James Stevens (Sturt, Liberal Party) Share this | Hansard source

The government had an opportunity in their budget last year to directly fund all kinds of measures they might like to in regard to housing. Instead, what we have before us is a bill—the Housing Australia Future Fund Bill 2023—that is effectively a conjuring trick, a sort of tricky accountant's way of making a commitment to do something, miraculously without costing the government any money whatsoever. We on this side of the chamber view that with a great deal of scepticism.

I'll come to that in a moment, but I want to start by making some broad comments about housing. In the last parliament, I served on the Standing Committee on Tax and Revenue, which was chaired by the former member for Mackellar, and participated in an inquiry into the issue of housing affordability in this country. I commend the findings of the report of that inquiry to this House. It's certainly a very significant challenge for all of us to grapple with as policymakers: how do we make the Australian dream of homeownership attainable for all those who want it, particularly younger people, who at the moment are finding it almost impossible to get into the housing market? Indeed, the supply challenges—which even the government in this debate seem to now concede, though that wasn't necessarily the position of Labor members participating in that inquiry—are significant. They relate to all levels of government and a whole range of other factors, and they are certainly things that I wish we had the opportunity to address in debates in this chamber. Instead of that, we're debating this bill.

Increasingly the data, including the recent census, is showing us that people are taking longer and longer to save to get into the housing market. I find that those on the Left of politics in some ways are not so much against people not getting the financial independence of homeownership. I think that there is a school of thought in our politics that it is good for big government if people are kept out of the economic independence of owning their own home. If people are resigned to renting for the rest of their lives, maybe that'll mean they'll vote for a lot more government to look after them because they won't have the independence to look after themselves.

The greatest legacy of the Menzies era was the transformation of people's economic futures through their ability to get into the housing market, own their own home and therefore be in control of their own economic destiny and their own future. It's absolutely fundamental to the political philosophy of the party I'm so proudly a member of to give people that individual empowerment and choice and make sure that they are in control of their own destiny and do not have to rely on some government. That is fundamental to the differences between those of us on this side of the House and those who are putting forward this proposal that purportedly has something to do with helping people with housing.

As I say, the particular measures that the government are saying will be supported by this bill are a separate point and a separate debate that could be had. There are no doubt worthy things that the government say they're going to spend money on through this bill, but they could have done all that through a budget appropriation. You could be spending X hundred million dollars a year on those sorts of measures if you want to, but you would have to account for it properly in the budget. You'd have to say, 'Hey, you know, we're spending this amount of extra money on these worthy initiatives, because that's what it should be spent on.' That would mean the government would have to either run a higher deficit, increase taxes or cut expenditure somewhere else. If they were serious, they'd be prepared to take on those serious challenges that befall a government and particularly a treasurer when putting together a budget.

Instead we have this trickery of saying, 'Well, we're going to borrow money at a certain rate, invest it and make more from it than we will pay for the debt that we will have encumbered ourselves with, and that miraculously creates a pool of funds that we can then spend on all these housing initiatives.' Imagine if you extrapolated that to the entirety of government expenditure. If this model works, why don't we just go and borrow many, many trillions of dollars, invest those trillions of dollars so brilliantly that we make more money from the investment than the cost of that capital, and use that to finance the entirety of government? We can get rid of all taxes. We don't need to tax people anymore. We can just choose how much money we borrow and therefore, by a miraculous outcome, how much money the government will earn on the gap between the return on investing that money and the cost of borrowing that money, and we can do absolutely everything that we want. We could achieve absolutely everything.

What a breakthrough revelation moment we are having here: let's just borrow an indiscriminate amount of money and earn more on it than what it cost us to borrow and pay for all of government—it's completely farcical. But that is what the proposition is in this bill. And that is fundamentally why we, of course, as responsible economic managers in the coalition, don't support it. It's actually frightening, because this bill literally says, 'Let's just go and borrow $10 billion, put it on the government balance sheet as debt and give it to the Future Fund.' Of course, they'll definitely make a higher return from it than the cost of borrowing it. Beyond question, apparently, that will happen—forever. Then the gap is what we get to spend on all these things that we're not prepared to put in the budget and finance through the usual budget processes. What economic cowardice that is and what economic recklessness that is. There is no way that we could possibly stand by and support the government doing this.

Without reflecting on anyone in the Future Fund—they've done a great job over the last years and decades, led very ably by a former member of this House—we know the chair of the Future Fund has already made some very candid comments about the future risk profile of the funds that they have under management and the general economic outlook. We know that interest rates are going up. The government's borrowing rate is increasing, and we've got no idea where the terminus of that is going to be.

What we're going through right now with this rapid escalation in interest rates is a great lesson—and maybe, to be fair, to be slightly charitable to the government, when they made the decision for this cowboy policy, it was before the experience of the last 12 months, and how dramatically markets can shift, and particularly how dramatically debt markets versus equity markets can change. The orthodoxy of the past decade with regard to the cost of capital and the return on capital is completely out the window right now with what's happening in markets of all forms. So the assumptions and the laziness of this when it was announced by the then opposition leader are completely different today than they would have been when it was conceived.

Whilst I don't tend to encourage people breaking election promises, despite the fact the government should be appropriately held to account for making a reckless promise, this is the kind of promise they absolutely should break. It is frightening looking at what is happening in some of the markets that we were assuming were going to behave in a certain way into the future. Far from making the sort of return that we believed this would—last year it would have lost money; things could only get worse into the future—borrowing money at more than four per cent and just assuming that that money invested can return better than that is not the outlook that we would say exists with any sort of certainty whatsoever. And, whilst we of course don't hope for it to occur, the risk is higher than ever right now for all sorts of funds under management having negative returns in the near future.

We're asked in this debate in this chamber to authorise borrowing $10 billion on this promise. The speakers in favour of it are talking about how they're going to spend the money. Well, let's talk about whether there will be any money—or, worse still, whether we're going to be borrowing an amount of money and the return on it goes backwards. So, in an effort to spend money on housing, we instead have the real likelihood of borrowing money and having the cost of the negative return on that hitting our budget and things going backwards. And that is really frightening. Once we borrow this $10 billion, unlike some of the mistakes that we might anticipate the government making, this is a very difficult hole to dig our way out of. Once we've borrowed that money, it needs to be paid back; we need to meet the interest servicing charges on it.

Maybe, for the government, $10 billion isn't a lot of money. Well, there are a lot of households out there who are struggling to pay mortgages, utility bills and grocery bills. People are making awful decisions—like no longer buying fresh vegetables but buying frozen vegetables because they're cheaper—because they've got to make those changes in their household budget. Those people think that $10 billion is a lot of money. Being cavalier with it, and just assuming that you can borrow it—apparently, with no risk whatsoever—and make a higher return than the bond rate, is completely ridiculous and completely reckless. And it's absolutely lazy policymaking.

We are very open-minded to all kinds of sensible investments, in the housing crisis that we've got. They're not as simple as reflected in the commentary around this bill. Nonetheless, this is a very important topic. For the people speaking for this to hurl criticism suggesting that we don't support appropriately investing in housing for veterans or victims of family domestic violence is obviously ludicrous and a disgusting and an appalling allegation with no basis whatsoever.

And that's not what this bill is about. This bill is about just assuming that you can borrow money, get a better return on it than the cost of it, and then use the money, instead of actually making strong, sensible decisions, within the normal processes of budgetary decision-making, to say: 'Housing is important enough for us to carve out a certain amount of money, against all the other priorities we've got around revenue raising, expenditure and deficit reduction, so that we are going to invest, each year, hundreds of millions of dollars in these housing initiatives.'

The government hasn't been prepared to do that. Instead, they've come up with this tricky accounting which says that there's this free money you can create just by miraculously borrowing, earning more on it and therefore spending the gap. Well, we will find out, of course, if this bill passes the parliament, what the actuals end up being there. But it is a great fear of mine that we now have seeping into the political culture this sort of Whitlamesque attitude to Commonwealth finances, where there are no consequences for borrowing money and all of our problems can be solved by all this complete accounting trickery.

If we brought this approach to the challenges of government, then we would be incurring trillions and trillions of dollars of debt and assuming that we could just get a standard return on that and pay for the entirety of government. That is completely fanciful. Obviously, there is no way that you could operate government finances like that.

The gutlessness of not being prepared to put real money into this problem—to create this sort of fictitious revenue stream that is not based on anything other than hope—is completely cowardly. And I would call on the government to properly resource, in the budget proper, expenditure on housing that they believe is going to make a difference. Then we will look at those proposals and determine our own position on them.

I look forward to the very comprehensive policy position that we will take to the next election around helping people to buy their own home and get out of the trap that Labor want them to be in, of perpetually renting and being reliant on government, rather than having their own economic independence. And that's the aspiration of Australians: they want their economic independence. They don't want to be owned and controlled by government.

But this bill is nothing to do with specific measures around housing. It is a complete cop-out. It is absolutely cowardly. It is saying: 'We're not prepared to make tough decisions within the budgetary framework, so instead we'll come up with this magic-pudding economics of borrowing money and earning more than the cost of it, and then we can spend that money.' We have to stand up to this, right here, right now. And that is why I urge the House not to support the second reading of this bill.

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