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Wednesday, 25 February 1987
Page: 602

Senator ARCHER(3.06) —I move:

That, in the opinion of the Senate the following is a matter of urgency:

The need for the Hawke Government to reverse its high interest rate and high taxation policies which are having such a disastrous impact on home owners and prospective home owners throughout Australia.

Australia faces economic circumstances that are unrivalled. At present the future of Australians is in grave danger. We are in circumstances where we have 10 per cent inflation-four or five times that of our international trading partners-and a huge overseas debt of $100,000m, rising at the rate of $111m per day and with no apparent levelling off. We have a fiddled and artificial floating dollar. We have crippling taxes. We have interest rates double those of our trading partners and we have a government which refuses to level with the people on the general overall mess that the country is in.

Senator Collard and Senator Jessop will also support the proposal and help in calling on the Government both to acknowledge the disaster and to get the economy back on the track-and to think of the hundreds of thousands of Australians for whom housing is either an impossible dream or a terrible nightmare. This is the most anti-housing, anti-family government in living memory. Every action of the Hawke-Keating economic package has acted against home owners and would-be home owners.

In my speech I will cover matters relating to interest rates, statistics on home building, the capacity to pay, the rental alternative and the government involvement. I start with the sociological issue-how it affects the family and the future of families in Australia. The sociological issues fall squarely on the Government. What is the Government saying about that? It is saying nothing at all. A recent newspaper article quoted the director of housing services for the Master Builders Association, Mr John Murray, as follows:

There is no doubt that the great Australian dream (of owning your own home) is becoming increasingly difficult to obtain.

The article continued:

This year 40,000 people who expected to move into a new home will not be able to do so. This is bad for the morale of families, bad for the upbringing of their children . . .

What about the extra 40,000? What about those living without any hope at all? What about those-now 400,000 or more-permanently living in caravans? What about those with no homes at all? What is the future for young Australians? What about those bankrupted through their inability to meet huge payments? Is there any conscience in this Government on this issue? No-not a bit of it. Every action makes bankruptcy a greater possibility. Every policy of this Hawke-Keating lot makes it worse and worse.

Let me deal with interest rates. Two years ago, in December 1984, the savings bank interest rate was 11.5 per cent; in December 1986 it was 15.5 per cent. The rate for permanent building societies was 13.25 per cent in December 1984 and up to 15.63 per cent by December 1986. What did the Government promise? It promised that things were rosy. Those figures come from the monthly economic and social indicators. The gimmick of this 13.5 per cent maximum is crazy, as everything else in the economic package is crazy. To bribe banks with $145m so that a phoney figure can be cited does little for the thousands of people paying 17 per cent or 18 per cent or more and who are generally not as capable of meeting those payments anyway. The recipients of the $145m, the paragons of fiscal virtue, are the same main purveyors of the famous cocktail mortgages-so much at 13.5 per cent, the balance at 18 to 20 per cent. Let us remember that interest rates are not at the top. They are still going higher. Our high interest rates are of course deliberate Government policy. Interest suffers with the cost of defloating our floating dollar. This is the same thing that makes foreigners put money into Australia and makes Australians borrow overseas. The cost of this is put on the cost of housing and then the added cost of owning is enormous. Does the Government care? Not a bit. Not only does it not care: it is instigating it.

The new factor in home finance is this index of affordability. Historically it was universal that buyers could not undertake any commitment exceeding 25 per cent of their average weekly earnings. Now, many are way past the crisis level and up to 35 per cent of average weekly earnings or more. What is worse is that during 1986 lending by the unsubsidised building societies dropped by 36 per cent. Funds for new houses, as against previously occupied houses, fell from 26 per cent to 21 per cent of total lending, and most lending is going to up-market existing dwellings to other than first home buyers. Nationally the cost has risen by 45 per cent in two years. It has risen from 21.3 per cent to 26.7 per cent in one year, even on increased incomes.

The Institute of Public Affairs in its current journal points out two things. Firstly, in regard to housing costs, home buyers are spending on housing payments twice what their forebears spent in the late 1960s, while governments are taxing them more ruthlessly than before. It also points out in a very interesting graph that, for anybody who is on 75 per cent of average weekly earnings, the proportion of after tax income spent on housing rose from 24.4 per cent in 1968-69 to 32 per cent by 1973-74 and to 43.5 per cent by 1985-86. Of the after-tax income of low income earners, 43.5 per cent goes on housing. What is this Government doing about that? Not a thing. All it is doing is finding other taxes and higher taxes for these low income earners to make the situation even worse.

Senator Chaney —It is forcing people into poverty.

Senator ARCHER —It is forcing people into poverty. A Real Estate Institute of Australia Press release of 22 February brings home the stark realities also, where it states:

. . . the report released today shows the ratio of average monthly home loan repayments to medium family income at 26.7 per cent across the nation. . .

It then goes on to show that in my own State, Tasmania, housing loans repayments have increased by 35 per cent at a time when weekly incomes have increased by only 5.2 per cent. The effect this is having on business generally in Tasmania is appalling. Retailers and commercial people generally are finding that suddenly the money is drying up.

These are only averages that I am talking about. Many people are far worse off than the averages. Does it stop there? No, of course it does not. The Government then brought in a fringe benefit tax to mop up any of the surplus that may have got missed in the run. These young people will not forget. They are angry and disappointed. How can they pay? They are in terrible trouble. For those who fall into arrears the trouble gets worse and the mortgage insurers move in. The Housing Loans Insurance Corporation annual report states:

About three quarters of loans falling into default in 1985-86 had been made in the previous two years, and more than 90 per cent in the previous three years.

Over two thirds of those were loans of more than 90 per cent of valuation at their establishment.

Senator Chaney —This is all under Hawke.

Senator ARCHER —This is all under Hawke. We have only to look at the latest figures for the first six months of 1986 which indicate that there was a rise of 70 per cent in the number of people who were listed as borrowers in arrears. It rose from 1,027 to 1,744 in just six months. I have put a question on notice asking for the figures for the next six months. When I get those figures I will certainly make known the result these Government policies are having. The only thing I will guarantee is that there will be no improvement. This lot of people are angry also. They are angry with this wretched economic pattern against home ownership. They are angry that home ownership, and everyone's ambition can go so wrong when they are trying to do everything right.

The appalling record is reflected in the figures as well. After all the huffing and puffing over the pumped up figures in 1984-85 the crash came with a vengeance. The Prime Minister (Mr Hawke) promised us 145,000 housing starts and it appears that we now stand no chance of exceeding 120,000. The figures are disastrous. In 1984-85 there were 160,415 dwelling approvals, in 1985-86 there were 140,655 and for the first six months of 1986-87 the figure was down to 61,294-a further 20 per cent drop. All I am prepared to say is that it is still going down and will get a lot worse.

Senator Chaney —It's dropping by what-about 20,000 a year?

Senator ARCHER —By 20,000 a year. The Australian Bureau of Statistics has produced figures which show that new residential building in the September quarter was down 20 per cent and that the value of work done was down 16 per cent. Everything one looks at in the housing area is getting worse. The slump is disastrous and it is occurring at the same time as a huge interest rise, high and rising inflation, a major sell-off of rental housing and a rise in the number of people registered for government rental housing. And the Government is doing absolutely nothing about it. When the figures were being pumped up the Prime Minister was puffing and huffing and saying that every 10,000 houses represented 15,000 extra jobs. Out there the figures are the same. A loss of 30,000 completions represents several things also. It represents a loss of 45,000 jobs, including probably 30,000 skilled tradesmen, most of whom will never go back to the industry again. It also produces a heartbreak for those who really thought they could get a house of their own. The crazy pumping up of the 1985-86 figures was a disaster.

Now to rental properties. There are many reasons for owning rental property. Some are retained by owners who have moved, some were inherited, some are owned by people working overseas and some are owned by people who have bought a second house to keep for their retirement. Very few produce a high income, but they do produce a bit of security. But every single one of those houses provides accommodation to people who need it. Then what happened? The Government moved in and said: `We will soon stop this; we will put on a capital gains tax, then we will disallow negative gearing, then we will see whether we can catch people who get some fringe benefits and so on'. Why would anybody now want to own rental housing?

The result of all this is the greatest divestment of rental property in Australia's history. The result is that the number of houses for rental goes down and down, engineered by the Government and its anti-home ownership policy. What is the result? The Real Estate Institute of Australia is able to tell us. In one of its recent news releases it pointed out that the rental vacancy in Sydney was 0.7 per cent. To all intents and purposes this is way past what is regarded as full total occupancy. `Sydney vacancy rates hit rock bottom' is the heading. This situation does not exist only in Sydney. The vacancy rate is as low as 1.7 per cent in Melbourne and 1.9 per cent in Perth. Anybody who has had any experience in real estate will say that anything under 3 or 3 1/2 per cent is full occupancy. The figures will not improve; I can promise honourable senators that. The would-be tenants-the people who are queuing up at real estate agents' offices-are angry with this Hawke-Keating Government. What this Government is trying to achieve, if it knows, is absolutely crazy.

Amongst all this the Housing Industry Association is still saying that the costs are going up and up whether one is buying or renting. The Housing Industry Association said in its annual report that one in five of all Australians are now paying more than 35 per cent of their income in rent. To quote further the article in which the statement of Mr Murray of the Master Builders Federation was reported:

Perhaps even more critical-

and it was talking about the lack of building-

is the decline in availability of rental housing. In the 1970s, private rental housing formed almost 30 per cent of the market, but that figure recently has dropped to under 20 per cent.

Where is all this heading? How long can we go on in this ridiculous manner? There are now 160,000 families on waiting lists for public housing.

When the Hawke-Keating mob moved to the treasury bench the figure was about 100,000. In 1983, it was 123,000; in 1984, 135,000; in 1985, 142,000; and in 1986, 154,000. All that was arranged and organised by the Hawke-Keating Government. What chance do young people have? We must remember that there can be no recovery at all without the full participation of the private sector. Right now, the Government does not and will not recognise that. It does so at its peril. There can be no recovery without the private sector.

The Government must have some plan for housing starts. Will the figure be the 145,000 promised by the Prime Minister, or the 135,000 predicted by the Indicative Planning Council? Is it the revised figure of 130,000 or the later revised figure of 125,000, or is it 122,000? I would say that the figure will be under 120,000. That is what I will bet on. The figures and the prospects are getting worse. Material costs are getting higher, inflation is rampant, interest rates are about to explode again, and there is no prospect for improvement. I suggest that the figure will be between 115,000 and 118,000.

How could first home buyers proceed given the prospects ahead of them? It is not a very satisfactory situation at best. Even before the banana day mini-Budget of 14 May, what are they going to do? What is the future of the young people of Australia who need a roof over their head so they can raise a family and get some security? How can they pay? I will quote the headlines of a few newspaper articles which have been placed on my desk in the past few weeks: `Hike in home loan bill hits hard'-the Age; `Agents condemn Government's policies'-the Australian; `Home loans cost more despite government aid: survey'-the Australian; `Home loan ceiling to stay: West'-the Age; `Interest rise traps renters, group says'-the Sydney Morning Herald; `Interest bars home buyers'-the Australian; `Plight of the homeless deepens as rents rise'-the Sydney Morning Herald; `Home loan payments jump 36pc'-the Mercury; `Park residents tell of life as fringe dwellers'-the Age; `Homeless to be counted for first time in special survey'-the Age; `Shine rubs off home loan record'-the Australian; and so it continues. Those reports are coming through all the time. Newspaper editorials to that effect are coming through, indicating that the newspapers see the issue as one of importance. What an absolute mess the Government has created! This is no crisis; it is a disaster. There is no drought; there is no America's Cup; there is no test match; there is nothing to blame but the Government itself and its crazy, ideological, unrealistic approach to probably the most fundamental issue to every Australian.

The classics of this Government will be long remembered. There was the trilogy-that statement of faith and hope which has been destroyed and is gone forever; the accord, which gave the Government's masters what they asked for and was called an agreement; the J-curve, which was a confidence trick to get people to expect less bad news longer; and the comment about a banana republic. Of all the predictions and statements of the Prime Minister, the Treasurer and others, that looks like being the only one to be true. Where will that get the young people of Australia who want to be housed, who need to be housed and on whom the future of the country will depend? We need those people to be settled. We need them to make contributions to the community. We want to be able to give them a fair and reasonable go. Under this Government they will not get it. Is it any wonder that they are angry out there. I believe that the passing of the motion today would be one of the steps in the right direction.