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Wednesday, 25 February 1987
Page: 611

Senator JESSOP(3.59) —I support Senator Archer in his matter of urgency which deals with high interest rates and high taxation policies that are having a disastrous impact on home buyers and prospective home buyers. It was interesting to hear the response from the Minister for Education (Senator Ryan) to a question earlier from Senator Archer. I thought that the quality of the answer indicated that Senator Ryan was not particularly well briefed. I am disappointed that she is so uninformed on the subject that she is not joining in this debate on behalf of the Government. With due respect for Senator Aulich, it is such an important subject that I would have thought it merited the attention of a Minister at least instead of him. I note from the brief tabled at the request of Senator Chaney that this does not give much joy to the Minister anyway. It is quite laughable. In the resume of this document it is stated:

The Government's economic strategy, including the Budget setting for 1986-87, is directed at providing an environment conducive to achieving lower interest rates.

At this stage it appears that any reductions in market rates that may occur over the course of 1987 will not be sufficiently sustained or pronounced to result in reductions in housing loan interest rates in 1987.

Accordingly, it appears unlikely that reductions in housing loan interest rates will occur until the first half of 1988 at the earliest.

The document then refers to action taken by the Reserve Bank of Australia, which has had the result of placing upward pressure on general levels of short term interest rates. Further, it points out:

The Report of the Indicative Planning Council to be presented to the March 1987 meeting of the Australian Housing Council will contain an assumption that any reductions in market rates that occur this year will not be sufficient to allow reductions in housing loan interest rates in 1987.

It goes on to say that housing rate reductions may occur in the first half of 1988, but it is unlikely that there will be any significant impact on building activity until the second half of that year.

Australians will remember that in early 1983 the then Hawke-led Opposition campaigned throughout the mortgage belt suburbs of Australian cities on the basis that only through Labor could home buyers ensure low interest payments on their dwellings. Senator Aulich in his contribution spent most of his time dealing with macroeconomic situations. He ignored the expectations of so many Australians who have worked hard, expecting that their enterprise would be rewarded with improved living standards. These expectations have been shattered by the explosion of government spending and debt. Public spending today amounts to 45 per cent of our gross domestic product and the increase during the term of the Hawke Government is the most far-reaching structural change the Australian economy has ever experienced. Australians generally are prepared to make sacrifices if the result is worthwhile, but under the Hawke-Keating Administration large amounts of public expenditure have gone to small public interest groups whose main aim is to destroy Australian society. People are totally disenchanted with this gross waste of their hard-earned money. They want to know, for example, how much of their money went to stage the so-called gay mardi gras in Sydney last weekend. I could go on and point to the many excesses that demonstrate the present Government's waste.

Those who had already embarked upon the purchase of a house are now spending twice what their forebears spent in the late 1960s on house repayments. At the same time they are being taxed more ruthlessly than ever before. The increase in interest rates on loans outstanding has turned their dream of owning a house into a nightmare and in some cases has shattered them beyond restitution altogether. The Hawke Australian Labor Party Government is crushing the very people who are its main pillar of support-the rock solid, taxpaying, middle class family. Our national debt is increasing at the rate of $4.6m an hour. In building and construction terms, Australia's debt is increasing at a rate equal to the cost of one new Parliament House every ten days. The building industry is drastically affected by high interest rates, a decline in real household disposable income, a capital gains tax, the abolition of negative gearing for housing investment and various State government regulations.

Despite what Senator Aulich has said about the wonderful ALP housing record, after falling by 20 per cent over the past two years new dwelling commencements are currently down to as low as 118,000-no higher than in 1981-82-compared with the 135,000 forecast by the Minister for Housing and Construction (Mr West). This level of new dwelling commencements is as low as the 1981-82 level when the Fraser Government was grappling with the worst world-wide depression since 1929 and Australia was in the middle of one of the worst droughts in its history. No excuse can be made at this time. The fact is that sustained improvement cannot occur in the housing area until interest rates fall substantially. Over the past six months funds for new dwellings have declined from 26 per cent of total housing lending to 21 per cent, while money for the purchase of existing dwellings and alterations or additions to houses has increased from 74 per cent to 79 per cent during the same period.

Over the past two years new home loan interest rates have risen from 11.5 per cent to 15 per cent, and in the case of the National Australia Bank the rate is as high as 17.5 per cent in certain cases. My colleague Senator Peter Baume tabled in the Senate on Monday a document which showed that the average family is now spending more than 25 per cent of its gross income on home loan repayments. That is an absolute indictment of a Government that is supposed to be looking after the young people and the middle class people of Australia who want to build their own homes.

The first home owners scheme continues to run down at an increasing rate. Potential first home buyers face increased prices, increased interest rates and a diminishing household disposable income. Thus, progressively the dreams of our young homemakers fade away. The Hawke Government, through its negative gearing and capital gains tax policies, has virtually destroyed investor housing. Over the past four years it has declined from 25 per cent of the housing market to 9 per cent and, as a result, privately owned dwellings for rental have decreased, with vacancy rates down and rents increasing faster than the rate of inflation. As a result, waiting lists for public housing have increased during the past four years from 100,000 to over 160,000-Senator Archer reminded Senator Haines of that a while ago-at a time when government spending must be curtailed. An increasing number of Australians are forced to live in caravan parks; that figure is now in excess of 400,000. However, up to 100,000 Australians are now permanently or temporarily homeless. In this International Year of Shelter for the Homeless I believe that the Government must get its priorities right, and I hope that it will take the opportunity to do so in the proposed May mini-Budget.

How have average home loan repayments increased since the 1984 election? I have a table which indicates that, in New South Wales, average home loan repayments have increased from $472 to $678 a month since the 1984 election, when this Labor Government was returned to power. In Victoria the figure has increased from $405 to $609 a month; in Queensland, from $413 to $532; in South Australia, from $415 to $622; in Western Australia, from $368 to $495; in Tasmania, from $293 to $468; and, in the Australian Capital Territory, from $541 to $871.

Senator Archer —Enormous!

Senator JESSOP —These are enormous increases. I saw a housewife being interviewed on a television program this morning. Her monthly housing commitment has risen by over $200 to something in excess of $500, I think she said. Her husband is now out of work because of a back injury, and she is desperate. At the moment she is hanging on very grimly. She has had consultations with the people from whom she received the loan and she is living from day to day fearful that that couple will have to sell their home and find alternative accommodation. That case is typical of many throughout Australia.

The Opposition recognises that there is a desperate need for something to be done, firstly, to reduce public expenditure. This is an unpopular step for any government to take, I have no doubt, but it must occur. Other aspects of economic management must be addressed. I sincerely hope that the Government will do so in May. I am worried about the slump in the housing industry caused by the high loan repayments due to the level of interest rates. It is adversely affecting many ancillary industries. About half a million people are directly employed in the building industry throughout Australia and about the same number are employed by it indirectly. So we are looking at the employment prospects of one million people. A slump in the housing industry affects manufacturing industry-building supplies, PC items and tools. In the materials area, it affects resources such as timber, sand, gravel, stone and clay. The industry also enables many Australians to start their own business by subcontracting. So this matter seriously affects future employment.

Although more money is available for housing now than in early 1986, increasingly the funds are being used for larger loans for more affluent Australians to purchase more expensive existing homes. I think Senator Haines mentioned that building society lending remains at lower levels, reflecting the $120m interest rate subsidy provided to the savings banks under the Government's housing assistance package of April last year. That was just a band-aid provision which has had only a very temporary affect. The Government needs to deal with the matter urgently and I hope it will do so in the mini-Budget in May.