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Tuesday, 19 August 1980
Page: 187

The Commonwealth funds a range of programs to provide housing and to assist persons to attain home ownership. Some of this assistance takes the form of recycled funds, interest subsidies and tax concessions that are not reflected in Budget outlays. The total Budget provision for housing programs in 1980-81 is $365.5 million, an increase of 6.7 per cent compared with 1979-80.

Welfare Housing Assistance to the States and the Northern Territory

Advances to the States and the Northern Territory for Housing

Advances are being made to the States for welfare housing purposes in 1980-81 in accordance with the terms of the three-year Commonwealth/State Housing Agreements executed under the authority of the Housing Assistance Act 1978. The Act and the Agreements will expire on 30 June 1981. Under the Commonwealth/Northern Territory Housing Agreement signed in March 1980 financial assistance for housing is provided to the Northern Territory under the same terms and conditions as with the States. This Agreement will also expire on 30 June 1981.

An amount of up to $175.5 million has been provided for advances to the States and the Northern Territory in 1980-81. This compares with $168.7 million advanced in 1979-80. The advances, which are repayable over a 53 year period and carry interest rates of 4i per cent for home purchase assistance and 5 per cent for rental housing assistance, assist the States and the Northern Territory to provide concessional rental assistance for low income earners and to provide concessional loans to assist low income earners into home ownership.

The allocation of advances in 1980-81 between rental housing programs and home ownership assistance programs remains to be determined. However, under the terms of the Agreements at least 40 per cent of the total advances in 1980-81 are to be allocated to home ownership programs. As in 1979-80, all welfare housing advances to the States and the Northern Territory are to be provided on a $1 for $1 matching basis. State and Territory expenditures on welfare housing under the Agreements and surpluses arising from the operation of the rental housing and home purchase assistance programs under the Agreements are eligible for matching.

Advances for rental housing programs are applied to the construction or acquisition of public housing for rental or sale and for innovative purposes covered by the Agreements, such as the leasing of dwellings from the private sector and private/public housing ventures. The States and the Northern Territory have the responsibility for the design and conduct of their programs and are free to determine eligibility criteria, provided that assistance is directed to those in need. Emphasis continues to be placed on moving rental ceilings towards market rents. Rebates are provided to allow those unable to meet the ceiling rent to pay a rent geared to their income and their family circumstances. This system aims to ensure that assistance is geared to need. The Agreements do not impose a limit on the number of dwellings that may be sold, but all sales by the housing authorities are to be at market value or replacement cost, and on the basis of cash transactions.

Home purchase assistance is directed to those who are unable to obtain mortgage finance in the private market. The Agreements do not impose specific means tests or prescribe how assistance is to be provided; instead, each State and the Northern Territory is able to determine for itself the conditions of eligibility for home purchase assistance and to apply its funds to schemes of its own choosing.

Assistance is provided on flexible terms so as to limit concessions, as far as practicable, to the period of real need. Purchasers of public housing also have access to loans from the home purchase assistance program if they are unable to obtain finance in the private market.

Details of the State by State and Northern Territory allocation of the $175.5 million advances in 1980-81 are shown in Budget Paper No. 7, Payments to or for the States, the Northern Territory and Local Government Authorities, 1980-81.

Grants for Rental Housing in the States and the Northern Territory

An amount of $109.5 million will be provided to the States and the Northern Territory for rental housing assistance in 1980-81 as compared with $105.3 million in 1979-80. Of the 1980-81 amount $104.0 million is to be provided to the States under Section 11 of the Housing Assistance Act 1978, which provides for assistance to specified categories of pensioners and to any other class of persons declared by the Minister for Housing and Construction to be in need of rental housing assistance. The remaining $5.5 million will be provided to the Northern Territory under the Commonwealth/Northern Territory Housing Agreement for the same purposes. These grants complement advances provided for rental housing assistance under the Commonwealth/State Housing Agreements and the Commonwealth/ Northern Territory Housing Agreement.

In 1980-81 grants will be provided for three broad categories - pensioners, Aboriginals and other persons in need. Eligible persons under the pensioners category include those in receipt of an age, invalid or widow's pension, a supporting parent's benefit, a special benefit, a sheltered employment allowance, a training allowance in certain circumstances and some classes of service pension. Grants totalling $32.65 million are to be provided for the pensioner category, $22.1 million is earmarked for Aboriginals in need of rental housing assistance and $54.75 million is provided for other persons eligible for or receiving rental housing assistance under the Housing Agreements.

Details of the State by State and Northern Territory allocation of the $109.5 million are shown in Budget Paper No. 7, Payments to or for the States, the Northern Territory and Local Government Authorities 1980-81.

Renegotiation of Current Housing Agreements

The current Housing Agreements expire on 30 June 1981. The arrangements to apply after that date are being negotiated between the Commonwealth and the States and the Northern Territory. However, the Minister for Housing and Construction has announced broad details of the Commonwealth's proposals for new arrangements to apply for five years commencing 1 July 1981. The main feature of the Commonwealth's offer to the States is to provide a guaranteed base level of funding of $200 million a year for each of the five years for welfare housing, including $20 million in grants for home purchase initiatives such as interest subsidy schemes and temporary assistance with private mortgage repayments and $30 million in grants for rental housing assistance including leasing, subsidies to tenants renting privately and private/public housing ventures. Total Commonwealth assistance would continue to be decided each year in the Budget context. Similar arrangements are proposed for the Northern Territory.

Other Grants to States for Housing

The States Grants (Housing) Act 1971 provides for housing assistance to the States by way of basic grants of $2.75 million a year, payable for a period of 30 years, in respect of the States' housing operations in each of the years 1971- 72 and 1972-73. An amount of $5.5 million is provided in 1980-81 for this purpose. The payments are in lieu of an interest concession on funds used by the States for welfare housing in those years.

Homes Savings Grants are payable to eligible persons to assist with the purchase or construction of a first home contracted for on or after 1 January 1977, on the basis of $1 for each $3 of savings held in an acceptable form. A maximum grant of $2000 is payable in respect of savings over three years ending on the contract date, while grants of up to $1333 and $667 are payable in respect of savings over two years and one year respectively. ^ A house value limit applies for homes contracted for after 24 May 1979. For homes contracted for between 24 May 1979 and 18 August 1980 an applicant is eligible for the full grant if the value of the home is less than $35 000; the grant reduces progressively as the value of the home increases and cuts out completely when the value of the home exceeds $40 000. An increase in the value limit in respect of homes contracted for on and after 19 August 1980 has been announced in the Budget Speech. Persons buying homes contracted for on and after 19 August 1980 are eligible for the full grant if the value of the home is less than $45 000; the grant reduces progressively as the value of the home increases, cutting out completely when the value of the home exceeds $55 000.

An amount of $52.1 million has been provided for Homes Savings Grants in 1980-81, compared with $71.6 million in 1979-80. The current nine months waiting period between receipt of application and payment of a grant is expected to remain in 1980-81.

Housing Loans to Savings Banks - Repayments

Under the Banks (Housing Loans) Act 1974 loans of $150 million were made to savings banks and certain other banks to provide a short-term stimulus to activity and employment in the home building industry. Balances outstanding at 30 June 1980 amounted to $23.6 million. In response to a request in 1979 from the Government, certain of the banks concerned made early repayments in 1979-80 of all or part of their loans outstanding, while further prepayments are expected iri 1980-81. As a consequence, repayments to the Commonwealth were $40.8 million in 1979-80, compared with $10.7 million in 1978-79. Repayments for 1980-81 are estimated at $14.0 million. The $9.6 million expected to remain outstanding at 30 June 1981 is currently scheduled for repayment over the period to 1984-85.

Defence Service Homes

The Defence Service Homes Scheme assists former and serving members of the Defence Force and certain other persons who meet the eligibility requirements to acquire a home by providing low-interest loans. As announced in the Budget Speech the maximum Defence Service Homes loan is to be increased from $15 000 to $25 000. The first $12 000 will be available to borrowers at an annual interest rate of 3.75 per cent, the next $3000 at 7.25 per cent, and the additional $10 000 at 10 per cent. The Government has also announced its intention to reduce the waiting period for loans from 14 months to 10 months during the current financial year.

Total expenditure on Defence Service Homes loans is estimated at $111.5 million in 1980-81. This comprises an amount of $67.5 million estimated as necessary to maintain the previous loan conditions and waiting period and $44 million for the estimated cost of the two new measures - $25 million for the increase in the maximum loan and $19 million for the reduction in the waiting period.

The expenditure of $111.5 million in 1980-81 is expected to be financed as follows : $74.6 million from repayments of principal retained in the Defence Service

Homes Trust Account for re-lending; $14.0 million from surpluses in respect of previous years' operations retained in the Trust Account; $10.9 million in respect of excess payments by borrowers available to the

Trust Account by way of the Special Appropriation under Section 39c of the Defence Service Homes Act 1918; and $12.0 million by way of a new capital appropriation from the Budget.

Expenditure on Defence Service Homes loans in 1979-80 was $75.4 million; no capital appropriation (other than the Special Appropriation under Section 39c) was required.

In 1980-81 $12.5 million is being provided for the Defence Service Homes Corporation's administrative expenses, including salaries but excluding rent. As from 1 July 1980 administrative expenses, including salaries, in relation to the Defence Service Homes Insurance Scheme are funded directly from the Defence Service Homes Insurance Trust Account. The previous arrangement whereby expenses are initially funded from the Corporation's administrative appropriations and an equivalent amount is paid as an administrative recovery from the Insurance Trust Account to the Consolidated Revenue Fund still applies for some indirect expenses.

Provision is made for a capital repayment of $14.0 million to be made from the Defence Service Homes Trust Account to the Consolidated Revenue Fund in 1980-81 to reflect the proceeds of projected sales of surplus land holdings. Receipts in 1979-80 amounted to $1.6 million. The Corporation has surplus land holdings as a result of the phasing out of the Corporation's estate development and construction activities.

Receipts from the Corporation in 1980-81 in respect of administrative fees and recoveries are estimated at $2.0 million and receipts in respect of excess payments to the Corporation by borrowers are estimated at $12.2 million. In 1980-81 $12.1 million of these excess payments is expected to be drawn; $10.9 million for payment to the Defence Service Homes Trust Account and $1.2 million for other purposes specified in the Defence Service Homes Act.

Other General Housing Expenditure

Expenditure under the Commonwealth Hostels heading in 1980-81 is mainly for completion of buildings and works projects commenced in 1979-80 and earlier years for the Commonwealth Accommodation and Catering Service. New projects planned for commencement in 1980-81 include works at the Wacol Migrant Hostel in Queensland at an estimated total cost of $0.9 million, with little expenditure in 1980-81. Other expenditure included under this item provides mainly for caretaking and repairs and maintenance of rental dwellings in the Australian Capital Territory.

Housing in the Australian Capital Territory

Dwellings Built for Sale or Rental

The provision of $2.6 million in 1980-81 relates mainly to the continuing program of upgrading of older government dwellings in the ACT.

Other Gross Advances for Housing

This item provides for loans by the ACT Commissioner for Housing to means-tested welfare applicants in the ACT and public servants compulsorily transferred to the ACT and Queanbeyan (NSW). A total of $18.0 million is expected to be available for loans in 1980-81 - $8.6 million from Budget appropriations and $9.4 million from funds recycled through the ACT Housing Trust Account - compared with total expenditure of $17.5 million in 1979-80. Of this amount $3.1 million is to be applied to loans for public servants compulsorily transferred and $14.9 million is to be available for funding approximately 650 concessional loans for means-tested welfare applicants, the same number as in 1979-80. It is expected that at 30 June 1981 the waiting period for welfare loans will be about 8 months.

Repayment of Principal

This item comprises repayments of principal in respect of loans provided for the purchase of private dwellings and of Commonwealth mortgages provided for the purchase of Government dwellings by tenants.

Accommodation for Migrants

This heading covers expenditure on minor works, new and replacement plant, and major items of equipment required in the operation of migrant centres and migrant transitory flats.. The increase of $0.8 million relates to the need to outfit additional hostel-type accommodation for use as migrant centres in view of the expected increase in the level of migrant intake in 1980-81.

Housing for Aboriginals nec

Expenditure in 1979-80 included payments of $5.5 million to the Aboriginal Housing and Personal Loans Fund of the Aboriginal Loans Commission (ALC). This amount was used for housing loans and, together with $1 million of recirculated loan funds, provided for 205 housing loans in 1979-80. On 1 July 1980 the Aboriginal Development Commission (ADC) assumed responsibility for the activities of the ALC. (The ADC is included under the Social Security and Welfare function.)

In 1980-81 $33.0 million will be provided for other special assistance for Aboriginal housing through the Department of Aboriginal Affairs' States grants program ($10.9 million) and grants-in-aid to Aboriginal Housing Associations ($22.1 million) for the construction and purchase of homes for Aboriginal families. Under these programs some 900 houses are to be purchased or constructed in 1980-81. In addition a subsidy of $7.4 million will be provided to Aboriginal Hostels Ltd for the provision of hostel accommodation for Aboriginals. Aboriginal Hostels Ltd now funds the operation of 103 hostels comprising 2411 beds.

Earmarking arrangements under the Welfare Housing program will make a further $22.1 million available to meet the housing needs of Aboriginals in 1980- 81 (see Grants for Rental Housing in the States and Northern Territory above).

General Administration

Outlays of $4.4 million under this heading provide for the administrative costs of the housing function of the Department of Housing and Construction.

Other Recoveries and Repayments

Revenue in 1980-81 under this item is derived principally from rental of government dwellings in the Australian Capital Territory. Revenue is estimated to fall by $1.1 million in 1980-81 due to a reduction in the stock of rental housing and increased vacancies resulting from higher tenancy turnovers.

Housing Loans Insurance Corporation

As noted in Statement No. 3 attached to the 1979-80 Budget Speech, the Government has announced its intention to sell the assets and business of the Housing Loans Insurance Corporation. Issues relating to this matter are under consideration. No allowance is made in the 1980-81 estimates for the proceeds which may be received from the sale.







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