Sussan Ley (Farrer, Liberal Party, Shadow Minister for Housing) Share this | Link to this | Hansard source

I appreciate the opportunity to continue my remarks on the First Home Saver Accounts Bill 2008, the Income Tax (First Home Saver Accounts Misuse Tax) Bill 2008 and the First Home Saver Accounts (Consequential Amendments) Bill 2008, which I commenced in the last sitting of parliament. Those remarks focused on the reasons we in the opposition believe that this First Home Saver Accounts measure is unlikely to do much to help the housing affordability crisis in Australia today. I remind the Treasurer and the Prime Minister of the following real reasons for the worsening housing affordability problem. Limited land supply induced by restrictive land release policies of state and local governments is the main reason for rising housing costs. Government taxes, fees, levies, charges and compliance costs are adding enormously to the cost of new housing and now represent a quarter to a third of the cost of a new house and land package.

Not much more than a month ago the Housing Industry Association reminded us of the housing supply crisis when they said there should now be a united focus and interest by all governments in increasing the supply of affordable housing. Housing finance and a range of other leading indicators suggest a further widening in the gap between housing supply and demand. HIA contends that the housing industry should be building at least 175,000 new residential dwellings each year to satisfy existing demand. In my earlier remarks I contended that others have said that the under-building rate is 30,000. I agree with the HIA: it is much, much more.

In my earlier remarks I talked about the way the first home saver account addresses the demand side of the housing affordability equation and does nothing for the supply side, and I said that we would not be opposing the measure because anything that encourages young people to save for their first home—or, in fact, save at all—has got to be a good thing. I mentioned the example, which caused some amusement to those opposite, of plasma televisions. I mentioned that because they are still the most demanded consumer item in Australia today. But we have seen them come down in price from about $14,000 five years ago to about $1,500 today—for the simple reason that the supply has kept up with the demand. This is pretty basic stuff. The supply of land to build entry-level first homes is in no way keeping up with the demand. So, by adding more dollars to the demand side of the equation, you are giving people more money to spend in an already extremely tight housing market.

I will anticipate some of what the housing minister may say in her remarks. She may talk about the supply side and the things that the government is doing to address that. There are in fact two measures on the table: the Housing Affordability Fund and the National Rental Affordability Scheme. Anyone who tuned in to Senate estimates this morning would have found some very interesting material on the likely effectiveness of both of those schemes. I was able to watch some questions and answers on the Housing Affordability Fund and it reinforced to me that there is a generational divide without comparison in the way we do development applications in this country and in the way that local government produces first homes for first home buyers. So, if you live in the leafy North Shore of Sydney you would pay far, far less than somebody starting out in the western suburbs of Sydney, where sometimes the development applications take three years to process through council.

The Housing Affordability Fund is, I think, $500 million—it may be $600 million. I would be unkind but I need to be: I am going to call it a slush fund that local and state governments are allowed to apply to. So here we have the federal government providing a fund which state governments can dip into in order to relieve the housing affordability crisis. Thirty million dollars has been released to help develop a website where you can track the progress of your development application—a so-called electronic development application website. I noticed that there was a development assessment forum brought together in 1998 to talk about this, and clearly they are just still talking. If we have the delays that we are hearing about, with the holding costs for developers and ultimately for first home owners, it is just not good enough. Why should the federal government provide $500 million for state governments to dip into to do the things that they should be doing anyway? It is incumbent upon them to release land in a progressive and orderly fashion and in a way which allows first home owners to build.

The fact that there is no affordable land on the fringes of our major cities is an indictment of us all. I have told the House before about the reasons why: state treasuries must maximise the returns to themselves from the land that they own and from the stamp duty they get from first home owners. Yes, there are some concessions in some states, but overall they get money from first home owners through stamp duty. State treasuries say: ‘Well, we have to maximise the land, so we will release it in a suitably slow fashion so that we get as much money as possible.’ But the people who are stuck at the end of this are the first home owners not able to get an affordable home.

When the matter was discussed in Senate estimates this morning, they also covered the National Rental Affordability Scheme. It was interesting to see officers from the housing branch of the department of family and community services essentially say that what they are doing is implementing the government’s election commitment—that that is what their work is focused on. So, with the National Rental Affordability Scheme, there will be 3,500 houses in 2008-09, 7,500 in 2009-10, 14,000 in 2010-11 and 25,000 by the time we get to 2011-12. But, when the senators quizzed the department on sound evidence and research to demonstrate the rate at which these housing incentives would be taken up or why they would work or the details of the scheme, they kept coming back to the answer: ‘We are focused on implementing the government’s election commitments.’ They did not say there was a reason why they would not work, but they could not tell the Senate committee why they would work.

This has been my point about the National Rental Affordability Scheme. It is fine to offer incentives to developers. I will remind the House that that is what it does. As a developer you are entitled to a $6,000 tax credit from the federal government and a $2,000 tax credit from the state government, either in dollars or in kind, and that is over a period of 10 years. As a developer you are then required to build an affordable home—the style of the home, of course, is up to the developer—but the requirement is that it is rented out for 20 per cent below the market rent of the geographic area.

The questions that the senators quite reasonably asked were: how do you determine the geographic market area; how do you police such a scheme; what happens if somebody within one of these homes moves out or their circumstances change—do they suddenly break through the threshold and have to leave? But, more importantly, what was focused on and what I believe is important is that this is actually not going to address the supply-side problem that we face. There will be 3,500 houses if we are lucky this year—

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

Madam Deputy Speaker Burke, I rise on a point of order. If I could draw your attention to the subject matter of the legislation, it does seem to be drawing quite a long bow to be discussing these matters, which are not at all at issue in the legislation.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Farrer will return to the bill before the House.

Sussan Ley (Farrer, Liberal Party, Shadow Minister for Housing) Share this | Link to this | Hansard source

I know it may appear to the government that these are not relevant, but I think they are. This is a bill that discusses housing affordability—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Can I just point out to the member for Farrer: it is not whether the government thinks it is relevant; it is whether the person occupying the chair finds it relevant, and I have asked you to return to the bill before the House.

Sussan Ley (Farrer, Liberal Party, Shadow Minister for Housing) Share this | Link to this | Hansard source

I will quickly conclude my remarks on this part of what I wanted to say. What I really wanted to say is that, as is demonstrated all over this place at the moment—in Senate committees, in conversations that are being had, in admissions by government officers—the measures that the government is proposing on the supply side of the housing affordability equation are unlikely to work. They are untested, unresponsive and unlikely to work. I want to make that point because I am not sure whether those measures are coming before the House in any legislation. I think that, while we have something that is being presented as a reason—

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

Madam Deputy Speaker, on a point of order: I appreciate the attempt of the honourable member to continue to do what the chair has directed her not to do, but I ask the chair to make certain that we do not digress further and that we actually do return to the subject matter of the legislation.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Member for Farrer, I ask you to address the bill before the House.

Sussan Ley (Farrer, Liberal Party, Shadow Minister for Housing) Share this | Link to this | Hansard source

It is clear that the minister for housing does not want me to actually expand on the reasons why the two other supply-side measures are not going to work.

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

Madam Deputy Speaker, I rise on a point of order. I am not the minister for housing, and it is the request of the Deputy Speaker that the member return to the subject matter of the legislation.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Member for Farrer, I again remind you that it is not the government asking you to do this; standing orders require you to be relevant to the legislation before the parliament, and I ask you to return to the bill before the House.

Sussan Ley (Farrer, Liberal Party, Shadow Minister for Housing) Share this | Link to this | Hansard source

Madam Deputy Speaker, I appreciate that you are in a frustrating position and I will try to make it less frustrating for you. No doubt, I will have another opportunity to talk about the Housing Affordability Fund and the National Rental Affordability Scheme.

As I reminded the House earlier, the opposition are not opposing first home saver accounts, because we appreciate that any opportunity young people have to save is a good thing. However, if the measure is successful, the principal reason for it being successful will be that people change their saving habits. A relatively modest government co-contribution—$850—is the most one could receive and then you would have to save $5,000. That is difficult for a young person in any situation these days. If you saved $1,000 you would get a government co-contribution of $150. Add that to the enormous complications surrounding the rules that govern the accounts—that have been admitted to be quite inflexible and quite onerous—a young person considering whether to go ahead and take up a first home saver account, should the financial institutions offer them in a competitive way, and we have yet to see that, may well decide to use other savings options. They may well decide that the small advantage they would accrue over the time they held their first home saver account would be quickly outstripped by the rising costs of housing in Australia. If nothing is done to address the supply-side factors I expect that that is exactly what will happen.

I conclude my remarks on this bill by reminding us all of those who do not have a roof over their head. We talk about houses, but there are some Australians who will never own their own home and there are many Australians who are homeless and sleep on the street each night. During the last sitting of parliament the Salvation Army was here. I would like to place on record my strong support for their programs. I assisted them in the launch of the Red Shield Appeal in Cairns relatively recently. I could not believe the individual work that they do for the homeless and the quality of the advice and support they provide. So I think it was quite difficult for Salvation Army Captain Paul Moulds to warn the government—yes, there has been a great focus on the homeless issue, which is much appreciated by those who help the homeless—‘I don’t think there has been one additional homeless person that has yet been helped.’ It is very important when expectations are this high that we do not continue with reviews, green papers, white papers, committees and discussions that actually do not give the dollars to the people who need them—the people who know very well what is required.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Farrer is again straying significantly from the bill before the House. I have allowed her a great deal of latitude.

Sussan Ley (Farrer, Liberal Party, Shadow Minister for Housing) Share this | Link to this | Hansard source

Thank you. I have concluded my remarks.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Housing) Share this | Link to this | Hansard source

I am almost speechless to hear representatives of the former government that presided over 12 years of inactivity and inaction on housing affordability and homelessness now getting up and urging a new government in office for six months to do more on an issue that they ignored for over a decade. The extraordinary hide of the shadow minister getting up and saying we have done nothing—when we have spent $150 million already on crisis accommodation, have backed RecLink Australia to roll out their programs nationally, have backed the soccer Homeless World Cup, have released our green paper on homelessness and are now anticipating a white paper in September, which is a very fast turnaround time for anyone who understands how the green paper and white paper process works—after 12 years of neglect by the previous government, is absolutely extraordinary.

We see it also in these arguments about the first home saver accounts. I think the shadow minister’s most damning indictment was when she said, ‘We have a responsibility to fix this.’ What a damning indictment of the previous government. Yes, there is a housing affordability crisis that the shadow minister mentioned half-a-dozen times or a dozen times in her speech. Did this housing affordability crisis evolve in six months? Was housing perfectly affordable on 25 November last year but now, suddenly, there is a housing affordability crisis? This crisis has evolved because we have not been building enough homes—I perfectly agree with the shadow minister on that. We are 30,000 homes short. The shadow minister believes that this is probably an underestimate. I think it is probably an underestimate too. How many years has this been going on? What action did the previous government take to improve housing affordability? Name one thing. Impossible.

We have had various criticisms. The first that the shadow minister raised when she started speaking in our past sitting period was that money saved through the first home saver accounts would be capitalised into higher housing prices. That is curious because that was not the approach the previous government took when they introduced the first home owners grant. They did not believe that at the time. There is a very clear difference between the first home saver accounts and the first home owners grant. The first home savers account, as the shadow minister understands, has a minimum lock-in period that she has also criticised. They have a minimum lock-in period because we do not want this extra money to flow through in one lump and push up housing prices. That is a design feature for the very reason that we do not want additional money punching the market all in one go and pushing up house prices.

Many people who start saving in their first home saver accounts this year will not be ready to buy a house in four or five years time. It might take them six, seven or eight years to save a deposit, so we will not have the inflationary impact of all of this money coming through at once. We also give ourselves the time to start to address some of the critical—(Quorum formed) The shadow minister several times made a point about this government not doing enough to address housing supply. I really need to take issue with this. The first home saver account is one measure out of a range of measures such as the Housing Affordability Fund, the National Rental Affordability Scheme and the reforms that we are engaging in with our state and local government colleagues. All of these are designed to begin to turn around the critical housing supply shortage we have.

We have a housing supply shortage. The shadow minister is absolutely right in saying that. And the reason that we are engaging with the housing affordability problem in a range of ways is so that we help young people save a deposit for their first home and also make sure that there are more affordable homes being built. That is what the Housing Affordability Fund and the National Rental Affordability Scheme will help with.

The shadow minister also said that the first home saver account will increase demand. That means more young people will want to buy their first homes. What a scandalous idea: that more young people would want to buy their first homes! If this increases demand for first homes then I will be the first to be pleased about that. We have seen a declining proportion of all loans going to first home buyers because they have been priced out of the market, and a critical factor in that is that they cannot afford the deposit on their first home anymore. This is partly because they are paying so much more for their rent. So if demand goes up for first homes, I will be the first to be excited about that.

The shadow minister says this is a small measure. It is a modest measure. We think it will help about half a million people save a deposit for their first homes. I think that is substantial. The shadow minister argued that the measures here should be more tightly targeted. I think, from someone who was in a government where 270 millionaires were paid $3½ thousand each in family payments in the last two years, that an argument about tighter targeting is one that is difficult to sustain publicly.

She criticised the minimum lock-in period. The minimum lock-in period is vital because we want people to change their culture of saving. We also do not want a flood of money to hit the market before our supply measures begin to work. She was worried about what would happen to joint accounts when people split up. There are not any joint accounts, so we do not need to worry about that. She was worried about what would happen if the savings that people were making were outstripped by price increases. So the logical argument is that people should go now and borrow 100 per cent of the purchase price of a new home and get themselves into exactly the sort of trouble that we are seeing, with people defaulting on loans in record numbers, because we do not want people waiting around to save a deposit. That is the kookiest logic I have heard in some time when it comes to talking about saving a deposit.

The shadow minister puts all of the problems down to land supply, taxes and charges. According to her, it is all the fault of the states, it is all the fault of local government and there is nothing the previous government could have ever done from a federal level. It could not have released Commonwealth land like the states were asking, for example. It could not have done any of that.

I will finish commenting on the shadow minister’s points with this one last point. The shadow minister was critical of the Housing Affordability Fund and talked about how the $30 million for electronic development applications was for a website. She clearly misunderstands that this is about a substantial reform, not just to how people interact with the system but to the system itself, to give the ability to process applications much faster.

She mentioned that the Development Assessment Forum have been around since 1998. They gave the same advice to the previous government as they have given to us—that there needs to be massive reform—and we have actually taken that advice and started to move on it. The fact that they could not get anyone to listen to them for 10 years, the fact that the only measures in this area undertaken by the previous government had no accountability measures at all and the fact that they had no interoperability so that any changes made to electronic development around the states or between local government areas could not work together properly have not been mentioned at all.

Jon Sullivan (Longman, Australian Labor Party) Share this | Link to this | Hansard source

Who was there, Housing Minister?

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Housing) Share this | Link to this | Hansard source

Let me think!

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

The minister will not respond to interjections.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Housing) Share this | Link to this | Hansard source

That is right. They did not have a housing minister so it would be impossible to name a housing minister. It shows how important they thought this was.

The homebuyers have been shut out of the housing market. We know that now, across Australia, they account for barely one in six of all home purchases. The figure was 16.4 per cent in March 2008 compared with over one-quarter of home purchases five years ago. The size of the typical first home mortgage has more than doubled in 10 years, from $104,000 in December 1997 to $230,000 in March 2008. According to the Real Estate Institute, median house prices continue to escalate and increased by 12 per cent across Australia in 2007. That is great for people who own their own homes already. What we are missing is an entry-level product and the ability for first home buyers to enter the market at that affordable level. I get letters all the time from people who despair of ever being able to own their own home or indeed parents and grandparents who despair of their ability to see their children and grandchildren own their own homes. One letter was from a lady in Perth who wrote to the Prime Minister. She said:

Myself and everyone I know can not believe how much the prices of houses ... are at the moment. It is a really sad thing, as I am happily married with a beautiful baby and would love to have a house of our own, as we live with my parents. Our dream is to have our own house, but ... I doubt it if we will ever have a house of our own. My husband works long hours, 7 days a week ... but there is still no hope. So, it would be absolutely fantastic if the government could do more to help with first home buyers ...

Well, we are. First home saver accounts will help aspiring homebuyers like this young family from Perth to save a bigger deposit. The new accounts will be available from October this year. The shadow minister criticised that as well, asking: why only from October? You could ask: why not from last October or the October before or the October before that?

The government will provide a 17 per cent contribution on the first $5,000 of individual contributions made each year. That means someone who manages to save $5,000, which I agree is a lot of money to save, will receive an $850 deposit from the government. The thing is that, if you are not able to save those bigger amounts, it will be hard to save for a deposit and pay your mortgage down the track. We do have to encourage people to engage in serious saving if they aspire to own their own homes.

I notice that the shadow minister is now critical of the flat rate because it benefits an apprentice on $10,000 a year more than it does a person earning $180,000 a year. The point to make here is that the apprentice is more likely to save for a number of years. If you start saving when you are 18 or 19 you might be saving for eight, nine or 10 years but, when you are in a position to pay the mortgage on your property, you will have saved a substantially greater deposit. That young person might be able to put away hundreds of dollars every year from the government contribution. Someone on $180,000 a year is not going to save for 10 years to buy a house. In fact, they might not even take up these new accounts—and we accept that—because they might think: ‘I don’t really need to save for four years; I can put away a lot more money over the next two or three years, and I’m going to go down that path.’ Good luck to them if they can manage without us.

The 15 per cent tax on contributions as they are accumulating interest within the account is a terrific measure. It means that the accounts will be more tax effective as the money collects in them than if they had the money in an ordinary savings account. It is the same amount as if they were older people putting money into their superannuation, and I think that that is a very fair approach to take in helping these young couples save for their first home. A couple on average incomes that save 10 per cent of their incomes would be able to save a deposit of more than $88,000 after five years. I understand that it is a big ask for people to save that proportion of their income, but what I also need to say is that we find a lot of young people who set themselves the target of saving for their first home are very prepared to make some sacrifices. The government seeks to help and reward them along the way so that, instead of being caught in a rental cycle as more and more young Australians are today, these young couples and young individuals will be able to begin to save a deposit for their own home. This is not just good for individuals, for couples and for families but also very, very important for our national savings. We need to encourage people to get into a regular habit of saving. We all know that having a mortgage come out of your weekly pay packet and being in the habit of living within your means is much easier than taking the initial step of saving the deposit in the first place. So we hope that this will encourage a culture of saving. We expect that people will save and that, by 2012, the government contribution will have accumulated to about $6½ billion.

This is absolutely vital in our efforts to bring down the inflationary pressures in the Australian economy. We do not just need these individual savings, though it is very important to encourage a culture of saving. Tto increase our national savings by $6.5 billion by 2012 is phenomenally responsible, well-judged policy that does reflect our commitment before the last election.

I thought it was very curious that the shadow minister was somehow criticising public servants for saying that they are in the business of helping the government to deliver on election commitments. I thought that is what the people of Australia would expect of the government: to deliver on our election commitments. This was one of our election commitments. It was designed to help young Australians who are increasingly finding it difficult to buy their first home save a bigger deposit with a little bit of government help. I am very proud of that aim and very proud that this policy delivers on it.

Danna Vale (Hughes, Liberal Party) Share this | Link to this | Hansard source

I rise to address these three bills, the First Home Saver Accounts Bill 2008, the First Home Saver Accounts (Consequential Amendments) Bill 2008 and the Income Tax (First Home Saver Accounts Misuse Tax) Bill 2008. First, all the business that was put before the House last week has demonstrated that this government is forcing through its legislative agenda with insolent disregard to the well-established parliamentary convention here in this place. For decades this practice has allowed the various parties and Independent members the opportunity to scrutinise legislation in the true exercise of the democratic process as it moves through the threshold of initial consideration by this House. The process is essential for the transparency and accountability that our fellow Australians have rightly come to expect from us here in this chamber. Unfortunately for my constituents, there has been no opportunity to fully apprehend the details of several bills that went through the House last week, and these bills were virtually dumped on them by the government late last Tuesday night.

Fortunately, these three bills relating to housing affordability measures were held over to this week and I wish to take this opportunity to speak on the bills because they are aimed at an issue which has engaged my interest for some time and one that is of concern to many of my fellow Australians, especially Indigenous and disadvantaged Australians, who see themselves as locked out of the great Australian dream of owning their own home. The First Home Saver Accounts Bill 2008 is not a supply-side solution; it is a demand-side measure and a modest measure at that, but I do not oppose the measure. It does establish first home saver accounts, it governs their operation, it provides for the payment of government contributions for account holders and it provides for the prudential regulation of account providers. The First Home Saver Accounts (Consequential Amendments) Bill 2008 provides consequential amendments to other Commonwealth laws, chiefly the taxation and corporations law. Finally, the Income Tax (First Home Saver Accounts Misuse Tax) Bill 2008 imposes the misuse tax to claw back benefits obtained by an account holder who inappropriately uses the account.

I note that the government’s proposed model has significantly changed since the announcement of the budget. Pre-budget, the government was to pay a variable contribution of between 15 and 30 per cent of the first $5,000 per annum, depending on the account holder’s marginal tax rate. This would have resulted in higher income earners receiving a significantly larger government contribution than lower income earners, which would have been grossly unfair. It was a point made a number of times in this chamber during question time, to which the minister never provided a straight answer but which we now note has been addressed in this legislation. I am now advised that the first $5,000 per annum saved in a first home saver account will attract a 17 per cent contribution from the Australian government and earnings on the account will be taxed at a low 15 per cent. The overall account balance limit has also been increased to $75,000 indexed, after which no further personal contributions can be made. Withdrawals can only be made after contributions of at least $1,000 have been made in the last four separate financial years, and withdrawals are tax free when the money is used to buy or build a first home in which the couple lives.

During the last election the coalition policy regarding homeownership proposed to introduce tax-free home saver accounts to provide a simple, tax effective way to help Australians to save for their first home. A key difference in the coalition policy is that it was proposed to have two types of accounts: one a tax-free home saver account for children and the other a tax-free home saver account for adults. Tax-free home saver accounts for children were to be available to all Australians under 18 years of age. Parents, grandparents and others wishing to contribute up to a total of $1,000 between them each year could place money into an account. The enticement of this initiative is that these contributions would have been tax deductible and savings in the account would have been available to purchase a first home anytime after the account holder turned 18 years of age. Other initiatives proposed by the coalition last year included shared equity schemes. This included providing a capital gains exemption to individuals who shared equity in a home occupied by a family member and which is the family member’s first time home.

This legislation now before the House represents the Rudd government’s response to the crisis in housing affordability and I repeat that it includes three measures: the Housing Affordability Fund, the National Rental Affordability Scheme and the first home saver account. However, as Australians well know, the major drivers in the housing affordability crisis include the restrictive land release policies of state and local governments, and government taxes, fees, levies, charges and compliance costs which are borne by the new homeowner. These charges make up more than a quarter of the cost of a new house and land package.

I note that the report from the Senate Select Committee on Housing Affordability is due to be presented in mid-June this year. While this government is looking at these three measures to address the current housing affordability crisis, we all know that they will not solve the core problem. It seems to me that what is really required here is that we take a objective, fresh and honest look at the issue, which is a problem that impacts on the most disadvantaged Australians, and find a solution that provides equity and equality in homeownership for disadvantaged Australian families, including Indigenous Australian families. It is possible that such a solution could be framed to be a supply-side solution flexible enough to address, at the same time, several key portfolio areas of concern and, further, be implemented at considerable savings to the government.

If I ruled the world, I would want such a solution to provide affordable housing for our disadvantaged Australians, our disadvantaged Indigenous Australians, as well as mainstream Australians. I take the opportunity provided by this debate to outline a framework that would include three important benchmarks in addressing affordable housing ownership, particularly ownership by my fellow Australians: one, it must provide homeownership for disadvantaged Australian families; two, it must pay for itself through savings in recurrent outlays; and, three, it must include Indigenous Australians.

Members may not be aware, but the federal government spends around $3 billion a year on rental assistance. This is in payments for rental assistance through Centrelink and housing assistance to the states. This is $3 billion a year. It is spent by the government simply to keep people as renters. The Australian government can do much better than this. Home affordability is an issue in all the states and, evidenced by these bills, it is an issue also for the federal government. If this government is serious about addressing this issue, it needs to set in place a national structural change agenda that systematically addresses the reasons for the emergence of home affordability as an issue in the states and one that provides for coordinated and economically responsible long-term solutions.

The idea is this: the federal government should adopt a national housing policy framework to allow it to take a direct leadership position in stimulating the supply of affordable housing through a private-public partnership approach and at the same time address the causes of home affordability issues that have emerged in the states. Let’s face it, the piecemeal approach adopted by the states has proved to be an abject failure. We are all aware that the explosion of state fees and charges on land is one of the main causes of the increase in the cost of housing. Mindful that the federal government contributes around $3 billion each year to keep people as renters, it could allocate a portion of this to fund up to 20 per cent of the cost of a house and land package constructed for a price—let us say, $250,000—and sold to approved applicants who are currently on state government public housing waiting lists or for other low-income earners—

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I apologise to the member for Hughes for the discourtesy of asking her to address the subject matter of this legislation, but she is very far from this particular bill and it was a matter that your predecessor in the chair drew attention to earlier today.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

What is your point of order?

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

I would simply ask that the member address the actual subject matter of the legislation rather than the generality of issues that she is addressing presently.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

There is no point of order. I have been listening to the member for Hughes. She is talking about housing affordability. I think she is also putting forward some suggestions as part of her speech. I call the member for Hughes.

Danna Vale (Hughes, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. Indeed, I am—I could not be more focused on a particular policy or a particular piece of legislation. As I was saying, the federal government could allocate a portion of the $3 billion a year that it spends to keep people as renters to fund up to 20 per cent of the cost of a house and land package constructed for a price—and let us say, $250,000—and that would be sold to approved applicants who are currently on state government public housing waiting lists or other low-income earners who may wish to buy in. Three-quarters of this 20 per cent could be allocated as a co-contribution to the approved purchaser as a deposit on the $250,000 house and land package. The remaining quarter could be allocated to the developer as an incentive to provide housing in the market sector.

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. This is a very interesting excursus into what a policy might be on an area not covered by the legislation.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

There is no point of order. The member for Hughes is talking about housing affordability. I call the member for Hughes.

Danna Vale (Hughes, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. I certainly am. I am talking about housing affordability for our most disadvantaged Australians, and it is appropriate that it be addressed in this particular legislation. Mr Deputy Speaker, you will have noticed that this is a supply-side solution. It is about building a family home for a price. Yes, the approved purchaser would have to source their own house financing, perhaps via the new shared equity mortgage products that are currently appearing on the market, or perhaps cashed-up baby boomers would run with the opportunity to equity-share with a grandchild now that the grandchild has access to a home deposit, especially if the government provides that there would be no tax liability for the other party on any future sale of the property.

The federal government is in a position to allocate crown land or surplus Defence land to a developer on commercial terms or perhaps offset the co-contribution, where appropriate, to target areas in particular need of affordable housing. Most importantly, this framework would provide a return on the investment to the public purse, which might be of interest to the member at the table. On a $250,000 house package, the cost to the government is $50,000.

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. It is of interest to the member at the table, but it is simply not relevant to the legislation under discussion. Mr Deputy Speaker, you do have a responsibility of holding speakers to the subject matter of the legislation before the House. This is not legislation addressed generally to the subject of housing; it is legislation—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The parliamentary secretary has made his point of order.

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

which is very specific, and it would be helpful to at least have one or two comments from the member for Hughes on the legislation.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The parliamentary secretary will resume his seat. I also listened to the minister herself, who spoke about the previous government’s inaction, as she termed it, which I do not think was referred to in the bill. We listened to that. I have ruled on the point of order. The member for Hughes has the call.

Danna Vale (Hughes, Liberal Party) Share this | Link to this | Hansard source

Most importantly, this framework would provide a return on the investment to the public purse. On a $250,000 house and land package, the cost to the government is $50,000. Of this amount, $12,500 would be assigned to the developer and $37,500 to the approved purchaser. These figures are indicative. For example, for a person in public housing receiving rent assistance of about $130 a week, the pay-back period is under eight years and in this time the approved purchaser is a winner in Australia’s economic stability and not a victim of it.

One of the key positive outcomes of this approach is that in providing a solution to those communities needing homeownership support, it creates the greatest long-term and short-term return—that is, by providing homeownership support to a family with two or more children, the social benefits for the family are immediate and as such families attract the highest government rent assistance, the long-term economic benefit is high. This framework would pay for itself in eight years and return about 12 per cent on the investment to our government. This is a national solution to a national problem, and with homeownership as the key driver to increased supply, we enable people to get out of the rental trap and allow the federal government to rebalance federal housing funding by either implementing national long-term solutions or maintaining the currently failing systems of state public housing.

It also provides leverage. For every $1 of public money we get $5 worth of increasing affordable housing and the affordable housing is in the form of homeownership, not bigger and fatter landlords. This means that the $15 billion allocated over the next five years by the federal government to the states for housing and rental assistance could be leveraged to $75 billion by putting disadvantaged Australians into their own homes. I refer to an article in the Herald Sun on 14 August last year called ‘Rental relief ‘flimsy’’ where the then Treasurer, Peter Costello, said the federal government would be spending the equivalent of $15 billion on homes for low-income earners and on rental aid over the next five-year period.

The federal government would then be in a position to undertake a long-term program of balancing federal housing funds between providing increased homeownership and/or the current state public housing. This program would allow the government to target housing solutions to rural and remote areas or to key areas within towns and cities. But what can this framework deliver for the people of Australia? Several cross-portfolio opportunities present themselves, like the opportunity to implement a national building code and the ability to address the current skills shortage. Also, the program will honour Indigenous Australians and assist with the process of reconciliation in a positive way. But most importantly, such a national structural change will also beget social attitudinal changes. Those federal funds that currently pay to keep low-income Australians in the rent trap will be available to contribute to many of those same Australians becoming homeowners with all the positive social ramifications that homeownership is known to generate.

With an opportunity to implement a national building code, the government would be in a position to assist in driving down the associated building costs of housing which can be part of its solution for affordable housing. Driving down the cost of building houses is important as a long-term strategy, but it would also provide increased certainty to the housing industry and help level out the bust and boom cycles. Further, a national building code could call for all the individual cost components for land to be itemised so that the consumer can see exactly how much of the price is due to value-add by the developer or builder, and how much is fees and charges by state and local governments. Many an Australian family would be vitally interested in knowing such details that go to the cost of their home. I think this is important and it is something that was raised by previous speakers on this bill.

This framework would also allow the government to address another key cost driver in the housing industry—that is, the skills shortage. A new national trades accreditation regime by the federal government could be based on trainees having their year 12 plus a two-year traineeship program. Already, some school students are undertaking vocational training as part of the HSC. But when we understand that even to be a tiler is a four-year training program, it is ridiculous in the greater scheme of things. The federal government would be in a position to introduce a national TAFE training and accreditation program to address this issue. A national trades accreditation regime means mobility of the workforce and increased supply. It would encourage more trainees and, in particular, it would remove key barriers to mature age people taking up a trade.

A national regime would also encourage—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Hughes is straying from the subject at the moment by talking about skilling Australians. She will come back to the bill before the House.

Danna Vale (Hughes, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. No doubt, the government would find that other opportunities would present themselves in this framework. It is a practical suggestion regarding housing affordability that is driven by the supply of housing built for a price for disadvantaged Australians who may never have the opportunity to share in the great Australian dream of homeownership. I will be putting this framework for affordable housing to the Senate Select Committee on Housing Affordability in Australia for the committee’s consideration. I thank the House.

Brett Raguse (Forde, Australian Labor Party) Share this | Link to this | Hansard source

In the time given to me in the next few minutes, I will give my introductory views on this bill. I certainly rise to speak in favour of the First Home Saver Accounts Bill 2008 and the associated bills that form that set. In my electorate of Forde there is no one issue that is more important than housing—housing availability, housing affordability. It is interesting to listen to the opposition today and their discussions about what alternative legislation would bring to this place, but the reality is that these particular bills are not just about housing to get a person into a house; they are also about the overall economic conditions under which we are placed.

The interesting thing for us is that when we talk about south-east Queensland, where the seat of Forde is, it is an area that is experiencing an enormous rate of growth. The pressures there are more specific to the economic concerns we have across the country simply because of the demand. It is, as the opposition have said, a supply and demand issue. But as our Prime Minister has said, silver bullet solutions just do not exist. This is a case of making a raft of options available, and certainly our first home saver accounts scheme is about bringing young people into the culture of saving. We have heard it many times this morning, certainly from the opposition. Interestingly enough, the opposition essentially agree with this bill. They agree so much that they had to talk about their alternatives. The reality is this is the bill before the House; it is important that this bill gets passage through this House because it is part of some relief for those young people who are attempting to buy their first homes. When I say ‘young people’ I certainly include other people who are classified under that arrangement, but it is about people having the opportunity to buy their first home.

The seat of Forde is an area that is in such demand that people who once had affordable housing in some of the areas are now not able to even find rental accommodation. The pressure is such that the demand for rental accommodation is outstripping supply. We have areas that have had huge rental increases—up to 70 per cent increases—simply because the supply of housing is not there. Mr Speaker, I obviously commend this bill because of its ability to provide—

Debate interrupted.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! It being 2.00 pm, the debate is interrupted in accordance with standing order 97. The debate may be resumed at a later hour and the member will have leave to continue speaking when the debate is resumed.