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Wednesday, 7 September 1983
Page: 457

Mr HURFORD (Minister for Housing and Construction)(11.20) —I move:

That the Bill be now read a second time.

This Government was elected to office on 5 March 1983 with a commitment to boost the nation's economy, to provide a better deal for those in need and to give priority to reducing unemployment. Our housing policies are an essential element of our national recovery strategy. We have an ambitious and innovative program for action in housing. Our program is designed to achieve the dual objectives of ensuring that housing plays a key role in our economic recovery and ensuring that Australian families can gain access to adequate housing at a price they can afford.

The main elements of our program are, firstly, to provide more effective assistance to low income families seeking to buy a first home-and to ensure an adequate supply of housing finance at affordable interest rates; and, secondly, to generate additional activity in the housing industry in order to stimulate job creation and economic growth-to re-establish confidence in this vital industry and to increase the availability of public housing and other innovative forms of low cost housing for the large number of needy households in the community.

We have made a significant start in just under six months. We consulted carefully with all areas of the housing and finance industries before we announced targets and programs. Arising from our careful assessment of the industry we set an activity target rate of 130,000 to 135,000 commencements a year by the second half of 1983-84. We will be working with the financial institutions to ensure sufficient finance is available to meet these targets. We have rationalised existing home ownership schemes and designed a new more effective scheme to assist low income home buyers-the first home owners scheme. To get the housing industry moving without delay we removed the savings requirement from the existing home deposit assistance scheme. We have provided a 50 per cent increase in Commonwealth funding for public housing and have given the States strong financial concessions to increase their own spending in this area.

But we are not resting on our laurels. There are other major areas of our program to be implemented. We have commenced work on the renegotiation of the Commonwealth-State housing agreement. A key feature of the renegotiation will be a focus on more innovative approaches to the provision of public housing. We are reviewing the operation of the mortgage and rent relief scheme. As a result of this review it is likely that States will be given increased flexibility to introduce measures in co-operation with local government and community organisations to expand the range of low cost rental housing for people with an acute need for housing. Discussions will be held with the States and community groups on the need to increase the supply of low cost rental accommodation through programs to expand community housing. We have an important commitment to the introduction of a community housing expansion program. In all these ways we will be working with the industry, the States and the community to ensure housing is given the priority it requires and deserves.

The Government has a comprehensive housing package. The first home owners scheme is a major component of that package and the Bill before the House provides for a flexible beneficial scheme to assist low to moderate income earners into home ownership. In a full year we believe that some 50,000 deserving households will be helped by our scheme and will receive all the social and economic benefits that flow from the security of home ownership. By stimulating housing activity the scheme will also directly improve employment opportunities in housing and related industries. The Bill before the House provides for the Federal Government to assist financially people building or buying their first home on or after 1 October 1983. To be eligible for assistance applicants must satisfy an income test and must occupy, or have an intention to occupy, that dwelling as their principal place of residence.

The scheme is a major departure from previous home ownership assistance programs. Earlier programs concentrated on providing a single grant linked to savings accumulated over a period; the greater the savings, the larger the grant . We consider this to be a discriminatory arrangement that did little to assist those potential home buyers most in need. We have therefore developed a scheme which provides for financial assistance over the first five years of home ownership. The spread of benefits is specifically designed to help people meet their loan repayments. Indeed, because of the annual benefit, eligible applicants will be able to service a much larger loan than otherwise would be the case.

The Bill recognises that potential home owners have different financial requirements. Some require assistance with their deposit, others require increased borrowing potential, while others need help with their repayments. Because of this the scheme will provide for three options. For instance, applicants may opt for all of their entitlements to be paid over a five-year period and so increase their borrowing potential to the maximum. Alternatively they may opt to commute some of their entitlement to a lump sum to be paid at the time of purchase. In this way they will have increased money available for the deposit on their dwelling. The scheme has been developed in close consultation with housing industry organisations and financial institutions. Their co-operative attitude has been most encouraging and I wish to place on record my appreciation of their efforts.

The scheme is designed to encourage first home owners to apply when they are arranging their finances. In this way the scheme will be of real benefit in meeting the specific needs of applicants at the right time. More importantly, it will also ensure that assistance is directed towards housing, rather than towards incidentals, as has been the case with past schemes. My Department will be making available explanatory material to those who are involved with first home buyers including lending institutions, real estate agents and builders, to help them assist home buyers who may be eligible. Brochures outlining details of the scheme will be widely circulated and special measures are in hand for the active promotion of the scheme to ensure that those in need are aware of their entitlements. Available assistance will in many cases be the very thing to enable low income families to buy their own home. Furthermore, my Department of Housing and Construction is setting up ground floor offices in the central areas of the capital cities to assist the public with their inquiries. We aim to have offices in outer suburbs of Sydney and Melbourne and there will also be regular promotions in country areas.

The Bill before the House sets the conditions for eligibility for assistance and provides the guidelines to be adopted in the administration of the scheme. The Bill also provides for the making of regulations which will cover the income test to be applied, the amount of benefit payable and the manner of payment. The regulations will also cover the circumstances in which assistance will be adjusted during the five-year subsidy period. I would therefore now like to summarise the main features of the new scheme including the provisions which are to be included in the regulations to be made after the passage of this legislation.

The first home must be acquired on or after 1 October 1983. The date of acquisition is the contract date for purchase or construction of the home, or in the case of an owner-builder, the date construction commenced. The dwelling can be new or established and be a house, home unit, flat or other type of self- contained fixed dwelling which meets local government standards. First home owner applicants may be single or married. Joint applications from individuals sharing a home will also be acceptable. Ordinarily all parties to the home acquisition, and their spouses, will be required to join in the application. Exceptions will be made where, for example, a parent joins in the contract simply as a guarantor to meet the lender's requirement and will not live in the dwelling. In the case of migrants, at least one applicant must hold the right to permanent residence in Australia before assistance can be paid.

An income test will apply generally to income in the financial year before home acquisition. For those buying a home this financial year, the income test will be to the combined taxable income of husband and wife or other joint applicant for the financial year 1982-83. Full assistance will be payable where taxable income is $24,300 or less. Assistance will reduce for taxable incomes above that figure, reducing to zero at $27,900. The taxable income limits will be adjusted each year in accordance with movements in average weekly earnings. In the event of an applicant's current taxable income being less or likely to be less than for the year before home acquisition because of unemployment, loss of overtime or cessation of work or other such circumstances, the Bill provides for the more recent income to be tested.

Where an applicant was not resident in Australia for the whole of the financial year before acquiring his home, the income test will be applied to that applicant's income in the first full financial year as a resident. The amount of assistance will depend not only on income but also on the number of dependants. Applicants with income below $24,300 in 1982-83 and with two or more dependants will be eligible for the maximum assistance of $7,000 payable over five years. With one dependant, the assistance will be $6,500 payable over five years. The Bill provides that children born or adopted up to 11 months after home acquisition will be included in the calculation. As I mentioned earlier, applicants will be able to convert part of the assistance to a lump sum. In the case of those entitled to maximum assistance, applicants with two or more dependants will have the choice of receiving $2,000 in a lump sum and $4,500 over five years or $3,500 in a lump sum and $2,750 over five years. Those who choose a lump sum payment will have a reduced ongoing subsidy because they will have the benefit of immediate access to a considerable portion of their entitlement. For those who are entitled to smaller levels of assistance, for instance those with one or no dependants, different lump sums will apply. Mr Deputy Speaker, I seek leave to incorporate in Hansard a table which sets out the various levels of entitlement for different family sizes.

Leave granted.

The table read as follows-


OPTION (ii) OPTION (iii)

OPTION (i) Lump sum plus Lump sum plus

subsidy only subsidy reduced subsidy

Home buyers without children-

Year 1 1,800 1,500 1,000 2,500 550

2 1,400 800 450

3 1,000 600 350

4 600 400 250

5 200 200 150

Total 5,000 1,500 + 3,000 = 4,500 2,500 + 1,750 = 4,250 Home buyers with one child-

Year 1 2,300 1,500 1,500 3,000 750

2 1,800 1,200 650

3 1,300 900 550

4 800 600 450

5 300 300 350

Total 6,500 1,500 + 4,500 = 6,000 3,000 +2,750 = 5,750 Home buyers with two or more children-

Year 1 2,400 2,000 1,500 3,500 750

2 1,900 1,200 650

3 1,400 900 550

4 900 600 450

5 400 300 350

Total 7,000 2,000 + 4,500 = 6,500 3,500 + 2,750 = 6,250

Mr HURFORD —I thank the House. Mr Deputy Speaker, I also seek leave to incorporate in Hansard a table which shows the benefits payable for different income levels.

Leave granted.

The table read as follows-


(Total $ over five years)

Option 1 Option 2 Option 3

Lump sum and reduced subsidy

Lump sum and reduced subsidy

Subsidy Reduced Reduced Income

only Lump sum subsidy Lump sum subsidy

$ $ $ $ $

Home buyers without children-

24,300 5,000 1,500 3,000 2,500 1,750

24,300 5,000 1,500 3,000 2,500 1,750

24,500 4,722 1,417 2,833 2,361 1,653

25,000 4,028 1,208 2,417 2,014 1,410

25,500 3,333 1,000 2,000 1,667 1,167

26,000 2,639 792 1,583 1,320 924

26,500 1,944 583 1,167 972 681

27,000 1,250 375 750 625 438

27,500 556 167 333 278 194

27,700 278 83 167 139 97

27,900 . . . . . . . . . .

27,900 . . . . . . . . . .

Home buyers with one child-

24,300 6,500 1,500 4,500 3,000 2,750

24,300 6,500 1,500 4,500 3,000 2,750

24,500 6,139 1,417 4,250 2,833 2,597

25,000 5,236 1,208 3,625 2,417 2,215

25,500 4,333 1,000 3,000 2,000 1,833

26,000 3,430 792 2,375 1,583 1,451

26,500 2,528 583 1,750 1,167 1,069

27,000 1,625 375 1,125 750 687

27,500 722 167 500 333 306

27,700 361 83 250 167 153

27,900 . . . . . . . . . .

27,900 . . . . . . . . . .

Home buyers with two or more children-

24,300 7,000 2,000 4,500 3,500 2,750

24,300 7,000 2,000 4,500 3,500 2,750

24,500 6,611 1,889 4,250 3,306 2,597

25,000 5,639 1,611 3,625 2,819 2,215

25,500 4,667 1,333 3,000 2,333 1,833

26,000 3,694 1,056 2,375 1,847 1,451

26,500 2,722 778 1,750 1,361 1,069

27,000 1,750 500 1,125 875 687

27,500 778 222 500 389 306

27,700 389 111 250 194 153

27,900 . . . . . . . . . .

27,900 . . . . . . . . . .

Mr HURFORD —I again thank the House. The level of benefit for each option and for various numbers of dependants will be covered in the regulations. People will be encouraged to lodge their application as soon as they enter into a contract. My Department will then provide an approval advice setting out the entitlement under the three options and asking them to select an option and to provide payment directions. Lenders will be involved in this process to enable them to take the benefit into account when arranging the financial package. Income and the number of dependants will be tested only at the time the application is orginally assessed. Changes in subsequent years will not affect the level of assistance. To obtain the assistance, each applicant must occupy or intend to occupy the dwelling as his or her principal place of residence. The scheme is to assist low to moderate income earners into home ownership and not to subsidise investment in housing for income or capital gain purposes. The assistance, once approved, will be paid monthly, generally to a nominated account in either a bank, building society or credit union. The subsidy will continue for the five years subject to continued ownership and occupancy of the home. The circumstances relating to cessation of the subsidy will be covered by the regulations. We propose that if the home is sold or if an applicant no longer occupies and has no intention of ever again occupying that home as his or her principal place of residence, the subsidy will cease. In this way, the Government will not be paying subsidies to those who no longer own a dwelling or where the dwelling is being used as an investment property.

Regarding ownership and occupancy, the onus will be on those receiving the assistance to inform the Department if they permanently lease or sell the dwelling. If they do not, then they will be liable for a severe penalty and will need to repay any benefit they obtained wrongly. Because the benefit will be paid over five years, our intention is that the regulation will include provision which will protect the rights of each applicant. For instance, where two or more people buy a home and one subsequently leaves permanently or sells his or her share of the home, then payments due to the other applicants remaining in the home will not cease. There will also be instances where a married couple permanently separate or are divorced with one of the partners leaving the dwelling. To cover adequately the range of situations which will inevitably arise for some home owners during the first five years of home ownership, we propose that the regulations will provide for each applicant to have an equal share of the assistance. In this way those who continue to own the dwelling and regard it as their principal place of residence will continue to receive their normal entitlement.

The payment to the applicant who permanently leaves the dwelling will cease but will not automatically be lost completely. There will be cases where people sell their home or leave it to move to another location because of medical, employment or other reasons. We do not wish to disadvantage these people. We propose that the regulations will provide for the subsidy to recommence if an applicant buys another dwelling within 12 months of selling or permanently leaving the first. The subsidy will also recommence if an applicant re-occupies or re-establishes the intention to reside in the first dwelling as principal place of residence. Where any of these events occur, the applicant will not lose any of the remaining entitlement. The subsidy will continue from where it left off. Should a spouse in a joint application die during the period, the assistance will automatically be transferred to the remaining spouse. For a sole beneficiary, the assistance will cease. The assistance is tax free and non- repayable. It will also not count as income for means test purposes under the Social Security Act.

The First Home Owners Bill provides for significant assistance to those seeking to obtain their first home. Its objective is to encourage and assist persons to purchase or build their first home. One characteristic of the scheme is flexibility, and it will be administered in a sympathetic way to provide maximum assistance consistent with helpful legislation. This Government is committed to home ownership. That is what this new scheme and this particular Bill are all about. Additionally, the scheme will provide significant stimulus to housing activity and employment in the building industry and elsewhere in the economy. The scheme has received overwhelming support from the industry and the community alike. I thank my Department for a lot of hard work that up to this stage has gone into producing the Bill, and I am glad to see the Secretary to my Department present on this important occasion. Accordingly, it is with pride and pleasure that I commend the Bill to the House.

Debate (on motion by Mr McVeigh) adjourned.