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Thursday, 17 February 1977

Mr Les Johnson (HUGHES, NEW SOUTH WALES) - The Deputy Leader of the Opposition has drawn the attention of the House to the very serious implications contained in the Government's intention to renegotiate the CommonwealthState Housing Agreement. This proposal to increase interest rates on welfare housing loans has caused intense anxiety and alarm throughout Australia. Low income earners' hopes for adequate housing have been dashed, and those renting or purchasing State housing authority homes are fearful of a massive upward spiral in rent or repayments in cases where houses are being purchased. Let me remind the House of the history of Commonwealth-State Housing Agreements. With the limited time at my disposal, I am obviously unable to give the history in detail. It is sufficient to say that successive Liberal-Country Party governments have never shown enthusiasm for the States' housing programs for low income earners. They have always kept interest rates for the welfare housing program at a high level, generally providing only a one per cent advantage against the bond rate. If the Agreement were changed in terms of traditional Liberal-National Country Party policy, the interest rate, which at present stands at 4 per cent under the Agreement negotiated by the Labor Government, would increase to a figure slightly over 9 per cent- to one per cent less than the Commonwealth bond rate. That would have disastrous effects on the provision of housing for low income earners.

Honourable gentlemen will recall that the purposeof the Housing Agreement was to provide adequate accommodation, reflecting economic rentals, to which has been added a rental rebate system for those whose income is exceptionally low. The rebate system varies from State to State. There is scope to moderate and improve that system. The primary requirement is that the economic rental system, which I as former Minister for Housing and Construction encouraged the States to uphold, operates effectively. If it is applied in the proper manner it will ensure that nobody whose income rises will be getting a home at the expense of the Australian taxpayer. There is no need to jettison that scheme. It has provisions which, with some adjustment and moderation, can prevent the exploitation of the Commonwealth-State Housing Agreement and the housing commission program as we know it. The Agreement provided that up to 30 per cent of funds went to terminating building societies, at interest rates not exceeding 5lA per cent. This is a very important consideration for that medium income range of people whose income does not exceed 95 per cent of average weekly earnings. Another intention of that Agreement was to build up a stock of rental housing so that no more than 30 per cent of completed homes could be sold. We wanted young people to have the opportunity to pass through the housing commission system, to gain the benefit of a low rental for a considerable time, enabling them to have every opportunity to save which would enable them, in turn, to raise a deposit for a loan through a bank or a building society. Previously houses were being sold and resold, and sometimes bulldozed down to make way for flats in the inner city suburbs which workers could not afford.

We had this Agreement with all its virtues. If the Government abandons it, as the Minister for Environment, Housing and Community Development (Mr Newman) is apparently contemplating, the effect could be disastrous in many ways. The housing commissions of the various States have contrived a tender system which screws down the cost to a very competitive level. Probably no private contractor is able to turn out houses more competitively than the housing commissions are, even using private contractors, because that tender system is so tight and competitive, Moreover, if one abandons the housing commission system and the Housing Agreement one jettisons the benefit of the economic assembly of land processes. Land is bought in parcels. That does not mean that people in housing commission homes have to be congregated together. In Western Australia, a State which runs its Housing Commission quite effectively- this applies to other States as wellthere is a deliberate policy of mixing the income strata of people by selling some of the land acquired by the Housing Commission so that home ownership can take place and the socioeconomic groups can be dispersed on that basis.

What is the reaction of the State Premiers to the proposal to raise interest rates in the Housing Agreement? Mr Wran condemned the idea. He said it would mean that a typical Housing Commission rent of $32 a week would more than double in 18 months. He said rent for a new Commission house could rise to $80 per week or more. Mr Dunstan, the Premier of South Australia, said that the proposal would have a disastrous effect on rents and loans. He said that this would put home ownership beyond the reach of a very wide section of the Australian community. The honourable member for Mallee (Mr Fisher) interjects and says that they are all Labor premiers. I have mentioned two of them. I will mention a third Labor premier. Mr Neilson of Tasmania accused the Federal Government of turning its back on welfare housing for low income earners generally. He has called for a special Premiers Conference to discuss the proposal which he said would force State housing department rents up by as much as $ 1 2 a week.

What of the other Premiers? How about their obligation to low income people and to the provision of low income housing? The best that Mr Bjelke-Petersen could say was: 'But let us just wait and see if it happens first'. Is that a good thing? That is his extent of concern for low income people. Mr Hayes, the Victorian Government's spokesman on housing, said that the adoption of the proposal would mean State governments paying 10.5 per cent on money borrowed for welfare housing. At least he is showing concern. Of course, there did not seem to be any response at all in Western Australia. I wonder whether the people of Western Australia, who are to go to the polling booths on Saturday, will have regard for the fact that the Premier of their State has raised no objection at all to this iniquitous proposition which will jack up the cost of Housing Commission homes to such a level that they will be beyond the reach of people seeking them. I wonder whether the people realise that if they want to protect the Housing Commission system and if low income earners are to be given the opportunity of obtaining housing- this group includes many young couples who have not had the opportunity to assemble the deposit- they will have to vote for a Labor Government in Western Australia.

Enormous consequences are involved. A 1 per cent movement in interest rates has an enormous effect. For example, the monthly repayment on a $25,000 loan over 20 years at 7 per cent is $ 193. If the interest rate is taken to 8 per cent the monthly repayment on this loan is $209. If the interest rate is taken to 9 per cent the monthly repayment is $224. At 10 per cent the monthly repayment is $241. Under the proposal put forward by the Minister, Housing Agreement interest rates could spiral from 4 per cent to 9 per cent plus. Of course, there is a proposal to introduce a new scheme- the housing assistance voucher experiment scheme, known as the HAVE scheme. If one had time it would be possible to indicate that that scheme is no substitute for the Commonwealth-State Housing Agreement. I warn the Parliament that the Government's proposal puts at risk the terminating building society movement in Australia. I hold in my hand an appeal from the president of that organisation to fight to sustain assistance for low income housing.

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