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Monday, 30 May 1994
Page: 877

Senator WOODLEY (6.46 p.m.) —I rise to support the comments of my colleagues on the Senate Select Committee on Superannuation and also to support the 12th report, Super for housing. As I understand it, the report resulted from a reference by the Australian Democrats that was supported by others some time ago. I have to say that we started with a very open mind but we have been convinced that access to super for housing in a very tight policy regime is supportable. Not only do I want to deal with the details of the report, but I also want to address some of the assumptions which lie behind the issue and perhaps signal to the government that it needs to have a look at this issue together with the whole issue of home ownership for retired people.

  Because of the tax system, investment in one's own home is the very best form of retirement saving with higher post-tax returns than super itself. Yet we are faced with the fact that an increasing number of Australians cannot afford housing, and that certainly includes retired people. Of course, part of the problem is the reduction in public housing in some states. I want to say that lack of housing—not necessarily the very narrow issue that we deal with in this report—for people in their retirement and housing for people in general is an issue of social justice.

  Given my background, I am tempted to go into great detail, but tonight I will resist. I simply say that one of the major concerns of the prophetic stream in the Hebrew scriptures is the whole issue of housing. I am reminded of a text which says, `Woe to those who join house to house.' Really, that is a reference to people who, 3,000 years ago, were seeking to control the housing market so as to be able to charge high rents and oppress the poor. It is an issue which has been with us for a long time.

Senator Watson —Put that in the report!

Senator WOODLEY —Perhaps I should have. With rental housing costs often taking up more than half of the income of retired people, higher home ownership means less post-retirement poverty. This issue was clearly documented in the report. However, I agree that limited access to superannuation deposits would help only some low income earners to reduce the amount they would have to borrow for a first home—in other words, it would help them to do something about the deposit gap.

  Perhaps it is useful to place on record that before I came into this place I would have been regarded as a reasonably low income earner. Yet, because of the two-tier system of the Uniting Church's beneficiary superannuation fund—called a home acquisition fund—I was able to borrow sufficient money to get a deposit on a house which has enabled me to provide for my retirement.

  If we were able to get the government to look again at this issue, I believe that it would result in a higher proportion of retired people owning their own homes. That would certainly address an issue of justice for them. Increasing home ownership should be a vital part of the retirement incomes policy—that is the point I want to make. For that reason, we have opposed, for example, any access to superannuation for home improvement as this does not affect retirement income.

  I am very disappointed that the federal government saw fit to pre-empt the report of this committee by dumping its pre-election promise just two or three weeks before the report was to be handed down. I hope that it was not showing some contempt for the Senate or, at least, signalling to the Senate that its reports were of no consequence. Surely I am attributing to the government a motive that was not in its mind, but I do have those kinds of concerns.

  The alternative—the ACTU-National Mutual housing loan scheme—delivers a housing interest rate tied to the overnight cash deposit rate. That rate is highly volatile. I admit that at its current seven per cent it is below the housing loan rate of 7.5 per cent, but in the late 1980s it rose to over 20 per cent, well above the then mortgage rate of 17 per cent.

  The ACTU-National Mutual scheme could turn into another HomeFund style disaster. Our problem is that we have not been able to access the details of it in order to take them into account. I am very disappointed about that. I would hate to think that many low income earners could be locked into high interest rates and repayments through the ACTU-National Mutual scheme.

Senator Watson —If it gets off the ground.

Senator WOODLEY —That is right. I am also worried that Minister Brian Howe may not have done us a service by arguing that housing affordability has never been higher. For some people that may be true but only last Friday the Reserve Bank chief, Bernie Fraser, gave a strong warning on this, pointing out that interest rates are likely to rise and that wages are likely to be constrained. That would rapidly reduce housing affordability.

  In any case, the housing affordability record of banks is woeful. Interest rates were kept as high as 17 per cent for too long, and even though housing interest rates have come down, the banks have been allowed to profiteer. Since December 1989, official interest rates have fallen by 13.25 per cent but mortgage rates have fallen just 8.25 per cent. The difference has been pocketed by the banks. The `big three' banks all recorded higher profits and fatter interest margins last week, thanks largely to housing finance.

  This report only seeks to offer one strategy for dealing with the critical issue of retirement housing while there are other strategies—for example, in the public housing area—which the government must employ. However, I want to finish by emphasising the point that higher debt-free home ownership means less post-retirement poverty, and I am sure we all want that.