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Wednesday, 28 February 2018
Page: 2413

Mr ZAPPIA (Makin) (17:44): In speaking on these bills, the National Housing Finance and Investment Corporation Bill 2018 and the National Housing Finance and Investment Corporation (Consequential Amendments and Transitional Provisions) Bill 2018, debated jointly, can I say that it seems almost a contradiction that we live at a time of very low interest rates, yet housing has never been more unaffordable. Indeed, we see falling home ownership rates and have done so for several years. This is at a time when interest rates, certainly in my recollection, have never been lower. It is not just now that they have never been lower; we are talking about several years. The reality is that, for many of the younger generation, their dream of ever owning their own home will never be realised, unless they have a rich parent, which was the view of a previous Treasurer of the coalition government. He said that, if you wanted to own your own home, just be born into a family with rich parents. Of course, you could inherit a home from your parents once they die. Even that is becoming more risky because, as we know, many elderly people are no longer able to maintain their own home and are entering into a reverse mortgage situation to survive themselves. By the time they come to the end of their life, one wonders what they will have to pass on to their children.

Home ownership for the younger generation is, quite frankly, a matter that seriously concerns me. It concerns me because I believe that home ownership is important. Home ownership is what creates family stability. It also creates community stability. When people own their own home, they take an interest in the community in which their home exists because they are part of it. If they don't own their own home, they know full well that they may float from one residential area to another. They lose the sense of belonging to a community that in turn reaches out to provide all of the community facilities and support structures that are required in order to have a healthy community.

The reality is that today the value of a home is 10 times or more the annual salary of a person who works. Fifty years ago, it was three or four times more. We can see that there's been a huge shift with respect to how expensive owning a home is today compared to four or five decades ago. That, in my view, reflects a serious national public policy failure on the part of both federal governments and state governments, which share the responsibility for home ownership. For most people, the issue of owning their own home goes to the heart of their financial planning. A home, whether you are paying a mortgage or renting, accounts for the largest amount of weekly outlay for most people. Whether you rent or own your home, it doesn't make a lot of difference because, in both cases, it goes to your hip pocket, affordability and the cost of living. The reality is that, as housing prices go up, so do rents, so the two go hand-in-hand.

I believe there are several reasons why housing affordability is declining. Firstly, it goes to state governments and the demise of their investment in housing. Years ago, state governments invested considerably in public housing, particularly in the sixties and seventies. The rate of investment by the state governments across Australia has dropped, and perhaps it's dropped because they have received less funds from the federal government as well. But it has dropped, and so we've seen a decline in public housing.

Secondly, we have seen the closure of public banks that in years gone by were established with the prime purpose of providing low-interest loans for housing. Certainly in South Australia that was the prime objective of the State Bank of South Australia. Yes, it branched out into other areas later on, but initially that's what it was set to do, and it did indeed provide lower interest loans specifically for housing than did all of the competitive public banks in the state.

Thirdly, we have state and local governments now charging for infrastructure up front, which means that the cost of the land on which the houses are built has reached a point where it well exceeds the cost of the house itself. That's because the infrastructure is being paid for up front. That was never the case before. The houses were built and then through the rates paid local governments and state governments in turn provided the utilities and other infrastructure that was required, sometimes over many years. In some of the older parts of Adelaide there are streets that still do not have all of their footpaths, but it is an ongoing program for those councils and they will ultimately get their footpaths.

The fourth matter is the negative gearing tax laws that have been talked about time and time again and which the coalition government simply turns its back on but which are adding considerably to the cost of housing. The Grattan Institute suggests that each year about $5 billion is added to the annual cost to revenue as a result of negative gearing tax laws. We then have discounted capital gains tax laws as well, which add about another $7 billion to the cost to revenue, according to the Grattan Institute.

Lastly, we have the incursion of foreign buyers. I'm aware there is another piece of legislation that tries to address that matter, and it's a matter that I have been talking about for several years. The incursion of foreign buyers has made a difference to the price of housing in Australia and it will continue to do so.

This legislation is a rather paltry response to what is indeed a very serious issue. The legislation establishes a $1 billion fund to assist with housing in Australia. I'm not sure over what period the $1 billion is meant to last, but it establishes a $1 billion fund. The reality is that to me it looks more like a $1 billion slush fund. It's made up of $600 million as concessional loans, $225 million in equity investments and $175 million in grants.

Now let's look at who can apply for these funds. Essentially, the money is targeted towards state and local government entities. Concessional loans are of little value to state and local government entities when they already have access to low-interest loans through their own financial institutions. For example, in the state where I come from, the South Australian Local Government Finance Authority already sources low-interest loans on behalf of councils through its own means. It doesn't need the federal government to provide it with low-interest loans. And so I see little value in having a low-interest loan facility for entities that already have that access.

Secondly, with respect to the equity investments and the possibility of grants, I have a real concern that those entities—local governments and state governments—may well apply for funds to fund infrastructure and projects that they would otherwise already be responsible for and that they will simply be reaching out for money that's available to fund existing commitments that they have. And so again I have some real concern about that source of funding. I see the fund being used in a way which it was never intended for even if it is for a project which the council doesn't have on its books now or the state government doesn't have on its books right now but may well in the future. It will simply say, 'In the past we would have relied on a different source of funding stream, but now we can actually apply to the federal government and see if we can get a grant, a loan or an equity investment in order to fund works that otherwise we are responsible for.'

There are other matters that concern me with this legislation and one of them goes to this: because local and state governments have off-loaded their housing development responsibilities of past years, they have been left with little expertise in the housing market. So for them to now access funds for what I would suggest are going to be relatively small projects in comparison to what they used to do, it means they do not have the expertise to manage those projects in the most efficient way. If they were going to go back into public housing in a big way, they would establish the departments and the key personnel that they need to be able to get back to an efficient level. But they won't if they're just dealing with projects here and there. So I see that there are inefficiencies in handing money to organisations who currently do not have the expertise to be in the housing market. That certainly does concern me. Even if they can build the properties as efficiently as the free market can, where are the savings if they are no cheaper than what the free market can build? Where are the savings to the end user who is ultimately going to be the person or family who rents or buys that property? There will be none. If there are none, how is this going to help with housing affordability in Australia?

We don't know from this legislation just what conditions will apply to the loans or grants, who is going to be able to get them and how they will actually be managed, because those are decisions that are going to be made by the board. The qualifications of the board members, just looking at the list I've seen, would suggest that they are all going to be the professional class of people that we have in this country. There is no representation from perhaps real people, real families or working people; they are all white-collar professionals. Yes, we should have some of those, but I'm not convinced it should be made up entirely of that class of person. More importantly, they are going to be hand-picked by the minister. We know full well that the minister will pick the people that he or she chooses not necessarily for the reason that they are the best people for the position.

Furthermore, the board will be exempt from freedom of information provisions with respect to who they make grants to, who they provide loans to, who they invest with, et cetera. The argument there is that they're dealing with commercial-in-confidence documentation, so the freedom of information provisions shouldn't apply. Given that most of the applicants for this funding are likely to be state or federal government bodies—in fact, that's almost one of the criteria of the legislation—why shouldn't the public have the right to know what other government departments are doing with their money? I believe they should. I believe that the freedom of information denial in this legislation is inappropriate.

In closing, I have concerns about this legislation because, quite frankly, as I said from the outset, I see it as an opportunity by the government of the day for pork barrelling. I don't see enough clarity about how the funds will be used, how they will result in cheaper housing for people and how the broader Australian community is likely to benefit. I do see it as a paltry way of this government suggesting that they are doing something about affordable housing. I understand the legislation is going to be referred to the Senate Economics Legislation Committee. I welcome that because I believe some of the matters I have raised may well be addressed as part of those hearings. I certainly look forward to hearing from the committee in terms of their report back to parliament.

The last comment I make is in respect of the member for Berowra, when he talked about the government's own initiatives in this respect. The initiative about putting superannuation funds towards a person's housing simply says to the Australian people, 'You can have superannuation for your retirement or you can have housing, but you cannot have both.' Quite frankly, that is not an appropriate way to deal with this serious problem. What we are trying to do is give people a home and let them have their home and a life after they retire.