Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Hansard source

in reply—The government would like to thank those honourable members who have taken part in the debate on the Housing Loans Insurance Corporation (Transfer of Pre-transfer Contracts) Bill 2006 and the Housing Loans Insurance Corporation (Transfer of Assets and Abolition) Repeal Bill 2006. To start with, I think it is important that I rebut some of the—frankly—nonsense that we have just heard from the member for Ballarat and, before her, the member for Prospect and, before him, the member for Lilley. They raised issues about housing affordability and mortgage defaults and all that sort of thing. What is important to understand first is that these bills do not affect homebuyers. That said, the Howard government has done more to assist homebuyers than the opposition did in its entire 13 years of government.

The Reserve Bank found in its recent Financial Stability Review that aggregate measures of household finances are sound, are supported by solid growth in household disposable incomes and continued growth in net wealth, and that the unemployment rate is at 30-year lows. Real wages have increased by 16.4 per cent since March 1996. This compares with a 0.2 per cent decline in real wages recorded over the whole 13-year term of the previous government. We did not hear that figure from those members opposite, did we?

Over 1.9 million jobs have been created by the Howard government since March 1996. Arrears in bank home loans remain low by both historical and international standards. The rise in mortgage arrears has largely been in low-doc and sub-prime loan areas—products for which the Treasurer has been very active in reminding lenders to maintain credit standards.

Increases in the value of land have increased house prices. Housing prices in general have outpaced construction costs. State and territory governments need to do more to release land for housing. This is central to the housing affordability issue. What is also central, and which we did not hear from those members opposite of course, is that state government stamp duties impose significant additional unnecessary costs on home purchasers and particularly impact first home buyers. That said, household borrowing is occurring in an environment of greater confidence after 10 years of consecutive economic growth; unemployment is at around 30-year lows; and households are enjoying better standards of housing than ever before. This is all backed by net wealth that has nearly tripled over the term of this government.

Having cleared up those facts, it is important to remember that these bills will bring to an end the long-running process of ceasing the Commonwealth’s involvement in the mortgage insurance business—and this makes perfect sense. When the Housing Loans Insurance Corporation was first established in 1965, the government was responding to a gap in the housing finance market—a gap that if left unfilled would have prevented lower and middle-income aspirational homeowners from achieving their dreams. The HLIC fostered the development of the mortgage lenders insurance market in Australia. In this, it has served its purpose very well. But, as can be expected, much has changed since the HLIC was established, and the financial sector in Australia is now characterised by multiple financial services providers and numerous products. Indeed, since 1979, successive governments have recognised that with the entry of private insurers in the market there was no longer justification for the Commonwealth’s continued involvement in the lenders mortgage insurance business.

In 1997, the Australian government commenced its formal exit from the housing loans insurance market by abolishing the Housing Loans Insurance Corporation and successfully selling a new company, the Housing Loans Insurance Corporation Ltd, which would contain the renewal business. However, the pre-transfer contracts—the ones written prior to 1997—remain vested in the Commonwealth under the existing legislation.

These bills propose to amend the existing legislation to allow the Commonwealth to divest itself of ownership of these contracts, without which an exit from the lenders mortgage business is impossible. Importantly, the bills do not commit the government to a divestment of the remaining contracts but instead provide the necessary framework to enable any transfer to occur.

The Australian Government Actuary advises that current market conditions suggest we have before us now the best opportunity to negotiate the sale of the pre-transfer contracts. I look forward to the completion of this endeavour in the interests of the Australian public. I commend the bills to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

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