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Wednesday, 6 May 1987
Page: 2704

Mr WEST (Minister for Housing and Construction)(3.17) —The speech we have just heard from the honourable member for O'Connor (Mr Tuckey) was not in line with the motion before the House today, which purports to deal with the standards for Australian families resulting from the Government's housing and high interest rate policies. I do not think that anyone who listened to the new shadow Minister's speech could say that he dealt adequately with the issue that he put up. During his contribution he challenged me to put forward some examples of support that the Government may have received on its housing and interest rate policies over the past several years. I do not need to go back several years in order to give examples of support. The Prime Minister (Mr Hawke) put these before the House yesterday and I will do so again briefly. Since the March housing package was announced by the Treasurer (Mr Keating) and me, we have received support from industry organisations, trade unions, individual members of the public and also various State Ministers. Let me quote the Master Builders Federation of Australia Inc., which wrote personally to me:

Your measures are in line with various submissions we have put to you. We therefore believe that Cabinet's decision to revamp the first home owner's scheme represents a vindication of our discussions with you.

The letter goes on:

The Government's decision not to renew the subsidy to banks is also supported and we believe that the gradual freeing up of $900m in deposit funds, currently frozen under the financial regulations, provides the basis for the availability of further funds for housing.

The Federation then says:

We also support the Government's commitments to public housing, especially in times of public expenditure restraint.

That is a wholehearted favourable response from the Master Builders Federation which it reiterated in a Press release on 3 May.

The other major industry organisation, the Housing Industry Association, wrote a letter to the Prime Minister giving effusive backing for the Government's housing policy. It said:

On behalf of the National Board of Directors of the Housing Industry Association, we should like to convey our appreciation to your Government once again affirming its very high priority for housing.

And so it went on. It then said:

Not only will the new housing assistance package help to revitalise housing prospects, but it is of no less importance that it will enable the States to alleviate housing poverty within our country.

That was a reference to our ongoing commitment to public housing funding. Of course it is history how that package ended the subsidy to the banks, but it reiterated our commitment to hold the 13.5 per cent ceiling on what are known as the old savings banks loans.

Mr Tuckey —The silvertails!

Mr WEST —As I have mentioned, it gave the savings banks the flexibility to reduce the funds invested, to the extent of $900m under the reserve asset ratio arrangements with the Reserve Bank from 15 per cent to 13 per cent of their deposits. It also lifted the income limits for the first home owners scheme. I advise the new shadow Minister for Housing and Construction to have a good look at the benefits available under that scheme. It is recognised as being the best home ownership assistance scheme ever seen in this country.

The new income limit arrangements were welcomed widely within the industry, as was the matter of funding for public housing, which allows the States to be offered $700m per year as a base level for each of the next three years. Of course one can add to this the nominating fund arrangements, whereby the States can nominate up to 60 per cent of the total State government borrowing program, at 4 1/2 per cent, repayable over 53 years. That is worth nearly $600m to the States this year. All up, they received almost $1,400m from the Federal Government to construct public housing. I will return to this issue in a moment.

What I am saying quite clearly is that individuals and the industry organisations have welcomed the Government's latest initiatives to assist the housing industry, as indeed they have welcomed our policies for the past four years. What we did for the first home owners scheme was very laudable indeed. For instance, applicants with two or more dependent children will be eligible to receive a $6,000 grant if their taxable family income is less than $26,000, with reduced benefits phasing out for taxable family incomes up to $34,000. That is really a reasonable income and yet they are able, as with much lower income earners, to receive this benefit to assist them in coping with current interest rates and the deposit gap.

So, I point out to the House that the Government has offered very substantial assistance measures to alleviate housing problems. We have held the 13 1/2 per cent for the old savings banks loans. That was very important, as there are 900,000 of those loans, and this probably affects 1.5 million or two million Australians. The honourable member for O'Connor said today that they are silvertails, but those people went into those loans in good faith, as the Treasurer and I had said that we would put a cap on the 13 1/2 per cent rate-and we did. Those people involved are thanking us for it, and I make no apologies for the measure. However, I recognised, and the Government recognised of course, that having done that there was a need to assist those people who are currently paying 15 1/2 per cent. That was the reason why, in very tough and stringent economic times, we made the changes to the first home owners scheme by raising the income limits. Some 13,500 additional families will be helped as a result of that change; they will become eligible, whereas they were not eligible before. Another 13,500-odd households will receive improved benefits. They were eligible before, but they will now get more because of the increased income limits.

To be precise, the Government has spent $1.065 billion on the first home owners scheme. That scheme has already helped 235,000 households in Australia. Many people are involved in that bearing in mind that although there are some single households the majority of households comprise families, the number of people helped under that scheme would be at least double and probably three times that figure. So, the Government has provided assistance by capping the 13 1/2 per cent limit applying to people who were paying savings banks loans prior to April last year and we have provided assistance through FHOS to people who have to pay the 15 1/2 per cent new rate.

The part of the shadow Minister's speech that was most relevant to the matter of public importance before the House concerned interest rates and lending for housing. I shall now address those matters. The savings banks are currently effecting record lending, as are all significant lenders in total. In the month of February-these are the latest official figures available-the major lenders were lending at an annualised rate for all significant lenders some $13 billion, and the savings banks were lending at a monthly rate of about $830m, which is about $9.8 billion at an annualised rate. Therefore, currently there is very strong lending for housing from the lending institutions. In comparing loans which are being made today and which have been made over the last three years with the record of the Opposition in that regard, one notes that during the last three years that the Opposition was in government under its policies there were 735,000 home loans from major lenders, as compared with the 914,000 loans effected under the Labor Government for the three years since June 1983. The average number of home loans per year of 305,000 under the present Government compares very favourably with the average over the last three years of the former Government of 245,000. In value terms, under our Government $21 billion has been lent, while under the former Government only $11.7 billion was lent over the comparative three-year period.

As far as interest rates are concerned, of course the Government realises that they are a key factor affecting the housing industry. The trend for general rates at present is, of course, down. We are putting in place the economic policies to get a sustainable fall, and we are achieving that. Bank bill rates are currently running at a rate of 14.6 per cent. Another factor involved is the current account deficit. That is falling. This has enabled the Australian dollar to become more stable. The economic statement to be made next week is another factor that will favourably affect interest rates over the months ahead. The Government is committed to tight fiscal policies and there has been a general acceptance of the tight wages policies which the Government is committed to follow through.

This all represents a moderately encouraging picture for interest rates, and in due course that will be reflected in housing interest rates. They will come down. The Opposition referred today to high interest rates affecting business and the housing industry. In June 1982 the commercial bill rate for 90 days was 18.7 per cent; today that same rate for 90 days is 14.6 per cent. There is a relationship between the cash management trust rate, the housing industry rates and bank bill rates. In July 1985 housing interest rates were 12 1/2 per cent and the commercial bill rate was 15.2 per cent, while the cash management trust rates was 14 per cent. Today, the figures are 4.6 per cent for bills and 14.7 per cent for cash management trust rates. I believe that those figures are encouraging and that in due course-if that trend continues; that is, the downward trend in bank bill rates and cash management rates-without putting a time frame on it, one could be moderately optimistic that housing interest rates will fall in line with general interest rates.

I want to make several points regarding public housing policy. The Government has been very committed to ensuring that the States get adequate funds from the Federal Government for public housing. In this financial year, as I have said earlier, we made $1.95 billion available through Federal and State expenditure and almost $1.4 billion of that came from the Federal Government through grants and concessional loans to the States, at 4 1/2 per cent. That has enabled about 18,000 additions to public housing stock. It has enabled another 14,000 low interest loans to be made to low income earners. As I said, in the housing package we announced an ongoing commitment to public housing for the next three years of $700m by way of grants and reiterated our commitment to allow the States to nominate 60 per cent of their Loan Council funds for public housing at 4 1/2 per cent, as they were able to do in this financial year. They will be able to do that again next year.

As a result of that agreement, as I just said, over 14,000 loans have been approved for home purchase assistance at concessional rates, compared to 8,500 in 1981-82. This year we would expect something like 44,000 new placements in the public housing system, and that compares with 34,000 in the last year of the former Government. In all respects with regard to public housing we are doing better than the former Government, the current Opposition. We are doing better with regard to funding; we are doing better with regard to placements; and we are doing better with regard to new construction and additions to the rental stock. If we look at what the Opposition says it will do, it is very hard to get any hard policies out of it, as happened again at Question Time today. It does not know where it is on tax policy and it does not know where it is on housing policy, except to say that it intends to abolish the Commonwealth-State Housing Agreement. If it does, it will abolish 20,000 new starts, and 18,000 additions to the rental stock.

The Opposition is in hopeless confusion. At worst it is in absolutely total confusion and at best it simply does not know where it is going and does not understand what to say about specific housing policy. It is complaining about the public housing waiting lists being too long, and that there are not enough starts in housing in Australia, but then it says that it will abolish the public housing agreement, abolish grants to the States and abolish the nominating funds arrangements, terminate 20,000 to 21,000 starts and wipe out 40,000 jobs. It has no credibility. The coalition is finished. The National Party has a caretaker leader. The Liberals have a leader who leads only one faction of his Party, and neither of those parties or leaders is in a position to produce either tax or housing policies that will stick because the Premier of Queensland will not allow them to be in a position to do so.

Mr DEPUTY SPEAKER (Mr Leo McLeay) -Order! The Minister's time has expired.