Judi Moylan (Pearce, Liberal Party) Share this | Hansard source

I rise to speak on the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008. I think that I would like to start with a quote from Julian Disney from the University of New South Wales because for many years he has been a fairly lonely voice, may I say, calling for something to be done about the housing crisis in Australia. In a paper that he put out commenting on this scheme he said:

Lack of affordable housing strikes at the heart of our lives, our communities, and Australia’s future prosperity. It impoverishes people, erodes families, destroys jobs, weakens the economy, and damages the environment.

He went on to say:

Problems of unaffordable housing have worsened alarmingly during the last 10–15 years—

and I think I have been listening to him talking about this for about that length of time. He has been supported by other organisations like Shelter and ACOSS. Many other organisations have also been heard, but they have not been really listened to. Professor Disney went on to say that these problems have been known about over that period and he continues:

average house prices relative to household income have almost doubled

average monthly payments on new loans have risen by more than 50 per cent

the proportion of first homebuyers has fallen by about 20 per cent

the proportion of low-rent homes has fallen by at least 15 per cent

opportunities to rent public housing have fallen by at least 30 per cent.

These are really very disturbing figures.

The government purports that the design of the National Rental Affordability Scheme will encourage large-scale investment in new affordable housing stock by the provision of tax offsets and direct cash incentives for the development of new housing stock or new dwelling stock providing it is let to eligible tenants and at a benchmark rental over the 10-year life of the scheme.

My concern is that, at the time of preparing this speech, the income test applying to the scheme is not specified, the market rate of rent remains undefined—that is, the benchmarked rate—and the legislation is silent on who the eligible investors will be, apart from the specified institutional investors. These are the key elements that go to the heart of this legislation and the possibility of it providing the 50,000 affordable rental dwellings that it promises to deliver. Fifty thousand is the stated number of dwellings that the scheme should deliver, all things being equal. I think that this is an optimistic view—and I think others share that view—if the scheme is fully subscribed to. The setting of the market rate of rent will form the basis for the rental being charged by developers opting in to the scheme. To qualify, rentals must be set at 20 per cent under market value. This alone could determine the level of interest in investing in the scheme.

We had a Senate inquiry into housing affordability, which looked at this scheme. There were some very good contributions to the Senate inquiry. One of the people who had a bit to say was Ms Kakas from the Property Council of Australia. I hope I have pronounced the surname correctly; it sounds like it might be Greek. I might need the help of my colleague in the chamber the member for Kooyong. Ms Kakas made a good contribution—very constructive. She said:

... we have the opportunity, if the National Rental Affordability Scheme is properly designed, to bring some maturity and some changes into the marketplace to bring superannuation, developers, trusts and new ways of bringing products to market and to keep investors in place.

But she went on to say:

I think not having the detail certainly adds a level of constraint and speculation which keeps our development people as a whole putting their toe over the sidelines, saying, ‘We’d like to participate and we think this has real potential but we really need to see how it is going to work on the ground and whether or not there is some feasibility and flexibility there to allow for innovation to occur.’

I think these are real concerns. I do not want to be a wet blanket. I raised the matter of the housing crisis in this place immediately following the 2004 election, so I have long felt that more needs to be done. I applaud the Minister for Housing for taking this initiative but I think that it needs much more detail if we are going to be able to fully subscribe to it and even touch the side of what has become an immense problem in this country.

Without knowing the income test that is to apply to this scheme, we have no idea whether it will cover many of the service sector people working in regions, in particular where housing is expensive due to rapidly expanding workforces. The country town of Boddington, in the electorate of Pearce, is one such case. The goldmine has reopened, and the resulting population explosion has greatly increased property values and rentals, with severe shortages driving up costs. Indeed, the local government has spoken to me a number of times about this. They wanted to open up new land but the state Labor government—at that time—had done nothing to fund infrastructure services to the town. It was very difficult to develop land without the basic services of power and water supply and sewerage. The hands of local government were very much tied in that case—as I have noted is the case in many parts of my electorate, in the outlying country towns within an hour or an hour and a half of the city.

Despite the lack of critical detail as we debate the merit of the passage of this legislation through this House, measures which hold the promise of increasing housing stock for the rental market, it is a very welcome start. It is important, though, for us to understand that the serious state of housing availability and affordability in many cities and towns in Australia has come about largely due to the serious dereliction of duty of state and territory administrations under Labor governments primarily.

It has been reported that there is a shortfall of some 30,000 houses in the public housing sector alone, and in most areas it has been difficult to rent housing in the private sector even if you can afford rents of $500 or $600 a week. Some people in big cities have had to agree—and this is very recent—to pay six months rent upfront plus a bond to agents just to get to the front of a long list of applicants, and sometimes there are 30 or so applicants for one dwelling. This has left many families and individuals living in temporary accommodation, hiring caravans, living in cars or on the streets or, as I said, moving from one household to another. It is a very unsatisfactory situation, especially for families with children. Many people are experiencing a high level of rental affordability stress.

It is little wonder that we have reportedly over 100,000 homeless people in Australia. The shortage of both private and public housing is having a serious impact across the community, including on young single students and young families. But the situation is particularly dire for those on low and fixed incomes, such as pensioners—disability pensioners in particular—veterans and those who have little opportunity to increase their income stream. Those who rely on private rentals, which are scarce, expensive and continue to increase, are under particular stress. There are many reasons for the housing shortage and the high prices, which are out of the reach of many people. They can be resolved with proper management and with political will.

I want to acknowledge the constructive work done by the Real Estate Institute of Australia in outlining some of the speed humps slowing development and I acknowledge REIA’s endeavours to make recommendations on the way forward. Again, they have been a bit of a lonely voice in the wilderness. I think they have been coming to see me in this place for at least 10 years—that I can recall—over problems with housing shortages. They, along with many others, valiantly worked for several years to highlight the growing housing crisis. Poor planning has resulted in many Australians forgoing the dream of owning their own home or finding affordable, reliable rental accommodation.

The coalition government supported greater land supply and was joined by the Residential Development Council in calling for the adjustment of public policy settings. The deliberate restrictions on the release of land for new housing by state governments have been one of the key drivers of spiralling home costs in recent years. In 2006, RDC Executive Director Ross Elliott identified three things driving the decline in housing affordability. Firstly, deliberate restrictions on the release of land for urban growth have forced up raw land prices faster now than in almost any period in living history. Secondly, not only is the land too expensive but new developments are now heavily taxed to the point where these taxes, charges and levies are adding up to $200,000 in costs for a new house and land. Mr Elliott said the third problem was a dysfunctional system of development assessment, which was adding unnecessarily to development costs, adding to needless delays and inflating the price of developed stock.

Try getting your applications through some local government authorities—and this is not what Mr Elliott said but is my experience and my understanding. Many local governments are underfunded and understaffed. I know for a fact that it can take 12 weeks to get an acknowledgement that a letter of inquiry has been received by local government, and then no answers are forthcoming on the development questions. In my view there needs to be a federal, state and local government strategy to do something about supply, to remove unnecessary roadblocks and delays in the development approval process and to work to bring down government taxes and charges on real estate transactions for home owners and rental accommodation developers.

As I said before, I spoke in this House in 2004 about the high cost of government taxes and charges on each real estate transaction, highlighting the fact that the increase in the stamp duty revenue of the states since 1998 has been 120 per cent, with Sydney a whopping 171 per cent and Western Australia 110 per cent. The Productivity Commission found that:

… for a home buyer required to provide 10% of the purchase price for a deposit—

this is for an average priced property—

a stamp duty of 5% increases the deposit gap by 50%.

Meeting this extra upfront cost might require first home buyers to delay their entry to the market …

The Urban Development Institute of Australia in 2006 found that the ‘increases in government fees and charges as well as the add-on cost to development land amounted to 21 per cent to 34.8 per cent of the cost of homeownership’. These are some of the problems that have made it much harder for those on low incomes to manage to pay increasing rentals in the private sector and to find housing in the public sector.

National figures from the Australian government housing data set in June 2006 showed that more than one-third of Commonwealth rent assistance recipients paid more than 30 per cent of their income on rent, after CRA was factored in. This situation has been exacerbated due to little progress by the state governments in maintaining adequate stocks of public rental properties, with unacceptably long waiting lists for public housing. For example, there were reportedly 16,000 families on Homeswest waiting lists in May this year in Western Australia—16,000 waiting for public housing. And this was at a time when the West Australian government, a Labor government, was selling off prime public housing sites, leaving properties derelict and not spending adequate amounts of money on renovating existing stock and certainly not putting very much money into the development of new stock.

Sadly, this measure, which seeks to attract private investment, is not actually going to provide for this particular section of the market. These are people who sometimes have chronic problems in meeting their rental payments and who have other social difficulties that would not make this kind of housing an attractive proposition to very many in the private sector, I postulate. We still have an obligation to take care of this group. And I am very concerned—deeply concerned—about the lack of affordable and suitable housing for people who have a disability, particularly those with a mental disability. In the past people with certain kinds of disability were institutionalised but they are now put out into the community and often these are the people who most struggle to find appropriate and affordable housing. Often they form the bulk of the people who today live on the streets. In a wealthy country like Australia, despite the financial woes of the world, it is totally unacceptable that we neglect so badly this sector of our population. We ought to be ashamed at what is happening to this low-income group in our community. It is just a disgrace. So there are 16,000 people on Homeswest waiting lists in Western Australia and I would expect that the figures are similar in other states.

Although it is pleasing to see that many key stakeholders, such as the Master Builders Association and the Housing Industry Association, to name two, were considered in the development of this legislation and while the $622.6 million is a welcome injection of funds into the rental housing sector to address the significant undersupply of new dwellings, it is, as I said, unlikely to be able to fill the gap. Somebody forecast that we need an increase of more than 200,000 new dwellings by 2009-10. So this is like a drop in the ocean. As I said, it is a welcome drop in the ocean but it is a drop in the ocean. I know that the states have been a party to this agreement and that they are making a contribution, but it is nowhere near the contribution that they should be making given the dereliction of duty that we have seen, especially over the past decade. I think much more could be expected of state governments in this respect.

There are some definite positives but there are some problems with this. I know that our shadow minister has put forward an amendment to the legislation and, in the interests of a bipartisan approach to what is a very serious problem in this country, that amendment ought to be considered and there ought to be greater clarification of some of the points that are causing concern in those investor groups that might help us to solve the housing rental availability and affordability problems in this country.

One of the other problems that I see with this legislation, I note in the little time I have left, is that, if a development is designed to convert existing residential stock in an established urban area to affordable housing stock based on a new design and layout that caters for specific disability groups or the ageing, that project should be worthy of consideration; however, I think we will find that such projects are excluded under this scheme. That is disappointing because, as I said, these people are amongst some of the neediest within our community with regard to public housing.

There are a number of other issues, probably too numerous to go through now in the time that I have available. But one other point is that this scheme does apply to existing housing stock where it meets the criteria, and it does apply to renovations. Again, that will prevent us from providing those 50,000 new dwelling units that we need just to begin to touch the sides of what is a huge gap in affordable and appropriate rental accommodation in this country. As I said, our shadow minister has identified some of these problems and put forward an amendment and, while we support this legislation, it would be good to see that amendment accepted.

See this speech in context