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Wednesday, 24 September 2008
Page: 5431

Senator HUMPHRIES (10:02 AM) —I too support the legislation which has been tabled to assist first homeowners by establishing first homeowners savings accounts. But I am a little less enthusiastic about the outlook for homeowners than Senator Polley is. I recognise that the legislation which the government has tabled in this area changes one small part of the equation that homeowners, particularly first home owners, face. But I also acknowledge that there are huge pressures in other areas and this measure, of itself, will only go a very small way towards reducing the present struggle that many Australians encounter in being able to afford their own homes.

The fact is, as Senator Polley has noted, that housing affordability has become more difficult in recent years because of a complex range of factors. No one decision of government, or no one omission or neglect by government, has led inexorably to homes becoming less affordable than they once were. But we can point to a number of key factors. One of those is that the supply of new land into the Australian marketplace has become more and more restricted.

It is clear, and this was identified by a recent Senate inquiry, that state governments had pursued a deliberate policy of limiting the amount of land that they released into the marketplace for new homes. Not every homeowner looks for a greenfields block of land to build their home but a very significant proportion of them do just that. If state governments make the deliberate decision to reduce the amount of land that they put into the marketplace for the purposes of allowing new building to occur, it increases the cost of the land that they do actually release and that pushes up the cost of homeownership.

We can see in areas all over metropolitan Australia, particularly Sydney, Melbourne, Brisbane, the Gold Coast and elsewhere, that the decisions of state governments to restrict that pipeline of land onto the marketplace has had a very significant inflationary effect on the cost of land. The cost of a block of land anywhere near urban areas in this country these days is very much higher than it was just 10 or 15 years ago. That has a flow-on effect.

You might ask why governments would choose to restrict the amount of land that they release. Well, of course, governments receive returns from the release of that land. When those returns are maximised because the price is pushed up, the return to the governments concerned is that much greater. This is very evident in the case of the Australian Capital Territory, where the government in this territory has made a quite deliberate decision to restructure the land release program to greatly restrict the amount of land being released in this territory with the effect that, first of all, the price of new blocks of land has risen dramatically in the last 10 years and, secondly, many people have been pushed to crossing the border into New South Wales to find affordable land. It is quite ironic that a Labor government in this territory would force people to go across the border to find housing that they can afford, but that is exactly what has happened in this territory. It is not alone in doing so.

Also, the costs to government associated with the purchase of land have increased quite dramatically in recent years. We have seen very little attempt by state governments to adjust, for example, thresholds at which stamp duty is paid for the purchase of housing. So, as the price of housing has gone up, people are finding themselves having to pay more and more in stamp duty to be able to make that purchase. Other fees, levies, charges and compliance costs have been rising and, in almost every case, that goes to state governments; sometimes it goes to local government but, in all cases, it is government that is benefiting from those higher costs. Indeed, governments across this country have been reaping increasingly larger amounts from taxes and charges relating to housing.

That might all be excusable and understandable if that enormous dividend to governments was being ploughed back into affordable or public housing in some form or another, but we know that that is not the case. We are also aware that the amount of public housing available to Australians across the country has been, at best, stagnant or, in real terms, diminishing in recent years. Despite the investment of over $1 billion by the Commonwealth government in the Commonwealth-State Housing Agreement over a number of years, we have seen no net increase in the amount of housing available to Australians in the category of public housing. It might be a good thing, in some sense, that people are leaving public housing and making the decision to buy their own homes outside the public housing system. But it also obviously puts pressure on that system when more people are being effectively forced out of public housing because of the unavailability of suitable accommodation.

I note Senator Polley’s views about how iniquitous it is that housing has become less affordable to Australians in recent years. But I have to say that I do not share Senator Polley’s view that somehow this can be sheeted home to the former coalition government, because our contribution to that situation was to increase the real living standards of Australians by increasing real wages in Australia by some 20 per cent. That was our contribution to making Australian housing more affordable. But we were working against state and territory governments, which were at the same time pushing up the cost of housing. There was a very real transfer going on there from the Commonwealth to the state and territory fiscs by virtue of that sleight of hand.

The First Home Saver Accounts measures before the Senate at the moment do go some small way towards helping Australians to cope with those higher costs but, as I have indicated, they are far from being the complete answer. We appreciate that mortgage pressures are very difficult to cope with and that getting your first toehold in the marketplace is a real challenge. Being able to put together the money for a deposit is extremely important and it is a welcome development to see the measures in this bill put that more within the reach of average Australians.

I do note, however, that this measure is an echo of the measure that was announced by the coalition during last year’s election campaign. One of the features of the coalition’s proposal was that there should be two types of accounts available to potential first home owners: the first a tax-free home saver account for adults and the second a tax-free home saver account for children. People might well wonder why children need home saver accounts, but the fact is that those children will grow up and they will aspire, like every other Australian, to own their own homes. Their capacity to do so will be enhanced if they have some money behind them. These days children will need to face the costs of higher education and so having the money put aside in a quarantined form by way of a first home saver account is actually a very good idea. It also offers the possibility for parents, grandparents and others to contribute to that account. Being tax free, they would help those children to reach adulthood with some backing behind them for the purposes of making housing accessible and affordable to them within a reasonable period of becoming adults. In my opinion, that is a superior model for providing affordable housing in the long term to Australians. That has not been taken up by this government, but I commend the idea to them. It is not too late to come back and to look at the question of how we might make housing more affordable in a long-term sense. That is certainly one way of doing it.

We acknowledge that a measure such as this needs to be carefully thought through. It needs to be buttressed by a number of other measures to ensure that Australians are in a position to be able to put together the wherewithal to make these important decisions. But, as I said, we do not believe that this is the complete answer. The supply of land is a crucial additional ingredient for ensuring Australians have the ability to afford to buy their own land or to buy existing housing.

In addition, I note that the first home saver accounts are restricted to $75,000. The Rudd government is not addressing with this measure the actual cause of increased house prices and so we can expect there to be further pressure on that figure as time goes by. This figure as a percentage of the cost that people will have to incur in getting into their own homes will steadily decrease in relation to the overall house price. At the end of the day, it will need to be adjusted. There does not appear to be a mechanism within the legislation to do that. I expect that the government will have to revisit that question as housing continues to rise in cost.

There is a restriction on accessing the saved money for four years—meaning that, should the market turn, many first home savers may miss a key opportunity to enter the marketplace, and that is always unfortunate. The government will pay a contribution of 17 per cent of up to $5,000 saved each year. That is a flat rate across the board for everybody. It does not vary on the basis of one’s existing needs. Those on high incomes will be able to compete more effectively in an already tight property market. It was a little bit surprising to see a Labor government introduce a measure of that kind without any sort of progressive nature. As I say, we foresee some issues that will need to be re-addressed when the government sees the operation of this scheme in practice. It could be that, in due course, amendments will be required. Problems potentially include the clause that the individual must deposit $1,000 over four separate financial years in order to be able to withdraw their money.

We are aware that Australia is entering a period of financial uncertainty. People these days are more likely to face the prospect of unemployment than they were just 12 months ago. We see the prediction in the budget this year that over 100,000 Australians are expected to join the dole queues. If you happen to be one of those Australians and you have perhaps put one or two years deposit aside pursuant to the terms of this scheme and you find yourself unemployed and unable to contribute in the third year or the fourth year, your capacity to withdraw from the scheme is thereby limited. I think that represents a serious limitation on the way in which this operates. If people’s plans change, they cannot access their money until they roll the money into their superannuation and take their chances with early release provisions, and we know that there are many problems associated with the way in which that works.

The scheme being set up at the moment, effectively requiring a four-year qualification period, means that these measures will not benefit any first home purchasers until 2012. For people who are already in the process of saving for their first home these measures will not be of particular benefit. A great deal of work needs to be done by this government to ensure that it puts in place a really changed outlook for Australian first home owners. I think cheap lines like, ‘We’ve got a minister called the housing minister in this government,’ and, ‘We’ve turned the corner on housing affordability because we’ve got a person called the housing minister in this government,’ really do not give credit to Australians’ understanding of this issue or create any real expectation that we can make a difference with policy such as this.

The fact is that we as a government did care very deeply about homeownership and the capacity of people to be able to afford to buy their own home; hence our decision to ensure that Australians were able to take advantage of a rising economic tide, to benefit from increasing levels of employment and to take advantage of rising levels of real wages, and those measures were rolled in together to ensure that the outlook for Australians was much brighter. In one sense, the growing wealth of Australians would have had some flow-on effect to the price of housing. It is somewhat inevitable, I suppose, that the wealthier people are overall, the more expensive housing becomes in reaction to that marketplace.

But it was not helped one iota by seeing state governments respond to that problem by starting to deliberately push up the cost of housing in order to be able to effectively transfer that benefit from the pockets of taxpayers into their own coffers. I hope that in the present environment, where housing affordability has become more tight, where Australians are facing the prospect of falling living standards and higher unemployment, state governments will review those policies and push more land out into the marketplace to address the problem of the high costs associated with buying that first block of land to build that first house. That, I think, is an appropriate response to Australians’ desire to see that dream of first home ownership continue and to preserve the very high levels of homeownership that we experience in this country relative to other parts of the world.

To sum up, very clearly the opposition will not stand in the way of a valuable measure such as this, which presents a possibility for Australians to take forward a dream of being able to own their own homes. Putting money aside in an account like this, which is tax free and protected and for which incentives are offered, is a really important measure to be able to make a real difference, but it is not the entire answer.

Before we hear other Labor senators rise in this place and tell us how much we have turned the corner by virtue of putting this measure in place, let me remind them that this is a very long-term and very complex whole-of-government task that must be shared with governments at other levels in Australia. I think the Rudd Labor government would do well to put the issue of greater housing affordability on its agenda for future COAG meetings and meetings of the relevant state and territory ministers councils to make sure this issue is not neglected. I suspect a great deal could be done through the persuasion of state ministers to release some of the land which they have tied up in land banks at the present time to improve affordability through measures such as that.