Brendan O'Connor (Gorton, Australian Labor Party, Shadow Parliamentary Secretary for Industrial Relations) Share this | Hansard source

I am in continuation, having commenced this debate in the main chamber. I inform this House that there are a series of things I would like to refer to with respect to this particular matter. They all just happen to start with ‘i’. Firstly, I want to start with a local matter, and that is the intersections along the Calder Highway in the electorate of Gorton. There are three intersections requiring construction. I want to talk to the people of Australia via this House about that particular matter.

Secondly, I want to refer to interest rates—the fact that there have been a series of increases to interest rates since the Prime Minister’s commitment to maintain low interest rates and certainly since the election. I think that has a bearing upon not only the difficulty for average householders to maintain their quality of life but also the increasing difficulty for average families to purchase an average home.

Thirdly, I would like to refer to Iraq. I think there is no doubt that there is a growing consensus in the community that the situation in Iraq is a debacle. It has been badly handled from the beginning. It was strategically incorrect to send our troops to invade that country. It was not in any way strategic insofar as targeting terrorists, targeting those who murdered people in New York and in other places—indeed, in Bali and in Spain. It certainly has not assisted the war against terrorism, and I would like to refer to that particular matter.

Finally, I want to refer to industrial relations. I think it is fair to say that, since its election in 2004, the government has shown itself to be arrogant and out of touch with ordinary working families. The introduction of Work Choices legislation has done nothing other than strike fear into the hearts of workers, knowing now, as they do, that their security of employment is very much diminished in most circumstances. The capacity to lose their entitlements such as penalty rates and other conditions of employment is certainly more likely now than prior to the introduction of that legislation.

I will now return to the need for three intersections to be constructed along the Calder Highway in the electorate of Gorton. There is no doubt that there is a major safety issue associated with the failure of the federal government to contribute to moneys required to construct the Calder Park Drive intersection, the Kings Road intersection and the Sunshine Avenue intersection along the Calder Highway. Most people are aware locally, as indeed are those who work on roads, that this is a Melbourne growth corridor. It is one of the fastest growing regions of Australia. There has been a significant increase in the traffic along the Calder as a result of population growth, not only in the suburbs I represent but also in the outlying communities of Sunbury, Gisborne, New Gisborne, Macedon, Woodend and even further towards Bendigo. For people travelling from Melbourne to those suburbs and towns, the Calder in this area is increasingly dangerous, with three ground-level intersections onto a freeway. As a result of the failure of the federal government to construct interchanges, there have been fatalities and injuries and they continue to occur. It is about time the government commits itself to construction.

I have asked the state Labor government to do the same. While it is a federal road, I have been given an undertaking from the state government to provide half the amount required to construct three interchanges. As far as Kings Road is concerned, they also would be willing to ensure the completion of that road to connect with the Calder, which would be their undertaking. It is about time that matter was resolved. I have had public meetings on this matter and people have come out in droves to support the need for the construction of these interchanges. There is no doubt in my mind that, upon completion, not only will they ensure less congestion along what is a freeway, after all, but also they will diminish the likelihood of injury or fatality along the road, particularly at those intersections. I call upon the minister for roads to match the Bracks Labor government’s commitments to provide 50 per cent of construction costs in order for those roads to be complete as soon as practicable.

I turn to interest rates. As I said, there have been seven interest rates rises—four since the election. This is against the backdrop of the Prime Minister during the last election campaign in September 2004 promising that his government would maintain ‘record low interest rates’. As we have seen and as was the case with the GST being a ‘never, ever’ consideration, we now see, with the undertaking given by the Prime Minister on interest rates, that those commitments were false and empty. Many people across Australia, certainly in the electorate of Gorton, are suffering economically and socially as a result of the failure of the government to meet its commitment to that target. What has happened, as you well know, Mr Deputy Speaker, is that these incremental increases have led to an extra burden upon ordinary Australian families’ household budgets.

In my electorate in the areas of Caroline Springs, Cairnlea, Taylors Hill and Hillside, and in other growing communities, many highly-geared families have invested in their family’s future by purchasing a home, but now find themselves very close to forfeiting that family home because they cannot sustain the increase in interest rates resulting from the Prime Minister’s failure to fulfil his promise of September 2004.

There is also another associated problem, and that is the affordability—or the unaffordability—of purchasing a home. The Housing Industry Association and the Commonwealth Bank reported only this week that housing is now more unaffordable than at any other time in the 23 years that they have been measuring it. For the first time, the average Australian household can no longer afford to buy the average Australian home. In the December quarter, the cost of the median first home was $376,000, which requires a gross household income of $93,000 to cover the mortgage of $2,332 a month—roughly $28,000 a year. This is against the average household income of $91,300.

The Reserve Bank’s three interest rate rises last year have increased debts, with an alarming rise in mortgage default rates. The figures from the Supreme Court of Victoria show that 2,791 property repossession claims were lodged last year—most of them against private home buyers—compared with 2,578 in 2005.

My electorate, as I indicated, has not been spared. One of the hot spots for extremely high mortgage repossessions and mortgagee sales has been the expanding housing estate of Carolyn Springs and Hillside. The Reserve Bank’s quarterly economic review says that the low vacancy rate in rental property is directly related to the housing boom. Official figures released yesterday showed that, last year, there was a massive 6.9 per cent jump in rents in Sydney. Rents rose at their fastest rate in 15 years last year and the Reserve Bank says that they appear set to rise a lot more quickly in the year ahead. I think it is very important to note, therefore, the government’s policy and how it has affected this particular concern in the rental market.

No-one in this place would want to see no improvement in the superannuation area, but there is no doubt that the immediate impact upon changing the superannuation laws has been that investors have very rapidly taken their money from the housing market and put it into superannuation. This, of course, has led to a reduction in investment in housing, which has in turn led to a reduction in the construction of housing and, therefore, a lack of availability of rental houses.

Rents are still low compared to the cost of buying a home. Unsurprisingly, there has been a surge in the proportion of householders wanting to rent as rising prices become unaffordable. Investors therefore are less keen to buy investment properties to rent out, particularly as there now appear to be only limited opportunities for making a capital gain when a property is sold. Across all Australian cities, vacancy rates have fallen to their lowest level in more than 20 years. The consequences are obvious: limited stocks in a time of rising demand push up rents, which further increases the stress on those families least able to cope financially.

Deborah Pippen from the ACT Tenants Union said:

The Bank is talking as if housing rents are just another financial instrument. But people live in homes. You are not looking at something that people can choose whether or not to purchase. If the Reserve Bank won’t address housing affordability and why it matters as a social issue, other arms of government will have to.

The chairman of the real estate company Raine and Horne, Max Raine, said that he believed that the worst was yet to come for rents. He said that, near the centre of Sydney, tenants were facing rent hikes of up to $150 per week. Vacancy rates of 2.5 per cent traditionally indicate full occupancy as there is always a degree of movement of tenants between properties. But with the vacancy rates currently at 1.5 per cent there is clearly a pool of people who simply cannot get accommodation.

While the Treasurer welcomed the Reserve Bank’s prediction that Australia’s underlying rate of inflation would fall, he was silent on the subject of rent rises. Governments of all stripes must also imagine what it means to be a householder. While average incomes slip out of sight of monthly housing loan repayments, governments will have to look beyond the traditional Australian prejudice that renting is just a brief pause on the path to homeownership.

For a generation of Australians, this pause is turning out to be a permanent settlement. Renters now comprise 28 per cent of all households, compared with 35 per cent who have mortgages. If we continue on this path of inaction, those figures will simply exchange places. The Western Australian government is showing the way, with a creative response to the tensions arising out of Western Australia’s own housing boom. Creative responses are needed if both federal and state governments are to offer younger and lower income Australians a way into the Australian dream of property ownership. Low or nonexistent wage growth in real terms and a booming housing market are a cruel combination. Prices rise, creating artificial wealth for those who have a stake in it, while wages fall or remain the same in real terms, cruelly opening the gap even further and preventing a generation of Australians from owning the kind of asset that might guarantee their financial future.

Now that this generation has the impact of Work Choices to contend with as well, things can only get worse. Not only are their wages static in real terms or falling, as proven this week by Professor Peets’ research, but also their jobs are insecure or becoming increasingly casualised, making it more difficult to plan any sort of long-term financial future. People come into my office and say how difficult it is to convince a bank to provide them with a loan as they cannot guarantee that their work is anything other than casual. This precarious form of employment is making it more difficult for people to plan for the future as they cannot secure commitments from lenders to purchase and pay off a house. A number of factors are making it increasingly difficult for people to purchase homes. It is about time the government sought to restore the balance in this area.

I refer to the Prime Minister’s intrusion, if you like, into the primaries in the United States. I think it was entirely unconscionable for the Prime Minister of this country to enter into the domestic politics of the largest Western nation, our biggest ally, by attacking one of the candidates in the Democrat primaries and the Democrats as a whole. As the Leader of the Opposition indicated, a political party that has had as its leaders Franklin Roosevelt, Harry Truman, Lyndon Johnson and John F Kennedy should never be assailed in that manner. The Prime Minister was reckless in his language in attacking the fortunes of the Democrats in the forthcoming US election, in late 2008. It could lead to adverse relations between the two countries.

As we have seen, not only have Democrats responded quickly and harshly to the comments made by the Prime Minister but so have Republicans. A Texan Republican senator has invited the Prime Minister to stay out of American domestic politics. This is a dangerous course the Prime Minister has chosen to take. It is an illustration of the pressure he is under as more and more Australians realise that the invasion of Iraq was wrong. It was strategically wrong. It was morally wrong. It did not in any way assist the war on terror. Labor indicated our opposition to that from the beginning. We now ask the Prime Minister to outline in detail his way of getting Australian troops out of Iraq. The only thing the Prime Minister will say on this matter is, ‘We won’t be out until the job is done,’ and he will not define the job. It is about time the Prime Minister fronted up to his responsibilities and gave the Australian people a clear indication as to when Australian troops will leave Iraq. It would also be helpful if the Prime Minister chose not to attack potential American presidents in his attempt to score points at home.

See this speech in context