Sharon Bird (Cunningham, Australian Labor Party) Share this | Hansard source

I rise to support National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008. These bills seek to address a long-emerging problem in our housing economy whereby people are increasingly stuck at the level of accommodation in which they are residing and are unable to move through the system. By this I mean—as the previous speaker outlined and as I know through direct personal experience—we have the phenomenon of adult children living for extended periods with their families because they cannot access rental accommodation or save a deposit to get into an affordable first home. The old model, of course, was that people lived at home probably until they went on to post-secondary education or a job. At that point they moved to fairly low-rent accommodation for a while—shared accommodation and so forth. They got their first job, were able save a deposit and move into their own first, normally small, home and gradually either extended or upgraded over their lifetime. As a result of that, in this country we have a very high degree of security behind people in their retirement via the fact that they own their own home. We have seen that pattern, which has been a long-established one in our society, vastly disrupted over recent decades. In this package the government has had, I believe, the foresight to identify that there will be far-reaching consequences not only for our society and communities but also for our economy if people are unable to sustain themselves over the longer period and have their own homes by the time they are at retirement age.

The legislation before us first identifies that part of the market—the rental market—where clearly barriers to access are emerging and the trap of rental stress is being created for people. Interaction in that end of the market is particularly important in the issue of homelessness, because service providers trying to move the homeless into low-rent accommodation are increasingly competing with people who are unable to move out of that level of the market. This legislation is important both in providing rent relief in our communities and in being part of the solution to the homelessness issue. I will come back to that very briefly at the end of my comments.

The object of the bills before us is to increase the supply of affordable rental dwellings and thereby to also reduce rental costs for low- and moderate-income earners. Many speakers today have talked about the pressure on those in low-income types of accommodation. Indeed, even moderate-income earners, the people we rely on—policemen, teachers, council workers and all those service providers in our community—particularly if they are living in high-demand areas, are finding their income is increasingly stretched in providing for rental accommodation.

The scheme encourages large-scale investment in affordable rental housing by offering 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. With some of the increases we have seen in the rental rates that will barely get us back to a few years ago but will be a significant improvement for people under stress. The incentives comprise a Commonwealth contribution of $6,000 per dwelling per year and a state or territory contribution in the form of direct financial support or an in-kind contribution to the value of $2,000 per dwelling per year. The incentives can be in the form of a refundable tax offset or payment. The incentives will be provided each year for 10 years to complying participants and will be indexed in line with the rent component of the CPI.

The National Rental Affordability Scheme is a key part of the government’s $2.2 billion affordable housing package. The government’s package will increase the supply of affordable rental homes, help people save for their first home, lower housing infrastructure costs and build new homes in order to provide for the homeless. The associated National Rental Affordability Scheme (Consequential Amendments) Bill 2008 makes amendments to the Income Tax Assessment Act 1997 to provide for the refundable tax offset and to ensure that state and territory contributions to entities participating in the scheme are non-assessable and non-exempt income for tax purposes and also that there are no capital gains tax consequences for receipt of incentives under the scheme.

If market demand remains strong, the Commonwealth will make a further 50,000 incentives available from July 2012. And, with such wonderful policies and programs in place, I am sure we will still be in government in 2012 to see that through to its injection into the system. This will help to build another 50,000 affordable rental dwellings. The establishment of the scheme will offer the flexibility required by changing circumstances and conditions in the rental market, including determining market rent, tenant eligibility criteria and acceptable periods of vacancy. The scheme will be reviewed to test whether it is adequately focused, whether there needs to be simplification of the scheme reducing the administrative burden and whether there are issues of noncompliance that need to be addressed.

I would just like to turn to the situation in my own seat of Cunningham. For those who are not familiar with it, it is basically Wollongong. It is a beautiful part of the world. It is a coastal area on a main railway line. As a result of this, it is a very popular place for people to live. Indeed, it has been under significant housing pressure because people are able to sell up in Sydney and move down to Wollongong and still access employment in Sydney. In my seat, one in four of my working constituents travel to Sydney to work. Twenty-five per cent of the working population leave every day to travel to Sydney. Beyond the broader infrastructure pressures that has provided, it has provided real pressure on housing as well. When that is combined with the fact that we have a world-class, fantastic university attracting students locally but also significantly from regional areas of the state and from overseas, you can imagine the converging pressures that we are experiencing on the regional accommodation market.

In my seat, there are 3,932 rental households in rental stress. The total number of renting households in Cunningham is 9,448. If you do the quick sums—I cheated by doing it on a calculator earlier—that tells you that 41.6 per cent of my renting households are in rental stress. That is as a direct result of the fact that we have had those converging pressures at the same time as it is very difficult to create new housing stock because we are placed right between the sea and the escarpment.

The pressures are very significant in the rental market. Rental stress of course means that people are forced to relocate and find it increasingly difficult to relocate. Often they get into back-payment problems. They are thrown out of a particular accommodation and then they have to try and find alternative accommodation. Or, at that end of the market, an elderly couple might discover the neighbourhood they are in is a university rental area. The lifestyle clashes that occur mean the block of flats or whatever are not appropriate for them and they have to move again. We see a lot of that in our area. Sadly, as that pressure hits home, they start cutting back on the essentials in order to just keep a roof over their heads. That can have quite dire consequences of course in terms of their health and wellbeing as well.

The Illawarra Regional Information Service’s Economic report 2008: issue2 recently pointed out that the Wollongong statistical district is currently going through a unique period characterised by a sudden drop in rental property vacancies. As recently as June 2006 there was an average of 175 houses and 360 units listed for rent in the Saturday edition of the Illawarra Mercury. Just over two years later there has been a large-scale decline in those numbers. In the December quarter of 2007, only 87 houses and 170 units—half the earlier numbers—were available. Median rental prices have also been steadily increasing in the Wollongong, Shellharbour and Kiama local government areas. The IRIS study also points out:

Contrary to conventional wisdom, Wollongong may actually be a more expensive place to rent a property than Sydney and New South Wales when the relative sizes of renter’s incomes are taken into account.

I think that indicates one of the drivers behind 41.6 per cent of renters being in rental stress. The study noted the medium rent of family households in Wollongong is 26.1 per cent of household median income, which is higher than Sydney at 23.5 per cent and New South Wales at 22.7 per cent.

Wollongong and the Illawarra’s population will of course continue to increase. In some ways, I think we have underestimated the growth in population that is taking place and will take place in the future. That will place increasing pressure on the housing and rental market in our region and in my seat in particular. The increases in the first home owners grant to $14,000 and $21,000 are undoubtedly welcome. I am sure my colleague the member for Throsby, Jennie George, will see a lot of activity in her seat because most of the new housing in our region goes up there. I am sure a lot of the renters in my more cramped seat will be looking for those opportunities as well.

In my final few moments, I would like to say that in December last year I talked to several of the homelessness and emergency service providers in my region. They are acutely conscious of this decreasing pool of available affordable rental accommodation. Most services aim to be an intermediary—that is, to take people in in crisis or difficulty and then move them into a more sustainable, long-term situation. That is becoming more difficult for them. I particularly want to thank Southern Youth and Family Services—Narelle Clay and her team. They offer six different services ranging from crisis refuge to medium-term accommodation, to the point where they find independent living and then provide support services. I was horrified to learn that hundreds of young people are turned away every month because they just cannot provide enough accommodation. I also went to see the accommodation St Vincent de Paul provide for homeless men. They said that people come down from Sydney on the train thinking they will go to a nice coastal area where it is more pleasant and friendly, but they find it impossible to get accommodation. I thank both of those organisations for providing me with some fairly sad but important information on the challenges facing our region. This is an important part of an overall package and it is a really innovative approach that finally a federal housing minister has been able to progress. I commend the bills to the House.

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