House debates
Thursday, 28 August 2008
Questions without Notice
Housing Affordability
2:41 pm
Tanya Plibersek (Sydney, Australian Labor Party, Minister for Housing) Share this | Hansard source
I want to thank the member for Hasluck for her question. I was in Hasluck earlier this month and saw firsthand her extraordinary efforts on behalf of her constituents. She is a very strong advocate indeed and was lobbying very strongly for her local area to benefit from the Rudd Labor government’s housing affordability measures. The government made clear before the last election that housing affordability would be a key priority. We recognised that strong action was needed to overcome many years of neglect in the area of housing affordability. The May budget funded our commitments in full and delivered $2.2 billion worth of new investment in the area of housing affordability. It was the first budget in over a decade to deliver new spending in this area.
First home saver accounts, for example, will be available from October this year. The new accounts will provide a simple, tax-effective way for Australians to save a bigger deposit for their first home through a combination of government contribution and low taxes. The government is investing $1.2 billion in these new accounts and will provide a 17 per cent contribution on the first $5,000 of individual savings made each year. This means that anyone who is contributing $5,000 to their account will receive an $850 deposit from the government. As we get closer to October, I would urge people who are interested in these new accounts to contact their banks and talk about the availability of the accounts. I am particularly thinking of young people, perhaps starting in their first job. They should think very seriously about putting aside $10 or $20 a week and, as their wage increases over the years, putting more into those accounts so that by the time they reach the age of 25 or 30 and are thinking about buying their first house they will have a nice little nest egg ready.
Look at the National Rental Affordability Scheme, our $623 million scheme to help build 50,000 new, affordable rental properties around the country. These properties will rent for 20 per cent below the market rent for a particular area and residents will still be eligible for Commonwealth rent assistance, making the properties even more affordable. On 24 July the Treasurer and I launched the first round of expressions of interest for the National Rental Affordability Scheme, and the applications are coming in. There has been a strong interest from institutional investors and from community housing groups who want to build bigger portfolios of affordable housing. These new homes will make a huge difference to people who are struggling in the private rental market.
I will also say something on our Housing Affordability Fund. Our $512 million Housing Affordability Fund will lower the cost of building new homes, particularly at the entry level of the market. Thirty million dollars of this new fund has already been distributed to advance electronic development assessment. Earlier this month I announced further funding for the states and territories to roll out new electronic development with councils in their areas. There are no overnight solutions to the housing affordability problems that we have inherited. The mayors from South-East Queensland who were in the gallery earlier today, and who are here lobbying, know as well as we do on this side of the chamber the pressures that working families are facing in terms of housing affordability.
Our agenda depends on a strong surplus, and the best thing the opposition could do would be to stop their attempts to block $6.2 billion worth of our surplus. We understand on this side of the chamber that many Australians are facing cost-of-living pressures, including in the area of housing affordability. We know how important it is to pass the budget in full so that we can continue our vital work helping Australian working families find an affordable place to buy or rent.
Comments
Patrick Terrett
Posted on 30 Aug 2008 10:44 am
US motgagees (owner occupiers) can deduct their mortgage interest which makes housing much more affordable.
Australians would benefit greatly from this system but unfortunately our governments (Liberal & Labor - local, state and federal) need to scour dollars out of everybody's pockets to maintain their corpulent over staffed, over-funded institutional structures.
Your average Aussie will never benefit from a fair system while Libs v Labor self-serving systems survive.
Instead of Labor and Liberal governments reaping the benefits of ever growing stamp duty incomes based on a percentage of the property value they should introduce the US system of deductibility and drop stamp duty to cover the cost of stamps (intended use).
A prime example of misused tax is the $13,000,000 used to set up "grocery watch". What a half baked nonsense that is but it was seen as necessary to throw that sort of money into the abyss of govt bureaucracy and outsourcing. Some web site hawker has benefited but I doubt even one pensioner saved sixpence off their food bill.
Next time a politician tells you that your salary needs to be restrained to be competitive with emerging markets ask them why Aust management and Government slaries aren't. That is the BIG problem and if not addressed quickly we will be the Banana republic much touted by a former multi-millionaire Labor Prime Minister.
"Why is it so?" That ex Prime Ministers and Ministers are so wealthy when they leave office. It seems it's not such a level playing field.
I think it's time to reduce government and to reign in the privilege of office or maybe we should all dream of launching golf balls from the astro-turfed rooftop of our harbour-side mansions.
Jaye
Posted on 31 Aug 2008 8:12 pm
Agreed Patrick, Housing Unaffordability in Aus is no accident. Successive govts seem to have the knackery for picking the worst of all policy when it comes to equitable treatment of home buyers.
Blatant advantage is sheeted home to self-interested investors. Investors have now proven beyond any doubt that they can provide neither enough dwellings nor sensible rents. http://www.facs.gov.au/internet/facsinternet.nsf/housing/nra... It is estimated that Australia currently has an annual housing supply deficit of up to 30,000 homes. (updated to 45,000 by HIA on 19aug08)
This is despite massive tax concessions. For example, only 1 in 12 dollars of investor loans is for new dwellings. That means 91 percent of investors use tax breaks to outbid home buyers at sales and auctions for existing homes. How daft is that? See details:
http://www.theage.com.au/news/national/investors-housing-spl...
Investors are sponsored by government to the tune of about $120,000 per $300,000 property (yes, calculate how much can be claimed in loan interest deductions on a 25 year loan and divide by your average rate of tax, say 30 percent. Talk about gross unfair advantage). And that calculation does not include income from rent for the property or other deductions.
About time govt backed another horse. Investors have proven themselves useless in regard to housing, or in horsey terms, they are dilapidated nags ready for pasture.
Time to give the carrot of tax concessions to home buyers to build new homes.
A win for home buyers and support for builders and the economy.
Jaye
Posted on 30 Aug 2008 7:52 am
Good answer Ms Plebersek. One point, if housing affordability is a key priority, why not tackle underlying causes of unaffordability such as negative gearing?
Negative gearing and investor tax advantage are the key drivers of this problem. Housing unaffordability has become essentially a self-generated debacle (since 1999).
Successive studies including the 2003 RBA First Home Ownership report: http://www.rba.gov.au/PublicationsAndResearch/SubmissionsToP...
and the 2008 Senate report Housing Affordability:
http://www.aph.gov.au/Senate/committee/hsaf_ctte/report/b01....
have both pointed out the discriminatory tax system as being a major influence on affordability.
Is it rational to continue to pander to strong interest from institutional investors who want to build bigger portfolios of affordable housing? Would it be more fair to directly give home buyers a similar tax relief offered by the National Rental Affordability Scheme?
What is the government trying to create? A nation of renters and institutional investors with large rental portfolios? If that is the plan there is no need to consider any other solution. If however, you want to see families owning their own homes then work needs to be done to remove discrimination from the tax system.
The 3 main obstacles to fairness in purchase of residential property are negative gearing, interest only loans (totally toxic and should be nowhere nearing housing) and the discriminatory tax treatment of residential loan interest.
If you are not fully aware of how negative gearing has skewed home ownership try: http://www.prosper.org.au/2007/11/01/negative-gearing-incomp...
Thank you in advance.