Mike Symon (Deakin, Australian Labor Party) Share this | Hansard source

I rise in strong support of the First Home Saver Accounts Bill 2008 and, rather than pick holes around the edges, I want to say I think it is a very good package all up. Together with the other two bills, the First Home Saver Accounts (Consequential Amendments) Bill 2008 and Income Tax (First Home Saver Accounts Misuse Tax) Bill 2008, this bill implements the Rudd government’s 2007 election commitment to introduce a first home saver accounts scheme. It is an initiative that makes it easier for families to put money away for a deposit to buy their first home by giving them access to low-tax accounts. From 1 October 2008, thousands of young families from across the country, many from my own electorate of Deakin, will be able to edge closer to that dream of owning their first home through this initiative.

It is a dream that has become more and more distant over recent years as housing affordability has decreased. The prices of properties have increased much faster than wages. Many families need a scheme such as this to help them achieve the very Australian dream of owning their own home. The great benefit of an account such as this is its concessional tax feature. You save money, rather than putting it into a bank account where you find out, at the end of year, that you have to pay marginal tax at the full rate on the small amount that you have been able to save. That is a great benefit and one that more and more people will see as the scheme rolls on.

I talk to many young house hunters and many young families as I get around Deakin between Canberra sittings. I talk to locals who are looking to purchase homes in the growth areas of my electorate around Croydon, Ringwood and Bayswater North. I know these areas very well. I grew up in the local area and I have lived and worked there my whole life—and I have seen it change. In that time it has gone from an area with open spaces—there were even farms and orchards around—to being almost fully developed. But, because it is 30 to 35 kilometres out from the city of Melbourne, housing prices there, whilst expensive, are in the range where first home buyers think they may be able to make a purchase if they shop wisely. So this type of scheme is particularly relevant to a seat like mine. These are the mortgage-belt suburbs of Melbourne’s outer east and they are examples of the very places that first home buyers want to settle in.

These people tell me how hard it has been for them to save a deposit as they try to lock money away whilst they deal with spiralling rents—and it is almost impossible to rent in eastern Melbourne now; we have a vacancy rate of one per cent—with the increasing costs of living and with the cost of running two cars. If you are going to live that far out from the city, you actually need two cars out there because public transport does not always go to where you need it. Quite often many of them are travelling 70 kilometres or more to and from work each day. That is a cost, and all that comes out of the family budget. One of the first things to go in that case is savings for a house, because you are looking after your week-to-week expenses. First home saver accounts help in that regard because of the tax advantages that come with them.

There was no sign of a helping hand for first home buyers from the former federal government. We have heard a lot in here today about things that might be wrong with particular little points of this scheme but nothing about what should have happened in the previous 12 years. There was no helping hand, there were no new ideas and there was no strategy to help these aspiring young first home buyers get their foot in the door. First home buyers in Deakin have a friend in this new Rudd government, a government that is acting on the housing affordability crisis. First home saver accounts are just one part of the government’s $2.2 billion package to tackle the housing affordability crisis. The first home saver accounts, the National Rental Affordability Scheme and the new Housing Affordability Fund now come together as a complete strategy to help young families save that deposit and get into their first home.

First home saver accounts will provide first home hunters with a simple, tax-effective way to save for a place to call home, through an effective combination of low taxes and Rudd government contributions. The government will contribute 17 per cent on the first $5,000 of contributions made into individual accounts each year. That means that a typical couple in Deakin, each earning an average income, will be able to save a deposit of more than $88,000 after five years if they exercise discipline in their savings. Depending on returns, that can be up to $12,600 more than if they had saved their money in an ordinary deposit account. A key feature of the accounts is that parents and grandparents can make contributions to their children’s and grandchildren’s accounts, with all benefits flowing to the home saver. That means a bigger deposit and a faster start to buying their first home and planning the rest of their lives. It is by getting into their first home that most young families can begin to map out the rest of their lives. They can make big decisions, like having children and deciding which local schools they want them to go to and which community they want them to grow up in. They now have the ability to do so with greater confidence, knowing they finally have a federal government going in to bat for them, a government that is putting in place first home saver accounts that will mean real dollars for them at the end of the line.

This can be shown by having a look at how the average young family in Deakin will benefit in dollars and cents. Let us look at a mum and a dad with two kids, aged four and six, as an example. Dad works full time and earns $60,000 per year, while Mum works three days per week and earns $27,000 per year. They work hard and set aside 10 per cent of their combined income into their first home saver accounts in 2008-09, putting away $8,700 split evenly between their accounts. This will mean that both of them will receive about $1,480 of Rudd government contributions. And, if they keep working hard to put money away at that rate, in five years they will have a combined balance of $64,800 for their home deposit and be $10,100 better off than if they had put it in a regular deposit account. There are real dollars in this scheme, giving young house hunters more money in the bank and cutting down the time before they can start their house hunting.

The Rudd government has consulted widely with the community on the design of this policy to make sure that it is as fair and accessible as possible. The Rudd government has improved the first home saver accounts to include the flat 17 per cent contribution for all individuals, to make sure that people on average incomes get better returns on their savings. We have removed the planned $1,000 up-front contribution so that accounts can be opened up without the need for existing savings. That is particularly important to parents who might want to open up an account for one of their adult kids but who do not have $1,000 at hand to do so. This bill now calculates the four-year rule from the financial year in which the account was opened, in order to reduce compliance costs. It also introduces a 14-day cooling off period to give people the chance to change their mind, although with such a good scheme I would not think that there would be many doing so. We have replaced the $10,000 annual contributions cap with one overall account balance cap of $75,000 indexed. This cap includes personal contributions, government contributions and earnings and, when the cap is reached, earnings and any outstanding government contributions are still able to be credited to the account, although no further personal contribution is permitted at that point. The ASIC, the ATO and APRA will work closely with the industry to minimise the reporting requirements as much as possible to make accounts easier to use and understandable for the end-user—those that are saving the money.

It is anticipated that these changes, aside from making first home saver accounts fairer and more accessible, will also increase savings in accounts from over $4 billion to around $6.5 billion over four years. This is another example of the new Rudd government doing things smarter and delivering fresh ideas that produce results and which net massive savings at the same time. It is perhaps a good idea to place the gains for first home buyers and young families through this initiative into the basket of all the other benefits flowing to them from the Rudd government. I commend this bill to the House.

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