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Housing and the budget

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. V


Canberra A.C.T.

The 1978/79 Budget indicates the Government's concern for . the health of the housing industry, and the ability of Australians

to buy their own home. . . '

The Minister for Environment, Housing and Community Development, Mr Ray Groom, said today the monetary decisions taken in the Budget to .

increase the capacity of savings banks to lend for housing would have

an important effect on industry activity and confidence as 1978/79 .

progresses. . .

The decision to reduce the prescribed assets-ratio of the savings banks by 5 per cent will enable banks to increase lending for housing as the year progresses. Dwelling construction activity .

should show gains throughout theyear. .

. "The economic.strategy outlined by the Budget will reinforce

the decision on savings bank lending, by further bearing down on inflation

and creating the conditions for an expansion in private sector finance and a sustainable reduction in interest rates," Mr Groom said.

. . 1978/79 is also the first year of the new Commonwealth/State Housing Agreement, xvhich will ensure that welfare housing assistance

is directed to those in greatest need. Advances of $330M will be

provided. Including the matching contributions from.the States, spending

under the Agreement will be at similar levels to 1977/78. .

Under the new three-year scheme grants of $14M - an increase

of $4M - will be provided to the States for rental assistance to pensioners, including married couples.

. The reductions achieved in inflation have greatly assisted,

housing costs - for instance, the increase in materials costs was 6.6

per cent in 1977/78, half that of the previous year. Further gains will

occurr in 1978/79, and make housing more affordable.


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. . 2 . "Due. .to/' the. Government'.shpolicies , the ..increase·'in .the.‘cost . . . /".hi:

i of.~ housing.-hassmoderated/significantly over 1 9 7 7 / 7 8 1 . . ci 7 ‘ ;i_r> · . . rc.

' ; " "The anti-inflationary stance of the Budget will again moderate ;

the/rate, .of inflation in' housing costs, during .1978/79 , so increasing : the ability of intending home buyers to purchase a home. .

. . . "A reduction in the interest rate of %% on a savings bank

loan cf $25,000 would reduce monthly payments by approximately $9.·. 00.

Over the full term of a 25 year loan the borrower would save about

$2,600. .

Mr Groom said the creation of the most appropriate economic and financial conditions for home ownership remained the central element

of the Government's housing policy. _

. "The Budget reinforced that aim, and the associated objective

of maximising the provision of new housing, and housing finance, through

the private sector. .

"in formulating its strategy, the Government greatly appreciated,

the advice and interest of the housing industry bodies in the pre-Budget

consultations. . · ■ · . .

"The responsible views of the industry are reflected in the Budget, and represent the significant benefits of close and continuing

dialogue between the Government and the private sector," Mr Groom said.

' "The housing sector is an integral part of the Australian

economy. . .

. "But it is not a matter for the Government to attempt, to solve the industry's problems by large and irresponsible additions - to Government spending.

"Effective management of the industry is much more than simply writing out large government cheques when problems arise."

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' : Mr Groom said" the 1978/79 Budget gave a clear indication of

the high priority the; Government attaches to housing. It had acted prudently to assist the industry in the overall economic strategy.

"The Government is of the firm belief that.the total package

for housing outlined in the Budget will be of real benefit to the industry and the Australian home buyer," the Minister said.


17 August 1978 . .