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Tuesday, 13 September 1983
Page: 694

Mr GROOM(8.34) —As one who fought along with others over a number of years to ensure that we provided adequate assistance for first home buyers I welcome this chance to say a few words about this package of Bills, the First Home Owners Bill, the Home Deposit Assistance Amendment Bill and the Housing Loans Insurance Amendment Bill, despite the deficiencies that are evident in their provisions. I found the comments that were made tonight by the honourable member for Bowman (Mr Keogh) very interesting. At one point he said that the Australian Labor Party was not concerned about the private sector. I am not too sure what he meant by that. He was referring to the Housing Loans Insurance Corporation-

Mr Keogh —Mr Deputy Speaker, I raise a point of order. It may be as well for me to correct the honourable member. That is not what I said at all. I said that the Opposition is concerned only about the private sector.

Mr DEPUTY SPEAKER (Mr Mountford) —Order! There is no point of order.

Mr GROOM —The honourable member is very touchy. If he reads Hansard tomorrow, he might have to correct the Hansard record. That is my recollection of what he said. The disappointing aspect for those who are concerned about home ownership is that, if they look at the package of measures that are provided for by the Government, they will find that in fact the amount of money to be provided for private home ownership has been reduced. I refer honourable members to the table that appears at page 56 of the printed copy of the economic statement that was made by the Treasurer, Mr Keating, in this House on 19 May of this year-the May mini-Budget. Honourable members will see at that page the details of the package from which this legislation flows. They will find that there are a number of different aspects to the package.

The Government has terminated the home deposit assistance scheme. In 1983-84, that means a saving to the Government of $50m. In its place, it has established the first home ownership assistance scheme. We are now debating that Bill-the First Home Owners Bill-and the scheme is said to cost $80m in this financial year. We add on to that amount funds for welfare housing of $127m but then take away $50m for terminating the housing interest rebate scheme, and then take away $30m for the termination, from 1 October, of the March housing interest rebate scheme. Some aspects of that particular scheme continue, but there is a saving of $30m. In this year, the cost to revenue is $77m, but the bulk of that is additional funds for welfare housing. So the clear fact is that, if this package is carefully analysed and not looked at superficially, and if all the propaganda being told about it is not accepted, honourable members will see that, as far as private housing is concerned, in 1983-84 the Commonwealth Government is saving $ 50m. There is $50m less being spent on private housing in Australia by this Government.

If honourable members look at the same table they will see a saving of $255m next year. So, out of the whole package, in the next financial year the Government is not spending more money; it is spending $255m less on housing. In 1985-86, it will spend $265m less on housing. I will acknowledge that the latter two years do not include the appropriation which will obviously take place for welfare housing in those two years. If we look at it rationally, objectively and honestly, we will have to agree that the total amount of money for housing has been reduced. The main reason why it has been reduced is that the Commonwealth has terminated the assistance that was to be provided for people spending large amounts of money in mortgage repayments and the interest on those mortgage repayments. This is a real blow to the people--

Mr Keogh —Many of them did not need the help.

Mr GROOM —The honourable member has had his go. Just let me have a go for a moment or two. This is a savage blow to the people in Sydney and Melbourne and in all the cities and towns around Australia who face very hefty mortgage repayment bills. What happened? During the election campaign, the Prime Minister (Mr Hawke) went all around Australia-the Minister for Housing and Construction ( Mr Hurford) may have too, but I do not have him on record; he can correct me if I am wrong-saying: 'We won't touch the interest tax deductibility scheme. You will still be able to put in a deduction for the interest you pay on your mortgage.' He went all around Australia promising the people this. What sort of Prime Minister do we have who makes that sort of promise and, as soon as there is an election, breaks that promise and dishonours his word? What is his word worth? We heard the Prime Minister during Question Time today admit quite proudly that he had received, I think, $1,100 for a speaking engagement as a member of the Parliament. I think that is a disgraceful admission that has been made by the Prime Minister. He said it quite proudly and then he added on other amounts. We are paid as members of parliament, and paid a reasonable salary, to express our views to the community at large. Here we have a man who pretends to have integrity as a prime minister, asking for payment for speaking to the public.

Mr DEPUTY SPEAKER (Mr Mountford) —The honourable member should come back to the provisions of the Bills.

Mr GROOM —I relate that point directly to the fact that a promise was made before the election and during the election campaign that interest rates on mortgages would remain deductible for taxation purposes. As soon as the election was over that promise was broken. And the man is not concerned about it. It is almost a case of George Orwell's 1984. I suggest, Mr Deputy Speaker, that you read his book. You will see the double talk that features in George Orwell's book. We are seeing it come from the mouth of this Prime Minister. His bond is worth nothing. His word is worth nothing. This is evidenced by the statement he made and the promise which has now been broken. We should also carefully analyse the effect that the Budget will have on home ownership.

Mr Keogh —Very good.

Mr GROOM —Well might the honourable member say 'very good'. I will explain the matter to him. During Question Time today the Prime Minister very proudly said that interest rates on housing loans are on the way down. He said: 'This is great and this proves that our Budget strategy was well founded and was correct' . He is living in a fool's paradise if he believes that he can just take one isolated reduction and say: 'This establishes the fact that our strategy is correct'. If he looks at the official Budget Papers, particularly Budget Paper No. 1 of 1983-84, he will see it specified there quite clearly that there will be pressure on interest rates during this financial year.

Mr Keogh —So what?

Mr GROOM —The honourable member for Bowman says: 'So what?'. He does not know what that means. It means that interest rates are likely to go up.

Mr Keogh —It does not say they are going to.

Mr GROOM —I will refer to the document. The honourable member can read it for himself if he wants to. Under the title 'Financial Markets' three points are made: A further fall in corporate borrowing and an increase in household lending , a marked increase in public sector borrowing and continued pressure on interest rates. That is the likely outcome. I do not want to be a doomsday man, but if one looks at the amount of the Budget deficit-approximately $8 1/2 billion-and looks at the real evidence contained in the Budget Papers and the sound advice from the officials, not comments that are made during Question Time , one should have to come to the conclusion that for a start the Budget deficit is quite likely to be higher than $8 1/2 billion and the Government will have to go around the community borrowing vast amounts of money to finance that deficit. There can be only one result from that and that is upward pressure on interest rates. So we have this ridiculous situation in which on the one hand we have taken away this tax deductibility and at the same time during this financial year we will have this upward pressure on interest rates. The people living in the suburbs of our great cities and towns, paying mortgage interest, will suffer . They will be hoodwinked by this hoax being perpetrated by this Government. I ask anyone who is concerned about housing, mortgage interest rates and the promises that have been made, to look carefully at the Budget Papers and to analyse and read the words carefully. In particular, people should read the statement made by Mr Keating, especially page 56, which contains a table. The facts are there for everyone to see.

There are a few points I would like to make about the first home owners scheme. One is that a strict means test is applied in order to get the full amount of the benefit. A family-that is both husband and wife-must have a taxable income of $24,300 or below that amount. The cut-off point is a family income of $27,900 . A family has to raise a deposit, does it not? It has to make ends meet. So in many cases both partners have to work. When a young couple works, in reasonable sorts of jobs, their income will be above those limits. If a couple's income is above $27,900 they will not get a brass razoo out of this scheme. Where is the benefit for such a couple?

There is no savings requirement. That sounds good. There is some merit in that idea, but there are factors which work against the interests of those who want to buy a house. The scheme will not encourage people to deposit their money in a bank or building society, which are the traditional lenders for housing. Once upon a time the scheme encouraged people, because of the savings requirement, to deposit their money in a bank or building society. The effect of this new scheme is that those institutions will not have the same amount of money available to lend for housing. There is a misconception in the idea that there is no savings requirement, because in almost every case there will be a savings requirement. the maximum lump sum payment which a home buyer with two or more children can receive is $3,500. A home buyer with no children will receive $2,500. That is not much different from the figures which were available under the old scheme. There are not many houses which one can buy with a deposit of that sort. There is a savings requirement. People will have to work and save some money to get a deposit.

The scheme is administratively complex. I cannot for the life of me understand why the Government did not simply continue with the previous scheme.

Mr Hodgman —It was a good scheme.

Mr GROOM —It was a good and very effective scheme.

Mr Keogh —This is better.

Mr GROOM —We will wait and see about that. There are many complications which the honourable member obviously does not understand yet. The administrators understood the old scheme. They had a history of working with it. Now that all these changes are taking place it must be very frustrating for the officials who have to administer the scheme. There are questions to be asked. When will the lump sum be paid? People want the money at the right time. I direct that question to the Minister for Housing and Construction. He may be able to answer when he sums up the debate. Will people be paid on the signing of the contract, which is the relevant date, or will they be paid on settlement?

Mr Hurford —The second reading speech tells you.

Mr GROOM —I have read the second reading speech. I ask the Minister to clarify the point. I know that in the second reading speech he talked about the money being paid to the lending institution and that certificates, letters of advice and so on would be issued. It seems to me not to be a very clear statement.

Mr Hurford —I will tell you again.

Mr GROOM —The Minister says he will tell me again. Will the money be available on the signing of the contract?

Mr Hurford —I will tell you when I sum up.

Mr GROOM —The Minister will tell me when he gets some advice.

Mr Hurford —If you want me to interrupt your speech and tell you now I will do so, but I think I would probably be out of order.

Mr DEPUTY SPEAKER (Mr Mountford) —Order! I ask the Minister to resume his seat. The honourable member for Braddon will continue his remarks.

Mr GROOM —It is important that the matter be clarified. The money is needed at the time of settlement. That is the time when the money has to be provided for the purchase of a house. That is when the money should be available. From what I hear, the housing industry has some doubts about the scheme. There is an officialdom-the bureaucrats-in the housing industry. That officialdom, which is based in Canberra, says it speaks for the housing industry. When one gets down to the grass roots level sometimes one sets a different opinion from ordinary home builders and people within the industry-the people in the real world. They are very upset about the prescribed payments scheme. I think it is relevant to mention this scheme because it does affect housing and no doubt it will affect the price of housing.

The point has been made that this scheme is a great boon for the housing industry, but the industry is terribly upset about this prescribed payments scheme. It is incredibly complex. I do not know whether those honourable members who are in the House at the moment have studied all of the detailed documents that have to be filled out by people within the industry. If they have they will see the cost to people in the industry which they will have to pass on to home buyers. That is the problem. Costs will continue to spiral as a result of this kind of taxation measure. That is a matter on which the Minister might again comment. I acknowledge that it is not directly on all fours with the legislation we are now discussing, but it is a matter of concern to people within the building industry in my electorate; that is, Braddon in the north west of Tasmania, down the west coast and on King Island. That sales tax on piping and tubing and certain other materials used in the building industry will also have an impact on costs. There is a whole range of new costs, and this package is not what it purports to be or what it has been sold as. There are a lot of uncertainties about the scheme. There are a lot of aspects of the scheme which I believe will do harm. It certainly does not help the home buyer generally.

The Budget itself does not help the home buyer generally because it, through the high deficit, will put much pressure on interest rates. If there is a key factor in private housing it is that we must keep interest rates as low as possible. Most of the experts acknowledge that if we are to do that we have to reduce the call on public funds. That means that we have to be concerned about the general size of government and try to get down the size of government, the bureaucracy and the tax Bill, if possible at the same time.

Another factor that is relevant to housing is unemployment. How disappointing it is when we look at the Budget again and see the statement that unemployment in Australia will edge up during this financial year. That statement is in the official Budget Papers. I will quote again from the document if anyone has any doubts about it. The relevant statement is contained in the Budget Statements 1983-84, Budget Paper No. 1, issued and circulated by the Honourable P. J. Keating, M.P., Treasurer of the Commonwealth of Australia. At page 65 that document reads:

Labour market

Mr Keogh —We are honest; not like the last Government.

Mr GROOM —The Government is honest, I will give it that. The document states:

. . . an edging up in the rate of unemployment.

That again relates to one of the promises made to the people of Australia; the promise that 'we will do something about unemployment'. Only a few weeks ago the Government said: 'We will get unemployment down'. Here is the admission in the official papers tabled in this House by this Government that unemployment will go up. How disappointing it is for the people of Australia, especially the young people of Australia, when they read those sorts of comments.

Mr Hurford —You agreed to 15 minutes.

Mr GROOM —The honourable member is upset about what I am saying.

Mr Hurford —No, I am not. I am telling you that you agreed to 15 minutes. You are saying nothing, so for goodness sake get on with it.

Mr GROOM —The main point is that this package will not assist private home ownership. In fact the amount of money that is being provided for home ownership in this package.

Mr Keogh —What rubbish!

Mr GROOM —It is there for the honourable member to see. He says: 'What rubbish'. He should have a look at the figures for himself and see what I am getting at, if he can understand them. The amount being provided for private home ownership has been reduced in this financial year and, according to the figures, for the next two financial years.