Richard Marles (Corio, Australian Labor Party) Share this | Hansard source

I rise to speak in support of the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008, a bill which introduces the National Rental Affordability Scheme. It does that by amending the Income Tax Assessment Act 1997. This is another commitment that was made by Labor in the lead-up to the election which is now being fulfilled by Labor in government. This legislation is part of the government’s response to the national housing affordability crisis and the national affordable housing shortage. That is a response which involves a $2.2 billion commitment in housing measures that were announced in this year’s budget. They include $1.2 billion for first home buyer savings accounts and $512 million for the Housing Affordability Fund. It involves the green paper consultative process around homelessness, with a white paper in relation to homelessness due later this year.

Housing is fundamental to the principles of social cohesion and individual wellbeing. The great Australian dream of home ownership has become a distant memory over the past decade and in some cases an impossible objective to achieve. The Rudd government is committed to assisting Australians to reach that goal of making housing an affordable objective irrespective of whether or not Australians choose to rent or buy, and this bill forms part of the government’s response in relation to that.

Accessibility to homeownership has long been one of the defining attributes of egalitarian Australia. As early as 1911 almost half—49 per cent—of Australian households owned or were purchasing their own home. Despite the Great Depression and two world wars, that level was maintained right through until 1947 when 53 per cent of Australian households owned or were purchasing their own home. That figure peaked in 1966 at 71.4 per cent and has since then been hovering in the high 60 per cents. By international standards that represents a significantly high level of homeownership. Countries such as Austria, France and Holland all have homeownership in the mid to low 50 per cent range. Germany, for example, has a level of homeownership which hovers just above 40 per cent. But, in Australia, at the same time that homeownership levels have remained high, housing affordability has been in decline.

When the Housing Industry Association first commenced its affordability index in 1984, the rate was at 203.9. That represented a comparatively affordable level of housing. It represented a median house price back then of $61,000 a year, monthly repayments of $496 and a repayment to income percentage of 14.7 per cent. By December of 2001 that index and those figures remained comparable. The index was at 205.2. The median house price had jumped to $210,100 but the monthly repayments were at $1,049, which meant that the repayment to income percentage was almost the same at 14.6 per cent. But it is at that point that we have seen a dramatic fall in housing affordability. Since 2001 this index has been in freefall. By March of 2008 the affordability index was down to 103.1. It was at the lowest level in its recorded history. The median house price was at $425,600, a figure which had more than doubled in six years. Monthly repayments had climbed to $2,799, representing a 166 per cent increase on the 2001 figure and the repayment to income percentage was at 29.1 per cent—more than double the 2001 figure.

To put that in some form of context, mortgage stress has often been defined as 30 per cent of a household’s income being spent on household costs. So what this was saying was that in March of 2008 the average percentage was hovering just below a level which is described as mortgage stress. As a result, homeownership went from being the dream of every working Australian to becoming a nightmare in many cases.

At the time of the last election in 2007 over a million households in Australia were under mortgage stress, and 75 per cent of those households earned less than average weekly earnings—hardly a surprise. The main victims of mortgage stress, again, were those under the age of 35, people who had bought their first home in the years between 2000 and 2004. All of that then begs the question as to what the former Howard government did in the period between 2001 and 2007 when we saw such a dramatic reduction in housing affordability, such a dramatic increase in the cost of housing. Despite repeated warnings from the industry, that government found the nearest sandpit and plunged its head into it. Despite repeated calls from organisations such as the Urban Development Institute of Australia, the Housing Industry Association, the Tenants Union and none other than the Reserve Bank of Australia, the Howard government did almost nothing.

The figures and arguments from those organisations were indisputable. The Urban Development Institute of Australia in 2007 released a report showing that only 39 per cent of Australians could afford to buy a house in their local area, compared to a figure of 96 per cent in 2001. In 2005, the Tenants Union called on the federal government ‘to commit to a housing plan that includes providing genuine housing affordability’. But still we saw no action on the part of the Howard government. The Housing Industry Association repeatedly warned of the chronic shortage of new housing stock and how that linked to other housing issues. That led Mr Harley Dale, the chief economist of the HIA, to say in 2007, in reference to the housing shortage:

The situation for new home building will in turn sustain the current problems of struggling first home aspirants and tightening rental markets.

Despite all of that, the Howard government did nothing. It ignored repeated requests and pleadings on the part of the industry. It disregarded data from the Housing Industry Association and the Reserve Bank of Australia and it was deaf to the cries of the Australian public who are feeling the housing pinch.

In my electorate of Corio, which covers a large part of Geelong, we see a situation which is probably similar to situations all around Australia. The median household income in Geelong, according to the 2006 census figure, was $840 a week, compared to a national average of $1,027 a week. The median house price was $257,500. If you assume the mortgage repayments on a loan constituting 85 per cent, say, of the purchase price at a current market rate of around 8½ per cent over a 25-year standard variable loan, that amounted to $406.50 per week in mortgage repayments. Based on those figures, you can see that the average household expenditure in my electorate on mortgages was approaching almost 50 per cent of weekly income.

The single most significant reason why we saw the lack of housing affordability go up was the 10 interest rate rises in a row which occurred under the Howard government. Thankfully, the people of Geelong and the people of Australia are beginning to receive some respite with the most recent round of interest rate cuts. The Rudd government came to power acknowledging that there was much work to be done in the area of housing, a problem which has grown over the course of the decade. This problem will take a lot more than the 11 months the Rudd government has had in office to fix. There is clearly no silver bullet in relation to this problem. Having said that, I also note that the Rudd government has come into office with clear policies, as seen in this legislation. That stands in stark contrast to what we have seen from the other side of the House—a coalition which offered very few policies, if any, in government. They offered nothing tangible in relation to this issue at the last election and we have seen absolutely nothing come from the Liberal Party while in opposition.

A recent visit to the Liberal Party website to see what the shadow housing minister, the member for Cook, has done in his first few weeks in the job reveals that he has done not much at all. I suppose at least we have to commend the opposition on having a representative responsible for housing. He has issued three press releases since coming into the job. On 30 September he identified that there was ‘a gap between supply and demand for housing right across the country’, an insightful observation, but one that has come about five years too late. But having made that observation, there are no clear policy solutions offered to deal with that observation. Again, on 2 October, the same issue was identified and again no policy solutions were put forward. On 8 October, there was another press release identifying the same issue and the only policy response we saw at that point was, ‘Our approach will be driven by practical economic policies that address the supply challenges in the market.’ That is hardly an edifying comment about the direction in which the opposition would go in terms of this issue.

The Australian people waited over a decade for the coalition to formulate a housing policy and it appears from what we have now seen that we are still waiting to see a housing policy from the other side. It begs the very obvious question: why would they bother to have a shadow housing minister if they are not actually going to produce any housing policies? As I said, by contrast with that, the Rudd government has had a very clear position in relation to this.

A division having been called in the House of Representatives—

The Rudd government have been listening to the warnings of the industry and it has been hearing their calls. We listened to ideas and suggestions that came from the participants of the National Summit on Housing Affordability last year. From that a discussion paper was produced on the Australian housing market which was titled New directions for affordable housing. That of course included a discussion of, amongst other things, the issue of the shortage of supply in housing—and it would do well for the new shadow minister for housing to perhaps read that document and to learn something about these issues. We took these policies to the Australian people at the last election and since coming to office the Rudd government has been working to implement them.

We have for the first time a Minister for Housing. We introduced and committed funding to real policy responses such as the First Home Saver Accounts, the national Homelessness Information Clearinghouse, the Housing Affordability Fund, the National Housing Supply Council and the electronic development assessment to speed up the planning approval process, and of course as late as last week we had the doubling of the first home buyers grant, a tripling for buying a new dwelling. And we have the National Rental Affordability Scheme, which is the basis of this legislation.

The object of this scheme is to create affordable rental housing and reduce rental costs. Its implementation is forecast to create 50,000 new rental properties at a cost of $623 million in its first four years, and it does so by encouraging investment in new dwellings which, following a government incentive to the owner, can then be offered for rent at 20 per cent below the market rate. This will provide an option of affordable housing for low- and moderate-income households. The government incentive to the owners comprises a Commonwealth contribution of $6,000 per dwelling per year and then a $2,000 in-kind contribution from state and territory governments per dwelling per year. These contributions can be taken as a tax offset or as a payment and the incentives will be provided for a period of 10 years. The incentives will be indexed against the CPI so that they keep pace with inflation.

This scheme has been developed in consultation with the Council of Australian Governments, which agreed to its implementation in March of this year. It will be reviewed in its early stages to ensure its effectiveness and scope. It is envisaged that if demand for the scheme is high then another 50,000 properties will be offered from July of 2012.

In conclusion, this legislation is part of a suite of measures that constitutes the government’s response to the issues currently facing the Australian housing market. We have acknowledged not only the existence of the problem but also its gravity and complexity. The people of Geelong and the people of Australia are feeling the pinch. We have not got into this position overnight; it has taken the better part of a decade of neglect and it is going to take some time and some work to fix. But this government has a plan to do that and that plan is being implemented. It stands in stark contrast to those opposite who do nothing but continue to offer empty rhetoric and platitudes to the Australian people. They seem utterly disinterested in the plight of ordinary Australians when it comes to affordable housing. Housing, as I said, is fundamental to social cohesion and indeed the Australian way of life. The Rudd government acknowledges this, even if those opposite do not, and this legislation will assist Australians by providing more affordable rental housing and in that sense provide more affordable housing options to all Australians. I commend the bills to the House.

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