Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Hansard source

The Prime Minister is acting more like, as Glenn Milne recently observed, the Sun King or, as the Leader of the Opposition recently remarked, Chairman Kev. This is no way to run a country. It is right to question our government. It is even more important that governments and prime ministers answer those questions.

Today we commit more than half the surplus. This is a surplus that took the coalition government, under John Howard and Peter Costello, more than 10 years to build. The coalition first had to pay back $96 billion in debt, which had it still been around would today be incurring an interest cost of around $15 billion. Were it not for the responsible management of the Howard-Costello government we would already be in deficit. But today we are committing the majority of the surplus—and we cannot spend it twice. This is the point of no return. The government’s forecasts represent the line in the sand. The measure of this package will be whether the growth forecasts, to achieve two per cent as outlined in their forecasts, are met and whether the budget remains in surplus, which those forecasts project. It is now true that the only surplus available to the government for infrastructure spending and matters of that nature is what the Howard and Costello years left behind in the form of the Building Australia Fund.

We need to put the decisions we support today in context. Earlier this year the government declared a war on inflation. They fuelled inflationary expectations earlier this year, egging on the Reserve Bank at every opportunity. The result was a 50 basis point increase in interest rates, due to their irresponsible egging on of the inflation crisis and the inflation war, as they described it, referring to genies and bottles and monsters. They argued for a contractionary budget, which combined with the 50 basis point interest rate rises following their egging-on of the Reserve Bank to put the brakes on the Australian economy just when it needed support. They called it wrong. And, if you are going to be honest and upfront with the Australian people, you are honest when you get it wrong. When you get it wrong, you say you got it wrong—and that is not something we have seen this government do. In many ways the Prime Minister is like the Fonzie of Australian politics: he is unable to announce the word ‘wrong’ at any occasion in relation to himself. Australian homebuyers have paid the price for that with the increase in interest rates earlier this year as a result of those government decisions. The government increased taxes in the budget, including on motor vehicles—another area reeling in the wake of the government’s other ill-considered decision—to introduce an unlimited bank guarantee. In fact, the only genuinely stimulatory component of the federal budget was the measure that was put forward by the member for Higgins in the last election campaign—the tax cuts. That was the only one.

After the war on inflation we had the war on the global financial crisis, where too many Australians have been taken out in the friendly fire of the government’s bungling of the unlimited bank guarantee. Mortgage fund and property fund investors, car retailers, small businesses looking to access and roll over finance, housing developers looking to bring their supply onto the market and unable to raise capital are the victims of the friendly fire from the bungling of the government through this global financial crisis. The wars on inflation and on the global financial crisis have, we learnt yesterday, evolved into a war on unemployment. We note that, according to the government’s forecasts, there will be more than 200,000 casualties of this war by the end of the financial year, up from 134,000 predicted in the May budget.

I fear that the next war will be a war on the deficit that will be created by the government. They have been running around the country preparing the ground to go into deficit. Just this week we have seen a deficit announced by their Labor mates in New South Wales. And what we see in New South Wales in how the New South Wales Labor Party runs the show is what we will ultimately see here in Canberra. What we see in New South Wales is a glimpse of the future for this country under a Labor government. I fear that this war on the deficit will then become a war on debt. It will join all the other wars—the war on alcopops, the war on obesity, the war on homelessness and even the war of the Minister for Youth on fashion, of all things. I think it is time for the war to end all the wars—that is, on the PM’s overblown and confected rhetoric. It is time for the Prime Minister to sue for peace on the Australian economy.

The stimulus package in this bill provides $1.5 billion over two years to increase the first home owners grant to $14,000 for existing dwellings and $21,000 for new dwellings. The coalition introduced the first home owners grant in July 2000, including a differential higher payment at that time of $14,000 for new dwellings. As shadow minister for housing I have expressed particular support for the increase in the first home owners grant for new dwellings due to the need to provide a stimulus to the residential construction industry. The trend for building approvals since September 2000 has fallen by 14.5 per cent. Housing finance figures released just this week show that finance for new dwelling construction has fallen each month for the past 15 months. It is now down 17½ per cent on trends since November last year. Questioning in estimates revealed that no modelling or advice was provided on the likely impact of this stimulus on house prices or rents, in particular from the minister’s department. They have no idea, frankly, of what the potential impact will be, particularly of the first home owners grant increase for established dwellings. The government’s forecasts also reveal that dwelling investment in 2008-09 following the delivery of this package is expected to be not the two per cent that was forecast in the budget but zero per cent. That is the forecast released by the government for increases in dwelling investment.

I have also asked questions about the impact of this package on the increase in the first home owners grant for established dwellings—the impact it will have on rents and on artificially inflating house prices, given the structure of our housing market. These are simple questions and I raise them because these are questions the Minister for Housing should know the answers to. She should know the answers to the questions about what these measures will do to housing affordability, particularly for those who pay rent and for those who are not first home buyers but who are also seeking to pay mortgages or seeking new properties. We need to look at all the housing market, not just those elements that the government seeks to pay particular attention to. These are questions the government needs to know the answers to. As we went through the estimates process I was disturbed to find that there has not been any work done by the department. There does not seem to have been any questions asked and there has been no modelling. The answer is, ‘We simply do not know, but we are going to do it anyway.’ These are the rigorous answers I would expect from a government doing its job, and the simple fact that it has been unable to answer these questions over recent weeks is a matter of concern.

As I have noted and expressed publicly, the first home owners grant changes are welcome, but they do not address longer term issues in the Australian private housing market. This is a package designed to introduce a stimulus to the Australian economy, not to solve the problems of the Australian housing market in the longer term. I am not suggesting in any way that the government is trying to do that with this stimulus initiative—it is a stimulus initiative—but it is timely to reflect as we talk about housing affordability in this country, as many speakers in this debate have, on what the real issues are for housing affordability in the private housing market in Australia. Australia faces a chronic housing undersupply challenge, estimated to reach a shortfall of 200,000 dwellings by 2010. It is the key housing affordability challenge—the road block to Australians seeking to be self-supporting in the private housing market, which must be the ultimate overall objective of all housing policy in this country—to ensure that the maximum number of Australians are able to support themselves in the Australian private housing market.

The mismatch between supply and demand is evident in escalating rental costs, further placing housing affordability out of the reach of more Australians and placing strain on household budgets. Vacancy rates are at between one and two per cent in virtually all capital cities and increases in rents, along with fuel prices earlier this year, were the key drivers of inflation highlighted by the Reserve Bank. We have seen fuel prices come down now, but rents continue to rise. The major causes of undersupply are the failure of state planning, infrastructure and land release policies that have constrained supply. They are what have been driving up rents and home prices around the country. If anyone wants to take the time to read the various reports from the economists and those who make a living out of operating in this market—they know what make it tick—they will tell you that those are the things that have been driving the market for the last five to 10 years at the very least.

The Rudd government has put in place a number of measures which have come through this place already, but these measures do not really address the fundamental points that I have raised. The National Rental Affordability Scheme addresses the social housing sector, not the private housing sector. It is seen as an arm of the social housing policy of this government. The Housing Affordability Fund rewards, rather than seeks to reform, the failure of state governments by simply writing a cheque—direct subsidies for their excessive taxes and charges. As I noted before, the Building Australia Fund, funded by the Howard-Costello surplus, is now only replacing state expenditure on infrastructure, not adding to it, as we saw in the New South Wales state minibudget yesterday. The first home saver accounts are overly complex and have not been taken seriously by the banking sector or depositors alike.

I note that the National Housing Supply Council has not even met yet with Infrastructure Australia, let alone made a submission on infrastructure needs to unlock housing supply. For this government, housing is an island—cut off from economic policy, cut off from infrastructure policy, cut off from environment policy and looking increasingly like a well-intentioned social exercise with little dividend. A comprehensive economic reform plan is needed to address housing supply in this country dealing with capital, land release, infrastructure planning, federal-state reform, to keep a lid on building costs and to understand the impacts of immigration and population pressures on future demand.

To keep Australians in their homes, the Prime Minister must keep Australians in their jobs. The Australian housing market is, as I have said in this place before, in a relatively strong position in comparison with overseas markets. This is due to the already noted undersupply of housing stock, which is completely different to the situation in the United States, where there is a massive oversupply. There is a low level of exposure to subprime mortgages here, with non-conforming loans comprising around one per cent of mortgages in Australia compared to 15 per cent of subprime loans in the US. Our loans are full recourse, so there is not the option for those who are in a position of default to throw their keys in the door and allow the stock to be dumped on the market and have a run made on the housing market. And there is a relatively low level of foreclosure. According to RBA statistics for August, delinquent home loans accounted for 0.4 per cent of banks’ balance sheets in Australia, compared to 2.2 per cent in the US and 1.3 per cent in the UK.

Delinquency in home loans is what this is all about at the end of the day. I note it was significantly greater for Australian banks in the late 1980s and the early 1990s. Even more specifically, it is a third less today than it was in 1996 before the coalition came to office, when Paul Keating was Prime Minister. Why was that? Why was delinquency on mortgages so much higher back then? Because unemployment was so much higher back then. Unemployment is the key thing that underpins the performance of the Australian housing market at the end of the day, and it is unemployment that we need to focus on to ensure that this government does something to generate jobs in this country.

Strong growth in employment was a hallmark of the Howard-Costello years. More than two million jobs were created during that time. Real incomes grew by more than 20 per cent, and that assisted families to be self-supporting in the private housing market. According to the Reserve Bank of Australia, despite strong growth in real house prices over the last 25 years—these are Reserve Bank figures—growth in real disposable incomes of younger Australians in the home-buying cohort, after paying for accommodation, was higher in 2007 than at any other time in their records. The major concerns for Australian banks with respect to the home loan portfolios that they hold are the risks of delinquency from rising unemployment and job insecurity. The government’s new forecasts show that unemployment will hit five per cent and it will put an additional 200,000 and more out of work, up from the 134,000 forecast in the May budget.

So, as we look at this package today, and as the coalition takes the government on trust on this issue, we draw a line in the sand. The global financial crisis and the management of it by the Rudd government are now very much matters of their responsibility and their accountability. The budget must stay in surplus, and that is what is in the government’s own forecast. Failure to deliver that growth and failure to keep the budget in surplus will be seen as a failure of this package. The other thing that must be achieved is this: we need to keep Australians in their jobs, because if we keep Australians in their jobs and put Australians in jobs we will keep Australians in their homes.

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