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Tuesday, 6 September 1983
Page: 425

Mr BRUMBY(9.50) —It is unfortunate that few of the Opposition speakers this evening have bothered to concentrate at all on the content and the purpose of the Income Tax Assessment Amendment Bill (No. 3). Their arguments, when they have touched on that content, have certainly been very scant and very specious. I find it remarkable that the honourable member for Mitchell (Mr Cadman) should have spent some 10 or 15 minutes speaking about the general conditions of the average Australian family and the supposed broken promises of this Government. If we look at the record of the previous Government, at what it did in terms of interest rates, at how it decimated the housing industry and reduced the possibility for most Australian families to buy homes, we will see that its record is disgraceful.

The honourable member for Mitchell seems a little taken aback by those comments , but the record of the previous Government was deplorable. Interest rates were never higher than they were during the last months of the previous Government. We also saw massive levels of unemployment created by the previous Government. The honourable member for Mitchell talked about improving the conditions of average Australian families. I think it is fair to say that every decision that this Government has taken since 5 March has decidedly promoted the position of the average Australian family.

Mr Newman —Name one thing.

Mr BRUMBY —I am about to, and I am about to talk about this Bill before the House and about the new first home buyers scheme which will be introduced on 1 October. I mentioned interest rates. As was noted by the honourable member for McMillan (Mr Cunningham) in his excellent address, the lower limit for the general rebate which the previous Government operated was set at some 10 per cent. That was surely an admission of the failure of the policies operated by the previous Government. In this scheme which we have announced, which will take effect from 1 October, we will provide assistance to more than 50,000 Australian families and, most importantly, it will be targeted at those who need the assistance.

Mr Deputy Speaker, I indicated that I would return to the Bill. On 19 May the Treasurer (Mr Keating) announced in the economic statement that there would be no new participants in the first home buyers tax rebate scheme after 30 September this year. The main part of this Bill before the House gives effect to that measure. Those eligible for the rebate prior to 30 September will remain entitled to a tax rebate on home loan interest payments for the first five years of ownership, subject to an income test. As has been noted by the honourable member for McMillan, the full rebate will be available to those first home owners whose taxable income in the 1982-83 financial year is less than $24 000. Above that figure the rebate entitlement will be reduced proportionately and phased out at the maximum income level of $27,900. As I have indicated, this Bill is just one aspect of a total housing package announced in the May economic statement which is designed to rationalise housing assistance programs in Australia and is designed particularly to ensure a better targeting of assistance to low and moderate income earners; that is, those most in need of housing assistance and those most forgotten by the policies of the previous Government.

The initiatives and changes contained in that May package are marked by a very just concern for low income first home buyers purchasing or constructing their homes within the change over period, between the conclusion of the previous home deposit assistance scheme and the commencement of the Government's new scheme on 1 October. This Bill in its main provisions provides for those transitional arrangements. Although generally there will be no new entrants to the scheme after 30 September, first home buyers who contract to build or purchase before 30 September-in other words, those whose prescribed date is prior to 30 September-will be eligible for the rebate even though they do not take up occupancy until after 30 September.

These transitional measures will give access to the rebate to first home owners who would not be eligible for assistance under the new first home owners assistance scheme to commence on 1 October. I think it is noteworthy that the Government has taken care to ensure that there is a smooth transition between the two schemes and that all low income earners are certainly not disadvantaged, because concern for low income home buyers in our community was certainly not a prominent feature of the previous Government's housing assistance schemes.

The honourable member for Bennelong (Mr Howard) spoke tonight about the general tax rebate. The Government maintains that the general rebate was highly inequitable and that the great bulk of assistance went to moderate to high income earners able to take out significant loans. The rebate was set at 30.68c in the dollar for 1982-83 for interest exceeding 10 per cent on the first $60, 000 of a home loan. I have mentioned, as has the honourable member for McMillan tonight, that it is an indictment of the previous Government's economic policies that it introduced a scheme in respect of interest rates exceeding 10 per cent. I think it is worth pointing out in a general criticism of that scheme that fewer than 20 per cent of home buyers who made use of that rebate did so through pay-as-you-earn deductions. That shows that the remaining 80 per cent of people certainly did not need the rebate to meet their monthly mortgage repayments. This obviously raises the question as to whether that assistance was being directed to people in need. We have abolished that scheme from 30 June of this year.

The phasing out of the income testing of the special first home buyers tax rebate certainly strengthens this Government's commitment to low income home purchasers. The rationalisation of the tax rebate scheme has enabled the Government to increase the level of assistance to low and moderate income first home buyers through the first home owners assistance scheme which will operate after 1 October. Savings from the abolition of the tax rebate in 1983-84 will be some $80m, rising to $330m in total in 1984-85. Those savings will in part be directed to the first home owners scheme. There is no question that, with the maximum grant of $7,000, the scheme will bring the Australian ideal of owning one's own home within the reach of a great deal more Australians. Certainly the Goverment has completely honoured its pre-election commitment in terms of private sector housing by introducting this scheme which makes a $7,000 contribution to first home owners.

We heard some selective quotations from the honourable member for Bennelong. We certainly did say before the election that we would 'bridge the deposit gap which prohibits many moderate income earners from obtaining home ownership'. There is no question that our scheme does that. I should also add that the scheme we are introducing on 1 October also implements many of the recommendations of the Committee of Inquiry into the Australian Financial System -the Campbell Committee-in regard to home ownership. The Campbell report rejected interest rate controls as an effective measure of home ownership assistance. The report said that interest rate controls had been used for this purpose previously but with very limited success. The report noted that as there is very little scope to allow for greater risk in the interest rate charged, lenders naturally prefer those with a higher income and wealth; hence lending institutions employ income-related repayment rules which tend to disadvantage lower income earners in loan raising.

Mr Sinclair —You are reading that. You ought to make your speech without reading it.

Mr BRUMBY —I have not read much of my speech tonight.

Mr Sinclair —It is about time you stopped reading it.

Mr BRUMBY —I thank the right honourable member for his advice. I was saying that --

Mr Sinclair —He is reading again.

Mr BRUMBY —The right honourable member for New England would do well to listen to some of the remarks that have been made tonight by my colleague the honourable member for McMillan and some that I have made about the deficiencies in the policies of the previous Government. Already tonight we have heard that under the previous Government's programs construction of new houses fell this year to 106,000; interest rates were the highest ever in our history for borrowers who wanted to buy their own homes; and the inflation rate and other factors affecting home ownership reached such a level, as I have said, that very few Australians were able to purchase their homes. Our scheme, which will be introduced on 1 October, provides benefits to genuine low and moderate income families.

As I indicated, the Campbell report recommended that in the interests of an efficient financial system home ownership assistance should be directed towards providing tied cash grants to eligible purchasers to assist them to bridge the deposit gap. There is no question that our first home owner assistance scheme, which will be introduced on 1 October, will do precisely that. It has, of course , been argued that such a direct cash grant scheme discriminates against low income home renters who are far from being in a position of purchasing homes but who, nevertheless, share the tax cost of the scheme without enjoying any of the benefits. However, the Labor Government has acted to meet that need by extending supplementary rent assistance of up to $10 a week to all social security beneficiaries, including the unemployed, as announced in the recent Budget statement, and by boosting funds to public housing by a massive 50 per cent.

There is no doubt that a positive response to the Government's housing package has been unanimous throughout the public and private sectors. The Housing Industry Association, building societies and welfare housing agencies have all expressed their unqualified support for Labor's equitable housing policies. Throughout my electorate of Bendigo the response has been similarly enthusiastic and widespread, particularly amongst low to moderate income earning families who have never had an opportunity to buy houses with this sort of assistance. Consistently, the Government has at all levels sought to enhance the quality and availability of housing for all Australians, particularly those at the lower end of the income scale. Changes to the special tax rebate for first home buyers, to be given effect tonight by the Income Tax Assessment Amendment Bill (No. 3) are just one strand of the Government's unquestionably fair and very positive housing policies. I certainly commend the Bill to the House.