Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Sustainable Development and Cities) Share this | Hansard source

I rise to speak on the National Rental Affordability Scheme Bill 2008 and associated bill and to commend to the parliament the opposition’s amendment, which seeks not to decline to give the bill a second reading but to point to a number of opportunities to improve this scheme to make it more attractive, to have the interconnections between this initiative and others and the private market work better to make available more affordable housing.

I commend the opposition’s amendment to the House. It takes account of a range of factors such as the scheme’s seeming bias towards outer metropolitan developments, given the scale of eligible projects and the number of units that are concerned with that. It also encourages recognition of different land and development costs in different locations. There is also recognition that there is a need for people to evaluate the proposition that is put before them through this measure against the commercial opportunities of not participating in the measure. Some would say those benefits and costs are finely balanced—but I will touch on that a little bit later.

There is also an issue about responding to particular areas of housing stress—not stress in the mortgage sense but stress in the lack of availability sense, particularly for the aged community and those looking for accommodation that is within reach of support services. That goes to an issue that is very relevant in the electorate that I represent, the electorate of Dunkley, and particularly for the Frankston North community. Many Pines residents have been in their public housing units for many years and now their circumstances have changed. They have occupied the family home. Given the horrendous waiting lists for public housing in Victoria, you can imagine that any tenant that has secured the emotional and financial benefits of a public housing home would not be keen to let it go. You often see, particularly in areas within my community, public houses that are more family orientated being occupied by a much smaller household.

One of the propositions that I have advanced for some years now is the concept of housing conversion—recognising our different housing needs through different stages in our lives and better responding to circumstances. Yet, given the scarcity of public housing, you can understand why there is a locked grip on any kind of public housing, even if the three or four children that may have occupied it with the parents or single parent have long flown the coop. They do not want to let it go, because of the uncertainty over having some other kind of accommodation. I will come back to that in a moment.

Something I would particularly like to draw attention to is the interconnection between affordability and sustainability. One of the most appealing opportunities about any kind of measure of this nature is that it is a chance for us to send a clear signal to the building industry that sustainability attributes are highly valued—to not simply say that we are interested in them but insist upon them as part of the process. This means factoring in sustainability attributes in the design and in the technology that is employed—the use of solar powered hot water, even photovoltaic electricity generation systems, water efficient appliances and fixtures and fittings, the thermal orientation of a home to minimise the need for energy to adjust the climate inside, and the use of building materials that are complementary and look to manage the climate within that area.

All of the sustainability attributes where we as a nation have enormous opportunities should not be put on the table as ‘it would be nice if’ but as ‘this is what we are looking for’. That is not only because it is the right thing to do. Sustainability contributes to affordability, not just in the build phase with the selection of materials and the like but also once a dwelling unit has been established, as those sustainability attributes make its tenancy more affordable, with reduced water and energy costs and a better quality of the environment in which people live. More particularly, it sends a strong signal to the building industry and the market generally that these things are within our reach. They are entirely commercially viable, readily accessible, ready-to-be-deployed attributes. A leadership role from the Commonwealth when we are making these sums of money available would mean that we would be inculcating sustainability principles and objectives in the work, not simply mentioning them as an aside. I will come back to this in a moment.

The National Rental Affordability Scheme Bill basically puts forward a number of incentives and, as previous speakers have said, captures the elements of the ALP election policy. What is not being said is why we have got to the point where we are. Previous measures—particularly through the Commonwealth-State Housing Agreement, which saw $10 billion invested in public housing to support the efforts of the Commonwealth and the states over a decade—saw a few dozen extra properties become available. That is a national scandal. It is outrageous that, with the Commonwealth government providing that financial assistance and with the enormous demand, the excruciating waiting lists and the lack of hope and even promise, people well able to benefit from public housing cannot actually get anywhere near the front of the queue. To think that $10 billion was consumed over a decade with only several dozen extra dwelling units available across the continent is an absolute scandal.

I am not surprised Labor members with strong connections with state and territory Labor governments are happily avoiding a conversation about that. That is a decade of $10 billion of resources and we have very little to show for it. It is a credit to Mal Brough, the former minister, who went out and said, ‘Surely there are better ways,’ because that methodology is not going to deliver the outcome. He was a forward-thinking minister who said, ‘Let us try and see if there are new opportunities to bring about change and see if there are new ways of the Commonwealth interacting with the community, with the private sector, with housing organisations and with institutions, and let’s see if we can also give some encouragement to the state and territories to lift their games.’ That may well be the genesis of this bill. I am not claiming we would have gone about it the same way, but the need to do something different was unavoidably obvious when you looked at the money spent for the opportunities available for affordable housing under more traditional public housing models.

This bill deals with a refundable tax offset and other taxation issues related to the scheme. Its aim is to encourage large-scale investment in new housing by offering an incentive to participants in the scheme to increase the supply of affordable rental housing dwellings at reduced rental costs for low-, middle- and modest-income households. The idea is there are incentives available and they are outlined in the bill. Essentially, they look to secure a 20 per cent reduction in rent under the market value in return for the provision of about $8,000 in annual financial incentives—$6,000 from the Commonwealth and $2,000 from the states and territories—over a maximum period of 10 years. These incentives may be in the form of tax offsets or direct financial payments depending on the applicant’s eligibility. We note, and the Bill’s Digest draws out, the clear distinction about who may be eligible project participants, and that is something we hope to learn more about as the regulations are developed.

There are a range of phasings to bring online these scheme-induced dwelling units, with the ambition of some 50,000 incentives being available over the next four or five years. A considerable amount of funding has been made available and the scheme has been welcomed by the development industry and the community housing sector, so all of that sounds pretty good. That is encouraging at this stage.

I would like to just talk about a couple of aspects within the bill. Firstly, the commercial incentive is something that will need to be weighed up. The taxation or direct payment incentives in return for a discount on the commercial rent of 20 per cent will need to be evaluated by prospective scheme participants, and at this stage the commercial sector is working through the extent to which that is an attractive proposition or not. There is something that certainly I would encourage the minister to consider. Whilst those three avenues of incentive—whether capital gains tax relief, tax offset or non-assessable for tax purpose grants from states and territories, or in kind—are canvassed in the legislation, what is less evident is where the direct payment mechanism is for those that are not taxable, for the charitable organisations that may be involved. The advice I have had is that that is not canvassed in the legislation as it is drafted, and I would certainly encourage the minister to examine that just to satisfy the parliament that that is addressed adequately in the framing of this legislation.

A second issue goes to the composition of the scheme. The shadow minister, my friend and colleague Scott Morrison, has outlined how the way it has developed might in fact skew activity to the outer metropolitan and peri-urban parts of our community. I, for one, would think that is a positive, because I represent outer metropolitan peri-urban communities, but one of the things that we have found is the strong feeling of community connectedness that many people have with the areas within which they have grown up or spent much of their lives. We need to have a nimbleness within the scheme to bring about an availability of rental accommodation supported by this scheme, right across the continent—particularly in some of the inner- and middle-urban areas, where that threshold of dwelling units or houses may be difficult to achieve.

There is also an issue about the conversion of established properties. I have touched on an example in my own community in the Pines, where the type of housing that best suits a person’s needs may change over time. There should be scope to have that recognised or even to have established properties fully renovated at some expense, with a graduated incentive to recognise that investment. The net outcome should be a far improved opportunity for affordable rental accommodation. That idea has taken hold with some of the commercial property developers. If we are seeking to have the scheme appeal to that group, it might be worth hooking the scheme to a wagon that is already moving. That area could be examined also.

Another point is the issue of sustainability. The prospectus is circulating, and that is necessary because scheme eligibility is actually retrospective. The notional start-up date is 1 July 2008, even though we are not quite through the legislative and regulatory mechanics. The prospectus is circulating, and it seeks to tantalise people to become involved. It asserts that the offset and cash incentives will:

... make renting more affordable in two key ways, an overall increase in the number of rental dwellings and through the fixed term rental discount of 20 per cent.

That is a good call, but I wish it said there would be three-way attractiveness. It should deal with the sustainability issue. As an incentive it should be recognised and embraced—and not as in ‘it would be nice if’ but as in ‘this should happen’. The prospectus seeks to appeal to potential investors by suggesting that investing would help investors point to their social responsibility. They could report to their investors that they are doing the right thing and that the decisions that have been made are triple-bottom-line investment inspired. This should include sustainability. This would affect affordability at the point of entry, and the rent that would flow from it would be a factor. Also, affordability of occupying the tenancy would be improved because of reduced energy cost and reduction in water use. Hopefully, there would be some net gain in photovoltaic or solar electricity generation. That would be my sense. This is an opportunity that should be picked up. I encourage those present, particularly the officials present, to see whether there is scope to embrace that in the regulations. I understand the draft regulations are still being worked upon.

The prospectus, under the selection criteria and alongside ‘accessibility’, touches on ‘sustainability’ as a desired outcome. It points out at some length what the accessibility virtues of a proposal might be but does not tease out the sustainability virtues. When we go on further we see that there are some priority areas of interest. Again, all of that is heading in the right direction but I think we need to be more assertive about it. I think there is a need for leadership in these areas. We need to say, ‘No, it’s not satisfactory to build quick, readily constructible but less sustainable dwelling units just to secure this opportunity.’ We should be using the investment by the taxpayer to not only deliver the outcomes that we aspire to through this National Rental Affordability Scheme but secure something for the broader community. We could make greenhouse gains and water efficiency gains. I point to those, because everybody is talking about them. This is an opportunity to actually do something about them.

Part of my role as shadow minister for sustainable development and cities is to make sure that, where we are making enormous commitments of taxpayer resources, sustainability principles are embedded in our thinking and decision making, not just tacked on the end. There is an opportunity to do that. I urge—in the positive and constructive way in which I am seeking to raise these issues—the government to embrace these concepts and to see that they become embedded in processes like this. We have put forward a proposal that would see included in this scheme some of the rebate schemes that are available through other portfolios so that occupants would have an as-of-right ability to access them. That would be fine, but that would place the onus on the occupier. We should be saying to the developers, the proponents of dwelling units, housing developments and the like, ‘Under this scheme we expect you to do those yards and do them smartly.’ I would urge the government to take account of that. I point to that because this is what should be going on.

We look around and we see bodies of work—even Professor Garnaut’s body of work but more particularly the McKinsey work. That looked at climate change abatement opportunities in Australia. It highlighted that in the areas that are not only the most cost-effective but also cost-positive—that is, there is a net benefit for making these investments—you see things like residential heating and ventilation efficiency, refrigeration efficiency, lighting efficiency in residential areas and standby savings. These are just to name a few. There are also things like the handling of air and residential water heating efficiency.

We should acknowledge—and I again emphasise that this is not something we would like to or will take into account, as it currently is positioned under the draft regulations—that these are must-haves. Go and do your work proponents that make sure you do these things, and that will be something that the Commonwealth values. This is what the Sustainable cities report recommended, a bipartisan position. This is what the earlier work of the committee that I chaired, which looked at what sort of commercial signals we could send to see the uptake of these more sustainable technologies, was associated with. This is also the logic of the Australian Sustainable Built Environment Council, a peak body involving the Building Products Innovation Council, the Australian Institute of Architects, the Green Building Council of Australia, the Planning Institute and the Property Council. All of these people are calling for that kind of work, and we should make sure that sustainability is inculcated and embedded in the thinking of all areas of the Commonwealth and not simply bolted on as an afterthought or left to some other portfolio to pursue. There is an opportunity for all of us to do that and we should do something about it.

I will just illustrate the point. You can look at a place like California. Not too many people are living in caves in California. It is a lifestyle that is not that unfamiliar to ours, but contemplate the fact that the state of California has a little under twice the population of Australia and its GDP is almost twice that of Australia, yet it uses the same energy that we use. Australians consume twice the amount of energy for the same GDP output. To put it another way, Californians get twice the GDP output for the same amount of energy that we use. Why is that the case? It is because the kind of argument that I have been putting about inculcating sustainable thinking and opportunities into everything that we do is something they have been doing for some years. This is not some strange, remote, mung bean, hydroponic, bok choy inspired idea; this is reality—this is happening in places with a lifestyle not much different from our own. So why don’t we step up? Why don’t we say this matters? When we are using taxpayers’ money, why don’t we embrace the opportunities to pursue the very worthwhile, virtuous objective of pursuing sustainability objectives in parallel, to complement this measure? There is commercially viable, economically justifiable, proven, ready-to-install capability to achieve that goal. It will actually add to the objective that this measure seeks to pursue.

This is the same thinking that should accompany the recent stimulus package announcement about the First Home Owner Grant. If we are going to make more money available, why not reward and encourage the uptake of these technologies so that people benefiting from that Commonwealth taxpayer funding—and deservingly so—actually get additional gains, and so do we as a continent? The stimulus argument around upping a grant for an established dwelling is a little bit harder to follow, although it may make that transaction more achievable and it may be a confidence measure, but in terms of activity there is not really a clear link. There would be, though, if you said additional funds were available because we are looking to purchasers of established homes, first home buyers, to actually embrace some of this technology, put in the solar hot water services and make sure water efficiency is part of it. Let’s not miss this opportunity; there is a chance to do this with this measure.

See this speech in context