Sussan Ley (Farrer, Liberal Party, Shadow Minister for Housing) Share this | Hansard source

I appreciate the opportunity to continue my remarks on the First Home Saver Accounts Bill 2008, the Income Tax (First Home Saver Accounts Misuse Tax) Bill 2008 and the First Home Saver Accounts (Consequential Amendments) Bill 2008, which I commenced in the last sitting of parliament. Those remarks focused on the reasons we in the opposition believe that this First Home Saver Accounts measure is unlikely to do much to help the housing affordability crisis in Australia today. I remind the Treasurer and the Prime Minister of the following real reasons for the worsening housing affordability problem. Limited land supply induced by restrictive land release policies of state and local governments is the main reason for rising housing costs. Government taxes, fees, levies, charges and compliance costs are adding enormously to the cost of new housing and now represent a quarter to a third of the cost of a new house and land package.

Not much more than a month ago the Housing Industry Association reminded us of the housing supply crisis when they said there should now be a united focus and interest by all governments in increasing the supply of affordable housing. Housing finance and a range of other leading indicators suggest a further widening in the gap between housing supply and demand. HIA contends that the housing industry should be building at least 175,000 new residential dwellings each year to satisfy existing demand. In my earlier remarks I contended that others have said that the under-building rate is 30,000. I agree with the HIA: it is much, much more.

In my earlier remarks I talked about the way the first home saver account addresses the demand side of the housing affordability equation and does nothing for the supply side, and I said that we would not be opposing the measure because anything that encourages young people to save for their first home—or, in fact, save at all—has got to be a good thing. I mentioned the example, which caused some amusement to those opposite, of plasma televisions. I mentioned that because they are still the most demanded consumer item in Australia today. But we have seen them come down in price from about $14,000 five years ago to about $1,500 today—for the simple reason that the supply has kept up with the demand. This is pretty basic stuff. The supply of land to build entry-level first homes is in no way keeping up with the demand. So, by adding more dollars to the demand side of the equation, you are giving people more money to spend in an already extremely tight housing market.

I will anticipate some of what the housing minister may say in her remarks. She may talk about the supply side and the things that the government is doing to address that. There are in fact two measures on the table: the Housing Affordability Fund and the National Rental Affordability Scheme. Anyone who tuned in to Senate estimates this morning would have found some very interesting material on the likely effectiveness of both of those schemes. I was able to watch some questions and answers on the Housing Affordability Fund and it reinforced to me that there is a generational divide without comparison in the way we do development applications in this country and in the way that local government produces first homes for first home buyers. So, if you live in the leafy North Shore of Sydney you would pay far, far less than somebody starting out in the western suburbs of Sydney, where sometimes the development applications take three years to process through council.

The Housing Affordability Fund is, I think, $500 million—it may be $600 million. I would be unkind but I need to be: I am going to call it a slush fund that local and state governments are allowed to apply to. So here we have the federal government providing a fund which state governments can dip into in order to relieve the housing affordability crisis. Thirty million dollars has been released to help develop a website where you can track the progress of your development application—a so-called electronic development application website. I noticed that there was a development assessment forum brought together in 1998 to talk about this, and clearly they are just still talking. If we have the delays that we are hearing about, with the holding costs for developers and ultimately for first home owners, it is just not good enough. Why should the federal government provide $500 million for state governments to dip into to do the things that they should be doing anyway? It is incumbent upon them to release land in a progressive and orderly fashion and in a way which allows first home owners to build.

The fact that there is no affordable land on the fringes of our major cities is an indictment of us all. I have told the House before about the reasons why: state treasuries must maximise the returns to themselves from the land that they own and from the stamp duty they get from first home owners. Yes, there are some concessions in some states, but overall they get money from first home owners through stamp duty. State treasuries say: ‘Well, we have to maximise the land, so we will release it in a suitably slow fashion so that we get as much money as possible.’ But the people who are stuck at the end of this are the first home owners not able to get an affordable home.

When the matter was discussed in Senate estimates this morning, they also covered the National Rental Affordability Scheme. It was interesting to see officers from the housing branch of the department of family and community services essentially say that what they are doing is implementing the government’s election commitment—that that is what their work is focused on. So, with the National Rental Affordability Scheme, there will be 3,500 houses in 2008-09, 7,500 in 2009-10, 14,000 in 2010-11 and 25,000 by the time we get to 2011-12. But, when the senators quizzed the department on sound evidence and research to demonstrate the rate at which these housing incentives would be taken up or why they would work or the details of the scheme, they kept coming back to the answer: ‘We are focused on implementing the government’s election commitments.’ They did not say there was a reason why they would not work, but they could not tell the Senate committee why they would work.

This has been my point about the National Rental Affordability Scheme. It is fine to offer incentives to developers. I will remind the House that that is what it does. As a developer you are entitled to a $6,000 tax credit from the federal government and a $2,000 tax credit from the state government, either in dollars or in kind, and that is over a period of 10 years. As a developer you are then required to build an affordable home—the style of the home, of course, is up to the developer—but the requirement is that it is rented out for 20 per cent below the market rent of the geographic area.

The questions that the senators quite reasonably asked were: how do you determine the geographic market area; how do you police such a scheme; what happens if somebody within one of these homes moves out or their circumstances change—do they suddenly break through the threshold and have to leave? But, more importantly, what was focused on and what I believe is important is that this is actually not going to address the supply-side problem that we face. There will be 3,500 houses if we are lucky this year—

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