Senator CARR (2:07 PM) —My question is to Senator Minchin, the Minister representing the Prime Minister. Does the minister recall saying in question time yesterday that conditions have never been better for young couples trying to buy their first home? Is the minister aware that the Howard government has presided over the worst ever first home buyer affordability in New South Wales, Queensland, Western Australia, Tasmania and the Australian Capital Territory? Is the minister aware that the proportion of first home buyers now in the market is less than 17 per cent, well below the 21 per cent level when the government came to office? Is the minister aware that first home buyers now spend 28 per cent of their total income on mortgage payments, higher than at any time under Labor? Isn’t it really the case that first home buyer affordability has never been worse than under the Howard government? Why are so many couples and families currently unable to buy their own home?

Senator MINCHIN (Minister for Finance and Administration) —This is really a repeat of what was put to us yesterday, and I can only repeat what I said yesterday, which is that housing affordability is a function of many things. It is indeed a function of interest rates. We are proud that interest rates are much lower under us than they were when we came to office, and they have certainly been much lower on average over our period in office than they were under the previous administration’s period in office. They are also a function of the extent to which state governments are prepared to release land and the extent to which state governments impose taxes, levies and charges on the development of new housing estates. We have seen in recent weeks reports of the extent to which state governments are price gouging on this issue. They are posing enormous state levies, charges and taxes on housing developments. They are not keeping up with the pace of demand in relation to land release. They are making it more difficult for first home buyers.

There is, it must be said, increased demand for housing because we have had such a strong economy during our period in office. The economy has been remarkably strong as a result of our fiscal management, our ending of Labor’s $96 billion debt and the consistent growth that we have had. We have had record low levels of unemployment. Many thought we would never get below five per cent unemployment. That has put many more families in a position where they can afford new housing.

Obviously, we have had a period where prices for housing have been higher than the general rate of inflation. That is terrific for those with houses, and many Australians feel extraordinarily confident about their financial position because the equity in their house has increased considerably. The flipside is that, if the general pricing level rises—combined with the very inadequate policies of the state Labor governments in relation to land release, taxes and charges—then having the capacity to get into the housing market is made somewhat more difficult. That is why it is very important that we continue to have the fiscal restraint which we have displayed to ensure that we minimise the impact on inflation and, therefore, on interest rates so that we maximise the affordability of housing for young Australians.

We have had reasonably substantial increases in the price of housing because of the demands that flow from a strong economy, the immigration policy that we run and the return to higher fertility rates which is occurring under the Treasurer’s bold leadership on this issue. That does mean that there is a huge premium on governments running the sorts of economic policies which minimise upward pressure on interest rates. Whatever those opposite may say, there is an onus on state Labor governments to do their utmost to ensure that young families have access to housing at affordable prices.

Senator CARR —Mr President, I ask a supplementary question. Minister, rather than blaming the states, wouldn’t it be appropriate to address what the Commonwealth can do? In particular, now that the government has failed to keep its promise of record low interest rates and the Prime Minister has realised the stupidity of his plan to undermine the value of existing houses with a massive land release program, what exactly is the Commonwealth government doing to help young Australian families buy their first home?

Senator MINCHIN (Minister for Finance and Administration) —Implicit in that question is the typical Labor Party approach of having a bob each way. On the one hand, they say prices are too high and that is our fault; on the other hand, if we talk about the states and their land release programs, they say that is terrible because it would affect the price of housing. You cannot have it both ways. This is why they are in opposition. They simply have no coherence in their economic policies. They have a bob each way on absolutely everything. They complain about private health insurance. They do not like private health insurance at all, but then they cry crocodile tears and run a scare campaign that premiums will go up if we privatise Medibank Private. It is classic Labor Party incoherence on economic policy.