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Monday, 3 November 2003
Page: 21781


Mr ROSS CAMERON (Parliamentary Secretary to the Treasurer) (5:41 PM) —I rise today to grieve the attempt by Parramatta City Council to impose a new $10,500 tax on purchases of newly constructed multi-unit dwellings in my electorate, under the guise of a housing affordability measure. Parramatta City Council is proposing the introduction of a new levy on all developers of multi-dwelling developments within the local government area, under what it describes as an inclusionary zoning measure, under which multi-unit developments would have to give up three per cent of the floor space of any new dwelling to Parramatta City Council for management at below-market rentals. The argument is that this measure is needed in order to maintain the diversity of the residential community of Parramatta and to maintain access to housing for those on lower incomes.

This is a measure I regard as being probably well-intentioned. However, it will have adverse and unjust consequences for the vast majority of the residents of Parramatta and in particular for new home buyers. I say that because we know from research conducted by the Urban Development Institute of Australia that a disproportionately high number of purchasers of new dwellings are first home buyers. In fact, in a study conducted by the institute in 1999, they found that over one quarter of new dwellings were purchased by first home buyers, even though first home buyers represented a significantly smaller proportion of the total number of those people purchasing dwellings.

Perhaps one explanation for that is that in the decade between 1989 and 2000 the price of a new project home increased by 23 per cent compared to the rise of 53 per cent in the price of an established home. What we see is that the newer dwellings—both project homes and multi-unit developments—tend to be more affordable for first home buyers. Indeed, this government has taken a number of measures to try and make housing more affordable for those first home buyers. Among those measures is the first home owner grant—currently at $7,000—which is specifically intended to compensate first home buyers for the GST cost that applies to the materials involved in the construction of new dwellings.

Perhaps the more significant thing we have done—by astute and prudent management of the economy, particularly of the public finances—is that we have managed to reduce interest rates to a 30-year low, which is where they currently stand and where they have stood for some time. This has made access to finance much more widely available. But, at the very time the Commonwealth has been working to make housing more affordable, we find that at both the state and local government levels there seems to be a determined effort to place housing, particularly new housing, beyond the reach of young Australians. This measure is one among a series which I would put in that category.

It is suggested that developers will simply absorb the cost of this new three per cent tax—or $10,500 on the cost of an average new dwelling, which totals $350,000 in my electorate. The reality is that there will be no way to ensure that the costs are quarantined to the developer; they will certainly be passed on to the purchaser. There is no mechanism available to ensure that that transfer does not take place. We could ask ourselves whether it is just, equitable and fair to impose it on the developer. Developers have been the target of quite a bit of hostility. In fact, it is my view that development, soundly managed according to appropriate guidelines, powerfully enhances the quality of a neighbourhood and lifts property values.

In Sydney, we have seen a transformation in many local communities, and Parramatta has been at the heart of that transformation. Developers have to face quite an ordeal at the moment. In Parramatta right now there are 800 development applications sitting in a queue waiting to be processed by Parramatta City Council. You can imagine the cost of the delays involved. The official line is that there are six- to nine-month delays to have a development application considered. The anecdotal evidence is that it takes considerably longer than that. One developer in Parramatta told me that he recently sold five projects without beginning construction or getting the development application approved simply because he could no longer afford the finance costs of holding the undeveloped properties. This is a factor which Parramatta City Council might consider as they propose this new three per cent tax on new dwellings. If they could reduce the backlog of 800 development applications and increase the speed at which they process applications, they would significantly reduce the cost of new housing.

I now want to talk about the diversity within my electorate. Over 30 per cent of the people in my electorate speak a language other than English at home. When I attend the citizenship ceremonies in Parramatta, I find there is barely a white face to be seen in the crowd. We are seeing an extraordinary diversity and vibrancy as newer migrants make a beeline for Parramatta. This is due in part to this government's sterling economic management which has resulted in an unemployment rate for Parramatta of 4.4 per cent. When I was elected in 1996, it was just under 14 per cent. In the eight years since the Howard government came to office, we have seen a fall in the unemployment rate in Parramatta from 14 per cent to 4.4 per cent. In the Baulkham Hills local government area, the unemployment rate is down to 3.5 per cent; in Holroyd, it is at 5.5 per cent. So the average is a little over four per cent. That is my idea of an affordable housing strategy: to give people access to jobs and employment.

We have an affordable housing strategy in the form of the New South Wales Department of Housing. The New South Wales government currently has 100,000 people on the waiting list for public housing and an admitted backlog of $1 billion in maintenance obligations to its current tenants. That is $1 billion worth of maintenance work which has not been done because, as in the area of water management, the government is happy to take dividends out of organisations but is hugely reluctant to invest in the key assets of government. This New South Wales government has seen an extraordinary increase in revenue from stamp duty. In 2000-01, the New South Wales government took $1.9 billion in stamp duties. The next year, it took $3.6 billion—a 37 per cent increase; a massive financial windfall. This year, 2002-03, it will receive $3.6 billion—that is another 17 per cent increase. We are seeing the New South Wales Treasury sloshing around with the revenues that flow from this massive boom in property in Sydney. What is the government's response to that? `Let's introduce a new three per cent tax on affordable housing in areas like Parramatta.' This initiative has been strongly supported by Minister Craig Knowles.

I think it is an unjust and inequitable tax on the people in my electorate. In my electorate there are households where both members go out to work. They are working extremely long hours and they are making great sacrifices in order to make their housing more affordable. And now Parramatta City Council turn around and introduce a new three per cent tax. My strategy for affordable housing is: let's keep interest rates low; let's keep the economy growing and generating opportunities for jobs; let's reduce the tax on the GST components of a new house as a consequence of these new revenue measures the New South Wales government has introduced; let's repay the $1 billion backlog on the existing stock of public housing; and let's get Parramatta City Council to start processing its DAs more efficiently. (Time expired)