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Tuesday, 13 September 1983
Page: 699

Mr ROCHER(9.05) —Despite seven years in Opposition during which the Australian Labor Party gave assurances that it knew where it was going in relation to housing, the Labor Government has been slow to take positive action. It is no exaggeration to say that there have been a few hiccups along the way. To claim, as the Minister for Housing and Construction (Mr Hurford) did in his second reading speech, that the Government has 'an ambitious and innovative program for action in housing' is plainly gilding the lily. If we look at the substance of the Government's announced program, there is very little that could be considered innovative. One would have to have very low horizons indeed to reach the conclusion that there is anything ambitious about it.

To make a virtue, as the Minister has tried to do, out of consultations before the Government's intentions were announced calls for some imagination. All this talk of consultation tends to be meaningless. If talks with the housing and finance industries resulted in the Government accepting the views of practitioners in those industries it may well be a matter of some pride and satisfaction. However, the Minister makes no such claim, and it must be concluded that, whilst talks took place, in no material way did they influence this so-called package. That is just as well because the Government will claim and will deserve any credit due. It should not be in a position at some time in the future to blame anyone in the industry if the program fails. For a strange and chastening example of what this Government seems to mean by consultation we have to go back only to the May mini-Budget and ensuing events. The Minister for Housing and Construction announced the more important of the decisions reflected in this legislation at the time of the May mini-Budget, as honourable members may remember. On that occasion he claimed full and prior consultation with all State governments. Soon afterwards the Western Australian Minister for Housing is reported to have said:

Incentives to first home buyers contained in the mini-Budget could actually bring the home building industry to a halt.

As it turned out, the Western Australian Minister was right, and the Hawke Government had to institute interim measures to fill the void it had created by deferring commencement of its deposit assistance scheme. I get back to the point and to the Western Australian Minister's statement that the measures then announced could bring the house building industry to a halt. He said that after the claimed full consultation with his colleague the Commonwealth Minister. That would seem to indicate that each Minister, jointly and severally, did not consult or if he did, one or the other was not aware of or was prepared to ignore the other's views. Either answer would seem to indicate confusions between ministerial colleagues from the same party about the reasonable outcome of consultation between cohorts, what may be thought to have been the natural outcome of discussions or consultations between seemingly natural allies. One thing is clear: Consensus could not be claimed then. Why did the Western Australian Minister for Housing express his contrary view? He is quoted as reasoning:

I have a real fear prospective home buyers will hold off until the new incentives come into operation and that this could bring the home-building industry to a halt.

He was dead right. The questions which logically arise are these: Did the Minister for Housing and Construction tell his Western Australian counterpart that increased non-repayable, tax free grants will not be available until after 1 October 1983? Did the Minister for Housing and Construction acquaint housing industry representatives of this delayed commencement date? If he did, the Western Australian Minister and housing industry representatives were merely crying wolf. If the Minister for Housing and Construction did not, the Commonweath's claims for the value of consultation and, by innuendo, consensus are fatuous nonsense.

The best way this Commonwealth Government or any Commonwealth Government could help the housing sector of the building and construction industry would be to set about reducing deficit spending to manageable levels. Instead, this Government comes up with a so-called package for housing which panders to many myths promoted by politicians and, to a lesser extent, by bureaucrats from the housing industry. Apart from housing for the needy, any current lack of demand for new houses reflects the realities of the market place. There is no lack of long term finance; there is no lack of capacity in the building industry. However, there is a lack of reality in this Government's so-called initiatives in relation to housing. It is a long time since there was a sustained shortage of funds held by lending institutions which traditionally finance house purchases. That old chestnut is not relevant in today's housing market, but the Minister is not afraid to throw it in for good measure, as it were. There is a comparative abundance of funds. Recent published figures bear adequate testimony to that fact.

Although improving partly because of measures taken by the previous coalition Government during 1982, new housing commencements remain considerably below optimum levels. While the market continues to sort itself out, we may very well reflect on the reasons it will be difficult to increase the number of new housing commencements, particularly in the private sector. The first has to do with high levels of interest payable by mortgagees. In saying that, I am mindful of the welcome news that interest payable by mortgagees has been reduced by one half of one per cent with the real prospect of more to come in the near future- perhaps another half a per cent. But interest rates remain burdensomely high, even with these promised and prospective reductions.

Given that this Government seems to have committed itself to Budget deficits anywhere between $8 billion and $11 billion over the next three years, there can be no room for optimism in relation to interest payments. Unless the Government reduces its spending or its deficits it will be faced with an accumulated national debt of $70 billion or thereabouts within three years which will take it very close to its total outlays in the year 1985-86 if we can rely on expenditure growth patterns of recent times. Interest payments just to service accumulated borrowings of that order will account for $7 billion or $8 billion in three years time.

Mr Cadman —Absolutely frightening.

Mr ROCHER —It is frightening. If anyone thinks that prospect is not frightening, let him also reflect on demands to be made on the Australian financial market by State governments, statutory authorities and demands taking the form of semi- government borrowings. In the light of that scenario the Government may well ponder its decision to discontinue tax rebates for housing loan interest claimable by both existing and potential home purchasers. Certainly the honourable member for Moore (Mr Blanchard) and the honourable member for Stirling (Mr Ronald Edwards) in my own State of Western Australia will have some explaining and rationalising to do to their electors, particularly those with mortgages.

The second reason for uncertainty in the housing market, and in my opinion the most important, is the failure of this Government to commit itself to reducing the number of unemployed over the next three years.

Despite election campaign rhetoric this Labor Government, through the Treasurer (Mr Keating), appears to have accepted that it is inevitable that at least 700, 000 Australians may expect to be unemployed over each of the next three years. Whatever that says about the Government's sincerity will be left for the electorate to judge at the appropriate time. For the home building industry this means that a whole host of young couples will decide not to purchase the greatest single asset they will buy in their lifetimes until such time as they are convinced their employment prospects are sound. I believe that will not happen until Australia has a Liberal led Government occupying the Treasury benches in Canberra. Not just the 700,000 plus unemployed will not be able to purchase housing of any sort, let alone new houses. To that list must be added those tens of thousands of others presently employed who under this Government do not have the confidence to take steps to realise the dream of owning their own homes. We can be grateful, I suppose, that the Minister has deferred, at least for the time being, the 'funny money' housing bond scheme enshrined in the ALP's housing policy. That omission by deferment may well prove to be his greatest single achievement. We may also consider the suggestion that this so- called housing package will in itself lead the way towards economic recovery. Those who believe, as I do, that increased new housing starts are usually only precursory to economic upturn might easily misread the outcome of these measures , whatever the benefits.

Mr Cadman —Oh, they won't be fooled.

Mr ROCHER —I am assured by my friend that they will not be fooled. New housing starts arising out of normal economic activity should not be confused with commencements attributable to one-off forays by a government using handfuls of taxpayers' money. Without the necessary underlying economic strength we all want for Australia, nothing lasting is achievable in housing or in any other desirable economic activity. At the wondrous National Economic Summit Conference the Minister on behalf of his Government outlined a five point program which purported to give some hope for employment prospects in the building industry. This is what he envisaged might be the panacea for the ills of the building and construction industry: An expanded capital works program; more money for public housing; a community works program; jobs on local roads; and adoption of lease- purchase arrangements to facilitate construction of Commonwealth office buildings, presumably to accommodate those armies of public servants to be recruited as a result of the ALP's big government policies.

Mr Cadman —A taxation led recovery.

Mr ROCHER —A taxation led recovery, indeed. Well, I have news for the Minister and the Government. The only thing worth a can of beans to the house building sector of the building industry is additional funding for public housing. That benefit will be very narrow and will offer work prospects only to those who are contractors. There is nothing in it for the commercial cottage builder who traditionally builds houses for private sale, who in number forms possibly the largest segment of the cottage building industry and who is, indeed, the backbone of the house building industry.

I offer the Government a few words of encouragement and exhortation on its welfare housing policy. In his second reading speech the Minister for Housing and Construction spoke of focussing on more innovative approaches to the provision of public housing in negotiations with the States. That is a move that I welcome. Traditional public housing has not been a great success in Australia or in many other countries in the world. So I welcome the promise of innovation. But I most earnestly request the Minister not to circumscribe the debate by restricting it to-and I quote his words-'the provision of public housing'. The problem to be tackled is the provision of decent housing to those who cannot afford to pay market rates.

The traditional approach has been for governments to buy, cause to be built or otherwise acquire accommodation and then to rent it at uneconomically low rates to a relatively few at the top of a long list of applicants. The subsidy is attached to the accommodation and the benefit goes to those who are fortunate enough to get that accommodation. I have cited ample evidence in earlier speeches in this House that this indirect approach is an inefficient one. Not all public housing goes to those most in need and not all of those most in need get public housing. What is more, there is no certainty that those who are in need and who get public housing will remain in need of subsidised accommodation as their financial circumstances improve. The expense of moving from public to private sector accommodation is also a factor that can deter or prevent families from moving house and on many occasions makes finding a job even harder.

In this regard I note with some satisfaction that the Government makes provision for the portability of the first home owners scheme. The Government's awareness of this problem in home ownership suggests that it will appreciate the analogous situation in welfare housing. All those disadvantages of traditional welfare housing can be overcome by adopting the following two principles for all Government housing programs: First, rent for public housing should be at market rates; and second, welfare housing should be achieved by subsidising the tenants and not by subsidising the property. The Minister's mention of the expected results of the review of the mortgage and rent relief scheme suggests that his mind is open to ideas such as this. I am sure that all honourable members on both sides of the House would prefer to see efficient and equitable welfare housing systems in this country. To summarise, Mr Deputy Speaker, apart from the additional money allocated for public housing, the package represents a backward step. With that one important exception, nothing can be said to advantage the prospects for home ownership in Australia. Certainly the broken election promise to retain the existing deposit scheme as an option to the new scheme is a retrograde step. So is the discontinuation of the tax rebate to lower the impact of historically high interest on home mortgages.