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Tuesday, 17 March 1987
Page: 785


Senator ARCHER(4.54) —This motion relates to a reference for the Standing Committee on Finance and Government Operations on assessing the status and authority of a most important document and reporting back to the Senate on or before 1 April 1987. Senator Coates referred to the document and its author. In fact, the matter under discussion is the basis on which housing loan interest rates can be forecast and how a policy can be developed from it. Having seen the document referred to in the Senate, we need to look at how it is that the Prime Minister (Mr Hawke) and/or the Treasurer (Mr Keating) can, on reading the same document from the same source, come up with different conclusions from the author or the Minister for Education (Senator Ryan), who represents the Minister for Housing and Construction (Mr West) in the Senate. I find it quite incredible. That is why we need to know whether the documents that come before the policy-mak- ing decisions of the Government can or cannot be relied upon.

It is rather unwise of the Government to keep on raising the question of the International Year of Shelter for the Homeless, because undoubtedly this is the worst year I can remember as far as people seeking housing is concerned. As I was listening, or not listening, to a former speaker, I was contemplating the fact that I have spent about 40 years involved in housing in one form or another and in that 40 years this is the worst year for people seeking housing. The housing position is not just a mess and is not just serious; it is absolutely disastrous.

The document referred to by Senator Ryan, which caused this debate, was authorised by Dr Hawkins. Dr Hawkins is a very senior and highly qualified economist. He is the First Assistant Secretary of the Industry Policy Division in the Department of Housing and Construction and he represents that body on the Indicative Planning Council for the Housing Industry. The Indicative Planning Council is the major advisory body for the Government on all matters to do with housing planning. The Council comprises a selection of eminent representatives of housing associated organisations, government departments and unions. Those organisations include the Confederation of Australian Industry, the Australian Finance Conference, the Australian Bankers Association, the Real Estate Institute of Australia, the Housing Industry Association, the Urban Development Institute of Australia and the Australian Association of Permanent Building Societies. There are government representatives from the Department of Employment and Industrial Relations, the Australian Bureau of Statistics, the Reserve Bank of Australia, Treasury and the Department of Housing and Construction, and a representative from the Australian Council of Trade Unions.

This body surely must have the regard of everybody who wants to know anything about housing-or perhaps everybody except the Government. I find it quite extraordinary that the Prime Minister and the Treasurer would not take as much notice of the views put to that body or the Housing Ministers Council as anybody else would. Professor Gruen is well known in the community. He is the Chairman of the Indicative Planning Council and is a man of very high regard and qualifications. Although, whether it is the Indicative Planning Council or anybody else, the advice given is probably never 100 per cent. I do not expect that it should be. But it is based on the best projections that the Indicative Planning Council can make or gather. As with any statistics-the history of the Indicative Planning Council would bear this out-the projections of highs are never really high enough and the lows never go low enough. They are difficult to determine and I sympathise with the experts, who can only do the best they can with the best information and the best interpretation of that information that is possible.

This comes back to the Government. Why does the Government choose not to accept the advice or find out whether other advice is available? That is what we are trying to establish. To rubbish the comments of Dr Hawkins as was done by members of the Government, or even to brush them off as irrelevant, just is not on under these circumstances. By any standards housing is in a mess. There has been a huge fall-off in construction-something like 20 per cent. Housing rental applications in the life of this Government have risen 60 per cent-from 100,000 to 160,000. Interest rates in the last 18 months or so have gone from 11 1/2 per cent to an average of 15 1/2 per cent, and in many cases to considerably more than that. There has been a big sell-off and non-replacement of private rental housing. There have been high rises in rents. I noticed in today's paper that three-bedroom houses in Sydney cost $247 a week to rent. There has been a 70 per cent rise in arrears notifications of the Housing Loans Insurance Corporations insured borrowers as at the last count. What has the Government done? It has introduced a capital gains tax and it has eliminated negative gearing.

Private rental housing usually returns the owners 4 to 6 per cent plus a bit of capital gain if they are lucky. Without that only two things can happen: The shortage will drive the rents up, and the owners will endeavour to sell what they can to get out of it and get their money into something that might show them a return. There have been no significant additions to the stock. The Indicative Planning Council says clearly that interest rates cannot come down, certainly not in the foreseeable future. As Senator Chaney pointed out, Professor Gruen went further than that and made other comments as to the unlikelihood of there being any improvement.

Why is it that the Prime Minister and the Treasurer give information to the contrary? Clearly this could be regarded as a case of misleading home owners or would-be home owners. If the Prime Minister and the Treasurer are so sure that they can predict falls in interest rates during 1987, where do they get that information from? Where is this information that is so much better than that which the Indicative Planning Council gets? The Council has the resources of Treasury, the Reserve Bank of Australia and others available to it.

The Government has a total disregard for home ownership. We now have people waiting outside newsagencies overnight so that they can get the first paper in the morning to see which flats are for rent. What is the Government doing about that? It is keeping interest rates up to four or five times those of similar nations. We cannot keep bearing this kind of penalty. I query the disposable income projections of the Indicative Planning Council, which I regret may only make things worse. From my experience I believe that huge rises in rents and/or repayments leave most young home owners with absolutely no disposable income. One in five of all renting households in Australia are now paying over 35 per cent of their gross weekly income and often as much as 55 to 60 per cent of their net incomes in rent. How can they ever buy a house? The only thing that the Government has done in this regard, having seen these people pay an extra $60 from their salaries or $250 a month, is give them an offset of $10 a week and tax them $4 out of that.

Let us ask the Master Builders Federation of Australia or the Housing Industry Association, or the Real Estate Institute of Australia how things are. Ask the Commonwealth driver who told me that his repayments rose by over $200 per month to $795 per month from the time he signed his mortgage to the time his house was completed. Ask him about the 16.74 per cent interest that he is paying. It was 17.5 per cent but he created such a furore that it was reduced to 16.74 per cent. Ask his wife about the 20 hours a week overtime that he has to work to meet it. Ask the Tasmanians whose repayments overall rose by 35 per cent in the last 12 months. Ask the HLIC about its notifications of arrears. Ask the Australian Bureau of Statistics about the figures that are coming in to it. Ask the economists-they will tell us the answer too. The reasons they will give will be a debt of $100 billion, an inflation rate of 10 per cent, the fiddled floating dollar, the crippling rates of taxation, the ghastly overspending of the public sector, and interest rates which are more than double those of our trading competitors. Ask the 400,000 caravan dwellers. Ask the 40,000 people who thought that they could get into houses this year and who found that they could not afford it.

When will the Government get something on the line to get something going? If it is not going to, it should get out and make room for us. To bribe the banks with $145m is all it can do-a $145m subsidy or bribe to the banks, of all people-to cover its own declared policy of high interest rates. I call on the Government to tell us all about its housing program so that I can tell the home owners and would-be home owners around Australia. In this regard I ask five questions. First, how many houses will be built throughout Australia in the next 12 months? Secondly, what will the interest rates on mortgage loans be? Thirdly, what availability will there be for non-government rental property, and at what price? Fourthly, what help will home owners who are in trouble because of skyrocketing repayments get? Fifthly, when will inflation rates come to those of our competitors?

The slump is absolutely disastrous. A slump of 20 per cent takes much correcting. The loss of homes and the loss of hope, the loss of jobs and the loss of skills take much correcting. Even government rental housing will not solve the problem. Since the Government came to office housing rental applications have risen, as Senator Chaney mentioned earlier. The figure is now over 160,000 and it is still rising. How much further will the Government let this go or will it drive it up before it decides to do something about recognising the extent of the disaster in housing? In spite of a reasonably optimistic approach to both disposable income and a rise in the gross domestic product, the chances of meeting 120,000 new homes is very questionable. And so it goes on. We ask that the Senate have an opportunity to make an assessment of the document which was produced in the Senate, and from which the Government gets assistance in the preparation of policies and statements.