Michael Sukkar (Deakin, Liberal Party, Shadow Minister for Social Services) Share this | Hansard source

This is an opportunity for me to speak on these three bills. At the outset, I will make clear to the House that the opposition will be opposing the Housing Australia Future Fund Bill 2023. We intend to support the National Housing Supply and Affordability Council Bill 2023 and, save for an amendment, which has been circulated in my name, to remove schedule 4, we'll be supporting the remainder of the Treasury Laws Amendment (Housing Measures No. 1) Bill 2023.

Most relevantly for today's discussions, we will not be supporting the establishment of the Housing Australia Future Fund Bill. This is probably one of the most egregious examples of the financial engineering that we've seen from the government. Indeed, it has become a hallmark of the government since very soon after taking office—trying to facilitate significant government spending in off-budget items through funds such as this. I suspect that the genesis of the Housing Australia Future Fund, which we know goes back to the now Prime Minister's budget reply speech of 2021, was driven more by potential headlines, with the then opposition wanting to be able to say, 'We are proposing to invest $10 billion into housing.' Every time someone from the government says that, it is a falsehood. The government is not proposing, in this bill, to invest $10 billion into housing. What it is intending on doing, in a peculiar form of financial engineering, is to set up a fund of fully borrowed money—$10 billion of Commonwealth borrowings—with the hope that the returns of that fund could then be sufficiently high to be able to disburse to housing projects. Let's just look at that: $10 billion of additional Commonwealth borrowing—which, if we look at the current 10-year bond rate and where the markets forecast that it will go, would represent a $400 million interest cost each and every year just on its borrowing—to then be put into a fund to be managed by the Future Fund, in the hope that in good years, when equities and other financial products are strong, there will be sufficient returns to then pass through to housing projects.

It's very relevant, I think, that this bill is before the House this week. I think that, unfortunately for the government, it is very bad timing, because I know that out there in the public there's an intense interest, and pain is being felt in households due to cost of living pressures—nowhere more significantly than for those who have a mortgage. What we've seen from the Reserve Bank are very clear messages to the government. The Reserve Bank, in very unsubtle ways, have been saying to the government, 'You need to do some fiscal heavy lifting here to reduce inflation; otherwise the job will be entirely left to monetary policy,' which we have already seen with eight rate rises under this government and the spectre of more rate rises to come. So what's the government's answer to those pleas from the Reserve Bank to get their fiscal house in order—to borrow less and to spend less? It's to set up a fund with $10 billion of borrowings and with a $400 million interest cost each and every year.

There are a number of reasons, which I will outline now, for why the opposition will not be supporting this bill, but the first and foremost is that anything that will increase the inflationary environment in the economy and therefore increase the prospect of higher mortgage interest rates cannot in good conscience be supported in this House, and we will not be doing so, partly for that reason. More borrowing from the Commonwealth equals higher inflationary pressures, which equal higher interest rates. That's what this bill represents today. So it is very unfortunate timing from the government in bringing this forward.

That also dovetails into my second point, which is the absolute uncertainty of any funding that would emanate from this proposal. When the Prime Minister or the housing minister says, 'We're investing $10 billion into housing,' it's a falsehood. What they are hoping is that, through investments in the stock market, in equities and in other financial products, there will be a sufficient return, above and beyond the cost of borrowing, to then distribute into housing projects. That's a big if, and you don't have to go back too far into history to realise that's a big if, because, had this fund been established last financial year, not only would we as a Commonwealth have spent $400 million on the servicing of the $10 billion of debt but we would have seen a diminution of the fund by 3.7 per cent—$370 million, approximately. So, had this fund been in place last year, we would have seen a loss to the Commonwealth of $770 million. Without one dollar ever going to a housing project or a community housing provider to assist with social or affordable housing, Commonwealth taxpayers would have been down $770 million. That is just an example that there is no certainty provided by this fund of any returns—certainly not regular returns each and every year. In a year when the stock market does well, there might be something to distribute. In years when, as we saw last year, it is a tough year for those invested in equities, we would see not only no returns but also a reduction in the capital of the fund. So this is not a source of stable, recurrent funding for a government program.

What has always happened in the housing space is that when a government have an intention to fund social and affordable housing they set up a program, fund that program and then, through recurrent expenditure, fund whatever it is they want to fund. That is not what is being done here. This is a blatant attempt to try to keep this off the budget bottom line. In that being done there is absolutely no certainty that any money will ever—certainly not in this term of government—go to the intended recipients.

The IMF has already warned the government, pretty clearly, about the proliferation of these sorts of funds. But you don't need to be an economist from the IMF to appreciate what the government is trying to do here. The government is taking a big gamble and saying, 'We expect that we can get a higher return than the four per cent that we would be paying on this debt.' They're arbitraging, essentially, between debt costs and what they think they can get out of the fund. It's very heroic, in my view, and not how these important projects should be funded.

Mr Deputy Speaker Buchholz, I think there's every likelihood that we will get to the end of this term of government and find that the government have not delivered a single home that has been promised. They've promised, as we know, 30,000 additional social and affordable houses, plus another 10,000 through their council. Of the 40,000 that they've promised, there's a high likelihood that very few, if any, will even be started, let alone delivered. Australians want governments that make decisions and get on with the job, not kick the can down the road. Setting up this fund, with an uncertain future and no guarantee of returns, and placing an additional $10 billion of debt on the credit card, where we're paying $400 million of interest every single year, defies logic. But, again, it only defies logic if your intention is to keep it off the budget, which is precisely what it is, through this financial engineering.

The bill also lacks crucial detail. I suspect even someone who'd come into this House with the intention of supporting this bill would find it very difficult to support it, because of the lack of detail. The investment mandate is yet to be released, restricting scrutiny of key information on the fund's capacity to deliver on the government's commitments. I think we all know why the investment mandate hasn't been released. I suspect it's because, pretty quickly, even more holes in this fund will emerge. Without an investment mandate, the legislation, which is essentially a shell explaining how funds may or may not be spent in a discretionary way, has none of the crucial detail on the fund. Why wouldn't you, nine months after you came to government, be able to release the investment mandate with the bill? There's only one answer to that: you don't want the investment mandate to be scrutinised. I can tell you that that would make any observer even more nervous about this fund. All things being equal, the absence of an investment mandate should mean that no-one in this House, including members of the government, can support the bill. How would you support the bill without seeing the investment mandate?

The reality is that the investment mandate will have to come to light at some point in time. The government won't be able to hide it forever. I suspect their intention is to release the investment mandate at some point after the bill has passed the parliament or after an agreement to do so has been reached, at which time it will be too late. The investment mandate needs to go through a public consultation process because, I can tell you, Mr Deputy Speaker, the sector is very nervous about the way in which this fund is structured.

Indeed, the sector has outlined a number of failures in this bill. There's a failure to define key terms. What is the definition of 'social housing'? What's the definition of 'affordable housing'? What's the definition of 'acute housing'? These are all terms which will dictate what the potential future returns of this fund might be spent on, but there are no definitions. Could it be an oversight that the government hasn't thought about definitions for those? Possibly. As a former housing minister, I tend to believe it's more likely that they prefer those not to be defined to provide them with the greatest possible flexibility in spending these funds. They're potential funds. There's no guarantee. But, assuming there's a return out of this fund, they'll be spending it as some kind of slush fund to enable the government to spend as they so wish. That would be the only reason you wouldn't define those key terms.

What is 'acute housing'? Ask anyone in the housing sector and there will be slightly different views on what that is. There will be slightly different definitions. What are those? Stakeholders have also criticised the limit on the annual drawdowns, which, again, highlights the lack of funding certainty. There's no mechanism or performance criteria to assess the effectiveness of any grants that potentially come out of this fund.

We've got here a cap on the amount which the fund can distribute each year at half a billion dollars. I think that's a very heroic number from the government given, as I said, the $400 million that needs to be paid back each year before any money ever gets distributed, plus any investment related fees that the government has to pay for the operations of the fund.

But, putting that to one side, you have a situation here where a program is effectively wholly reliant on the fluctuations of the stock market or other financial products that the fund invests in. So, in good years, there might be a feast and, in bad years, there will be a famine. Can I say very clearly to the government that these projects and any projects that involve social and affordable housing are multiyear projects that require multiyear commitments and certainty of funding. That's why the conventional position of the federal government has been that, if we want to fund social and affordable housing, we will do so through recurrent expenditure and decisions of government in programs. That's how you do it. Each and every year when we spend more than $1.3 billion on the National Housing and Homelessness Agreement—we pay the states and territories through that agreement—that's not reliant on the performance of the Australian stock exchange. No, that's a payment made from the Commonwealth each and every year under that agreement. Well, here, we've got none of that certainty. So it could be feast one year and famine another. Do you know what that will mean? It will mean that projects won't happen. Unless you can provide that multiyear certainty, the projects will not happen. That is a fundamental flaw of this government.

We see also in this bill a remarkable attitude for the ministers—the housing minister, the social services minister, the Treasurer and others—with a huge amount of latitude on how this money is spent. The majority of it is earmarked, from what we can tell, to be paid to the states and territories directly. This is in absolute contrast to the approach of the former coalition government. I was the Assistant Minister to the Treasurer when we established the National Housing Finance and Investment Corporation, soon to be renamed Housing Australia. That body was a landmark achievement of the coalition government. I give some credit to the government for embracing Housing Australia and recognising that it is a remarkable achievement and landmark entity for the federal government that should be supported. I give them credit for that. But, in establishing that, we put community housing providers at the centre of what we did. When we established, as it was then, the NHFIC, soon to be Housing Australia, it operated two key activities: the Housing Infrastructure Facility, a $1 billion perpetual facility which financed infrastructure to unlock projects that contain social and affordable housing, and the Affordable Housing Bond Aggregator, a bond aggregator that had been asked for by the sector for years and took a coalition government to establish. In both of those things, through the Housing Infrastructure Facility and through the bond aggregator, which I will say more about, we put community housing providers as the centre of its remit. Why? We did so because, historically, for every dollar provided to a community housing provider, you get better outcomes than if it had gone to a state or territory treasury department. What we've seen from transfers from the Commonwealth to state and territory governments in recent years has been for every dollar the Commonwealth puts in, there's a withdrawal of a dollar from the state and territory governments. There's always exceptions to the rule here and there but, overall, that has been the experience, which is why we put CHPs at the heart of what we did.

We on this side knew Labor didn't like that at the time, because the command-and-control central planners in our great friends in the Labor party came to the fore. They resisted the temptation to trash community housing providers then but they are trashing community housing providers now by basically side-lining them in this bill and with this fund. By channelling the potential proceeds of this fund to state and territory governments and bypassing the CHPs is a huge abrogation of responsibility because, as a Commonwealth, we put in huge resources through NHFIC and through the bond aggregator to help those CHPs leverage their balance sheets, to help them develop the corporate governance they needed to really attract that extra capital, that private capital which, partnered with government money, would see and has seen social and affordable housing projects throughout the country.

Now we've gone back to the bad old days, where CHPs are side-lined. CHPs will have to get out the begging bowl and beg state and territory governments for a slice of the action. Now, some state and territory governments might in their infinite wisdom realise that CHPs do it a lot better and deliver a lot more with a lot less but there's no certainty of that and there is certainly no guarantee of that in this bill.

So we have $10 billion of borrowed money, which will increase inflationary pressures in the economy and put even more pressure on mortgages and interest rates. We have the uncertainties of the fund, where there is no guarantee of what is going to be spat out of that fund each year. Some years it will inevitably go backwards. Some years there will be zero dollars that can be dispersed out of the fund, or the fund will go backwards and the capital will be eaten into. We have CHPs now going back to the bad old days of being sidelined, of being completely ignored by this government and this fund, and that is why the opposition cannot support this bill.

In talking about placing CHPs at the centre of what the former coalition did successfully, here are some numbers, as of the election, that I think are relevant. NHFIC, soon to be renamed Housing Australia—a wonderful coalition achievement—delivered $2.9 billion of government-guaranteed loans to those housing providers, which supported 15,000 social and affordable dwellings and saved nearly half a billion dollars of interest to those CHPs. For those members in the House who are not familiar, once we established NHFIC, CHPs, which previously had to go out and raise their own finance privately at high interest rates, were able to access finance through the bond aggregator with a government guarantee, effectively, slightly above government bond rate, which saved them half a billion dollars in interest. And guess what that half a billion dollars did? It supported or built 15,000 additional social and affordable housing dwellings. It unlocked nearly 7,000 affordable dwellings through the National Housing Infrastructure Facility. So more than 20,000—in fact, nearly 22,000—social and affordable homes were supported by the work of the government in a way that put community housing providers at the centre of our thinking. Pulling that away now and going back to the bad old days is a retrograde step.

The coalition's record on housing is strong. In our former term of government we supported directly—not in some sort of indirect way—300,000 people into a home. Three hundred thousand people were directly supported into a home by the former coalition government. Of those, there were more than 137,000 projects under HomeBuilder, which was opposed by the opposition at the time. There were 137,000 HomeBuilder projects, which represented $120 billion of economic activity and kept the construction sector busy during the pandemic, for huge numbers of first home buyers. We also assisted more than 60,000 people into a home through our Home Guarantee Scheme. The Home Guarantee Scheme, which I put in place and established from 1 January 2020, helped 60,000—well, it's many more than 60,000 now; it's probably closer to 100,000 now—home buyers get into the market by bringing down the deposit hurdle from 20 per cent, which is what banks had been requiring, to a five per cent deposit for first home buyers. Most recently, there was the Family Home Guarantee, which required only a deposit of two per cent for single parents, 85 per cent of which are single mothers.

So we had the 137,000 HomeBuilder projects, the nearly 100,000 now first home buyers under the Home Guarantee Scheme—and credit to the current government for continuing with that, again, landmark coalition policy—and the First Home Super Saver Scheme, which helped more than 25,000 people fast-track their savings, fast-track their deposit, through tax concessions within their superannuation. That's more than 300,000 people supported into their own home through direct action and direct programs by the then coalition government.

So the message to this government is very clear. If you want to do something and are fair dinkum about it, you can move the dial. A policy where you can run around screaming from the rafters '$10 billion, $10 billion' that does nothing, that has no guaranteed returns, that's going to cost $400 million in interest and that's going to move the most productive area of the social housing market, that being community housing providers, to the side is not the way in which you get the positive changes that so many Australians require.

We've got a government, to be frank, whose housing policies are in tatters. Their whole housing agenda, thin as it was—a very thin agenda to start with—is in tatters. Where is the Help to Buy scheme, which I suspect is a fairly vanilla, shared-equity style of program which we've seen in states and territories? It was supposed to start on 1 January. Where is it? When you go to an election promising a start date and you don't meet it, that's a disgrace. Where is the Help To Buy program? It was supposed to have started six weeks ago. Not only has it not started; we've got no idea when it's going to start. Where has it gone? It's disappeared. We don't know where it is. I suspect that we're now shaming the government into it. They will work overtime to try and get it moving. But where is the Help to Buy program?

This future fund is, as has been highlighted here, a major problem for ordinary Australians because it has the real prospect of adding inflationary pressures into this economy and increasing mortgage rates even more. It will cost $400 million in interest to Australian taxpayers every year, just to have the funds sitting there, even if it loses money, as it would have done last financial year, without a dollar being spat out into any good projects.

We've seen first home buyer numbers drop month on month under this government—every month, they're down further—and no action from the government to try and encourage first home buyers. The former coalition government took first home buyers to their highest levels in nearly 15 years. When we came to government, they were sitting around 100,000 per year. In the last full financial year of the coalition government, it reached nearly 180,000. That was through effort and through policies and programs that worked.

We've seen first home buyer numbers drop. The rent rises to the December 2022 quarter were the highest on record, at 10.2 per cent. So first home buyers are down, rent's up, the Help to Buy program that was promised for 1 January, six weeks later, cannot be spoken of on the government benches—do not mention the Help to Buy program; we don't know where it is. And now the Housing Australia Future Fund will add to the inflationary pressures in the economy with no certainty of any returns ever being invested in housing, leaving the government's promise of 40,000 social and affordable homes in absolute tatters.

We will absolutely not be supporting the Housing Australia Future Fund Bill 2023. But, given this is a cognate debate, I will reiterate my remarks at the beginning: we will support the National Housing Supply and Affordability Council Bill 2023. We're told that the government's stated objective is to ensure the Commonwealth plays a leadership role in increasing supply, and that the council will set targets for land supply in consultation with states and territories and also collect and make public nationally consistent data on housing supply, demand and affordability. That we can support. In the Treasury Laws Amendment (Housing Measures No. 1) Bill 2023, we will support everything but schedule 4. (Time expired)

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