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Wednesday, 3 October 1984
Page: 1152

Senator RYAN (Minister for Education and Youth Affairs)(6.47) —I move:

That the Bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows-


The main purpose of this Bill is to authorise payments in 1984-85 arising out of two decisions, taken at the recent Loan Council meeting, which fall outside the provisions of the Financial Agreement Act 1928.

Specifically the Bill seeks to authorise the continued payment of:

general purpose capital grants to the States; and

such amounts as the States and the Northern Territory nominate from their approved 1984-85 borrowing programs as being for the purposes of public housing on concessional terms and conditions.

To provide scope for continuity of payments the Bill also provides for the payment of capital grants and concessional housing loans in the first six months of 1985-86. The amounts to be advanced under these provisions are limited to an amount equal to one-half of the grants to be paid in 1984-85 in the case of the grants and an amount equal to one-half of the approved borrowings in 1984-85 in the case of funds nominated for public housing.

Grants amounting to $521.5 million, equal to one-third of the approved Loan Council programs for the States in 1984-85, were agreed to at the 21 June 1984 Loan Council meeting.

These Grants are made in accordance with arrangements originally adopted at the June 1970 Premiers' Conference, whereby the Commonwealth Government provides a portion of the States' Loan Council programs as interest-free non-repayable grants, instead of what would otherwise be interest-bearing borrowings by the States.

The effect of the grants is to relieve the States of debt charges (that is, interest payments and sinking fund contributions) which they would otherwise have to pay, and the grants accordingly have a substantial beneficial effect on the States' financial positions. The States are free to apply these grants as they choose.

The arrangements whereby the States and the Northern Territory are able to nominate part of their approved borrowing programs for public housing were introduced in 1982-83.

As a condition of the payment of these funds, the Bill contains a provision that a State or the Northern Territory must be able to meet its matching requirements for the purposes of the Commonwealth-State Housing agreement. Subject to that, the nominated funds will be provided to the States and the Northern Territory at the loan terms and conditions set out in the Commonwealth- State Housing agreement, and hence will bear interest at the highly favourable rate of 4.5 per cent per annum and will be repayable over 53 years.

The object of providing concessional loans for public housing is to provide an incentive to the States to increase the amounts that they would otherwise direct to public housing. This is in addition to the various direct forms of Commonwealth assistance to the States for housing purposes which in 1984-85 are being provided under a new Commonwealth-State Housing agreement currently being concluded with the States by my colleague the Minister for Housing and Construction.

Payments under the new agreement will amount to $623 million in 1984-85, an increase of 19 per cent over expenditure on similar programs in 1983-84 and an increase of 77 per cent on the amount provided in the last year of the previous government.

The assistance being provided under this Bill forms part of the State Governments' new money programs for 1984-85 as approved by loan council and the analogous general purpose capital payments to the Northern Territory. In 1984-85 , these general purpose capital funds amount to $1702 million, an increase of 6. 5 per cent over the amounts for 1983-84.

This Bill forms an important part of the Commonwealth's overall financial assistance to the States and Northern Territory. I commend the Bill to the Senate.


A year ago when introducing the First Home Owners Bill 1983 my colleague, the Minister for Housing and Construction, said that the Government had an ambitious and innovative program, for action in housing, designed to achieve the dual objectives of ensuring that housing plays a key role in our economic recovery and in ensuring that Australian families can gain access to adequate housing at a price they can afford.

Mr Hurford identified the objectives of our programs as being:

to provide more effective assistance to low income families seeking to buy a first home and to ensure an adequate supply of housing finance at affordable interest rates

to generate additional activity in the housing industry in order to stimulate job creation and economic growth-to re-establish confidence in this vital industry

and to increase the availability of public housing and other innovative forms of low cost housing for the large number of needy households in the community.

The Hawke Labor Government was elected with a firm commitment to renegotiate Federal housing arrangements with the States.

This Bill, the Housing Assistance Bill 1984, honours our commitment to revamp public housing policy and assistance in Australia. This is an important piece of social legislation.

No honest person can deny the success of the Government's measures to date. In the short time since coming to office the government's policies have led to a rejuvenation of the housing industry, and to a large number of Australians acquiring their first homes. Housing finance has increased by some 30 per cent, and housing starts have risen from a low 105,000 in 1982-83 to an estimated 135, 000 in 1983-84. Some 55,000 first home buyers received assistance under the Government's First Home Owners Scheme during 1983-84, and an additional 80,000 first home buyers are expected to benefit from the scheme in 1984-85.

The housing industry is now set on a firm footing for the future, housing finance is readily available at affordable interest rates and in recognition of these facts measures announced in the Budget have enabled FHOS to be better targetted. Housing commencements in 1984-85 are expected to be in the range of 140,000 to 145,000. With regular reports from the Indicative Planning Council and through wide consultation with the industry, the Government is determined to avoid the costly 'boom and bust' syndrome of recent years, and will be seeing to ensure that commencements continue at sustainable levels in the future.

A year ago the Minister said that, with the introduction of the First Home Owners Scheme, we would not be resting on our laurels. Mr Hurford indicated that the Government had commenced work on the renegotiation of the Commonwealth-State Housing Agreement, and that a key feature of the renegotiation would be a focus on more innovative approaches to the provision of public housing. It was indicated that discussions would be held with the State Governments, local governments and community groups on measures to expand the range of low cost rental housing for people with an acute need for housing, and to expand community housing.

These negotiations and discussions have now been completed, and the Housing Assistance Bill 1984 authorises the Commonwealth Government to enter a ten year agreement with each State and the Northern Territory for the provision of home purchase and rental assistance housing for low to moderate income earners.

This legislation sets the stage for our ten year assault on housing poverty. It will be the largest housing assistance package ever undertaken in Australia. Taken together with the related increase in the Budget in the level of supplementary assistance for pensioner households in the private rental market, it reaffirms this Government's intention to improve the housing circumstances of those least able to help themselves.

The new Agreement is an important social document. It sets out principles to guide the development of public housing over the next ten years. The twin objectives are to alleviate housing related poverty and to ensure that housing assistance is, as far as possible, delivered equitably persons resident in different forms of housing. All State Housing Ministers have endorsed these objectives.

The legislation recognises that housing assistance provided under the Agreement should be available to all sections of the community provided that priority in granting assistance is determined by the need for assistance. Programs under the Agreement will be developed so as to increase progressively the availability of public housing to a level commensurate with the need for it in the community. This will be done in such a way as to avoid the social stigma and related problems so frequently associated with past housing assistance. All Housing Ministers agree that it is essential to provide a viable and diversified choice of public housing.

The Agreement covers programs of assistance to tenants and home purchasers. These programs are structured so as to ensure that those unable to obtain or afford housing in the private market have considerable flexibility in choosing the form of assistance that suits them best. The spirit of the new Agreement is that every Australian has a basic right to adequate and affordable housing.

There are currently some 137,000 people on waiting lists for public-rental housing, and many thousands of others discouraged from applying because of the lengthy waiting times for assistance. Most of those applying for assistance are pensioners and beneficiaries currently paying high proportions of their income in rent or staying in overcrowded or sub-standard accommodation.

The Government recognises that the massive housing problems facing low income earners cannot be overcome in one or two years.

This is why the Agreement is placed in a ten year framework. We have entered into a long term commitment to those in housing need.

Currently throughout Australia, there are some 250,000 dwellings in the public housing stock. This Agreement will cover rental and tenancy policies for these dwellings and others progressively added to that stock.

Rents for dwellings will be related to the cost of provision and not to so- called market rents which are outside the influence of the public sector. Over the life of the Agreement this should result in a decline in real terms in the level of rents for public housing which will provide long-term tenants with some of the benefits of home ownership.

Those tenants who are unable to afford the asking rents will continue to pay rents which are related to their incomes. About 60% of public tenants pay reduced, or rebated, rents.

As a means of further enhancing the position of tenants, the Agreement provides for tenants to be actively involved in the management of their dwellings. Co- operative housing arrangements, for instance, are encouraged through both administrative and financial practices.

The Agreement also provides for specific housing assistance programs including

Pensioner housing

Aboriginal housing

Crisis accommodation

Mortgage and rent relief

Local government and community housing

Even with ongoing programs, such as Aboriginal housing, there will be a new approach. For example, under the new arrangements agreed with the States, Aboriginals will be closely involved in the provision of Aboriginal housing assistance and a number of States have or are moving to set up Aboriginal Housing Advisory Boards to assist in the administration of these funds.

The Crisis Accommodation Program will rationalise a number of small unco- ordinated programs. The aim is to provide emergency accommodation where needed. This program will link in with the proposed Supported Accommodation Assistance Program. Mortgage and rent relief assistance was previously provided outside the CSHA. The Mortgage and Rent Relief Scheme is now properly brought within the CSHA to ensure that assistance is fully co-ordinated with other public housing assistance.

One innovative feature of the new Agreement will be the new Local Government and Community Housing Program which will aim to give local communities a bigger say in public housing.

The focus of the program will be on providing alternative forms of public housing and on developing tenant participation in the management of public rental housing. Local Governments and community groups will be able to develop projects such as co-operatives, group housing and boarding house accommodation, which will assist in meeting needs in their areas.

Financial assistance will be provided to local governments and community groups to buy, build, lease or upgrade dwellings for low cost rental housing. Local communities will also be able to borrow from the private sector with government assistance. The net effect of this will be to expand and diversify Australia's stock of housing available for low income earners. The dwellings will be managed by local governments and community groups.

Most Australians aspire to home ownership. The home purchase programs in the Agreement are structured to make this achievable.

Borrowers will be provided with low start loans. Repayments will be linked to income. Interest concessions available in the early years will be repaid where possible. These arrangements will mean that should a borrower face a reduction in income, loan repayments will not become crippling.

The home purchase assistance arrangements also make provision for new rental purchase arrangements, as a means of further ensuring that those wishing to buy a home are able to do so. The arrangements will provide a safety net to both public housing tenants and those renting privately who wish to purchase but are uncertain about their financial ability to do so. To achieve this, title of the dwelling will remain with the housing authority. Thus in a case where the purchaser does get into financial difficulty the household can remain securely in that dwelling. However, in order to maintain the stock of public rental dwellings, rental housing assistance funds will not be allowed to be used to finance rental purchases. These purchases will instead be financed in the same way as other assistance for home purchase under the Agreement.

Mr President, the principles and policies incorporated in this legislation will benefit many thousands of Australians. However, funding commitment is required to back up these fine principles.

This Government is providing the necessary funding commitment.

In 1984-85, some $623m will be provided for public housing. As part of the financial arrangements, $569m is being appropriated in the Budget and will be supplemented by $54m appropriated by the Housing Assistance Act 1981.

Funding this financial year will be about 9% higher than comparable funding in 1983-84 under various programs including the special employment assistance provided under the wage pause program. The following table shows details of comparative funding for public housing in recent years:


Loans Grants Total

$m $m $m 1981-82 146.0 118.1 264.1 1982-83 146.0 260.2 406.2 1983-84 146.0 420.9 566.9 1984-85 . . 623.3 623.3

All Federal funding in 1984-85 will be provided by way of grants. This is not necessarily a precedent: in future years some 75% of Commonwealth funds will normally be provided as grants, and the remainder will be provided as loans on the highly concessional terms of 4.5 per cent per annum interest repayable over 53 years. This generous assistance recognises the cost pressures being faced by the State Governments in housing very low income persons.

The State Governments will be expected to continue to play their parts. In 1984 -85 States will be expected to match $450m of the Federal funding. In later years they will be expected to match all Commonwealth untied funding on a dollar for dollar basis.

As an additional incentive to the States to provide funding for this vital area of social need, in 1984-85 the Government is continuing to permit States to nominate funds from their Loan Council borrowing programs for public housing and receive these funds on the concessional CSHA loan terms and conditions, i.e. interest of 4.5% per annum repayable over 53. Some $227m was nominated by the States under this arrangement in 1983-84.

In all, it is expected that over $1,500m will be made available for public housing in 1984-85 from Commonwealth and State Government sources.

The legislation provides for base funding of $500m in 1985-86 and 1986-87. It also provides for $10 m. in each of these years for the Local Government and Community Housing Program. This compares with minimum funding of $200m per annum under the 1981 Agreement.

The Bill provides for Commonwealth funds to be allocated between the States and the Northern Territory on the basis set out in the 1981 legislation. This maintains the move to per capita funding over the period to 1990-91 subject to minimum provisions to protect the smaller States.

There will be an Annual Report to be tabled in Parliament each year which will include an assessment of housing needs and a summary of assistance for housing being provided by governments.

This Bill reaffirms this Government's commitment to ensuring that all Australians, no matter what their station in life, have access to adequate and affordable housing. It is the result of inputs from a wide range of interested organisations and individuals. It has been moulded after considerable discussion with State Housing Ministers. It is a consensus reflecting their assessment of how best to deliver an effective and equitable program of public housing assistance. I commend the Bill to the Senate.

Debate (on motion by Senator Reid) adjourned.