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

My question is to the Prime Minister. Will the Prime Minister outline what the government is doing to address Australia’s housing affordability crisis?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

The government, in building an Australia for the future, is determined to ensure that whatever can be done to preserve the dream of Australians to one day own their own home does not just remain a dream but can still be a reality. The problem that we faced coming into office was that any measure of housing affordability in this country represented some stark figures indeed. The average house cost represented some four times the average annual wage back in 1996 but, as of the end of last year, represented some 7½ times the average annual wage. That is a huge change over time. The average size of a first home buyer mortgage has more than doubled, from $107,000 at that time to $248,000 as at the end of last year. These figures are then reflected in how much first home buyers are spending on mortgage repayments as part of their total income. Back in 1996 they spent 15.2 per cent of their total income on mortgage repayments. As of the end of last year it was getting up towards 30 per cent. These are clear-cut measures of a real decline in housing affordability, and everyone understands this core fact. If, back in the 1996 period, a new house was going to cost you some four times your average annual wage and if, by the end of the period in office occupied by the Liberals, that had risen to 7½ times, that is a huge change. That is what is reflected right across the Australian community. The practical challenge that we face is what is to be done about it. What we did about 12 months ago was convene a housing affordability summit in opposition.

Opposition Members:

Opposition members interjecting—

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

We said we would embrace three major new policies. I have news for those opposite who interject: each one of those policies has been implemented in government. There have been $2.2 billion worth of housing affordability investments by this government, against zero investment in these areas by the previous government. Under this government there is a Minister for Housing. Under the previous government there was no housing minister. Under this government there is an investment in First Home Savers Accounts. Under the previous government there was no such investment at all. Under this government there is investment in a new National Rental Affordability Scheme. On the part of those opposite there was no such investment.

Today we took this one step further by releasing the guidelines for the new Housing Affordability Fund. The Housing Affordability Fund is more than half a billion dollars strong and it is designed to do one thing: to provide a partnership with local government and others across Australia to bring down the on-costs for a new house in a new housing development across the country. If you have a participating local authority, we would seek to do two things. If they wish to partner with the government in the new Housing Affordability Fund, then the way in which we propose to do it is as follows. Firstly, if that partnership occurs, the amount which we invest with that local authority will represent a parallel drawdown in the infrastructure costs which are passed on by the local authority to a new homebuyer. That is one thing, but the second is that the other real increases in costs which are faced by new homebuyers out in new housing developments are also what are called holding costs or holding charges—in other words, charges which arise from delays in the development approval process. This is the second part of the proposal contained in this new fund. If we enter into an agreement with a local authority somewhere, the other part of the deal is to draw down the delay in the development approval process and again to draw down further the additional costs passed on to the homebuyer. Put those two things together and our calculation is that new homebuyers could be up to $20,000 per house better off. That is a practical step forward on the part of this government. It is a half-billion dollar program. It does not solve all the problems in housing affordability, but it is a program which has been warmly welcomed by the industry, including the Housing Industry Association.

The other thing I would say is this: if you also look at this in the context of the other measures we have put forward on housing—$623 million for a National Rental Affordability Scheme to encourage the building of up to 50,000 new affordable rental units of accommodation as well as the $1.2 billion investment in the First Home Saver Accounts, on which the Treasurer is currently engaged in final negotiations with the banks—what you have are three programs on housing affordability, more than $2 billion worth of activity, out there in the marketplace for the use of Australia’s homebuyers, or those who wish to invest in affordable rental housing and those who wish to save for their home. These are practical actions by a government getting on with the job of putting real programs out there to help first home buyers and other homebuyers deal with the challenge of declining house affordability.

We have said many times in debate in this House in recent months that cost of living pressures for working families, for pensioners and for carers have been going through the roof in recent years. Housing affordability—

Brendan Nelson (Bradfield, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Recent months.

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

Recent years. I would say to the Leader of the Opposition—so keen as he is to interject—that increased cost of living pressure only occurred in this country as of 24 November 2007! If you are going to have any credibility in the cost of living debate in this country, you have to recognise that these pressures have been building for a long, long time. The housing affordability figures that I referred to before go right to where they stood as of November last year. Let me just repeat this for the Leader of the Opposition. In March 2006, housing affordability stood at four times the value of the average annual wage. When those on the other side left office at the end of 2007, it was seven and a half times the value of the average annual wage. That is a huge decline in real housing affordability for working families. We have a practical plan of action to do something about a real need for working families.