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Wednesday, 18 March 1987
Page: 1028

Mr BEALE —I refer the Minister Assisting the Treasurer on Prices to the dramatic leap in housing rents over the past year as revealed in the latest CPI figures and in recent surveys by the Master Builders Federation of Australia. Has the Government undertaken any work to quantify the contribution of both the capital gains tax and the abolition of negative gearing to the surge in housing rents over this period? If no such work has been done, will the Minister undertake to have it done and report the findings to the Parliament?

Mr KEATING —This is about the only way I can get a question from the Opposition these days. They think that economic policy is running so nicely they do not ask about it.

Opposition members interjecting-

Mr KEATING —I wonder what the Opposition's mirth is all about. One would not expect to direct a question to Mr Brown as Minister Assisting the Minister for Defence while the Minister for Defence is here. Therefore, do not direct them to the Minister Assisting the Treasurer on Prices while I am here.

Opposition members interjecting-

Madam SPEAKER —Order! I warn the honourable member for Barker. If he continues, I will deal with him.

Mr KEATING —Influences on the housing market go way beyond any simple notion of price or responsibilities for price, which is implied in the question directed to my colleague by the honourable member for Deakin. Again I make the point that it is very interesting to see the Opposition weeping these crocodile tears about home mortgage repayments and rents. The Leader of the Opposition argues that people's pay packets have been diminished by the cost of their housing repayments and rents; yet when the Australian Conciliation and Arbitration Commission agrees to top up those pay packets, he says: `No, freeze their wages'. That is the contradiction, the hypocrisy of the Opposition's stand on incomes. We see this over and over again. We are constantly being told by the Leader and Deputy Leader of the Liberal Party that there should be a wage freeze; yet at the same time they cry about the fall in living standards.

At another venue the Leader of the part Opposition will stand up before the financial markets in Sydney and Melbourne or some audience which understands the economic debate and will say: `Yes, we understand that living standards must fall because our national income has fallen by at least $6 billion to $8 billion'. Never have we seen such a hypocritical stand-and I use that word advisedly-by a major party which says to one audience `Yes, there must be a decline in living standards concurrent with the notion that the world has cut our national income', but which, on the other hand, runs around to particular interest groups saying that it is a terrible thing that rents and mortgage repayments are rising. At the same time these people know that the cause of those rises, particularly that part which relates to interest rates, is part of the adjustment imposed by the rest of the world and the fact that our national income has been lost.

Either we have an honest and genuine economic debate in this country or we do not. The fact that we are not getting such honest and genuine debate from the Opposition is probably part of the reason why the honourable member for Bennelong is polling so poorly in terms of his public rating--

Mr Hawke —He's gone.

Mr KEATING —As the Prime Minister says, he is gone in his rating with the public. When the Opposition was in government it had a chance to deregulate housing interest rates and provide a stable flow of funds to housing. We got to the stage in housing, however, where the savings banks and permanent building societies were no longer competitive in the provision of funds and housing starts just dried up. They simply dried up; they dried up in 1982 when we were down to 100,000 starts.

Now, for the first time, because of the courage and good sense of the Government, the housing rate for loans after April 1986 has been deregulated to the point where one quarter of all savings banks loans are now deregulated and there is now an assured supply of housing funds for ever. Thus people can get a roof over their heads. There was no roof over their heads at any price, at any interest rates or rents when the Opposition was in power.

This Government has produced as many as 150,000 housing starts in a year and we are looking at a projection for next year of about 125,000--

Mr Beale —One hundred and twenty-four thousand.

Mr KEATING —All right, 124,000-what a telling point! While that figure is not the optimum, given the adjustments taking place in the economy, devoting those levels of resources to housing is, in my view and in my terms, adequate.

On the question of rents, we have never had a proper housing rental market. We had one that was subsidised in part through the tax system so that the 60 per cent taxpayers under Mr Howard could get out of their tax obligations. The result was that there were no substantial additions to the housing stock over the years and as a consequence we saw the return on rents as a proportion of the capital cost of properties go down to 4 and 5 per cent. Naturally that was not enough to sustain the building of new rental units. That is now changing. It is part of the transition and the Government has met that with a 4 per cent depreciation rate-a proper depreciation rate-which helps to bridge the gap in the investment picture.

Mr Beale —Frank Walker says that you have destroyed the rental market.

Madam SPEAKER —Order! The honourable member for Deakin will cease interjecting.

Mr KEATING —That gap has been accentuated by the interest rates which attend our national economic condition; but over time, as interest rates subside, in the face of changes in the current account and government policy, then that equation between interest rates, the 4 per cent depreciation and rents, will allow for the first time a sensible, rational development of the rental industry which Australia has never had. Before the honourable member for Deakin puts questions about these matters he should think about his own policy framework and test his own conscience to see whether he has any validity in saying that people should have higher living standards, when he knows that these cannot be sustained in terms of our national economic condition, and at the same time crying about rent and mortgage repayments when his Party is threatening to freeze people's wages.