Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Hansard source

I am delighted to speak on the First Home Saver Accounts (Further Provisions) Amendment Bill 2008. It represents the final parts of the First Home Saver Accounts scheme, already passed in the House in June 2008. The amendments represent the delivery of another election commitment by the government. The bill includes various provisions to make the First Home Saver Accounts scheme operational. These provisions include a system for dealing with unclaimed moneys; amendments to secrecy and information-sharing provisions between the ATO, APRA and ASIC; and also a mechanism for dealing comprehensively with family law situations. The system for dealing with unclaimed moneys will be similar to that which operates more broadly in relation to non-superannuation investments. That is, moneys in first home saver accounts that have been inactive for seven years and where the provider has been unable to contact the account holder will be paid to the Commonwealth. Individuals who are later identified as the account holder will of course be able to make a claim for that money. It is a system with which I am certainly personally familiar, having been a superannuation trustee for quite some time prior to being elected to parliament, and it is one that can work quite efficiently.

Amendments are also being made to ensure that the secrecy provisions enable agencies to access the information they require while at the same time protecting privacy. The bill will also allow relevant information sharing between the Commonwealth and the states and territories, and importantly will allow individuals to access information about their partner’s first home saver account without the need to formally commence legal proceedings. The provisions will ensure that payments under a family law obligation—for, example, payments to an account holder’s spouse—receive the same treatment as they would if they were paid to the account holder. The legislation also introduces a framework for imposing a levy on first home providers to provide funding for the Australian Prudential Regulation Authority to carry out its supervision of financial institutions that will offer these accounts. That is an important measure to ensure prudential regulation relevant to the first home saver accounts. In summary, these changes provide for the implementation of first home saver accounts and will help Australia confront the housing affordability challenge. That is an area, as I am sure people are aware, which is in desperate need of national leadership—something that has been lacking over the past decade in particular.

When you consider some of the trends in housing affordability over the last decade, that point is underlined in a most stark way. We have had declining rates of home ownership, with fewer first home buyers over the last decade. We have had declining availability of rental properties, especially affordable rental properties. For example, the vacancy rate for rental properties in my region—in western Newcastle and the western area of Lake Macquarie—remains well under two per cent. The third trend that we have seen over the last decade in particular is the declining availability of social housing, and the fourth trend that has been evident is the declining availability of affordable housing more generally. This point has been made a number of times but it is worth reiterating. The last government’s commitment to addressing these trends was so insufficient that there was not even a minister for housing dedicated to addressing this problem for so many Australians.

According to official statistics it has never been harder for first home buyers to purchase a first home in Australia. To buy an average priced home you now need a six-figure salary to service the loan. In 1996 the average house cost was about four times the annual wage, and today it is no less than 7½ times the annual wage. A typical first home buyer now spends a third of their income on mortgage repayments. This compares to a figure in 1996 of less than $2 of every $10 earned. The proportion of homes being bought by first home owners has declined from 21.8 per cent in June 1996 to 17.1 per cent today. I mentioned rental vacancy rates in my region a moment ago. More generally, rental vacancy rates in all capital cities are below two per cent, with some cities now under one per cent—little wonder it is extremely difficult for people to find rental accommodation.

The National Centre for Social and Economic Modelling recently undertook new research for the government, which found that 1.1 million low- and moderate-income families are in housing stress. These families, who are in the bottom 40 per cent of all earners in Australia, are spending more than 30 per cent of their limited disposable incomes on housing costs. Last year there were 220,000 more families in this boat than there were in 2004—an increase of a quarter in just three years. You can see from these figures just how pressing the housing affordability problem really is.

Families with children have been hit particularly hard, along with the young singles who are entering the housing market for the first time. The number of older households in housing stress is also on the rise, with the number of families headed by a person aged over 70 having doubled since 2004. In recent weeks I held a forum on housing affordability in my electorate of Charlton, which over 100 people attended. It was also attended by the Minister for Housing, for which I am grateful. In people’s stories the practical, real-life effect of these trends was extremely evident.

Housing has always been a key economic factor in our society, and affordable housing is one of the most important drivers of labour mobility. It helps to determine whether people are prepared to move to take up job opportunities in areas where there are labour shortages. On homeownership in particular, there are intergenerational problems associated with declining affordability and the effect of more limited homeownership. Owning a home is an important source of economic security for working families, and most particularly for older Australians as they reach retirement age. In our community nationally, the single most important way of accumulating wealth and saving for retirement has always been to purchase a home.

We have traditionally been a country with high rates of homeownership, but the numbers are falling at the same time as the rate of homeownership in other countries is increasing. That means social inequality must be widening. When you take the experience around our society over many generations, the capacity of people to save has obviously been diminished by these trends. In fact, 69 per cent of Australians own or are buying their own home, but this is now well below the rate in the United Kingdom and, interestingly, Ireland, where the economy has been booming for some years and where 77 per cent of people are homeowners. That is a great achievement in the Irish economy.

All of these trends are why the government is taking action and why the first home saver accounts are so important. They are only a part of the picture in trying to address housing affordability but they are nonetheless an important element of it. One of the biggest barriers to becoming a first home owner is saving a decent deposit. Increasingly, first home buyers are shut out of the housing market because of their incapacity to save that deposit. To try to reverse these trends, the government has committed $1.2 billion to establish first home saver accounts. These new accounts will be up and running in the second half of this year.

On the issue of saving a deposit, traditionally the position was that mortgage-lending financial institutions required first home buyers—and, more generally, others looking for a mortgage to buy a home—to save at least 10 per cent of the house price as a deposit. However, confronted with the trend of people having difficulty in saving a deposit, and in a desire to keep mortgage lending going at reasonable levels, just about all financial institutions relaxed that requirement. Of course in recent years a number of home lenders relaxed it to the extent that virtually no deposit was required at all. So it is my belief that the new first home saver accounts are extremely important in this context and in the prudential lending context as well.

The accounts represent the biggest reform in our savings culture since the last Labor government introduced compulsory superannuation. The accounts will provide a simple, tax-effective way for Australians to save a meaningful deposit for the purchase of their first home. Since the announcement of these new accounts, the government has increased the benefits to low-income earners to try to give greater impetus to the success of this program. We have extended the scheme to provide assistance to low-income earners through the provision of a minimum 17 per cent government contribution on after-tax contributions of up to $5,000 each year. This means that a couple earning average incomes and putting aside 10 per cent of their total income for their first home could be able to save a deposit of $80,000, depending upon the returns. This is $12,600 more than if the couple had used an ordinary deposit account. That is a significant advantage for people looking to save to purchase their first home.

Given the other initiatives that Labor is implementing in a wider government approach to policymaking, the first home saver accounts, as I indicated before, should not be seen in isolation. They are part of a much broader approach to housing policy, in particular trying to address the problem of housing affordability. The government has already announced the establishment of the National Housing Supply Council to assess current and future demand for housing across Australia. Another significant initiative is the Housing Affordability Fund, in which the government will invest $512 million to lower the cost of building new homes by working with all levels of government, particularly local government, to reform infrastructure and planning requirements.

For people who still cannot afford to buy a home or who are not perhaps at that stage of their life, there is also the National Rental Affordability Scheme. I think it is fair to say this is an ambitious scheme and an important initiative. It aims to create a new asset class for institutional investors in affordable residential housing. Taking my past experience, I was a director of Members Equity Bank, which is a significant mortgage lender, and I was also a trustee of a $30 billion superannuation fund, AustralianSuper. In my trustee role of the fund and in my directorship of the bank with others as potential investors in housing, we were always looking for ways to make the numbers work to create a better investment environment for institutions to invest in affordable rental housing. The NRAS is an important initiative that I think will help make the investment calculus work much better for institutional investors—and we have seen that in the early response to the scheme. The scheme will provide an annual incentive to institutional investors to build new homes and rent them to low- and moderate-income earners at 20 per cent below market rates. The Australian government will provide institutional investors with an annual $6,000 refundable tax credit for new buildings. State and territory governments have agreed to contribute at least $2,000 per annum in cash or in kind to match the Commonwealth’s contribution. I think it is fair to say that this initiative was unimaginable under the previous government. They did not have the ideas and did not seem to have any impetus for addressing housing affordability at all. I remember a number of comments by the then Prime Minister and the then Treasurer in which they essentially washed their hands of this problem. Also, their government was more intent on blaming the states for the problem than really working with them.

I have been pleased by the news that in recent times no fewer than 244 applications for this scheme have been lodged, proposing nearly 13,000 new dwellings in the first year of the scheme. The government plans to approve 3,500 new dwellings initially, followed by 7,500 next year and 25,000 in the following two years. In other words the scheme is so popular that in the first year of operation it will be oversubscribed by a factor of almost four. So you can see that this new initiative is affecting the investment calculus for institutional investors and will add to the supply of affordable rental housing. It is in this context that the first home saver accounts should be viewed as part of a wider package of measures to increase housing affordability. They are part of the government’s attempt to make up for more than a decade of neglect by the Howard government, in which housing affordability simply worsened for many Australian people. Housing became far more difficult and the capacity to become a homeowner was of course put out of the reach of many people. Homeownership rates declined, especially those of first home buyers. The Howard government was so relaxed about these trends that there was not a single significant initiative to address the problem. That is the legacy that the Rudd Labor government inherited when it won government in November last year—a legacy that hurt hundreds of thousands of Australians. That is why this bill is so important. I am very pleased to be able to support it in the House.

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