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Thursday, 28 March 1957

Mr CLEAVER (Swan) .- With other honorable members, I am glad to associate myself with the House's expression of loyalty to Her Majesty the Queen, and also to compliment my colleagues, the honorable member for Barker (Mr. Forbes) and the honorable member for Wentworth (Mr. Bury), on the splendid content and presentation of their maiden speeches.

The debate on the Address-in-Reply and the amendment moved by the Opposition have focused attention on the subject of housing. Whilst my speech will be on that subject, I trust I shall approach the so-called problem in a positive way and put forward some helpful practical proposal to house more and more of the increasing population. I suggest that a quick review of the contributions to the debate made by honorable members opposite points to the fact that the Opposition's attack on the Government has been virtually nullified by the citing of sound statistics, and by the public awareness that in this country our general standard of housing is high.

The true position is disclosed in section 41 of the report on the housing situation prepared by the Department of National Development. Its reference to home ownership is of more than ordinary interest. It shows that since 1 947 there has been a striking advance in home ownership in Australia. The number of occupied dwellings privately owned rose from 54.8 per cent, in 1947 to 64.9 per cent, as at the 30th June, 1954.

Later, I want to refer to the amazing development in private home construction in the United States of America. But let us note that the United States last year could claim only that 59 per cent, of homes were privately owned, whereas in Australia in 1954 64.9 per cent, of homes were privately owned. Notwithstanding the achievement in actual homes built, this Government is well aware of the need to build more homes. No government has been more keen to . house the people of Australia suitably. I suggest that the Commonwealth and State Housing Agreement itself reveals the desire of the Government to assist the people. Advances which have been provided through building societies under that agreement have been eagerly taken up by hundreds of people in Australia. Assistance is being sought by the applicants because this admirable system permits a family to turn to a private contractor, and erect a home of its own design on the block of land it has specifically purchased for that purpose. This is a move which, I am sure, is in the right direction, in that it will help to limit the extension of government housing areas, with homes built to a similar pattern, and often costing too much and with the quality of workmanship open to question. Advances to building societies must be increased, and State governments should withdraw from governmentcontrolled housing schemes if it is their wish to have a stable building industry with full employment.

The delay in the implementation of the new Commonwealth and State Housing Agreement, and the provisions for obtaining money under it are, so far as several of the States are concerned, most difficult to understand. How easy it seems to be for the Opposition members who have participated in this debate to speak of the Commonwealth providing more money. Members of State governments, particularly Ministers for Housing, seem to think that the Commonwealth has an unlimited income. Let me emphasize the point that, through the Australian Loan Council, the States themselves agree on the distribution of the available finance. Having done so, the State governments should, as do those engaged in ordinary industry, work within their budgets and accept full responsibility for the results accruing from the use of loan money and grants according to priorities they themselves prepare.

During the week-end, I read one of the soundest editorials I have seen in any paper. It was in Western Australia's " Sunday Times " under the title of, " Stop all this talk of Gloom ". It read -

Too often Western Australians are apt to forget the wealth they have in this State, the prosperity that is really here, and the magnificent, future just ahead.

Take a good look around and it's certain you will find enough evidence to change that glum look and that dejected talk into something more vital and encouraging.

But how can an employee of yours or a friend of yours or a son or daughter of yours get a sense of confidence and a will to get things cracking if the only talk he hears is dispirited and full of gloom?

That reminds me that in this House yesterday, by way of interjection, I referred to several Opposition speakers as "prophets of gloom ". The debate has been very gloomy, and we would never have the confidence to deal with this problem if we paid attention to the Opposition's jeremiad. The editorial in the " Sunday Times " continues -

Search around and there are facts staring you in the face that will lift you out of despondency.

Just as one example look at the way savings have increased.

There is £1 million a year being saved by employees through organized savings groups.

Money in savings banks in Western Australia has increased in the past year by £6,851,893, from £54,148,680 (£80 12s. 3d. a head) to £61,000,573 (£891s. a head).

Western Australia's export total for the last year (1955-56 - the latest official figures) was £103,000,000.

This was £119 a head, compared with the Commonwealth average of £83 a head and the New South Wales average of £64.

I happen to know, having myself obtained the import and export figures relating to Western Australian trade with the eastern States, that the figures cited in the article are correct. Western Australia is each year importing from the eastern States goods worth approximately £89,000,000. On the other hand, it is exporting to the eastern States goods worth only £34,000,000. Therefore, the eastern States have a distinct advantage amounting to £55,000,000 over Western Australia. As a representative of the Western Australian people it is perhaps pertinent for me to point this out to honorable members representing eastern States who have so much to say about Western Australia's share of petrol tax disbursements. One of my colleagues from Victoria has entered this field on behalf of his State and considers that Western Australia, South Australia and Queensland receive over-generous treatment. These honorable members should consider carefully Western Australia's achievement in the export field and leave the petrol tax formula well alone. The article to which I have referred continues to say -

Wool prices remain high and reassuring. And wool means a lot - but not everything - to us. The value of our wool production in 1955-56 was £35,900,000 and our wheat £34 million. W.A. has one of the biggest chances for primary development in the Esperance deal and thousands of acres of other light soil throughout W.A. in good rainfall areas. There's a chance of a big new industry coming to Bunbury.

More and more investment in secondary industry expansion seems to be only around the corner. You don't have to kid yourself there's prosperity here.

Facts and figures and the opinion of experts show clearly that prosperity is a real thing in W.A.

To me, this was a helpful and logical article, which should straighten out the thinking of many people. It exemplifies the spirit of positive approach that we need in housing.

I wonder if I might now try to define the objectives that this, or any sound government, should have in pursuing a successful housing policy. They are -

(1)   Constant improvement in housing standards and conditions - good homes and more of them.

(2)   Freedom for people to build on their own land and to their own design.

(3)   An adequate home-financing system.

(4)   Down payments within the reach of the average income-earner.

(5)   The exertion of a stabilizing influence on the mortgage and residential real estate market.

(6)   A competitive building industry sustaining full employment.

Are these not the objectives that this country is seeking to attain? Would not their achievement solve Australia's housing difficulty? Will any one deny that these six objectives form the basis of a sound policy for any government? If so, let us note carefully that, in the post-war years, the United States has attained these objectives and by using the relatively simple device of mortgage insurance, has demonstrated the simple way - and, I trust my colleagues would agree, the Liberal way - to build millions of homes.

Only last week,I asked a question about mortgage insurance. Unfortunately, I still await a reply, but I must concede that, at times, such details are not always on record to enable a quick answer to be given to honorable members. Mortgage insurance is so relevant to this debate that I have spent some little time in research with a view to making some observations regarding it. I was interested to see that the Federation of Co-operative Housing Societies of Victoria had inserted in a recent report, copies of which have been available to honorable members, a paragraph dealing with mortgage protection insurance. I am speaking of something quite different.

The story of American mortgage insurance is quite fantastic. In 22 years the Federal Housing Administration has become an indispensable factor in the booming American economy. In 1955, for the seventh year in a row, American homebuilders put more than 1,000,000 new nonfarm dwelling units under construction. The total for the year - more than 1.200,000 - was the second highest on record, and had been exceeded only in 1950. In 1955, the production of many major building materials set new records. Labour requirements for new construction in 1955 reached a record monthly average of nearly 3,500,000 full-time workers. Homebuilding accounted for about 1,200,000 on-site workers. The Federal Housing Administration of the United States has, since 1934, guaranteed finance for more than 4,500,000 homes. This is a volume of accomplishment in home construction of which every country must take note. In the United States, home ownership was once a problem. A citizen of limited income found it utterly beyond his reach. To begin with, the prospective home-buyer had to put up, in cash, 40 per cent, to 50 per cent, of the purchase price. To finance the remainder he had to take short-term mortgages, usually . at high interest rates, for two or three years. He had to shoulder the burden of both a first and second mortgage. We know something of the problem in this country. Any honorable member who is doing his job has had plenty of personal experience of people who, under the present system of financing home construction, have to struggle to find a sufficient down payment for a home.

I would like to make a few observations on how mortgage insurance works. The Federal Housing Administration has made it possible for the ordinary American to buy his own home on easy, long-term credit in the form of monthly " rental " payments. The United States Government, as well as the purchaser, signs the mortgage papers. Two government agencies are operating in this field. One is the Federal Housing Administration, to which I have referred, and the other is the Veterans Administration, which caters for ex-servicemen only. They do not lend money. They simply endorse the loan papers. The Government promises that if the purchaser does not pay his debt it will do so, and then collect from him. He can borrow from a savings and loan association, a bank, a mortgage company or a life assurance company. The Federal Housing Administration requires a monthly payment covering interest, repayment, and local taxes not exceeding the borrower's weekly income. His character, credit and job record are checked. With the backing of a government guarantee, a bank can loan to 93 per cent, of the contract price, or as high as 98 per cent, in the case of the exserviceman. The bank can allow 30 years for the repayment in small monthly instalments of the loan.

This is mortgage insurance. The borrower has to worry about only one mortgage and may be required to pay an interest rate no higher than 5 per cent. In addition, he pays one half of 1 per cent, per annum to the Federal Housing Administration to cover its costs. The Federal Housing Administration does not lend money or build homes, lt simply guarantees full repayment of the mortgage. It is interesting to realize that the average buyer of a governmentbacked private dwelling in the United States of America is a teacher, an accountant, an electrician, an automobile process worker, or a private secretary. Such a worker would be earning 5,000 dollars. He would buy a home and land for 11,000 dollars, acquiring a mortgage of 9,000 dollars. His house would have six rooms, including three bedrooms, and garage facilities. The term of this man's mortgage is 23 years. On this, he makes monthly payments to the bank of 70 dollars for reduction of mortgage principal, payment of interest and local taxes. The Federal Housing Administration has discovered that the man who acquires this type of mortgage justifies the Government's faith in his economic stability. If I had the time, I should remind the House that not many years ago the business people of America were not happy about selling a vehicle on terms. That type of transaction to-day, of course, is common practice, lt has been established that people buying a home on terms under mortgage assistance of this kind will pay their debts, as they do. in the majority of cases. The foreclosure rate under this system in America since 1934, has been a fraction of 1 per cent., namely, \l 200th.

As my time is running out, I should like to summarize, for the benefit of the House, the results of this programme in America. When mortgage insurance was approved in J 934, the real estate market was in a chaotic condition resulting from the general economic situation that prevailed at that time, and intensified by faulty lending practices in use before the depression. The Federal Housing Administration insurance was a significant factor in the economic recovery that took place in the mid-'thirties. To-day, Americans are so used to modern home-financing methods that it is difficult to realize how great a change has taken place in eighteen years. If 1 had the time, I should like to quote from the latest book issued by the administration, entitled " Housing in the United States ", which contains a graphic presentation of this amazing development in home-construction. I conclude by saying that here is something which Australia needs; here is a positive method of stimulating the building industry and catching up on any backlag of dwellings. Could it be that the Government may have hesitated, because of the Constitution under which we work? I give it credit for having a look at the problem. This scheme could well come within the latitude that we have, as a government, in connexion with insurance. Recently, we set up the Export Payments Insurance Corporation. Why not a Mortgage Insurance Corporation to-day, so that we may move into a new era of building enterprise and success? I commend this scheme to the Government, believing that it offers this young country a practicable and definitely acceptable method of housing all the families in this developing nation who are eager to own their homes.

Question put -

That the words proposed to be added (Dr. Evatt's amendment) be so added.

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