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Tanya Plibersek discusses the Govt's housing -

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Tanya Plibersek discusses the Govt's housing affordability plan

Broadcast: 03/03/2008

Reporter: Tony Jones

Housing Minister Tanya Plibersek joins Tony Jones to discuss the Federal Government's plan to
attack the housing affordibility crisis.


TONY JONES: Now to the Housing Minister, Tanya Plibersek, who joins us here in the studio. Thanks
for being here.


TONY JONES: What do you see to the argument that as interesting as this plan is, it won't even make
a dent on the housing affordability crisis?

TANYA PLIBERSEK, HOUSING MINISTER: Well, I saw the Leader of the Opposition saying that earlier and
I thought it was pretty funny actually, that after 12 weeks, when we have laid out a comprehensive
range of policies to help with housing affordability, the Opposition would be saying it's too
little too late when they had 12 years to do something about housing affordability and did nothing.

None of us believe that what we've announced today is the silver bullet to housing affordability.
This is a complex problem. It has developed over a decade. It's part of a suite of answers needed.
Today's announcement to double the amount of affordable properties through our national affordable
scheme is one important measure. Our housing affordability fund, which is a $500,000 million fund
to bring down construction costs for new housing, another important measure. Our first home saver
accounts to help young Australians save a deposit for their own homes, very important. Release of
excess Commonwealth land, having a housing supply council so that we are predicting 10, 20, 30
years into the future the housing and land supply needs that we'll have. All of these are part of a
solution. On their own, of course, they're not a solution and certainly no solution is an overnight

TONY JONES: Let's look at the numbers in this particular policy, though, we'll go through them.
You've doubled a national target to 100,000 new affordable rental properties. How many of them can
you possibly expect to be built in the term of this government?

TANYA PLIBERSEK: We have intentionally started in the next financial year the coming financial year
there'll be 3,500, the following year a total of 1,100 and the follow year a total 25 and finally a
total of 50. We've done it this way intentionally. We've got a skills shortage at the moment. If we
rammed 50,000 tax credits into the market in the first year we would have the potential of causing
inflation in the cost of building and we don't want to do that. So we've deliberately ramped it up
slowly. But each of those properties, once it's built, will attract the subsidy for 10 years. That
means that each property will, as it attracts the subsidy for 10 years it will stay in that
affordable rental pool for 10 years.

TONY JONES: But you're saying that what's stopping you from putting a lot of new housing on the
market quickly, which is what's needed, is inflation?

TANYA PLIBERSEK: There's a few things to consider. There's the skills shortage to consider. The
second thing to consider is that we want institutional investors to invest in this area. Some of
them will want to see what happens with this asset class. They'll want to dip their toe in the
water and start slowly. There's also the idea that many of these institutional investors will
actually want to partner with not-for-profit housing organisations to make those links to work out
who it is that will be managing the tenancies for these properties and so on. That is a complex
arrangement for some people because it's totally new in the Australian environment. Although it's
been done overseas quite successfully, it is a new asset class in Australia and it's a new
arrangement that businesses will be entering into. So they want to see what's going to happen along
the way.

TONY JONES: I'll come back to the businesses and who might get involved in investing in this in a
moment. Just the numbers, if I calculated that correctly in the term of the Government 30,000 new
rental, lower rental houses?

TANYA PLIBERSEK: Of course it depends on when the elections the first 50,000 houses, $603 million
is over five years and if that is successful, if there is market demand, if it's making a
difference, if we judge it to be a successful program, we'll have another 50,000 tax credits
available for another 50,000 properties.

TONY JONES: That's a 10-year plan so, in fact, you're looking way beyond the scope of your own term
in office?

TANYA PLIBERSEK: But, of course, we are Tony and we have to be for a couple of reasons. The first
is you can't build a house overnight. Everything we do in housing has to be long-term because it
takes a while to put houses onto the ground. The second reason that we're looking long-term is
because we want this to be a new asset class for investors they don't make decisions that are valid
for 24 hours, or a week or a month. Investors who are investing in this are investing long-term.
The rates of return will not be high. The reason investors will be attracted is because it will be
a reasonable rate of return over a longer period, not an overnight profit.

TONY JONES: I'm simply saying this - it relies on a future government being on board in the same
way. You're committing to a long way out?

TANYA PLIBERSEK: Well, we are, but we believe that the housing affordability problem can't be
solved in the very short electoral cycles that we deal with these days. This is a problem that's
emerged over a long period and it will take a long time to fix. We've said that all the way along.

TONY JONES: It's a huge problem according to your own statistics. Today the Prime Minister quoted
BIS Shrapnel figures that by 2011 there'll be a deficit in NSW alone of 50,000 houses by 2011 and
it's estimated that would be 150,000 nationally. So it is only a tiny percentage of the problem
that you're dealing with here?

TANYA PLIBERSEK: Indeed and we'll support the building of these affordable rental properties. We've
also got our $500 million housing affordability fund to help with the construction of new homes.
We're helping establish first home saver accounts, so another group of young people will be able to
move into home ownership who at the moment probably feel like it's out of their reach. There's not
one solution to housing affordability. We have to take this multi-pronged approach.

TONY JONES: We know how public housing works, how would this low rental, or more affordable rental
accommodation work? Who would be eligible for it just to start with?

TANYA PLIBERSEK: We'll take an income cap for family and singles who'll be alible.

TONY JONES: Have you worked out what that is?

TANYA PLIBERSEK: It will be up to low income working people. So it'll be aligned with Family Tax
Benefit or the equivalent sort of income for singles. So we're looking at some people who'll be on
social security benefits, but also low income working families. So we're looking at key workers as
the Property Council was referring to. Apprentices, people working in hospitality and retail - that
sort of income level.

TONY JONES: Will those people be encouraged to go from renters to buyers in the same property, or
will that defeat the purpose?

TANYA PLIBERSEK: No, indeed. It may not be in the same property but the fact that people are saving
20 per cent on what they would be paying on market rent gives them the opportunity to pay a
deposit. That deposit gap is one of the key barriers at the moment preventing young people moving
into home ownership.

TONY JONES: Will they be encouraged to buy the house or apartment they're living in, or will you
keep those for other people in this situation?

TANYA PLIBERSEK: In some arrangements may might be. It depends on who's participating in that
particular project.

TONY JONES: Which investors, you mean?

TANYA PLIBERSEK: Which investors, it may be that investors are partnering with not-for-profit
housing associations, which is already beginning to happen in Australia at the moment but hasn't
happened extensively. We believe that this system of tax credits will really kick-start those
arrangements that we've seen in about half a dozen not-for-profit housing companies around
Australia. So there may be some developments where people are encouraged to move from rental into
home ownership, or it may be that the people living in those properties are better able to save a
deposit and move somewhere else if they wish to.

TONY JONES: Very quickly on the superannuation funds that you're hoping will join this, have you
spoken to them? Have they expressed interest and have they indicated they're prepared to put up the
funds to do this?

TANYA PLIBERSEK: We've had a lot of discussions with superannuation funds and other types of
investors and they say they've been really looking for a way of investing in affordable housing in
Australia. As was said earlier in the program, some invest in affordable housing overseas. They
haven't been able to in Australia. They've been investing in commercial property and retail and so
on, but not in this more affordable end of the market. That's what makes me so excited about this
new proposal. It's great to see Australians' superannuation money in particular, making a
contribution to making housing more affordable for lower income Australians.

TONY JONES: Did you consider using the tax system in a different way, for example tax deductibility
of mortgage payments for people on low incomes?

TANYA PLIBERSEK: It's funny you should say this, because the taxi driver raised this with me on the
way here tonight. No, we think this is the best way of using the tax system to really target
investment at the more affordable end of the rental market. We see that as a very serious issue at
the moment. We are also, of course, using the tax system to help people save the deposit for their
first homes through our low tax first home savour accounts. We are, of course, looking at different
ways to use the tax system to meet our affordability objectives. We think these are the best two
ways to do that.

TONY JONES: You heard Julian Disney's argument of the tax system being upside-down and back to
front. The problem with the logic is at the other end of the spectrum there are tremendous
incentives for wealthy people to invest in properties but nowhere near as big as an incentive for
poor people to buy properties?

TANYA PLIBERSEK: We saw a lot of investment pulled out of the rental property market when the
changes were made to superannuation allowing people to put a large lump sum in.

TONY JONES: Do we know whether that's true or not?

TANYA PLIBERSEK: The evidence for that is anecdotal, but there were a lot of sales of investment
properties around that time. Real estate agents will tell you from clients that were telling their
estate agents that the money was going into superannuation. So I would be concerned with any tax
changes that further tightened our rental availability at the moment.

We've got vacancy rates of below 3 per cent in every capital city. Mostly they're around 2 per
cent. In Sydney they're just over 1 per cent. The Real Estate Institute says they have to be 3 per
cent just for a level of comfort and the fact that people have pulled out of residential rental
investment means that we are seeing rental auctions, we're seeing people offering up to a year's
rent upfront. This is really a desperate situation and any tax changes that reduce the availability
of rental properties in Australia would be something I'd be very concerned about.

TONY JONES: That would include obviously looking at negative gearing in any way or reviewing it
into the future, would it?

TANYA PLIBERSEK: We're certainly not doing that. As I say I would be very concerned about changes
that reduced the availability.

TONY JONES: A tax system artificially inflates the cost of housing by giving excessive tax breaks
to wealthy investors, does it do that or not?

TANYA PLIBERSEK: Julian and I agree on a lot of things, but we don't agree on negative gearing.

TONY JONES: Can you put your hand on your heart and say you don't believe that housing prices are
artificially inflated by negative gearing and the tax incentives provided to wealthy investors?

TANYA PLIBERSEK: Tony, what I can say is that any change in negative gearing would be a disaster
for rental availability in this country.

TONY JONES: But you don't dispute his logic then?

TANYA PLIBERSEK: Well, I dispute what he's suggesting we do. If we change negative gearing.

TONY JONES: You're sort of saying you're stuck with it.

TANYA PLIBERSEK: Tony, you're putting words in my mouth. If we changed negative gearing we would
see disastrous effects for renters in Australia.

TONY JONES: If you did it quickly that would be true. What he says is broad changes over time to
the tax system to put it back in balance so there are equal incentives for poor people and wealthy

TANYA PLIBERSEK: I think we've got a terrific suite of housing measures at the moment that our
national rent affordability scheme is going to deliver on what you're asking about, which is
benefits for lower income people. We're going to see over time 100,000 extra lower cost rental
properties. We're going to see a reduction in construction costs because of our housing
affordability fund and the changes we're making to development application processing and tracking.
We're going to help people save a deposit for their first home. These are all absolutely vital
measures to help with housing affordability and they're the ones that I'm concentrating on

TONY JONES: Okay, let me ask you one other question because we've just seen the new Newspoll
figures - 6.2 party preferred party boost for Labor. Kevin Rudd's popularity up again, Brendan
Nelson down to another record low, down to 7 per cent. Does this come as a surprise to you?

TANYA PLIBERSEK: I think Kevin's been doing an absolutely fantastic job and I think the figures
reflect that. And the thing that most people say to me when I'm out doing street stalls and so on,
"I can't believe he's actually keeping his promises". And the very short time, in fact, since the
election has seen an enormous number of commitments that were made before the election already
implemented. The ratification of Kyoto, discussions about removing troops from Iraq, the movement
on computers into schools and so on. All of these things the work has begun. People are responding
well to the fact we're keeping our promises and to the fact we're talking about our future. What
sort of future do we want for this country and how do we deliver on that.

TONY JONES: Tanya Plibersek, we're out of time, we thank you very much for a very long day for you,
coming in the end of it to speak to us on Lateline.

TANYA PLIBERSEK: It's a pleasure, Tony.