Darren Cheeseman (Corangamite, Australian Labor Party) Share this | Hansard source

I would like to congratulate the member for Cunningham for her very well thought through contribution to today’s debate on the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008. I know she has a very deep understanding of these issues facing her constituents.

The government is delivering much-needed housing reform as a part of our election commitments which we took to the federal election last year. We are establishing a National Rental Affordability Scheme to address a chronic shortage in rental housing, which has the greatest impact of course on those who can least afford it. Last week we observed the Rudd government taking unprecedented action to provide for pensioners, seniors, carers, veterans, students, first home buyers and low-income families by providing a broad range of initiatives to help them with the deep and troubling economic circumstances. It is these members in our community of course that rely most on rental housing. The National Rental Housing Affordability Scheme was announced on Monday, 13 August and this is another election promise that the Labor government is delivering. As part of the government’s $2.2 billion affordable housing package this suite of schemes will increase the supply of affordable rental homes and build new homes for homeless Australians whilst lowering housing infrastructure costs and assisting people in saving for their first homes.

According to the National Centre for Social and Economic Modelling, in December of last year there were 1.1 million Australian households in housing stress. As the nightly news reports on the incredible fluctuations in the Australian and international share markets and while governments around the world are going to great lengths to secure their economies, this figure of 1.1 million Australian households that are currently in housing stress must certainly be increasing. At the moment vacancy rates are at critically low levels and the rental market is being subjected to greater forces in the wider housing market, and with housing affordability being such a critical issue this has the effect of driving rental prices up. Out of the 1.1 million households that are currently subject to housing stress almost 700,000 are spending more than 30 per cent of their limited incomes just paying the rent. It is now harder for low-income and moderate-income earners to find affordable rental housing for themselves and their families.

According to 2006 census data, in my electorate of Corangamite there are 2,494 households where rental stress is significant. There are people in communities around Australia being forced to move from house to house, attempting to find the right house at the right price with of course increased overheads as they do so. The Labor government understands the nature of these concerns and we took significant policies to the federal election last year. With this much-appreciated assistance, the National Affordable Housing Summit Group states that whilst rental housing is becoming increasingly difficult, those that can afford it are finding it more difficult to save for their first homes. We have developed a $2.2 billion affordable housing package and the Rudd government is now delivering on that commitment. This is progressive policy on issues that need to be dealt with now. Rental affordability is affecting so many demographics within our society and this is having a detrimental effect on those groups.

I spoke last week on the Schools Assistance Bill and the fundamental emphasis of that bill on the need to provide quality education to everyone. Most university students are at the mercy of a private rental market where rent rises are outstripping wages growth and inflation and that is putting significant pressure on their ability to complete their university education. The current rental affordability pressures are driven by a poor supply of affordable rental properties and this is having an enormous impact on families, key workers, young people, students and pensioners.

The National Rental Affordability Scheme is totally new in the Australian context. It is an innovative approach to reducing the number of Australians living in rental stress. To give an example of some of the people this scheme will benefit, I would like to draw attention to people who have recently graduated or completed training in key areas such as teaching or nursing and even to entry-level police officers. Upon completion of occupation-specific training, some people choose to move quite a long distance away from where they previously lived and worked. Indeed, some are even assigned placements in areas that require physically moving away from the area in which they initially lived. Often, when they have just begun their careers and are on their initial placements, they are not in the financial position to be able to buy their own place or have flexibility in rental choice due to the costs of training or lower starting salaries. These people play key roles in communities, and finding accommodation in various areas can be very difficult. To combat that difficulty, the National Rental Affordability Scheme will create up to 50,000 new rental properties across Australia, at a cost of $623 million in the first four years. This will be a huge boost to low- and moderate-income households who are suffering housing stress. Subject to market demand, the government will expand that to 100,000 properties over the following five years.

The National Rental Affordability Scheme is designed to encourage investment in affordable housing for the purposes of renting to low- and middle-income households at 20 per cent below market rates. The scheme will achieve this by bringing together a range of participants from various government and nongovernment organisations by providing structured incentives to redress the shortage of rental housing. These structured incentives will take the form of cash and tax incentives to providers of rental accommodation to low- and middle-income households. These incentives are comprised of two main components. The Australian government is making a contribution of $6,000, in the form of a refundable tax offset or payment, for each residence that meets the criteria for the scheme. This will be joined by an annual contribution from the relevant state or territory government of $2,000 or more for each residence, which will be provided through cash payments or in-kind financial support. These two main components will act as the catalyst for a number of outcomes. It will be possible for community housing groups, equity investors, charities, church groups, developers and any other organisation that wishes to provide affordable rental housing or invest in affordable rental properties with a secure stream of funding for a 10-year period.

This scheme will bring substantial growth to the community housing sector. This growth will be in various forms, with the aforementioned organisations able to participate as tenancy managers all the way up to owners and developers in consortiums. The intention of the scheme is to leverage private sector investment of up to $13 billion over the next four years by offering institutional investors and other eligible bodies annual rental incentives for 10 years—provided, of course, the conditions of the scheme continue to be met. From an investor’s point of view this creates a fantastic new dynamic as it opens up a new investment opportunity for investors, creating a new asset class of investment in residential property. The government expects the scheme will facilitate new and creative partnerships between institutional investors, developers and community housing providers. Involvement of both investors and the not-for-profit charitable sector is critical to such a scheme.

Within the National Rental Affordability Scheme Bill we have provided for the act to be taken to have commenced from 1 July this year. By retrospectively including the commencement date we are reaffirming our commitment to providing affordable rental housing for those who need it most. The bill provides for the regulations to prescribe a scheme which deals with the approval of participants and the approval of rental dwellings, and provides incentives to an approved participant if certain conditions are satisfied. Including within the regulations of the bill the rest of the administrative detail of the scheme will provide the government with the necessary flexibility to address changing circumstances. Circumstances that may change include the process for determining market rent and tenant eligibility criteria. Other items that may be subject to reconsideration are acceptable periods of vacancy and reporting requirements of the scheme. The government will review the scheme in the early years of its implementation to ensure that it is adequately focused on those Australians in rental stress, and we may need to make improvements to the scheme before it is expanded.

Within the conditions of the scheme the government has included the ability to apportion, withhold, offset or withdraw the national rental incentive as a security measure in the event that the requirements are not met. To preserve the integrity of the scheme, an incentive may be offset or recouped in the circumstances provided for by the scheme. This bill also provides that the scheme may provide for variations, transfers and revocations of allocations.

In relation to receiving incentives, the bill provides for the secretary to either issue a certificate in relation to a refundable tax offset or make a payment. However, unless a participant is an endorsed charitable institution, the incentive is to be made available in the form of a refundable tax offset. We will also test whether or not there is scope for simplifying the scheme or reducing the administrative burden on providers and whether there are evolving issues of non-compliance that need to be addressed.

Other measures that will maintain the integrity of the scheme include mandatory requirements covering the conditions relating to eligible rental dwellings, eligible tenants and the maximum rent that can be charged, as well as the permitted vacancy rates. We will ensure that we are providing affordable rental housing to those who need it most. This problem will not be solved overnight and the government has shown its long-term commitment to affordable rental housing by providing a scheme which will be sustained over the next 10 years and which has the capacity to be increased if need be.

The National Rental Affordability Scheme will provide incentives to encourage large-scale investment in affordable housing. This will increase the supply of affordable rental dwellings and will reduce rental costs for low- and moderate-income households. The scheme is a new opportunity for all levels of government to work together with business and not-for-profit organisations to increase the supply of affordable rental housing for Australian families. The scheme will increase the supply of rental dwellings and will reduce the costs of renting in the private market for Australians and their families earning low and moderate incomes.

The big winners in this scheme are the renters of Australia. They are working families, students and people who are providing essential services; they are pensioners and people from low socioeconomic backgrounds. I commend the bills to the House. I, too, would like to congratulate the Minister for Housing for the well thought through contribution that she is making to the renters of Australia.

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