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Tuesday, 10 December 1974
Page: 3316

Senator CARRICK (New South Wales) - The Senate is debating the Banks ( Housing Loans) Bill. In brief this Bill seeks to provide a sum of $ 1 50m by way of advances to savings banks as a means of increasing the money available for housing. The Minister for Agriculture (Senator Wriedt) in his second reading speech stated the reason as follows:

The need for this action arises because the reduction in activity in the home building industry was in danger of becoming more extensive than the Government would have wished.

I do not wish to be provocative. I want to make some brief remarks because the state of the housing industry is so desperate that it would be utterly wrong to speak to this Bill without drawing attention to it. I do so against the background that today the Executive Director of the Master Builders Association of Australia, Mr Jorgenson, stated the alarming news that builders plan to sack more than 95,000 building workers over the next 6 weeks, because the Federal Government's easing of the credit squeeze had not made any impact on the home building industry. He went on to say that one of Australia's largest home builders, which normally has 2,000 homes under construction, is now down to 900 and by January expects to drop to 250 homes. He added:

We have been begging the Government for months now to pump money into new housing and to cut interest rates on home loans to 8 percent.

He pointed out that to advance $150m to the savings banks would be quite inadequate for one reason in particular, namely, that about twothirds of the money would go to the purchase of already existing homes and the remaining onethird would, of course, be insignificant in terms of the demand. He stated that in the present financial year it is expected that, compared with last year, there will be a drop of some 50,000 homes. He went on to say:

But now there are no jobs left. We expect more than 95,000 will lose their jobs in January and February unless the Government takes very swift action.

He pointed out that the industry employs nearly 400,000 people and is the key barometer to employment. The industry estimates that total home construction- public and private- will drop from 155,000 last financial year to between 100,000 and 1 10,000 this financial year. If this statement is right, it is an alarming situation. The thought that approximately 100,000 families in Australia, in addition to the present unemployed, face the prospect of almost immediate sacking is depressing and I think it is a situation which calls for the strongest immediate action.

Senator Steele Hall - That will have a domino effect.

Senator CARRICK - That will have a very strong domino effect, indeed. One of the difficulties, as the senator who interjected will appreciate, is that money put into the industry now could not be put to work for some time because the lead time for planning is 6 months to a year. I think it is sad to note that the Minister for Housing and Construction (Mr Les Johnson) said 2 things quite recently. He said that the Government will not reduce interest rates until inflation is defeated. The failure of the Minister to understand 2 simple facts is inherent in this. First of all, high interest rates create inflation. That is the simple situation. The putting up of interest rates has done as much as anything else to create inflation. Whilst interest rates remain enormously high and whilst bridging finance is at 14 per cent, 15 per cent, 16 per cent or more ordinary people cannot buy homes. It is as simple as that. The Labor leader from New South Wales, Mr Neville Wran, several weeks ago said:

The housing construction industry in New South Wales is in a desperate plight.

He called upon the Federal Government to reduce interest rates by 2 to 3 per cent. Here, of course, is seen the eternal conflict between State Labor leaders and the Federal Government.

The New South Wales picture will give honourable senators some indication of the situation. In the last 4 months to November the New South Wales Housing Commission had its applications for needy homes- that is, applications from people on low incomes- increased by 25 per cent. In other words, 7,000 families on low incomes came along and put their names on the list. The list went up from 28,000 to 35,000. To get into perspective the $150m that we are talking about now I make it clear that if this amount were used entirely to build or buy new homes it would build or buy only 7,000 homes. The best it could do would be to take up the slack with the New South Wales Housing Commission alone. However, the slack is 50,000 or so now and will be 100,000 in approximately 6 months time. Apart from the fact that this Bill is too little too late, one of the basic defects is that it is wrong in its direction. It is directing the whole of its money through savings banks. The argument, as I understand it, is that savings banks are fairly evenly distributed throughout Australia. The fact is that throughout most of Australia a very significant amount of the lending of money for housing is done through the permanent building societies. In Western Austrafia, in particular, 60 per cent of all home lending is done through the permanent building societies. In my own State of New South Wales the figure is very significant indeed. I think- certainly the Federal Opposition thinks- that this Bill is defective in that it draws away from a great body, a great organisation, in the permanent building societies, which have done so much to help the people of Australia.

If I may, 1 will in perspective sum up. The normal methods of determining what kind of house a person can buy is to take his weekly income and to quarter it, to divide it by four. So a person on, say, $ 160 a week would have a quartering of $40 a week. The quartering is recognised by banks and societies as being the highest amount of money a person can afford to pay off a home. So a person on somewhat above the average weekly wage today could not, under quartering, pay more than $40 a week. But a person who today sought to buy the most modest home in Australia at a cost of, say, $22,000- by any standards that is enormously modest- would of necessity have to pay off at least $60 a week. That would predicate that the person concerned, to justify such a loan, would have to be getting $240 a week. So the quartering principle is, of course, completely out.

I simply say that it is not good enough for the Government to say: 'We have put money into the community'. The money it has put into the community has been put in late- desperately late. It will not help most people because whilst interest rates remain appallingly high, whilst credit is so restricted and whilst bridging finance is so desperately dear, the simple fact is that most people will not be able to buy a house. It will not be at all possible to do so. So that the real tackling of the job must be done first of all by way of a lowering of the interest rates. I should point out that the Minister for Housing and Construction is himself somewhat contrite. In his speech on this Bill in the other place the Minister said:

The fact of the matter is that there will be unused capacity in the industry in the early months of the calendar year 1 97S. 1 am not pleased about that.

I pause to interpolate that neither will 95,000 building workers be pleased. The Minister went on to say:

I suppose some people here would contend that the provision of the $ 150m to the deserving section of the community whose income is less than $ 1 SO a week might have come with greater benefit a few months ago. But the feeling in the industry generally is that during 1 975 a situation could easily be reached in which the industry could come under pressure once again, that the supply of money will be such that there will not be enough tradesmen to meet the demand and that we may see a return to a shortage of building materials. So there has to be some limit. If it is a fact that the rescue, if you like, of the industry is a little later than it should have been, it ought not to cause people to feel that any volume of money can now be dumped into the industry to good advantage.

In fact what the Minister was saying was a confession of this plight. The fact is that the building industry was deliberately reduced to ruins by this Government by the record credit squeeze of all time. Having been reduced to ruins and despite our pleas, nothing has been done to revive it in the last 6 months. The thought that one can suddenly pump money into the building industry and revive it is utterly wrong. There will be massive delay. The Minister has said that there will be, in his euphemistic words, unused capacity. What a nice thought it is to think that 95,000 building workers are euphemistically 'unused capacity'. I think they may use stronger words.

Therefore while not opposing the Bill, I repeat that we feel that the sum itself is small in terms of the objectives, that it is at least six or nine months too late, that it ought to have gone substantially to building societies and that a high percentage of it should have been directed to home building rather than just to home purchase. I make plea that the Government take immediate steps to ensure, if the report is factual, that 95,000 people will not be thrown out of work in the next few weeks. I merely add the observation that if these 95,000 people are added with the school leavers to the present unemployment rate of 3.5 per cent the unemployment rate looks like being 5 per cent. I concede that the Government does not want that as we do not want it. I invite the Minister and the Government urgently to consult with the Master Builders Association to see whether this picture is as bad as is projected and, if it is as bad, to come out as quickly as possible with a crash program for the re-employment of these people.

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