Belinda Neal (Robertson, Australian Labor Party) Share this | Hansard source

I rise to speak on the First Home Saver Accounts Bill 2008, the First Home Saver Accounts (Consequential Amendments) Bill 2008 and the Income Tax (First Home Saver Accounts Misuse Tax) Bill 2008. They are bills aimed at dealing with an emerging social problem, and that is that the costs of homes over decades have risen to such an extent that many young people find themselves in a situation where purchasing their first home is an almost unattainable aspiration. If no action is taken we are heading to a generational divide of, on the one hand, the affluent older generation holding property which increases in value over time and, on the other, a younger generation without real property whose net worth is being eroded by the cost of housing for themselves and their families.

In my electorate of Robertson families are paying, on average, 29 per cent of their income on servicing their mortgage. They are the lucky ones, as they have already entered the marketplace. Those who still have not yet bought their home are in an even more difficult situation with a larger, almost insurmountable barrier. With a median house in New South Wales now costing $385,000 and even on the Central Coast a median house is $364,000, a 10 per cent deposit is a huge amount of money and many people are not able to accumulate this sum. Despite reduced clearance rates and negative publicity about the housing market, in recent years the annual rate of increase in property is still 4.8 per cent. We are certainly at risk of shutting people out—people who are not in the real property market but completely outside.

I bought my first house 20 years ago at a cost of about $80,000. That was not an unusual figure. Houses were available at that price both where I bought on the Central Coast and in Sydney. Certainly a 10 per cent deposit was reasonable. You could save and you could do it. Now I do not know how anyone does it, particularly people on low incomes. I am lucky enough to deal with a number of young people, and to know them quite well, particularly through my involvement in soccer. There are many young people in their 20s and early 30s who still do not have any idea of when they might buy a home. I find it very difficult to assure them that some day they will be able to do this. That is why I am so proud to be part of a government that is trying to find a solution to this problem. It is part of delivering our promises. I am very pleased to see that this government, this Kevin Rudd Labor government, takes its commitments—its commitments generally and in particular commitments made during the election—very seriously. This legislation is delivering on our promise to make housing move affordable, particularly for the younger generation.

This legislation assists saving for a deposit with a combination of tax concessions and government contributions to the first home saver account. This is about this government delivering, as I have said, in a very practical way. This home saver accounts bill and the consequential amendments establish a regime for first homebuyers saving for their deposit. To be eligible to establish a FHSA a person: must be aged between 18 and 65 years, must not have previously owned a home, and must provide their tax file number.

The legislation also does not allow such an account to be established before 1 October 2008, when this legislation comes into effect. Only one such account can be opened by each eligible individual to ensure that individuals do not double up on the concessions available on the account. The maximum contribution to the account is $75,000.

Generally an individual can have or have had only one of these accounts unless the account was closed for a number of specified reasons: the money was paid into another FHSA; the contributions to the account were refunded because the account was set up under an unsolicited offer under subsection 992A(4); there was a defective product disclosure document under section 1016F; or the account was closed within the cooling-off period.

There are a number of institutions that can provide these accounts, and they are already regulated. They are authorised deposit takers—essentially banks—life insurance companies and registrable superannuation entities, RSEs, that are authorised to offer FHSA accounts.

The manner in which payments can be made from this account is specified under part 3 division 3 of the bill. These are limited if an account holder wishes to retain the benefits this account is entitled to. The usual authorised withdrawals are for: acquiring a qualifying interest in the person’s main residence when they are under age 60—the account holder must also have contributed at least $1,000 in at least four financial years; transferring to another first home saver account; or making a contribution to the account holder’s superannuation fund. This is in fact compulsory where the account holder becomes ineligible to hold the account, which happens upon the purchase of a home, of course.

The benefit of such an account for an individual is twofold. Firstly, a government contribution is made to a saver account on annual contributions of up to a maximum of $5,000 at a rate of 17 per cent. This maximum is indexed. The minimum government contribution is $20. Where the calculation determines a lower amount then the contribution is rounded up to that $20 amount. The contribution, thus calculated, is paid directly into the account after the lodgement of the individual’s tax return or of their statement where they are not required to lodge a tax return.

The second benefit of a home saver account is the tax concessions. The contributions to such an account are not taxed, coming from after tax income, and the earnings on the account are taxed at a rate of 15 per cent rather than the marginal rate of the individual, which would generally be substantially higher. This tax concession extends to the withdrawal of funds. No tax is payable where the funds are withdrawn to purchase a home or where an account is closed and the balance of a fund is paid to a superannuation account.

As I have said, this is a decision of the government made in pursuit of an election commitment but is far more important than that. This is about delivering equity in our community—equity between the younger and the older generation. It is also ensuring that we do not create a group of individuals and families who have no home and do not have the security that that provides. I commend the bill to the House.

See this speech in context