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Thursday, 9 May 1985
Page: 1616

Senator HAINES(11.27) —The First Home Owners Amendment Bill before us today is in effect the third attempt by the current Labor Government to limit the effectiveness of what has been described, probably accurately, as the most successful operation of the first home owners scheme we have had. In doing so, as previous senators have indicated, it has ignored quite deliberately the needs of low income families and families with dependent children. Of course, those people are currently living in the private or public rental market sector, and in forcing them to remain there, as this legislation could well do, the Government is continuing that dreadful poverty trap that catches so many low income families, particularly those who have young dependent children. It limits their opportunities for saving. Therefore, it limits their opportunity to bridge deposit gaps and it limits their opportunity to get out of a cycle in which a large amount of their money is going into somebody else's asset and which will in effect achieve very little for themselves and their children in the future.

In the guise of budgetary restraint-indeed, in the guise of alleged responsible budgetary restraint-this Government has in the last nine months cut back not only the number of people who can qualify for the grant, but also the amount of money people receive in assistance by not indexing the limits for inflation. What may have seemed a fairly generous limit a year or two ago becomes a not so attractive limit when it is not indexed for indexation. One could almost say that we have here a case of reverse fiscal drag operating so that over a two-year period, fewer and fewer people are benefiting because limits are not keeping pace with inflation.

Of course, the first cut was effected by way of regulation in August last year and, indeed, it affected most single people. If, as is the case on both sides of this House, there is some agreement that we ought to have as a top priority the needs and concerns of families with dependent children, perhaps that was not a particularly reprehensible step for the Government to take. It may well have been an appropriate action to take, if that was the priority order it had. The second change was also done by way of regulation, although, from looking at speeches made in the lower House, that fact did not seem to register with some members of the Opposition. The regulation was changed in April of this year.

Of the two changes, I suggest that the one made in April of this year will have the most devastating effect on people who are looking to this Government for assistance to get a permanent roof of their own over their heads. That change cuts in a single stroke by $1,000 the amount eligible individuals and families can receive. Even in this day and age $1,000 is not an insignificant amount when people are budgeting tightly to build or buy a home. As one correspondent pointed out to me, it has in fact made the difference to him and his family of having a roof on his house. This gentleman and his family are building their own home. There is no contract to sign with a builder. There is no contract to sign with somebody who is selling an already built home. He is building his own house. He said:

. . . I object strongly to the way the Government has attempted to economise. Once again, it has been those who can least afford it who have been hit the hardest. My family, that is a wife and three children, live on a very low fixed income and have only a small fixed amount of money available for building. All of which has been budgeted for, with no prospect of further loans. The $1,000 in question represents to us the roof of our proposed new small house. Since we do not qualify for any type of home loan, I would like those in power to explain how I am going to finish building our home.

Of course, he has a quite definite point to make. The third change the Government has made to the first home owners scheme is implemented in the piece of legislation before us today. The Government is placing an absolute spending limit of $290m on the FHOS. The Bill places a ceiling of that amount for 1985-86, based on the $290m that was spent on the scheme in 1984-85. We may have reduced our inflation rate from what it was four, five or more years ago, but in holding down the spending in 1985-86 to the amounts spent in 1984-85 we automatically guarantee that fewer people will qualify, simply because the money spent-the $290m-in real terms, will be less than the value of the $290m spent last year.

Furthermore, since the payments under the first home owners scheme are spread over five years, some of the money to be allocated in 1985-86 must be to service first home owners scheme commitments made since 1983. I have not seen anywhere evidence that the Government has told us just exactly what proportion of that $290m will be used for those who have already been successful in getting grants. Therefore, it is impossible for me or, I presume, for anybody else to calculate exactly how large the cut will be for new people coming into the system. One is forced to ask: How many people who want to buy or build a home will be prevented from doing so in the coming financial year because the Government has opted for a sort of first in first served distribution principle?

I find this neither equitable nor fair and I wonder just what sort of backlog it is likely to produce in, say, the 1986-87 financial year. How many people will be prevented from buying the home of their choice either because the Government has cut by $1,000 the maximum eligible amount or because the $290m allocated has run out in, say, the first seven, eight or 10 months of the year? What sort of backlog will that produce in subsequent years? What kind of rolling effect will this have on people who want to make use of this scheme to get themselves into a home of their own?

Furthermore, one is forced to ask what effect this penny-pinching will have on the housing industry generally and a number of associated industries the Government successfully managed to stimulate through the first home owners scheme Mark 1. One wonders whether we are going to have the same sort of housing assistance muddle during the period of this Government with constant changes to the scheme, as we saw throughout the Fraser years with the constant changes to the health care system. I suspect that an additional problem will face us in this area, and that is that this Government is likely to continue its interest deregulation process to include home loan interest rates. If it does that, the impact on the housing industry and related industries such as soft furnishings, white goods and so on, could well be as dramatic as it was in the days of 1981-82, when interest rate rises were becoming almost a monthly event.

Mr Acting Deputy President, I am sure that you, like me, have been in the position of budgeting to pay mortgage repayments and so on. Of course, at the moment we are in a much better position than others to absorb interest rate rises that will affect our mortgage repayments. The majority of people in the community are not so fortunate. I think it is incumbent on this Government at least to give people some sort of warning about what is likely to happen to their budgets through action the Government is likely to take in the future. For example, if the Government is going to follow deregulation of small business loans, deregulation of personal loan interest rates, deregulation of Bankcard rates and so on, with the deregulation of housing interest rates, will it assure, and in fact reassure, people that it will take some other action that will offset the effect of this rise in interest rates-because that is what will inevitably follow deregulation-on the budgets of people who hold large mortgages? For instance, will the Government offer some sort of housing interest subsidy? People in the community are entitled to know. If they do not know, the housing industry will become unstable and families will have the budgetary problems to which I referred as occurring in the early 1980s.

Most families budget fairly tightly. They know what their interest rate repayments are likely to be. They usually know what their housekeeping costs are. They know when they are likely to need a new car. They can usually tell if the washing machine has a terminal illness and how long it is likely to last. If that sort of budgeting system is upset by the changes we see in the regulations concerning FHOS, which have been implemented by the Government in the last nine months, and by the changes before us in the legislation today and the impact they are likely to have on who can qualify this year or next, and if those sorts of budgetary problems are going to arise, I think people are entitled to know what offsetting benefits the Government is likely to use.

The Liberal Opposition has introduced an amendment to the motion for the second reading, which we will be supporting. The amendment states:

but the Senate, whilst accepting the need for overall budgetary cuts in Government spending, including in the First Home Owners Scheme . . .

As I indicated earlier, we certainly can see some sort of equity in the Government prioritising families with dependent children as it did by its regulation change last year. We, too, feel that the FHOS should not be excluded from budgetary cuts. Nevertheless, we agree with the other points raised in the amendment to the effect that the introduction of this Bill amounts to a shameful dishonouring of an election pledge by the Government to maintain the first home owners scheme and that the arbitrary action of the Government will mean that the heaviest cuts will fall on the poorest and most needy members of the community.

I add, however, that I wonder how many of the poorest and most needy members in the community ever did benefit. Did it ever help people whose sole income came from a pension or benefit of some sort? If the Government has any figures on how many supporting mothers, for example, with one or more children were in a position to qualify under the FHOS, I would be interested to have the figures. Also, I would be interested to know how many people who are on invalid pensions, with dependants, were able to qualify under this scheme to bridge a deposit gap and have some sort of budgetary assistance to purchase or build their own home. I suspect that the numbers will be very slight indeed. There is no doubt that a significant number of people who could have been and should have been helped by this Government to buy or build their own homes will not be helped because of the changes made in April to the regulations and to the first home owners scheme by this legislation. For that the Government stands condemned, and condemned in the words of the Liberal Party's amendment to the second reading-an amendment I have no hesitation in supporting.