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Thursday, 21 March 1957

Mr CREAN (Melbourne Ports) .- I rise to support the amendment to the motion for the adoption of the AddressinReply which has been moved by the Leader of the Opposition (Dr. Evatt) and which, as we have been informed to-day, is being treated as a censure on the Government. Although the amendment involves more than one question it deals specifically with the subject known as the housing problem. The Minister for the Army (Mr. Cramer), has admitted that there is a housing problem confronting a great number of people in the community. Of course, it is also true that, looked at from a purely individual and selfish viewpoint, there is no housing problem for large sections of the community. Those who are themselves adequately housed do not feel the housing problem individually although they may be sympathetic about it as a social problem. Members of this House no doubt are al) comfortably and adequately housed, but we must realize as responsible legislators that large sections of the community do, in a very real sense, face a housing problem. I would like to indicate broadly what these categories are so that at least we can get this matter a little bit into its proper perspective.

There are, for instance, newly-married and those contemplating marriage who are interested in setting up homes for themselves. There are slum-dwellers whose present accommodation is not satisfactory for human habitation. Married immigrant families are coming to these shores under our immigration policy and whilst we may call them new Australians, they have the same aspirations as we have to be decently housed. Also, there is a neglected section of the community to-day. I refer to the aged people, who number nearly 10 per cent, of our population. Many thousands .of them are very poorly housed at the moment, some in .single rooms for.. which they pay exorbitant rentals out of their most inadequate pension. To these groups this housing problem is very real.

I propose this evening to pay particular attention to a document that has been officially published by the Government and which, in the interests of brevity, I will refer to as the Spooner report. It is a report on the housing situation in Australia, published by the Department of National Development and bearing the signature of the Minister for National Development (Senator Spooner) who deals with housing at the Commonwealth level. In the report, which apparently is accepted as official Government policy, the honorable senator points to two ways of looking at this problem of housing. We can look at it purely as an economic concept or we can look at it as a social concept from the point of view of housing need, and it is on the housing need basis that the Labour party at any rate prefers to treat this very important problem.

It is surprising how keen this Government is to credit itself with the aggregate results Of housing in Australia to-day but to blame all the shortcomings that are being experienced at the moment upon the individual States. The report, for instance, proudly implies that it was due to the Commonwealth Government that between August, 1945, and the 30th June, 1956, 669,000 houses and flats were built in Australia. It claims that this total represents one in four of the number of houses and flats in existence in Australia at the moment. I think at this point there is one question that the Government might ask itself. It is this: Are the remaining three out of four houses and flats that were built in Australia before August, 1945 comparable in quality and standard with the one in four that have been built in the period from 1945 to 1956? 1 pose that question because there are undertones in this Spooner report that camouflage the position as it exists in Australia to-day. The assumption is that every Australian family, ranging from the single widow whom the Minister for the Army thinks ought to move up and make room for somebody else in her house, and the married couple whose children have married and set up homes for themselves, to the average family in Australia to-day, feels - and we say rightly feels - that it is entitled to a home of its own.

On that basis the report comes to the conclusion that there is a shortage of only 115,000 dwellings in Australia at the moment. To begin with that is a very questionable assumption. No information whatever is given about the quality of the three out of four dwellings that were in existence prior to August, 1945, and the report itself says that we have not had the facilities to go into such important questions as slum abolition. If the Australian community, through its Government, is serious about these problems, then the task should be to mobilize the economic resources of this country - the man-power and materials, and, of course, the finance that is necessary to bring the two together. But as has been submitted, and I would suggest substantiated from this side of the House, there are in Australia at the moment considerable surpluses of building labour and considerable surpluses of building materials. To suggest that by bringing together the materials and the man-power by means of a flow of money, we shall cause inflation, and that therefore it is better to have unemployment and an unsolved housing problem, is stupidity in itself. The term " fowlhouse " or " chicken house " has been used frequently in this debate to describe housing accommodation. The reality is that due to the financial and economic policy pursued by this Government, the chickens are coming home to roost and are likely to cause very serious problems in the next few years.

In a press statement issued on 16th February, 1957, the Minister for National Development said that the results of the housing survey suggested that if a rate of completion of approximately 77,000 houses a year could be maintained, in four or five years the back of the problem would be broken. I point to the fact that in March. 1957, there are nothing like 77,000 homes in the course of construction in Australia. We can take either one of two sets of figures. I do not think that, in the long run, it makes a great deal of difference whether we use as our basis for comparison the figures showing the number of houses commenced or those showing the number of houses completed, so long as there is a reasonable flow over the period. Taking the figures showing the number of houses commenced, we see that in the last four quarters for which figures are available the total is only 66,550. If we take the figures showing completions, we see that the total for the same period is only 69,909. So already we are at least 8,000 houses below the target which, in the opinion of the Minister for National Development, is necessary to enable us to make up the leeway in four or five years and also to cater for, so to speak, the annual increment of houses needed because of new marriages, immigration, demolitions and so on.

The Government must face up to this problem. We cannot afford to allow the buck to be passed backwards and forwards between the States and the Commonwealth. This is a national responsibility. If there is only some creaking of the machinery, the Commonwealth, as the accepted senior partner to-day in government affairs, ought to call together the various housing Ministers and the various representatives of the building industry just as freely as it seems to call bankers and economists together when it suits it to do so. It will take more than bankers and economists to deal with these problems if this deterioration of the state of affairs is allowed to continue.

I suggest that the Government should have given much more serious consideration to the findings published in " The Housing Situation " or, as I have preferred to call it, " the Spooner report ". If it had done so, it would have seen that two important factors emerge from the report. One of them has to do with the economic side of housing, the level of demand. In paragraph 50 of the report, the position is stated adequately and rationally for any one who cares to read it. The paragraph reads -

The level of demand for housing is thus related to the level of rents, of house-building costs and of terms and conditions (rate of interest, deposit, maximum loan and repayment period) upon which loans for the purchase or erection of dwellings may be obtained.

I suggest that the economic policy pursued by this Government has affected adversely every one of the conditions supposed to facilitate the demand for housing in this community. The Government's failure to control prices has led to a rise of building costs. Its failure to control adequately the financial machinery of the country has led to a rise of interest rates.

I pause here to point out to the House the significance of a rise of interest rates, particularly in view of the fact that the Prime Minister and the Minister for

National Development have suggested that one of the primary difficulties is that costs in the building industry have got out of hand. I submit that the majority of the ordinary wage-earners in the community are unable to pay cash for a home. The actual physical cost of construction, or the money that goes to the building contractor, is only one part of their obligation. They have to pay, in addition, interest on a loan extending over something like 30 years. If a man wants to buy a home at a cost of £3,000 and he can find only £500 as a deposit, he has to secure a mortgage. He has to find somebody to finance him to the extent of £2,500, and the person who lends him the money expects to receive interest on it at the ruling rate for the period of the loan and, at the end of that period, to be repaid his capital sum in full. It is said that the interest rate has risen during the last seven or eight years only from 3 per cent, to 5 per cent. That does not sound very much, but when we calculate that it means that the interest on 25 £100 units of a loan has risen from £75 a year to £125 a year, or by £1 a week over 30' years, we see that the rise is a significant factor. Let me quote from a book that is obtainable in the library, " A Course in Applied Economics " by Mr. Phelps Brown. The author makes this statement -

A rise in the rate of interest from 3 per cent, to 5 per cent., with the costs of building constant, has the same effect on the rent that must be paid as a rise of about 40 per cent, in the cost of building, the rate of interest being constant. We should all expect a rise of 40 per cent, in the cost of building a house ... to check building.

I submit that one of the reasons for the check to building at the moment is that the majority of the people who want to build or buy a home have to obtain finance through the mortgage market. They depend on government agencies of one kind or another - the War Service Homes Division and the various State agencies which now have authority to sell - and the co-operative machinery that has been set to up work primarily in conjunction with the Commonwealth Savings Bank and other savings banks. That section of the community is largely dependent on a flow of finance which could be regulated by government direction, but which this Government refuses to regulate because it feels that to do so would be to violate the sacred law of supply and demand. So the Government has allowed market forces to take control and, as the honorable member for Wentworth (Mr. Bury) pointed out in his maiden speech, more resources have gone to the less socially important sections of the community. That is pointed to also in the housing report to which I have referred, and which, apparently, has the authority of the Government. I direct the attention of honorable members, particularly those on the Government side, to paragraph 32 of that report, which, under the heading " Other Sources of Finance ", states -

Governments (including War Service Homes Division), major private lending institutions, and Building Societies and Housing Societies in 19SS-S6 provided a little less than SO per cent, of the finance used for the building or purchase of new houses. These monies together with the equity of individual borrowers from these institutions in the properties acquired, were responsible for the building or purchase of about 65 per cent, of the houses and flats erected in the year. [ ask honorable members to note that distinction. Disraeli talked about the two nations in England in his day, the rich and the poor. So far as housing is concerned, there are virtually two sets of people in this country to-day, who may be called, broadly, the rich and the poor. The paragraph states further -

The source of the remainder of the monies responsible for about 35 per cent, of the houses and flats erected was the cash resources of the building owners themselves and finance provided by individuals or institutions other than those referred to above as " major lending institutions ".

Apparently two classes of houses are being built in Australia to-day. Those in one class are approximately twice the cost, and, therefore, twice the size and luxury, of those in the other class. The pressure at the moment is not upon the luxury section of building activity. It is upon the other section, which accounts for 65 per cent, of the houses and flats erected. The pressure is upon sources of finance for that kind of building, which is probably the most socially desirable. That kind of finance could be regulated by government activity, and it is suggested in the amendment that that is what should be done by any responsible government working in a democratic community. There has been a lot of talk recently about the use of the word " democratic " by the Labour party. What kind of democracy is it that allows the nation to be divided into two sorts of people so far as this social problem is concerned? A person who has the money to finance his requirements does not need to worry about rates of interest. But a person who has not the money has to worry about rates of interest. When the Government came into office the gilt edge rate was 3i per cent. It has since risen to 5 per cent. That is the rate that ultimately sets the standard for all other rates. That rise of almost 2 per cent, occurred because of the policy of this Government. It means, in effect, that the average person seeking mortgage accommodation has to face an increase of nearly 2 per cent, in interest charges which, as that passage from Phelps Brown's book shows, means that in the aggregate an increase of the order of 40 per cent, is imposed on the cost of his home. And remember, we in Australia, in theory, regard a home as the right of every Australian citizen.

I suggest, therefore, that more serious attention ought to be given to the terms of this amendment than has apparently been given by Government speakers in the debate so far. If the amendment is read closely, it will be seen that it involves a number of inter-related factors, and ultimately it reaches, as it must reach, to the true root of the economic and financial policy that has been followed by the Menzies-Fadden administration. The amendment suggests that it is the failure to supply finance lo State governments that is the root of the problem. That suggestion was made here, and there was a great haggle about the way Queensland had applied for another £250,000. Do the people who are making that sort of quibble realize that £250,000 to-day, in any event, means only another 1 00 houses? The aggregate of this problem is much greater than a mere 100 houses or so in a particular State. There is a deficiency already of at least 8,000 dwellings on the assumptions that the Minister himself lays down as being the programme for housing in Australia. Eight thousand dwellings, multiplied by approximately £3,000 a dwelling, gives some idea of the kind of finance that is required to get near the bridging of this problem.

It is no good falling futilely back on the defence of inflation, because if the Government is going to fall back always on inflation as an excuse, it need do nothing at all, because inflation has been the very method by which it has been implementing its policy to destroy the living standards of the average Australian worker. Inflation has been used as a method for diverting investment. We got a lesson the other night - and a splendid lesson I submit - in the maiden speech of the honorable member for Wentworth (Mr. Bury). The policy of inflation has diverted investment from socially desirable channels into that which is regulated by a theory of private enterprise, or whatever one cares to call it. That word " diverted " is a term that some of the newspapers have sought to quibble over in the last few days. We contend that there should be a re-assertion of social control, a diversion back the other way, in order that the average Australian person can at least have the hope, in the next ten years, as he had in the days of economic controls under the Chifley Government, of getting an adequate home for himself.

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