Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Tuesday, 11 October 1983
Page: 1552

Mr MOORE(4.44) —In the absence of the honourable member for Farrer (Mr Fife), who is ill, it is my pleasure to respond on behalf of the Opposition to the estimates for the Department of Housing and Construction. The publication that was supplied by the Department shows that it employs 8,751 personnel, which must rate it as one of the large government operations. In terms of its expenditure it is certainly a very significant factor in the Australian building industry. I would like to address a few remarks concerning what has happened in that area since the Government came to power.

As honourable members will recall, a statement was made by the Government in May. There was a good deal of publicity and promotion about its new initiatives in the housing area. What really occurred was a reordering of priorities. Not much difference was made in terms of overall expenditure, but some difference was made to priorities. Because of that, we had a great hiatus between May and 1 October when the new program came into force. The Government left the usual amount of doubt as to the best thing that could be done for the participant in the market at that time while it sorted out its new approach. I commend the Minister for Housing and Construction (Mr Hurford) for his generosity in making the $7,000 grant available.

As I said in a previous debate, I still contend that the abolition of the saving component is regrettable, because people who have bought their first house without a history of saving will, I think, find some difficulty in adjusting to the sheer discipline of having to put aside the weekly or monthly payment that they are required to make. Because of that, I would have thought that the requirement of a saving history would have been an adequate provision for the Government to have made in this area. I do not wish to quibble too much about what went on, except to point out the fact that one more of the Government 's election promises in this area has been broken, insofar as it pointed out that it would maintain the tax rebate system. There was no action. That promise was broken. As I pointed out the other night in relation to some other Government promises, a team of people travelled around Australia and promised to every community interest group what it wanted. After the election, very few of those promises have been kept-the most notable feature so far of the Labor Government.

Under the new system which is now in place, first home buyers no longer face a saving requirement. Depending on their circumstances, they are eligible for grants of up to $7,000. Some State governments have added to that amount. On top of that, there has been quite a shift in emphasis from private to public sector housing. This, of course, is understandable given the ideological background of a socialist party. But it will not do a tremendous amount to ensure what the Liberal National Parties have always tried to ensure-the right of the individual to own his own home, a most important right. Because of that I think we should put greater emphasis on private home operations rather than on public housing.

Since these changes have occurred the market place has been slack. Undoubtedly the difference between the situation in May and that of 1 October, the starting point of the new scheme has made some contribution to this. Quite a stock of housing in the market has been difficult to shift. Prices of stock which has been shifted tended to be somewhat lower than those for comparable new houses. Until such time as some balance comes into the market in that area, people would be better advised to purchase existing housing rather than start new house construction. This might, of course, be reflected in some of the approvals for grants that have already been made. The fact that there is a lag between approvals for grants and start-ups may well reflect the difference between market prices for existing housing and those for new commencements. I am informed that price brackets for the stock of existing housing vary considerably from city to city. I am informed that in Queensland the general price bracket of $50,000 to $80,000 has moved very slowly indeed, whereas lower and higher priced housing has moved significantly. Of course, there is a far greater number of houses in that middle bracket than there are in other brackets. Because of that, this weakness has been noted.

I do not need to tell you, Mr Deputy Chairman, that the most important aspect of any commercial operation is interest rates. In the last two years interest rates were at levels which affected housing. They certainly affected new home buyers, not only in terms of the houses that they bought, but also in terms of their ability to fit out those houses with adequate furniture-the adequate inputs into the housing unit that are required. In my electorate a number of people bought quite expensive houses, but when I went inside them I noticed that they had been unable to furnish those houses with the appropriateness required. I have no doubt that this was due to the high interest rates which obtained at that point. It was not due to a shortage of money. It was a question of the price of that money. I am very pleased at the moment to see that while commercial interest rates have come down, there is an indication that the home loan sector will meet market demands, as the demand for money falls away from the corporate sector, leaving only the government deficits to be funded and the semi-government loan raising requirements to be met. Given that indication I think we can all look forward to a situation where first home buyers may well be able to buy their units at lower prices than would otherwise have been the case.

It is worth noting that in the area of home loans, financial institutions have been reluctant over the years to move interest rates around to any great degree. Bearing in mind that they have to deal with lengthy loan periods-perhaps of 25 or 30 years-interest rates are bound to move up and down. Recipients of those loans are used to, and indeed budget for, a fairly consistent home loan repayment. I have noticed that institutions have tended to try to keep interest rates down as much as possible in high interest rate periods and not necessarily take them down as far as they might go in terms of the commercial areas to compensate for some of the slumps and booms that occur with the price of money. I have noticed a tendency by commentators from time to time to say that this should occur. But certainly the difficulties that I have seen during the last two years have reflected this. Because of the 15 per cent plus interest rates being charged, institutions have been either lengthening the term of the loan, or finding some way to stretch the loan to other assets so that the monthly repayments are not altered or only marginally raised. I hope that when rates go down-I expect that they will stay down-for some time the institutions will adjust the period of loan for those who took out loans in the high interest rate period.