Ms Catherine King (Ballarat, Australian Labor Party, Shadow Parliamentary Secretary for Treasury) Share this | Hansard source

The Housing Loans Insurance Corporation (Transfer of Assets and Abolition) Repeal Bill 2006 and Housing Loans Insurance Corporation (Transfer of Pre-transfer Contracts) Bill 2006 seek to finalise arrangements in relation to the winding-up of the Commonwealth Housing Loans Insurance Corporation in 1997. The Housing Loans Insurance Corporation was established by the government of Sir Robert Menzies in 1965 to provide a government backed housing loans insurance scheme. The main purpose of this scheme was to assist prospective home purchasers to obtain a loan at a reasonable rate of interest by providing mortgage insurance. The scheme was changed substantially in 1996 and then sold off to the private sector in 1997. The mortgage insurance products that we have today are quite different to those that existed in 1965.

The bills provide the opportunity to reflect on the context of housing at the time of Menzies in 1965 and the establishment of the HLIC, and what is happening currently in relation to housing affordability. In 1965 a couple in their late 30s bought their first home in the newly established suburb of Mount Waverley. Based on a 10 per cent deposit, the average mortgage at this point was $8,460 and the average weekly income at that time was $53.80. Buying a new brick veneer home for this family of five children was a significant step on a single income. It took this couple until they were 60 to pay this house off, not without some considerable sacrifices and yet another child. This couple were my mum and dad, and they still live in the house in Mount Waverley today. They were fairly typical of couples in the 1960s—the dream of homeownership required sacrifices and hard work but it was still affordable for families on single incomes.

Today the story of homeownership is very different. Home loan repayments, as a proportion of income, have skyrocketed. Today 33 percent of the family budget is eaten up by mortgage repayments. While figures were not kept measuring the proportion of income families paid towards the mortgage repayments in 1965, we can go back as far as 1979-80, when the proportion was only 17.4 per cent. Almost twice as much of a family’s income is now being swallowed up in mortgage repayments than it was in the 1970s and 1980s.

Over the past few months, I have travelled around Australia meeting families in suburbs, regional towns, shopping centres and markets as part of Labor’s Family Watch Task Force. I have heard from many families deeply concerned about their ability to meet mortgage repayments—families who have concluded that the dream of owning their own home is completely beyond their means, and grandparents who despair over the opportunities for their grandchildren to ever own their own homes. As the member for Lilley has already articulated, these concerns are backed up by figures from the Supreme Court of Victoria which show that in the first half of this year there were 1,474 repossessions, or more than 2½ times the 563 repossessions in the first half of 2003. This trend is being replicated in New South Wales. The figures show that mortgage repossessions in New South Wales have more than doubled since 2002 and are now 50 per cent above levels recorded in 1991.

Surrounded by the spiralling cost of living, many families cannot make ends meet. Research shows that 30 per cent of Australian families have experienced some form of financial hardship in the last 12 months alone. The Family Watch Task Force, which I chair, as a part of its inquiry into the cost of living, is carrying out a national survey of financial pressures on Australian families. The comments that we are receiving in the surveys are illuminating and shine a light on the financial pressures that many families face. Responding to the Family Watch Task Force survey, a Queensland mother said:

My husband is doing more overtime to help cover increases to mortgage, fuel, healthcare and groceries costs. He is spending less time at home and family responsibilities fall on to me.

A second respondent said:

With the cost of everything going up we can not afford to live in our own home anymore.

And another said:

Even though my husband and I both work our son is not entitled to any benefits for being a full-time student. We totally support him as well as our daughter and try and pay the mortgage. We find this very hard.

Wherever we travelled, the stories were the same. A New South Wales family responded by saying:

These workplace laws are impossible to deal with when you have a mortgage, kids, school and childcare, rising petrol prices and increasing interest rates. Are we going to be out of pocket soon? I hope not.

Another family said:

I rely on my husband solely for income and we find we are the working poor. Mortgage, bills and food left nothing to save or get ahead.

It is not surprising that that low- and middle-income families are struggling to make ends meet. They have had to not only endure seven consecutive interest rate rises but also, under the Howard government, cope with childcare costs increasing by 95 per cent, petrol prices increasing by 90 per cent, education costs increasing by 77 per cent and dental costs increasing by 65 per cent.

The original purpose of the Housing Loans Insurance Corporation was to assist low-income earners with small deposits to obtain housing finance. It did this by insuring lenders against the cost of mortgage defaults. Ironically, the reality for many low- and middle-income families today is that they cannot afford to save even a small deposit. Owning a home has never been easy, and it certainly was not easy for my parents in 1965. However, faced with spiralling household debt and record health and transport costs, owning a home today has become almost impossible for many low- and, to some extent, middle-income families.

I note the presence in the chamber of the member for Isaacs, who has been travelling with our task force and meeting with families in shopping centres and markets across the country. A family from South Australia told the Family Watch Task Force:

Wages we earn just cover living expenses, no money to save, no holidays, live from week to week, wages too low. We would love to be able to save for a deposit to purchase our own home—but can’t.

Families right across the country have told me that in many cases they are faced with the unenviable choice of deciding between buying a home or increasing the number of children in their families. Buying a house or starting a family, or having more kids, should not be an either/or decision. While the Treasurer may lecture families about having a third child for the country, he has in fact created an interest rate reality—along with the rising cost of living—that is discouraging some couples from even having a child in the first place.

Official Reserve Bank of Australia statistics show a record proportion of household disposable income is now consumed by mortgage interest repayments. In fact, the share of income consumed by mortgage interest repayments is 50 per cent higher today than it was under previous Prime Minister Paul Keating. Housing affordability is one of the biggest problems facing Australian families today. However, instead of showing national leadership on this issue, we see blame-shifting to the state governments. While the Howard government is playing the blame game, families are struggling—struggling to pay household bills, struggling to pay footy club registration fees and struggling to pay off their family home.

The Family Watch Task Force has received hundreds of comments from families across Australia. While all of the results are yet to be tallied, it is clear that families are under increasing financial pressure under the Howard government. Families are struggling to save for deposits or make mortgage repayments. In some cases, they even rely on credit cards to meet basic household needs. The Prime Minister may claim to be a friend of families, but the reality for many families is very different from the Prime Minister’s rhetoric. They have been badly let down by the Howard government’s broken election pledge to keep interest rates at ‘record lows’. Many families are relying on credit cards to pay for life’s essentials. Groceries, school shoes and power bills are contributing to the growing debt burden of Australian families.

In conclusion, Labor will be supporting these two bills. They will lessen the contingent liabilities of the Commonwealth into the future, and the private sector mortgage market will most likely be able to accommodate the pre-transfer contracts that are currently guaranteed by the Commonwealth. However, the bills should also act as a reminder of the plight that many families are in with regard to paying off their home loan or, in fact, merely saving for a deposit to achieve the dream of having a home in the first place. It is not that buying a home and raising a family was easy when the Housing Loans Insurance Corporation was established back in 1965, but it was possible. There is no easy fix to the problem of housing affordability. These are complex problems which will involve a multipolicy and cross-portfolio approach. In contrast, the Howard government wants to deal with this very important issue by yet again shifting blame to someone else: state and, to some extent, local governments. And, yet again, the Howard government has failed to show national leadership in relation to housing affordability.

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