Darren Cheeseman (Corangamite, Australian Labor Party) Share this | Hansard source

I listened very intently to the contribution of the member for Robertson to this debate on the First Home Saver Accounts Bill 2008. In fact, the circumstances she described for people in their 20s and 30s are identical to the circumstances of many people in my electorate and certainly were the circumstances that I found myself in several years ago.

Labor is committed absolutely to helping people own their own home. For the overwhelming majority of Australians, owning their own home is one of the great milestones in life. It provides security. It provides satisfaction. It provides sanctuary. It is the boundary around the family. Within a family home there are usually thousands of happy family memories and experiences. The biggest step in homeownership is the first. I know that because I am still paying off my first home loan. Just a few years ago I took that very big step. Buying a first home for many is a great leap of faith. It certainly was for me. It is a time when families take on a large debt and many families need support and assistance to make that transition. That is why Labor has committed a very significant part of its federal budget towards helping first homebuyers.

The Rudd government will be investing around $1.2 billion over four years in the First Home Saver Accounts initiative. Labor’s first home saver accounts are a policy breakthrough. They are the first of their kind in Australia and will provide a simple, tax-effective way for Australians to save for their first home. Labor’s First Home Saver Accounts policy will not just help young families; it will help older families who have missed their chance of owning their home. It will resurrect their hopes. Any individual can open an account if they are aged over 18 and under 65. These accounts operate very flexibly. Following a detailed consultation process with consumers and finance and housing industries, they have been designed to accommodate and meet the needs of individuals and families. The benefits from these accounts will be derived from a combination of government contributions and low tax cuts.

There are four key ways that consumers will benefit from these accounts. Firstly, contributions to these accounts will not be subjected to tax. Secondly, investment earnings or interest will be taxed at a minimal rate of 15 per cent. Thirdly, withdrawals for the purpose of purchasing a first home will be tax free and, finally, first home saver account balances will be exempt from the income and assets tests. Withdrawals will also be tax free where they are used to purchase a first home to live in. An overall account balance cap of $75,000 has been introduced, but the initial stipulation of an up-front contribution of $1,000 has been removed. So we have actually significantly improved the benefits in these accounts above and beyond what we promised at the election.

I have a couple of other important issues to do with these accounts. Contributions may be made by an account holder or another party, such as an employer, on behalf of the account holder. The government will make additional contributions which will be paid directly into the account after the individual has lodged their tax return and the provider has submitted the relevant information to the ATO. The government will contribute 17 per cent on the first $5,000 indexed on individual contributions made each year. This means an individual contributing $5,000 will receive a government contribution of $850. No minimum annual deposit is needed to keep the account open. All I can say is that I wish this policy had been around when I purchased my first home just a few years ago.

This is a very good scheme. It has been well thought through. Consideration has been put into people’s changing circumstances. For example, if an individual’s circumstances change during the life of the account so that they no longer wish to purchase a first home, they will not be able to access the account but can transfer the balance into superannuation and then close the account. By transferring the account balance into superannuation, individuals may apply to access the superannuation through early release provisions of severe financial hardship, compassionate grounds or terminal illness. A wide variety of providers will be able to offer these accounts such as public offer superannuation providers, life insurers, friendly societies, banks, building societies and credit unions.

Over the first three years federal Labor’s first home saver accounts will help around half a million first homebuyers to save bigger deposits. That is a lot of help to a lot of people. The impact and benefits of Labor’s first home saver accounts are broader than to individuals. They will be good for the overall Australian economy. Federal Labor’s first home saver accounts will also help boost national savings, with the accounts anticipated to hold over $6 billion in savings after three years. This is attacking one of the fundamental problems with our economy—our ratio of savings—and is another legacy left to this government by the now opposition along with the skills crisis, rising mortgages and interest rates. As I said, it was only a few years ago that I was saving for a deposit for my first home. I know it was hard then, but today it is even harder. With the escalating housing costs over recent years, saving a home loan deposit is very tough. It is the greatest obstacle to buying a first home.

This policy will help thousands of Australians overcome that barrier. It will help more Australians save a larger deposit. And a larger deposit will also reduce the debt burden for young homebuyers. It can, for example, help them avoid incurring costly mortgage insurance. I point out something else: as good as this scheme is, it is not all we are going to do for Australians wishing to buy their homes. This policy goes together with a range of other initiatives that will further assist with housing affordability. As an example I point to Labor’s housing affordability infrastructure fund, which provides a very significant contribution to helping bring down the cost of housing and land. Labor, through the housing affordability infrastructure fund, is offering to assist councils to meet the cost of some community infrastructure and services so as to bring down the cost of land and house purchases.

Through these initiatives you can see what a difference Labor is making in government. You can see a government that is up early, thinking about how to help working families. This is a government with a strong work ethic, a government that knows what matters to working people, a government that is creative and a government that has policy incentive. What a difference an election makes. What a contrast we have today. There is the fading memory of the tired Howard-Costello government, tied up in policy knots, tangled in ideological obsessions, twisted inward with factional positioning and leadership jockeying and trying to shore up their own job security whilst abolishing job security for workers. Contrast this with a united, new Labor government with well-crafted and targeted policies, looking decades ahead and rebuilding Australia after a decade of neglect. Labor’s first home saver accounts are not just good policy in themselves. They are a sign of Labor’s creative thinking and our commitment to tackle the real needs of working Australians. I commend this bill.

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