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Monday, 23 February 1987
Page: 509

Mr WEST (Minister for Housing and Construction)(3.18) —The Opposition spokesman on housing, the honourable member for Deakin (Mr Beale), has just read a prepared diatribe, attacking the great record of this Labor Government in housing. But one might ask at the outset: Where is the Opposition's policy on housing? Come to think of it, where are any Opposition policies at all? Where is the Opposition's policy on taxation? This matter of public importance talks about that issue. The fact is that it has been delayed because the Opposition cannot produce its policy on taxation. The Leader of the Opposition (Mr Howard) wants, of course, to introduce a consumption tax, to increase indirect taxation. Of course, that policy has been vetoed by an octogenarian outsider from Queensland, who has simply cut a swathe straight through the preparation and timing of the release of Opposition policies.

I ask at the outset, in regard to taxation: How do the figures shape up now, given that the consumption tax has been vetoed? What about figures? Where will the expenditure cuts fall? Will they fall on housing? Will the Opposition present a policy of cutting housing programs to the bone? It has already been stated, as the Treasurer (Mr Keating) pointed out during Question Time, that approximately $14.6 billion would be involved in expenditure cuts and taxation cuts. How will the Opposition finance this? A consumption tax of 8 per cent would probably produce only about $3.8 billion of revenue and it would certainly not go anywhere near covering the $6.6 billion which would be required to implement two tax rates of 25 per cent and 35 per cent, let alone cover the other $8,000m worth of expenditure cuts that the coalition has said, one way and another, that it will introduce. I refer to such matters as the removal of the fringe benefits tax and substantiation at a cost of $900m. I refer also to the restoration of full tax deductibility on entertainment expenses at the cost of $320m. The Opposition reckons that it will also repeal the wine sales tax at a cost of $115m; introduce child care tax rebates at a cost of $115m; and abolish the indexation of fuel excise at a cost of $340m. Should I go on? It all adds up to $14.6 billion and even with a consumption tax of 8 per cent, the coalition would still only raise $3.8 billion. Of course, the Premier of Queensland has already ensured that the coalition will not be allowed to introduce a consumption tax. Therefore it will be saddled with this huge bill of $14.6 billion.

In those circumstances I am entitled to ask just where the cuts will be made. Will they be made in housing policy? Will housing policy be changed? Will the coalition abolish the first home owners scheme, as the honourable member for Deakin mentioned in his contribution? Will it terminate the tied programs, such as the pensioner rental program, the Aboriginal rental program, the mortgage and rent relief scheme or the crisis accommodation program? Will it terminate the local government and community housing program? In fact, some sections of the coalition-particularly those in the National Party of Australia-have already called for the total abolition of the Commonwealth-State Housing Agreement and its expenditure for public housing, yet at the same time the honourable member for Deakin, who is the Opposition spokesman, is complaining about the extent of the public housing waiting lists. A significant section of his own coalition is calling for the abolition of the public housing agreement. Under the Commonwealth-State Housing Agreement, $1.3 billion is contributed by the Federal Government-$700m by way of grants and $600m by way of cheap loans. If I have time, I will illustrate later the way in which this helps to alleviate housing-related poverty.

Let me turn now to interest rates. The Opposition spokesman was critical of our position on interest rates. Let me make some comparisons. In June 1982, Commonwealth 10-year bonds were 16.4 per cent. The two-year bonds were 16.4 per cent. Commercial 180-day bank bills were 18.35 per cent and 90-day bills were 18.75 per cent. Today the Commonwealth 10-year bills are 14.1 per cent and two-year bills 14.8 per cent. The bank bills are 16.6 per cent for 180-day bills and for 90-day bills. The latter figure compares with 18.75 per cent in June 1982. The coalition as it now stands-and I do not know how much longer it will continue-is well aware that the deficit on the current account is caused primarily by the deterioration in the terms of trade. The Government's response is to run a tight monetary policy and keep interest rates at a level which will protect the Australian dollar and prevent a further rundown on the current account. Indeed the Prime Minister (Mr Hawke) has said that here today. We also are continuing to run tight fiscal policies and tight wages policies.

When the Opposition criticises our level of interest rates, is it saying that it would act differently? Would it allow a sharp and sudden drop in bank bill rates and the bond rate in order to precipitate a fall in housing interest rates? Or would it simply let fiscal and wages policies blow out? It criticises interest rates at their present level, but at the same time, by inference, it apparently agrees with what we are doing on fiscal, wages and monetary policies as being necessary. Yet it is not prepared to follow those policies to their logical conclusion. In other words, it is prepared to resort to the politics of political quackery; that is what it is saying. On one hand it is saying that it supports the Treasurer's monetary, fiscal and wages policies, and by inference it is showing concern about the current account deficit and supporting high interest rates so that the value of the dollar will not fall. Yet on the other hand it is trying to get some cheap political kudos by criticising the resulting level of interest rates when it supports the policies which have generated those interest rates.

The Opposition knows, as well as the Government does, that if it were to facilitate a sharp and sudden reduction in interest rates that would put further downward pressure on the dollar and also upward pressure on the current account deficit and, of course, place further pressure on fiscal and wages policies. Why does the Opposition not come clean and tell this Parliament and the Australian people just what it really stands for? Before very much longer I just might get a question in Question Time from the Opposition's spokesman for housing. He has done everything except direct questions to the Minister. He has simply got people on the Opposition back bench to direct questions to the Prime Minister, but this session he has not yet directed any questions on matters of detail to the Minister.

Mr Hawker —Naughty boy!

Mr DEPUTY SPEAKER (Mr Leo McLeay) —Order! The honourable member for Wannon should refrain from interjecting. If he wants to make some other contribution he might return to his seat.

Mr WEST —I have said that this Government will adhere to its responsible macroeconomic policies. At the same time we recognise the importance of the housing sector and will deliver the highest possible sectional assistance to housing, as we have done in the past, commensurate with the balance of priorities of other portfolios and other areas. If one looks at what we have done one will see that it relates to ownership assistance programs, measures to stimulate investment in the private rental market and expenditure on public housing.

Let me quickly deal with the April housing package of last year with regard to subsidies to the savings banks. Of course we pegged and will continue to peg the 13 1/2 per cent rate for those who took out savings bank loans prior to last April. I point out for the information of the House that there are something like 900,000 of those loans, which probably indicates that about one and a half million Australian voters are involved. We also deregulated new loans, and the savings banks and many building societies have been able to continue with loans at around 15 1/2 per cent. The success of that package can be judged by the fact that growth in savings bank deposits in March 1986 was running at an annual rate of 2 per cent, and in December 1986 savings bank deposits were increasing at an annual rate of 13.2 per cent. With regard to lending, the December figures for all significant lenders showed that lending for housing was running at an annual rate of $13,000m and that savings bank lending was running at an annual rate of $9,000m. We have successfully protected the position of people who had loans before last April.

To assist the position of people who are still seeking housing loans, against a very tight budgetary situation we have been able to continue with the first home owners scheme. That has been highly successful. So far, 230,000 approvals have been made and over $1,000m has been made available. Of course, the scheme, unlike the previous home deposit assistance scheme of the former Government, does not require a savings record and an interest subsidy as well as a lump sum is paid out. It is a highly successful scheme. The current rate of approvals is running at approximately 700 to 800 a month and I expect that that is about the average that will continue over the next few months. Everyone in the industry-the builders, the first home seekers, the trade unions and the State governments-except the Opposition, accepts the fact that the first home owners scheme has been the most successful home ownership scheme in our history.

As far as further assistance to first home seekers is concerned, we have been pressing the banks, under the guidelines of the package, to offer low start loans, particularly to first home buyers. Let me again point out that an interest rate of 15 1/2 per cent on a $50,000 loan involves a monthly payment of $676. Repayments on the same amount on a low start-say, a Commonwealth Savings Bank low start loan with a reference rate of 9.5 per cent-can be reduced in the early years to $522 a month. That is a measure of the assistance that we are attempting to give to first home seekers during a time of necessarily high interest rates.

I think the figures speak for themselves as far as the private rental market is concerned. If one looks at vacancy rates in March 1982 and compares them with the current vacancy rates, one sees that in two capital cities the vacancy rate currently is tighter than the private rental market. I refer to Sydney and Perth. The comparative rates in other capital cities are: Melbourne, one per cent then, 2.1 per cent today; Brisbane, 0.9 per cent then, 4.2 per cent today; Adelaide, one per cent then, 2.8 per cent today; and Canberra, 1.9 per cent then, 4.7 per cent today. That is not to say that there is not a problem in Sydney and Perth regarding investment in the private rental market. I want to see an increase in investment in the private rental market. We have offered a 4 per cent depreciation allowance. If the equity of the investor is high enough, and I would suggest it should be somewhere around 30 to 50 per cent, it is possible to get a return that can equal what would have been received prior to the tax changes back in 1985. The 4 per cent depreciation allowance is extended to those who wish to invest in new construction. I urge those investors across Australia who may be considering their position to take proper account of the 4 per cent depreciation allowance.

Mr DEPUTY SPEAKER —Order! The Minister's time has expired. I call the honourable member for Fisher.

Mr Staples —Sir Joh!