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Speech to the Government Land Organisations Conference: 28 November 2008: New federalism; opportunities for a new urban paradigm.



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Minister for Housing and Minister for the Status of Women

Speech

Speech to Government Land Organisations Conference

28/11/2008

The Westin, 205 Collins Street, Melbourne

New federalism: opportunities for a new urban paradigm

****Check Against Delivery****

Introduction

I would like to acknowledge the traditional owners of the land on which we are gathered, the Woiworung people, and pay my respects to their elders, past and present.

Thank you Tony (Darvall, VicUrban Chair) for your kind introduction.

And thank you all for asking me to speak with you today - and for being so flexible with your agenda to allow me to be here this morning.

Affordable and secure housing is fundamental to the lives of all Australians.

Housing is more than simply a roof over one's head.

It connects us with our community and it helps us reach our goals.

It supports and shapes our ability to participate in work, study and recreation.

Cities, communities, neighbourhoods and how we live in them are critical to social cohesion and prosperity.

That is why the Australian Government is committed to making more affordable housing available; and reducing homelessness.

We committed $2.2 billion to new affordable housing programs in the May Budget - the first new investment in housing in many years.

Since then, we have kicked in a further $1.5 billion through the First Home Owner Boost - to keep our housing market strong at a time of tremendous uncertainty for all

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Australians.

But we recognise this is just a start.

I am confident that other levels of government - State, Territory and local - also understand the critical importance of housing to the social and economic fabric of our nation.

From the theme of your conference - New Federalism: Opportunities for a New Urban Paradigm - it is clear that government land organisations also see a real opportunity in this new era of cooperative federal-state relations.

That is good news - because the Australian Government knows that it cannot even begin to fix housing affordability on its own.

Impact of global economic situation

Government is not as simple as setting an agenda and then getting on with the job of implementation.

As Charles the First said, 'there's more to the doing than the bidding it be done.'

There are always emerging challenges that have to be addressed along the way.

The severe impact of global financial turmoil on the Australian economy is one such significant challenge.

In Australia, as in the rest of the developed world, the Government needed to take immediate, decisive action to protect our economy.

Here, as across the globe, every arm of policy - fiscal and monetary - is being used to help protect our economy against the powerful winds of financial turmoil.

The Government has done this through the $10.4 billion Economic Security Strategy.

This package is an immediate response to economic uncertainty - complementing the 2 percentage point cut in official interest rates in recent months.

Impact on housing

When the Government framed the Economic Security Strategy, we understood that Australians were worried about the impact of global turmoil on their own lives.

Naturally - given the collapse of the sub-prime market in the United States - people's thoughts turned to the impact of their houses.

The reason for this worry is obvious - because housing represents around 55 per cent of the total value of household assets in this country.

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Investment in housing accounts for about 6 per cent of the economy as a whole.

As well as the obvious benefits of helping first home buyers into a home of their own, that is why the Economic Security Strategy included a $1.5 billion First Home Owner Boost - to retain confidence and activity in the residential construction market.

First home buyers who purchase newly constructed homes will receive $21,000 - triple the usual Grant of $7,000.

First home buyers who purchase an existing home will receive $14,000 - an increase of $7,000.

These increased payments are effective immediately and are time-limited to contracts entered into between 14 October 2008 and 30 June 2009.

This is a short term macroeconomic measure designed not only to help first home buyers into the market, but also to maintain the strength of the housing construction sector.

The housing market

In Australia, 69 per cent of households own their own home either outright or with a mortgage.

Most would have seen the value of their homes increase over time, and they would want that appreciation to continue.

But they also want their kids and grandkids to be able to afford a home of their own one day.

The proportion of first home owners is declining and high house prices can be a barrier to those trying to buy their first home.

Existing residents want low rates; new home builders want low developer charges and levies; and both want better council services.

And it is not all about cost - many Australians are paying extra for a big backyard, to be close to the city, close to work or close to family and friends.

Home buyers want to live in a community which takes advantage of the landscape and is serviced by transport, schools, shops and other social infrastructure.

These are some of the difficulties governments and land organisations face.

Planning and development needs to be reformed, and there are new opportunities for industry in the Government's housing reform agenda.

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We want to encourage urban development which incorporates environmental sustainability, integrates with transport and employment, and promotes socially cohesive communities.

Major Cities Unit

Australia is one of the most urbanised countries in the world.

More than four out five Australians live in urban communities and this is increasing.

Between 2001 and 2006 our capital cities contributed 78 per cent to the nation's economic growth.

The Government is working to ensure that Australia's major cities remain places where people want to live, work, raise a family and do business.

That is why we have established the Major Cities Unit within the Department of Infrastructure, Transport, Regional Development and Local Government.

The Unit will renew the Australian Government's focus on the nation's cities, and urban development.

Right now our cities have to deal with a myriad of government departments, all of which can have a direct affect on economic, social and environmental performance.

A more coordinated and integrated approach is needed.

There is a role for the three levels of government to work together, and with business, land agencies and the community sector.

The Major Cities Unit will be central to achieving this, and it will also develop a strong relationship with Infrastructure Australia.

It will not only concentrate on our eight capital cities, but also regional centres like Townsville, Newcastle, the Gold Coast and Geelong that are also experiencing enormous growth.

But it's not only about growth.

The Major Cities Unit will identify opportunities at the national level where we can make our major cities more liveable, productive and sustainable.

Creating communities

Affordability is not the only challenge for the future of housing.

We also need to start thinking more about how we create the sort of modern communities that people want to live in.

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One of the pleasures of my job is that I get to see some wonderful new housing developments around the country.

Because VicUrban are hosting your conference this year, it is only fitting that I talk about how impressed I was with their new Aurora development when I visited it earlier this year.

Aurora provides quality living choices with a considerably reduced environmental impact.

Design features utilise environmental initiatives such as block and house orientation, passive solar design, insulation and ventilation to maximise warmth in winter and reduce summer heat.

This will produce ongoing savings in heating and cooling, benefiting home buyers as well as the environment.

Houses and community services will be connected by walking paths and public transport.

Parks and waterways will be managed to maintain habitat for local wildlife and consideration has been given to integrating Aurora with the character and heritage of the area.

Being mindful of all these issues - environment, accessibility and ongoing costs - can create a much more positive place for people to live, however it is something which is often missed in the planning of housing developments.

But the aspect of Aurora which I though was most innovative is its commitment to providing affordable housing.

More than 30 per cent of Aurora homes are priced in the lowest quartile of the market.

The Aurora development is one example of how builders, developers, planners and environmental experts can work together with fantastic outcomes.

This is terrific stuff.

I know that many of the other organisations here today are heading down the same path with developments of your own.

I am sure that I will get the chance to see some of them as I go around the country in the future.

But it is clear from developments like Aurora that industry - and I include State and Territory Government land organisations in that - are already taking the lead by building communities - not just houses.

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Opportunities under the Government's housing agenda

The $512 million Housing Affordability Fund gives developers and local government the incentive they need to reform development and planning systems and cut infrastructure charges.

It will improve housing supply by bringing forward new housing starts and reduce delays in the development process.

Infrastructure will be funded without passing costs to new home buyers.

Ninety-one applications were received from across Australia in response to the first round of expressions of interest.

There was a good spread of interest across the country with the level of take up at the higher end of expectations.

Applications are now being competitively assessed and successful applicants will be notified before the end of the year.

A second call for applications is expected to open in March 2009.

The Housing Affordability Fund demonstrates that the Government is working with all stakeholders - including developers, builders and other levels of government - to lower the cost of housing for Australians and their families.

The Government also recognises not everyone can, or wants, to buy their own home and many Australian families rent.

That is one of the factors behind the $623 million National Rental Affordability Scheme, which will increase the supply of affordable rental homes by 50,000 in its first four years.

Under this ambitious new program, homes will be rented at 20 per cent below market rates, and tenants will still be eligible for Rent Assistance - making it even more affordable for individuals and families.

Investors and developers will receive an annual incentive of $8,000 per dwelling to build these affordable rental homes.

We received 69 applications, from both the private and not for profit sector in all States and Territories, in our first round of applications for incentives to build almost 13,000 new dwellings.

Now that enabling legislation has passed through the Parliament, successful first-round applicants will soon be able to get on with the job of providing the new homes.

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I hope the councils, planners and developers - including government land organisations - will start to factor the National Rental Affordability Scheme in as they create new communities.

The Scheme is intended to operate an as incentive that can add value to developments and deals to deliver an affordable housing outcome.

A developer may wish to apply for incentives over a percentage of houses in a new development at the planning stage.

Conclusion

I will end my formal remarks there because I am really interested in your thoughts about where your work is headed, and the opportunities that exist under the Government's housing reform agenda.

I certainly do not have a monopoly on brilliant ideas, and so I would really appreciate your frank and honest assessment about where we are headed and what action we need to take in the future.

I am sure your input will help us deliver new ideas to make urban development more cohesive and housing more affordable in the future.

Thank you.

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