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Monday, 15 October 1973
Page: 2083

Dr GUN (Kingston) - This Bill provides for the expenditure of the unprecedented sum of S2 18.7m on public housing over a period of 12 months. At last some assistance is to be given to the low income earner who wants to provide shelter for his family. This Bill represents the first real breakthrough in welfare housing. The persons who want this type of housing from the housing commissions or housing trusts in the States have had to wait 23 years for a Federal Labor Government to be elected and to provide this type of provision to meet their needs. This Bill, perhaps more than any other Bill brought down by the Whitlam Government, is the embodiment of the fundamental differences in approach and philosophy between the Liberal Party of Australia and the Australian Labor Party. This Bill will make funds available to the State governments pursuant to the new Commonwealth-State Housing Agreement. That agreement replaces the agreement made between the previous Federal Liberal Government and the States.

There are many important differences between the present Agreement and the one it replaces. The two most important differences are the amount of money to be made available and the interest rate payable. An amount of $21 8.7m will be made available to the States for public housing. It is not possible to make an exact comparison between that figure and the figure made available under the previous Federal Government because previously the States determined the amount to be made available. However, last year the States made available a total of SI 67m for housing. Compared with that figure, the provision of $2 18m this year represents an increase of more than 30 per cent. This is an enormous increase in the allocation for welfare housing, and it signifies tha great priority which the Federal Labor Government puis on providing housing for families with a limited income.

The other great difference from the previous Agreement is the reduction in the rate of interest payable. This, of course, means much lower rents or repayments. The interest rate difference also would be difficult to calculate compared with the previous scheme, but I believe that a reduction of at least one per cent under this Agreement would be a conservative estimate. It is no secret that the housing industry is over stretched at the moment and that the supply of houses cannot match the high level of demand. That is why the Government has had to take some action to reduce the demand for housing in the private sector. It is not action that the Government enjoys taking; nevertheless some action was necessary. When one is in Opposition of course, one can afford the luxury of criticising anything and everything that the Government does. In Opposition one can criticise the Government because there is inflation, but because all anti-inflationary measures are unpopular one also can criticise the Government for taking them.

As far as the Government is concerned, the situation is quite straightforward. Had we not taken action to reduce the demand for housing, we would simply have raised even further the cost of building a home. If we have so much land, labour and materials we can build only so many homes. Merely to put more money into the housing field will not build any more houses; it will only raise the unit cost. The Labor Government, because of its prime commitment to the less privileged, has increased its expenditure on welfare housing. Until we can increase the supply of manpower and materials, we have to slow down the activity in the private sector. This, of course, is the complete opposite to what Liberal governments would do and have done. It is the public housing sector that they would restrain. Even now the Opposition is admonishing the Government to cut government expenditure. Presumably the Opposition means that we should reduce the expenditure on public housing. In other words, the Opposition would let the private housing sector have its head, and to hell with the hapless families -who are queueing up for public housing from State housing commissions. This would be to take the line of least resistance, but it is something which the Labor Government is not prepared to do.

It is important to see the difference between controlling the level of private housing and controlling the level of government housing. In the government housing field one simply establishes a queue. This is easy to do because the State housing commissions are in a monopoly position. The applicant for a housing commission or housing trust home has nowhere else to turn. In contrast, to control lending for private housing is much more complicated. The Government has no legislative authority to control the amount of lending, except from the banks. Outside the banks the fringe banking organisations, such as the hire purchase companies, the building societies, the trust funds and so on, cannot be controlled. Therefore it is not surprising that Liberal governments took the easy way out. They let the financial institutions, which lend for private housing, do what they liked and controlled the aggregate demand for housing by choking off the necessary funds for public housing. That is quite a simple policy to implement, provided one is prepared to disregard the neediest families in the community - and that is just what the Liberal government's record shows they did. In 1955, of all houses being built in Australia one out of five was being built by a government housing authority. But by 1972 this figure had fallen to one in ten. Equally revealing are the housing expenditure figures set out in Federal Budgets. In the 1954-55 Budget housing funds made up 2.68 per cent of Government expenditure, but in 1971-72 the figure had fallen to 1.8 per cent. What a policy! The previous Government let the private financial institutions do what they liked and it regulated the economy by turning the screw on the low income earner who was trying to provide shelter for his family.

In contrast to that policy, the Labor Government will be bringing in legislation to control the fringe banking institutions. This will enable the Government to regulate the volume of money going into the private housing sector. It is true that the Government does have indirect controls in the form of interest rates on government bonds, but these are crude controls. These controls have been used. It is true that they have caused interest payments on private housing to rise. There are measures which the Government has been reluctant to take, but I would like to say this: The increased interest payments may have made housing more expensive, but housing would have become more expensive still if nothing at all had been done. If the liquidity problem had not been acted on, housing costs would have gone through the roof; they would have had a bigger rise than any increase which has occurred from any increase in interest payments. These controls have been made necessary because at present the Government lacks the power directly to control the fringe banking institutions, but we expect that the Parliament will soon - that is, this year - pass legislation to give the Government the power it needs. When the Government has that power, private housing will be able to be allocated in the same way as public housing - that is, according to the order in which applications are made and not according to who can meet the highest repayments. I should mention also that the Government will be introducing another important measure to assist low income families in particular to own their own homes. That is a system of tax deductibility on interest payments on homes.

The Bill before the House and the Government's housing policies are aimed at diverting the provision of homes to families with limited incomes. However, the ultimate aim of the Government's policies is to bring about an increase in the aggregate number of houses built. This is not a question of making money available; rather is it a question of supply - the supply of land, manpower and materials. A great deal of ink has been spilt on how to contain land prices and to control land speculation. It would be wrong to understate the difficulties which exist. However, there are things which can be done, and I am pleased to say that some of them are being done. To the measures already announced by the Government I would like to suggest one or two additional measures.

The decision by the government to establish an Australian land commission is a most important one. The commission will act to acquire in Commonwealth Territories new land for development and subdivision by the Crown. Perhaps I should hesitate to use the word 'Crown' in this day and age and instead say 'the Government on behalf of the people of Australia'. Money will be provided by the commission to State governments to enable them to do the same in areas under their jurisdiction. This will be of benefit where the State governments are prepared to enact complementary legislation such as that which has been foreshadowed by the progressive Government in South Australia. In addition to setting in train legislation to establish a land commission for the purchase of land by the Crown, that Government has foreshadowed legislation to restrain increases in land prices to 7 per cent per annum. As a supplement to this measure I would like to suggest the imposition of a capital gains tax on land, except that under my proposition it would be a capital gains tax with a difference. The capital gain would be taxed away whether or not the capital gain had been realised. For example, if an unearned increment takes place in the value of land after subtracting the value of the improvements which have been provided, I believe that the increment should be taxed away from the person who owns that land even though the sale may not have been carried out. In a way, it is really more of a tax on assets than a tax on capital gains. I believe that this would be what is often said about taxes on assets; it would require that asset to be sold in order to pay the tax and, of course, this would have the very desirable result of making more land available, at the expense of the land speculator.

The land commission could perform another very important function in a situation where there was some dispute with a landholder in regard to the value of his land. For example, if it were decided that a certain capital gain had taken place in the value of the land and the landholder said 'I believe that the valuation is unfairly high', the land commission could offer to acquire the land from the owner at the lower price - in other words, at the valuation given by the person who owned the land. If it is bought at the price suggested by the Crown the increased capital gain could be taxed away from the vendor. As I say, I believe this would have the very beneficial effect of increasing land sales and it would also increase revenue from people who may be well able to afford to pay it. This may have an additional spin-off of drying up excess liquidity and it may enable more rapid action to be taken to reduce interest rates in the private housing sector.

Another measure which I believe should be taken, which has been taken to some extent, and an area where I think perhaps we could do a little more is in the field of foreign investment which is purchasing residential and commercial land in Australia, particularly around metropolitan areas. The Government has already taken important measure to restrain the inflow of foreign capital which is purchasing residential and commercial land in our cities. However I believe we will have to be even more heavy handed in this matter. After the recent visit by an Australian parliamentary delegation to

China, when I was in Hong Kong I was discussing this with some individuals there, who were asking me what the prospects were like for investing money in land in Australia. I suspect that this is often the case; that this is really refuge money that is coming into Australia. Foreign investors think that Australia has a pretty good political climate and it is a good place to put their money. That is all very well except that it is making it pretty costly for Australians who want to buy their houses. I believe that we have to be quite ruthless in this field and quite heavy handed with our foreign exchange regulations to ensure that foreign capital coming into Australia is not used to make residential land more expensive for Australian families. I feel very strongly on this matter.

Another matter that has been mentioned on a number of occasions by the Minister for Housing and I welcome this, is a further look at the question of industrialised housing. Of course the provision of such housing has been the practice in South Australia for some years and I believe it is something that could be developed much further. Unfortunately there are problems with the provision of industrialised housing, and very often those problems reside in the attitude of local government authorities, which sometimes adopt a rather negative approach to the construction of factory made houses. For instance, in my own electorate there are Housing Trust homes which were in fact built in the United Kingdom, but under present local government authority conditions those houses could not be built. I think that perhaps we have to have a further look at ways and means of overcoming this problem. I think that further research into the industrial housing field will come up with methods of design that will be acceptable to local government organisations. I think, though, that it is also a question of consultation between local government authorities and the Commonwealth, and in this era in which the Australian Government is according greater recognition to the needs and problems of local government it is a very propitious time for us to discuss this problem with local government authorities. I think it is a most important field, particularly when there are bottlenecks, particularly with certain manpower problems, for instance, with bricklayers. There is a shortage of that type of building operative, and I think the industrial housing question could be a way of overcoming this problem.

I would like just briefly to ask the Minister for Housing to give some consideration to the question of restructuring payment of interest. At the present time when a family buys a house, in the early years of home repayments the repayment forms an inordinately high percentage of that family's income. That is because a rate of interest is struck at the beginning of the loan and that average rate of interest is sustained throughout the entire period of the loan. Might I suggest that there are other ways interest payments could be made. For example, in the early part of the loan a notional low interest rate below the average could be paid and as the person's income rises through his working life we could raise the rate of interest to ebove the average in the latter part of his working life. This would take some of the burden off the young family which has many other commitments in trying to pay off a house. This would transfer the burden and make the cost a more constant proportion of income throughout a person's working life. This is a subject that has been canvassed by Professor Downing, amongst others. I think it is something we could look at because I believe it could mean a great deal of financial relief to young families.

Finally, I mention one other matter. We are not actually discussing the terms of the Commonwealth and State Housing Agreement, but this is after all the Budget appropriation for that Agreement for this year. There was one item in the Agreement which I believe the Commonwealth Minister and the States ought to h 'e another look at, and that is the provision relating to resale of houses. I completely agree, of course, with the low rate of interest that is being provided for people to purchase their homes. That is very solidly in accord with Labor Party principles and I would not depart from that at all. But of course, it is possible that a person's financial position might improve and he then might be able to make a considerable capital gain out of the sale of the house which was originally purchased at a subsidised rate of interest. This cannot be done for the first 5 years because the Commonwealth and State Housing Agreement provides that the housing commission shall be given first option to repurchase i \ the first 5 years. But after that 5 years it only says that the State Minister may require that the housing commission be given first option to repurchase. I believe that the housing commission should be given first option indefinitely, in other words beyond the 5-year term.

In conclusion I congratulate the Government for a magnificent breakthrough that has been achieved on behalf of the low income earners for whom we are trying to provide shelter. I think this is a measure which should be commended throughout the length and breadth of this land. I wholeheartedly support the legislation.

Mr DEPUTY SPEAKER (Mr Scholes)Order!The honourable member's time has expired.

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