Mike Kelly (Eden-Monaro, Australian Labor Party, Parliamentary Secretary for Defence Support) Share this | Hansard source

It is a great pleasure to speak in support of the National Rental Affordability Scheme Bill 2008 and related bill, which were introduced into this House by the Minister for Housing, the Hon. Tanya Plibersek. I think all Australians will have cause to be grateful to the minister for presenting such critical legislation at this time in our economic and social circumstances.

The National Rental Affordability Scheme Bill is designed to assist some of the millions of Australians who missed out on the benefits of the years of growth that Australia enjoyed following the economic reforms of the Hawke and Keating governments. The failure of the Howard government to see that the benefits of economic growth flowed to all Australians, and not just to those who were already well off, means that large numbers of people are still struggling. Once again, it is the Rudd government which is taking the necessary action to see that the benefits of prosperity are enjoyed by all Australians.

During the bleak Howard years, the government fashioned a governance landscape devoid of ideas. They sat here fat, dumb and happy and coasted on the back of economic growth, assuming that everything would always be fine. They never addressed the underlying, unfinished business in our economy and society. The Rudd government understands that growth is not enough: there must also be equity in the distribution of the benefits of growth.

While house prices in Sydney’s eastern suburbs and on the North Shore have doubled and doubled again, in the rest of Sydney rents have risen sharply and the availability of rental housing has fallen. The same thing has happened in all Australian capital cities, as well as in many regional areas such as those I represent in Eden-Monaro. As Australia’s economy and population have grown and as house prices have increased, people on average incomes have found it more difficult to buy a home. Between 2000 and 2005, the average price of a home in Australia’s capital cities increased by 170 per cent. Not surprisingly, many young families who in the past would be buying a home are now unable to do so and they are staying in the rental market.

The total number of rental households has increased from 1.5 million in 1995 to 2.1 million today. This increased demand is keeping rental vacancy rates very low—below two per cent in Sydney—and is pushing up rents across all the capital cities and in many regional towns. In the June quarter of 2008, rents across Australia increased by 2.2 per cent in the quarter, the largest quarterly rise since 1989. The increase for the whole of 2008 is expected to be 7.7 per cent. This is of course higher than the rate of growth of average weekly earnings and higher than the rate of inflation.

Rents overall are now on average 60 per cent higher than they were in 1990. This may not be a problem for higher income people living in inner city apartment towers, but it is a big problem for working families living on average or below average incomes and trying to raise a family, juggle work and family and send kids to school, all the while paying a quarter or a third of their income on rent. This is a problem not just for the capital cities but also for areas such as Eden-Monaro, where employment is increasingly concentrated in the seasonally dependent tourism, hospitality and retail sectors. Many people working in these industries, earning average or below average incomes, need to find rental accommodation at a reasonable rental rate close to where they work. At present, many of them cannot do so. This is hampering the efforts of many young Australians to find jobs and start families and is also hampering economic growth in these areas. As a consequence of the seasonal nature of the employment on the South Coast of New South Wales, there is significant underemployment, which makes it very hard to budget for a rent that does not follow this pattern. There are those in rental accommodation who are sometimes turned out to make way for holidaying tenants who pay higher short-term rents.

This year, an important study by the National Centre for Social and Economic Modelling found that rental stress was affecting an increasing proportion of Australians. Rental stress is said to occur when households have to spend more than 30 per cent of their income on rent. The study found that nearly 300,000 Australian households—more than 10 per cent of the total 2.1 million households in rental accommodation—are already suffering from rental stress. Since average household size is about 2.5, that means that about 750,000 people are living in households affected by rental stress. The centre estimates that this number will continue to increase sharply if nothing is done.

The centre also found that rental stress is higher in non-metropolitan Australia than it is in the capital cities, and is highest in Queensland and New South Wales. The reasons for this are fairly obvious. These are the areas where an increasing number of Australians want to live. We are seeing a steady shift away from the capital cities and into coastal areas such as those I represent on the South Coast of New South Wales. Anyone who has visited towns in my electorate can see why people want to live in them, as many sea and tree changers increasingly are doing.

An additional factor in my electorate is that it borders the ACT. Canberra has the highest rents of any large Australian city. This means that an increasing number of people who work in Canberra are looking to rent in Queanbeyan, Bungendore and Jerrabomberra, and this is squeezing the housing supply and pushing up rents in these towns. As population and employment in towns in Eden-Monaro have grown, the provision of affordable rental housing has not kept up. With house prices in the capital cities booming, investment has gone into building inner city apartment towers for the well-off and new homes in the suburbs for private buyers, not into rental housing for people on average incomes and particularly not in regional areas. That is quite understandable; investment goes where the profits are likely to be the highest. The Rudd government understands this, while the previous government did not. That is why Kevin Rudd announced during the election campaign that he would make housing affordability, particularly for renters, a priority for a new Labor government. That priority is even more important now that economic uncertainty may affect the availability of private investment capital for rental housing.

In Eden-Monaro there are 8,700 households renting and, of them, over a third are suffering from rental stress—they are spending more than 30 per cent of their incomes on rent. Anyone who has tried to raise a family on an average or below average income while paying more than 30 per cent of their incomes on rent will know how tough that is. I certainly know it. I know it from what people in Eden-Monaro told me during the campaign last year and what they have told me since I was elected.

I also know it from my own personal experience. In 1966, when my father’s business partner ran off with their funds, my father was declared bankrupt and we lost our home. This led to a downward spiral in our family circumstances that seemed to have no bottom. Our family became homeless, and I will never forget living in my aunt’s garage in a row of five beds and surviving for some time on the charity of the St Vincent de Paul Society, including the bed I slept on. This situation led to my father falling back on alcohol, resulting in domestic violence, my mother eventually suffering two nervous breakdowns and my sister attempting suicide. I finally drifted away at the age of 16 and was eventually taken into the home of a couple of friends. Homelessness can be humiliating, soul destroying and the cause of family disintegration and relentless misery. We need to bend all our efforts to avoid such human wreckage in our society. Needless to say, I do not want to see the scenario depicted by the National Centre for Social and Economic Modelling of a further rapid rise in rental stress over the next decade played out in the towns of my electorate.

Rental stress contributes to a variety of other social problems: substance abuse, child neglect and abuse, poor school retention rates and crime. These all impose costs, social and financial, on the community as a whole. It is the responsibility of government to see that this scenario is prevented. I do not think the Howard government, with its faith that the market will always provide what the community needs, really understood that. In the absence of leadership from the previous government my community typically decided to get on with the job as far as it was within their power to do so.

In Queanbeyan a dedicated and hardworking team were determined to do something about the 50 to 100 homeless associated with mental illness. They formed a board under the patronage of the Hon. Sir William Dean, our former Governor-General, and galvanised our community behind the Home in Queanbeyan project to build long-term housing for these people, with associated treatment and support rolled in. So far, they have raised over $400,000 in public money and $250,000 from the NSW government through the efforts of my colleague Steve Whan, the hardworking state member for Monaro. I am pleased to say that the Rudd Labor government has committed to support the project with $2 million.

One of the benefits of the Home in Queanbeyan project is that it has challenged the paradigm of homelessness and mental health management and has forced the NSW government to rethink its approach. It has also produced the added benefit of enlisting community responsibility and participation in a move away from the disengagement that has been an unhealthy feature of modern society. I salute all involved in the Home in Queanbeyan project, whose public spirit and compassion adds depth to the worth of our community.

Another example of this spirit in Eden-Monaro is the Bega Eco-Neighbourhood Development project, or BEND project, reflecting in fact some of the comments of the member for O’Connor that we just heard. This is a wonderful meshing of community managed affordable housing, the promotion of renewable energy, energy efficiency, water self-sufficiency and localised food production. They have benefited from federal assistance in relation to their creative water solutions and are now looking to draw specifically on the affordable housing programs that have been introduced by the Rudd Labor government. This project combines community concern to assist those in housing crisis with inspiring creativity and imagination. The BEND team are truly leading the nation as to the art of the possible and local self-help.

Another way of easing the housing problem is through greater supply. I am pleased to have been able to assist in this respect by helping to create the circumstances in which the key Googong and Tralee developments in the Queanbeyan area may now be able to go ahead. This included resolving the 20-year dispute over the Googong Dam and the water supply for the future expansion of Queanbeyan and the ACT. This took a great deal of personal effort and the invaluable assistance of the Minister for Finance, the Hon. Lindsay Tanner, and the Minister for Home Affairs, the Hon. Bob Debus. I would like to express here my gratitude and that of my community for their support, along with the support of the Chief Minister of the ACT, Jon Stanhope. I have greatly enjoyed working with Jon to the mutual benefit of our communities and wish him well in the upcoming ACT election.

In relation to the Tralee development proposal, I believe we are close now to achieving an outcome acceptable to all parties and I was pleased to play a role in this process, particularly in ensuring realistic information was available. In addition, in my portfolio role with respect to my responsibilities for the Defence Estate I have been working with my colleagues toward the release of surplus Defence land to ease the supply situation nationally, which goes to the other comments of the member for O’Connor in relation to the overall price of land. This is part of a comprehensive national strategy by the Rudd Labor government—the sort of strategic approach that has been so sadly absent over the 12 years of the Howard government.

The Rudd government does understand the need for a constructive role for government in tackling the housing problems that Australia faces. We are not suggesting a return to the housing policies of the 1950s, with government building and owning high-rise apartment blocks or suburban housing estates. We want to see the private housing industry build the houses and flats that people want. But we acknowledge that at present the incentives provided by the market are not producing enough investment in rental housing for average- and low-income working families, and particularly not in regional areas like Eden-Monaro. That is why this bill is so important and so welcome.

This bill will establish the National Rental Affordability Scheme to encourage large-scale private investment in rental housing by offering an incentive to participants. It aims to increase the supply of affordable rental dwellings and reduce rental costs for low- and moderate-income households. The scheme will offer incentives to providers of new dwellings on the condition that they are rented to low- and moderate-income households at 20 per cent below market rates.

The bill provides for a refundable tax offset or payment to the value of $6,000 per dwelling per year, provided there is also a state or territory contribution in the form of direct financial support or in-kind contribution to the value of $2,000 per dwelling per year. The incentive will be provided each year for 10 years to complying participants and will be indexed in line with the rental component of the consumer price index. The scheme is estimated to cost $622.6 million over four years.

The modelling that underlies the bill calculates that the provision of these incentives will lead to the construction of approximately 50,000 additional new rental units by 2012. Since it is a condition of participation in the scheme that these units must be rented to people on below average earnings and at a rent below current market levels, this scheme is targeted at those that need it most. It will not be a scheme which mostly benefits those who are already well off, unlike so many of the uncosted, uncapped giveaway schemes of the Howard government.

The minister has estimated that 1.5 million Australian households will be eligible for tenancies under this scheme. Of course, 50,000 units will not accommodate 1.5 million households, but the construction of these units will serve to reduce pressure in the rental market and help restrain the rise in rents. The scheme will thus make a contribution to housing affordability across the board.

I should also point out that this bill is not an isolated measure but part of the government’s overall housing strategy, which included $2.2 billion worth of housing commitments made in this year’s budget. The announcements this week, I might add, of the increase in the first home owners purchasing grant to take this scheme from $7,000 to $14,000 for already constructed homes and $21,000 for homes to be constructed have been very welcome. That is most welcome news in my electorate, I can assure you. This is combined with the pension assistance. That assistance will benefit 25,000 pensioners in my electorate and assist with the imposts of their housing costs.

There would not be such pressure on the rental housing market if so many Australians had not been pushed out of home ownership by the 10 rises in interest rates under the Howard government. Hundreds of thousands of young Australian families who would have liked to start buying their own home could not do so because of skyrocketing house prices and high interest rates. These interest rate hikes had a greater impact than at any time previously because, with larger sums having to be borrowed to break into the market, the proportion of disposable income consumed by a mortgage was much higher.

That is why the Labor Party held a housing affordability summit before last year’s election. Kevin Rudd, Wayne Swan, now the Treasurer, and Tanya Plibersek, now the Minister for Housing, met with economists, developers and industry representatives to hear ideas and develop solutions. One of the proposals that came out of that summit was the Housing Affordability Fund. The fund tackles two major impediments to housing supply: costs which result from planning delays, and the impact of infrastructure charges. The Housing Affordability Fund will give local councils the chance to improve housing affordability in their communities.

The Housing Affordability Fund has been welcomed by local government and the housing industry. Mr Wilhelm Harnisch, the Chief Executive Officer of the Master Builders Association, said:

The HAF is a welcome return of the Commonwealth into this vital part of the Australian social fabric and the economy. There has been a decade of policy neglect in addressing the supply side barriers and the HAF is supported by industry as a first and vital step in redressing this area of policy neglect.

Let me repeat that: ‘a decade of policy neglect’. That is not me talking and it is not the minister talking; that is the verdict of a leading representative of the private housing industry. That is a pretty damning judgement on the previous government, a supposedly pro-business government, from someone who is in a position to know and who has no political axe to grind.

The minister said in her ministerial statement last month that the Rudd government was elected to tackle the problem of housing affordability and that since last November the government has taken that mandate seriously and delivered on its commitments. I am very proud to be part of a government that is delivering on its commitments. The people of Eden-Monaro sent me here to be part of such a government, to see that the benefits of Australia’s prosperity are made accessible to all Australians, whether they live in Bellevue Hill or Bega, in Toorak or Tumut. I take that mission seriously and that is why I am very pleased to commend this legislation to the House.

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