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Wednesday, 15 October 2008
Page: 9138


Mr HAYES (10:23 AM) —This government understand that rents have been rising strongly and that today we have more than half a million people who are living in rental stress—that is, paying more than 30 per cent of their income on rent, getting caught in the trap and not being able to save properly for the future. The latest rental vacancy figures indicate that vacancy rates are down to 1.2 per cent, and that has been unchanged since July. Recently there have been a lot of reports in the media about the rental squeeze. It is now so bad that real estate agents are experiencing incidents of rental rage, with many of them facing abuse and threatening behaviour from potential tenants who are unable to secure accommodation for their families. Much has been said about rental auctions, and I understand they occur in the capital cities. But we are now seeing increasing competition for rental places in my electorate of Werriwa, in the south-west of Sydney. So it is appropriate that I inform the House about what is actually happening out in the south-west of Sydney. There is insufficient affordable private rental accommodation available to meet the needs of residents in my electorate. This is a genuine and intense crisis.

This morning, in preparing for my contribution to this debate on the National Rental Affordability Scheme Bill 2008, I decided to ring one of our real estate agents down at Ingleburn. I contacted Ken Barnard, the Principal of Richardson and Wrench Real Estate. Ken comes from a long line of real estate agents—this has been the family business for about 50 years. He has had 35 years of continuous service as a real estate agent and is an expert in his field in my electorate of Werriwa. He informed me that currently there are up to 60 people viewing one house for rent at any one time and from those 60 people he will receive 30 applications. That is extreme competition for rental accommodation in my area. When I asked Ken about the rental crisis he enlightened me about two specific instances recently which had had a profound effect on him. Disturbingly, he went on to say that he had never experienced anything like this in all his time as a real estate agent in Ingleburn. He also said that what really stands out for him is that he believes the media reports about the rental crisis at the moment are in fact underplaying the severity of the crisis—and that is not something you would normally say when talking about our media.

The first incident he recalled, and I was very moved by, had an impact not only on him but on his staff. He said staff from his office had recently been in the position of having to deal with a person who was desperate to maintain his accommodation. He went to considerable lengths to explain why he was having difficulty finding another home and the staff were trying to assist this client to find another dwelling. He was not able to meet the rent in his existing dwelling and Ken’s staff had to evict the client. People talk about real estate agents, but this is one of those things that they have no inclination to do and they will work overtime to try to find alternative accommodation. They gave the client notice that they would have to move in to evict him. Unfortunately for the staff that Ken sent in with the sheriffs to do the eviction, they found the client had suicided there that morning. That happened in Ingleburn, in my electorate. It is a real situation that occurred. This poor unfortunate person had genuine fear about the eviction because, as he had explained to his real estate agent, he was not able to secure alternative accommodation. Ken and his staff are still undergoing counselling because of this event.

The other incident that Ken brought to my attention this morning was about a fellow, a big bloke, who came to see him and burst into tears in the foyer of his real estate agency. This man had only 10 days left to find alternative accommodation for himself and his family. He had made many applications, all of which had been rejected. He had been to many other agents and Ken was trying to help him secure something in what was found to be an impossible market. Ken said that what stays with him is the incredible look of despair on this fellow’s face.

They are just two incidents. I did not make them up; they were put to me directly this morning by a real estate agent right in the middle of my electorate. If we did a survey of what was occurring in agencies right across metropolitan Sydney or Melbourne, or anywhere else, I would imagine those sorts of stories would be replicated. They give us some idea of the degree of the crisis in rental accommodation.

Between September 2002 and September 2007 median rents in Campbelltown for a one-bedroom dwelling increased by 22.2 per cent; for a two-bedroom dwelling, by 17.6 per cent; for a three-bedroom dwelling, by 20 per cent; and for a four-bedroom dwelling, by 24 per cent. Much of that growth has actually occurred in the last 12 months. That does reflect the tightening of the rental market that we are experiencing—and it is not simply in the middle of Sydney; this is in the outer metropolitan areas of a capital city. That is the scope of the crisis that is occurring here and now. There is certainly no overnight solution to housing affordability, and it cannot be simply left to the fluctuations of the market. This is unlikely to improve in the Sydney rental market as it stands, and that is why the government has acted. It is the responsible thing to do; it is the right thing to do.

We know that saving for a deposit is a major barrier to first home owners. We have only recently indicated two aspects of how we are trying to help in that regard. Firstly, there is the first home saver accounts policy, which was launched only recently. Under that scheme, the first $5,000 of an individual’s contribution to such an account will attract a 17 per cent federal government contribution, providing assistance to average income earners, like many of the people that I represent in my electorate. The earnings will be taxed at a low rate of 15 per cent, and the withdrawals from it will be tax free when used to buy or build a first house. I think that is certainly a valuable contribution to assisting people into the property market. Secondly, only yesterday the federal government announced a doubling of the First Home Owner Grant, from $7,000 to $14,000, while those able to purchase a newly constructed home will receive a grant totalling $21,000. Again, that is tangible assistance to help people into the property market throughout the country.

But the reason for this particular bill is that, even with those initiatives, not all people will be able to purchase housing. Some will still, either by desire or by circumstance, be locked into the rental market. So with this piece of legislation the government is recognising that the National Rental Affordability Scheme will play a key part in providing much-needed assistance in the rental property area. The government will provide $2.2 billion under its housing affordability package, and much of that will be dedicated to generating growth in the private rental market. It will provide some relief to the low- to moderate-income families within my electorate, which is important to me, considering 50 per cent of workers in my electorate are in clerical and administrative positions, are technicians or are working in trades or labouring, and the median household income in Werriwa is $1,096 per week.

Federal Labor’s National Rental Affordability Scheme will cost $623 million in its first four years and will be responsible for creating up to 50,000 new rental properties across the nation. In the lead-up to the last election, Labor promised we would make this a priority and we are now delivering on that vital promise we made.

The bill before us, the National Rental Affordability Scheme Bill 2008, will provide the principal legislation relating to the Australian government’s new Rental Affordability Scheme. The object of the bill is to encourage large-scale investment in housing by offering an incentive to participants in the National Rental Affordability Scheme so as to increase the supply of affordable rental dwellings and reduce rental costs for low- and moderate-income households.

The scheme offers incentives to providers of new dwellings on the condition that they are rented to low- and moderate-income households at 20 per cent below the market rate. The two key incentives are, firstly, the Commonwealth government incentive of $6,000—which will be indexed—per dwelling per year in the form of a refundable tax offset or payment; and, secondly, the state or territory government incentive of $2,000 or more per dwelling per year. State and territory government assistance will be provided through cash payments or in-kind financial support. The incentive will be provided each year for 10 years to complying participants, whose payments will be indexed in line with the rental component of the consumer price index. It is expected that we will see the first homes opened under this scheme during this financial year. This is great news for the many young Australians who are facing the stress of finding a place to rent or hanging onto a place they have already found. For many of them this is a critical first step.

The associated bill, the National Rental Affordability Scheme (Consequential Amendments) Bill 2008, will amend the Income Tax Assessment Act 1997 as a consequence of the substantive provisions in the National Rental Affordability Scheme Bill 2008. It will essentially provide for the refundable tax offset and ensure that state and territory contributions to entities participating in the scheme are non-assessable and non-exempt income for taxation purposes and that there will be no capital gains tax consequence from the receipt of incentives under this scheme. Additionally, this scheme will be reviewed and, if the market demand remains strong, the Australian government will make a further 50,000 incentives available from July 2012 with a view to building another 50,000 affordable dwellings.

Coming from an area where rental stress is at crisis level, coming from an area where I see firsthand the competition that is taking place for people to secure properties for themselves and their families and having regard to the two examples that I just gave from a real estate agent in Ingleburn today—two very tragic circumstances that have been witnessed only in recent times in my electorate of Werriwa—I think this legislation is a critical first step. I commend the bill to the House.

Debate (on motion by Ms Hall) adjourned.