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Wednesday, 28 February 2018
Page: 2422

Mr SUKKAR (DeakinAssistant Minister to the Treasurer) (18:24): Firstly I thank all members who have contributed to this debate. The National Housing Finance and Investment Corporation Bill 2018 and the National Housing Finance and Investment Corporation (Consequential Amendments and Transitional Provisions) Bill 2018 deliver an important part of the government's comprehensive housing affordability plan by establishing a new independent corporate Commonwealth entity, the National Housing Finance and Investment Corporation, to strengthen efforts to improve housing outcomes for all Australians. It's clear—and has been remarked upon by many members on both side—that housing is critical to the social and economic wellbeing of Australians and the economy as a whole. It can impact on employment, education and health outcomes, and is a significant driver of investment, productivity and participation. However, housing affordability is a complex and multifaceted issue which requires a comprehensive understanding of the different parts of the housing market and the underlying drivers impacting upon housing affordability. While land supply is primarily a state responsibility, the government recognises that housing supply has not kept up with demand, particularly in major metropolitan areas, and this has contributed to sustained increases in housing prices. For example, for first home buyers the number of years needed to save a 20 per cent deposit for a home in Sydney or Melbourne has increased by more than 60 per cent over just the past decade.

Housing affordability is also impacting upon the most vulnerable. Despite significant Commonwealth expenditure on housing, totalling $7.6 billion in 2016-17 comprising $4.4 billion in Commonwealth rental assistance and $3.2 billion in housing and homelessness funding, housing outcomes have not improved. For example, the COAG performance report dashboard shows that very little progress has been made on the benchmark in the National Affordable Housing Agreement to reduce by 10 per cent the proportion of low-income households experiencing rental stress. In addition, waiting lists have increased, with around 40,000 Australians currently on waiting lists for community housing and an additional 148,000 on public housing waiting lists. The challenge of being unable to access secure and affordable housing has flow-on effects for the functioning of communities. Housing unaffordability has resulted in key workers such as police officers and teachers being unable to afford to live near police stations and schools and participate in the communities in which they serve.

While there's no simple solution to the complex problem of housing affordability, these bills are one element of the government's comprehensive package that seeks to improve housing outcomes across the housing spectrum. The plan to reduce pressure on housing affordability is focused on three key pillars: firstly, boosting the supply of housing and encouraging a more responsive housing market; secondly, creating the right financial incentives to improve housing outcomes for first home buyers and low-to middle-income Australians; and thirdly, improving outcomes in social housing and addressing homelessness. These bills establish the corporation and its governing independent skills based board to enable it to administer the $1 billion National Housing Infrastructure Facility and an affordable housing bond aggregator. The infrastructure facility will help finance the critical infrastructure needed to unlock and accelerate new housing supply, particularly affordable housing. The financial assistance available will encourage and complement private sector and state and local government investment and facilitate the delivery of critical housing related infrastructure that otherwise would not be built, or not for some time.

The government anticipates that the infrastructure facility could also support the development of mixed tenure projects, a combination of affordable and private housing that provide broader community benefits, including housing, that enable key workers to live near the places where they work. The infrastructure facility could assist this nascent sector to develop further and to leverage other sources of finance, such as superannuation funds. The government has committed $1 billion which may be distributed by the infrastructure facility in the form of up to $175 million in grants, with the remaining balance being used to provide loans and other investments. Eligible infrastructure projects include transport links, power and water infrastructure, and site remediation works. State, territory and local government owned corporations, utility providers and, importantly, registered community housing providers will be eligible to apply for these funds.

The corporation will also need to ensure it funds projects that satisfy the appropriate regulatory and environmental standards. It's our view that the infrastructure facility will grow over time as the corporation reinvests the capital and earnings gained through the infrastructure facility. An important feature of the facility is that it will tailor its provision of finance to best suit the needs of individual projects, with many concessions calibrated to the particular circumstances of the project and limited to the minimum amount of assistance required to enable a proposal to proceed.

In the case of the bond aggregator, this will improve the efficiency of financing for community housing providers through the provision of cheaper and longer term loans, enabling those providers to improve housing outcomes for existing clients and potentially build scale by providing services to new clients. Community housing providers offer support for our most vulnerable through the provision of housing to those on very low to moderate incomes or those with unique or additional needs. The finance offered will be tailored to the needs of those community housing providers and funded through the issue of bonds, backed, importantly and quite celebrated in the sector, by a legislative guarantee which will drive the best price outcome for providers. Institutional investors will also benefit as they've expressed a clear appetite for social impact investments, which help to deliver better outcomes to the community at large.

The details of the infrastructure facility and bond aggregator are to be contained in the investment mandate to be issued under the bill. In line with the practices of other Commonwealth corporate entities recently established, the government will outline its expectations of the corporation in the investment mandate, but it will not be able to direct the corporation in relation to particular loans, investments or grants in relation to specific projects. Providing the particulars of the corporation's activities in the investment mandate rather than the bill allows the legislative framework to be flexible and nimble to adjust to the needs of the community housing providers as and when that occurs.

A key design feature is the corporation's independence from government. All financing and investment will be made by the corporation's independent skills based board. The independent board will be comprised of experts from a range of fields, including banking and finance, social and affordable housing, and infrastructure planning and financing, to ensure that decisions are sound and commercially based. Independence of the board's decision-making will cultivate credibility, we hope, in financial markets and will provide the board with the flexibility to perform its functions effectively and efficiently and tailor finance to the needs of recipients, being mindful of the risks involved. The experience of the Housing Affordability Fund underlined the importance of the independent decision-making. Indeed, the Australian National Audit Office noted that there were serious shortcomings in the administration of the Housing Affordability Fund and that some proposals that were approved were not selected on a merit basis or in accordance with established guidelines. We don't want to make those same mistakes.

An important feature of the primary bill is that it provides a legislative guarantee for the corporation's liabilities for at least five years of the corporation's operation. This bill provides for the guarantee to be potentially withdrawn in future if it's deemed to be no longer required. This would be dependent on both the corporation achieving sufficient maturity in scale and the community housing sector taking on a larger scale and more prominent role in submarket rental housing, including, importantly, through partnerships with the private sector and, of course, institutional investors. To provide certainty to investors, it may only be withdrawn by the government on a prospective basis after 1 July 2023 and with at least 60 days notice. The availability of the guarantee will therefore strengthen market confidence and improve the corporation's ability to achieve its underlying purposes.

In the medium to long term, the corporation is intended to be financially self-sustaining, which means it won't require ongoing support through the budget. The corporation's profits and funds returned from its investments will be available for reinvestment. In time, the corporation may accumulate surplus funds and be in a position to return a dividend to the Commonwealth. Importantly, there will also be a review of the operation of the bill after three years of its commencement to assess if the corporation is delivering the intended benefits that we all hope it will.

Passage of the bills during the current sitting period will facilitate the necessary preparations to enable the corporation to undertake its infrastructure facility and bond aggregator from 1 July 2018. The associated consequential amendments and transitional provisions allow the entity to be established before it starts making investment decisions on 1 July 2018.

The associated National Housing Finance and Investment Corporation (Consequential Amendments and Transitional Provisions) Bill 2018 also amends the Administrative Decisions (Judicial Review) Act, I should note, to exempt the corporation from the requirement to provide a statement setting out the findings and reasons for any decisions relating to its activities where requested—for example, by an unsuccessful applicant. This exemption ensures the efficient administration of the corporation and is consistent with previous exemptions provided to similar bodies, most notably the Export Finance and Insurance Corporation.

Further, that bill also amends schedule 2 of the Freedom of Information Act to exempt the corporation from the requirements of that act in relation to documents pertaining to any of its commercial activities. This exemption applies to the commercial activities, again, of other similar entities, such as the NBN Co and Indigenous Business Australia, and is consistent in those terms.

I therefore thank all members who have contributed to this debate and commend these bills to the House.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.