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Thursday, 21 September 1972
Page: 1119


Senator WRIGHT (Tasmania) (Minister for Works) - I move:

That the Bill be now read a second time.

The purpose of this Bill is to amend the Homes Savings Grant Act 1964-1971 in accordance with the proposals announced by the Treasurer (Mr Snedden) in the Budget Speech. The homes savings grant scheme aims at encouraging young people to save over a period of years for a home of their own when they marry by the offer of a tax free grant to supplement their savings. Since the scheme began in 1964, some 253,000 grants totalling about $11 Om have been paid to assist young couples, and widowed or divorced persons with dependent children, to own and establish their homes. The amendments now proposed will permit more young people to qualify for grants, and will make larger grants available to assist in the acquisition of their homes. Notes explaining the purpose of each clause and and sub-clause of the amending Bill will be distributed to honourable senators.

The Bill makes the following changes: Firstly, the maximum value of a home which may attract a grant is being raised from $17,500 to $22,500. Secondly, the maximum grant is being raised from $500 on acceptable savings of $1,500 or more to $750 on acceptable savings of $2,250 or more. Thirdly, the limit on the amount of savings made in any one saving year that may qualify for a grant is being increased from $600 to $900. Fourthly, the conditions relating to the approval of credit unions are being eased.

The changes in relation to value limit, maximum grant and annual savings are being made in recognition of changed conditions since their present levels were established. The existing limit of $17,500 on the value of a home which may attract a grant has been in force since 27th October 1969. Since then the average value of homes has risen with increases in construction costs, and in the cost of developed residential land. Prices also rise with progressively improving standards of new housing over the years. To take account of these changes, clause 4 of the Bill increases the value limit by $5,000 to $22,500.

The proposed increase in the maximum grant from $500 to $750 is provided for in clause 5 of the Bill. This recognises the need for young people to have greater financial resources for home purchase as housing prices rise. By offering a higher grant as a reward for higher levels of saving the Government maintains the incentive to save for home ownership. The grant payable up to the new maximum of $750 will continue to be $1 for every $3 saved in acceptable forms. Because one of the aims of the scheme is to encourage young people to save regularly over a period of at least 3 years, there is a limit on the amount of savings in any one year which may be counted in determining the amount of grant payable. In the interests of applicants the limit is set at a figure rather higher than the amount that would need to be saved in equal annual instalments over 3 years to obtain the maximum grant. The present annual saving limit is $600 whilst the equal annual amount needed to attract a maximum grant is $500. It is proposed to retain this flexibility by increasing the annual savings limit to $900 in conjunction with the proposed increase to $750 in the annual savings rate which, over 3 years, would attract the maximum grant. The amendments in relation to the maximum value of a home, the maximum grant and the annual savings limit will apply to people who contract to buy or build, or as owner-builders commence building their homes on or after 16th August 1972, the day following the Budget announcement.

Credit unions are playing an increasingly important part in helping young people to obtain their own homes. For this reason the conditions relating to the approval of credit unions for the purposes of the Act will be eased. A credit union needs to be approved so that savings with it by its members can become acceptable savings under the Act. The present conditions for approval of a credit union require that not less than 20 per cent of its annual lending is, and continues to be, in housing loans at a rate of interest not exceeding a prescribed rate; IS per cent of its annual lending must be in housing loans of at least $5,000 for a minimum period of 12 years, and it must lend not less than $50,000 in housing loans annually. The Bill provides that only one of these requirements will remain* Provided a credit union can show that not less than 20 per cent of the total amount lent to its members in its most recently completed financial year has been in the form of housing loans, and provided it undertakes to maintain this proportion in each subsequent financial year, it will be able to become approved for purposes of the Homes Savings Grants Act. A housing loan will continue to be defined as one made for the purchase of residential land, for the purchase or construction of a dwelling and for the payment of associated expenses. The prescribed interest rate provision will no longer apply.

The principal Act will continue to provide that approval of a credit union is deemed to have taken effect on and from the first day of the credit union's financial year in respect of which the approval is granted. Savings held with an approved credit union by members who have contracted to buy or build their homes, or commenced to build them as ownerbuilders, on or after the date from which approval is deemed to have effect, will then be acceptable for the purposes of the home savings grant scheme. Savings held by credit union members at savings dates during the 2 financial years immediately before the financial year for which the approval is granted will also be acceptable. The amendments will, I am sure, be welcomed by many thousands of young people who are acquiring their first matrmonial homes or who are saving for that purpose. I commend the Bill to the Senate.







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