intentioned.

I will have more to say on the National Rental Affordability Scheme when the legislation is introduced this week or next week. There is confusion on that scheme, and the confusion we have to address here is that it is not possible for the private sector to provide a public good. This is the confusion the government has around this issue, which is why it has had to change the guidelines and raise the earning level for people who could move into subsidised houses under the National Rental Affordability Scheme. I completely agree that governments should provide public and social goods, and do so properly, but the private sector will not receive the signals, and nor should it, so we cannot expect developers to build houses that are heavily subsidised without due recompense. The recompense that they would receive under the National Rental Affordability Scheme is insufficient for a lot of them to approach it. However, I know there have been applications and I look forward to reviewing those. I remind the House that a family can apply for subsidised rental housing under this scheme when their income is as high as $87,000 a year. The community housing sector has welcomed it, but it may not realise that those who seek to apply under it will be building houses that are possibly more readily available to those on incomes of $87,000, as I said. (Time expired)