Bob Baldwin (Paterson, Liberal Party, Shadow Minister Assisting the Shadow Minister for Defence) Share this | Link to this | Hansard source

I rise today to speak on the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008, which include various provisions to make the first home saver account scheme operational. Let me say from the outset that these bills introduce savings measures, which is always to be commended. The idea of people saving, putting money in the bank, putting it away is a great idea, but this legislation does absolutely nothing to make housing more affordable. The rhetoric from the Labor Party is simply this: we now have a minister for housing and that is going to fix all of the problems. A minister does not fix the problems of housing affordability. This requires positive action by a government in reducing taxes and charges and in stopping itself from being one of the inflators of property prices. This is particularly so in New South Wales, where one of the government’s arms, Landcom, has become a commercial developer. It has walked away entirely from its original ideal and goal, which was to provide affordable land. By increasing its land, Landcom has kept the commercial price of land up and made housing so much less affordable in New South Wales.

While these schemes do a couple of good things, and while these bills are designed to introduce a system for dealing with the unclaimed money that is saved into those accounts—they will introduce amendments to secrecy and information sharing provisions between the Australian Taxation Office, the Australian Prudential Regulatory Authority and the Australian Securities and Investments Commission and will also deal with issues surrounding family law situations—again, they do nothing to make housing more affordable. It matters very little how much money you are able to put away in the bank if, indeed, property prices keep escalating because of a restriction on supply that is being driven by state governments and supported by local governments. This makes the price of property go up. Property values go up because there is demand. Demand is driven by the amount of supply in the marketplace. It is simple economics 101—something that the Labor government has failed to address.

While these savings provisions are good, they will have very little effect on the ability of a young person who struggles to put petrol in their car to go to work, who struggles to pay the rent, who struggles to feed themselves and who, hopefully, has a little bit of money left over at the end of the week to put money into this savings account. It is clearly true that, because of the financial pressures placed on them today, young people are living beyond their means. How often do we hear of escalating credit card debt, massive mobile phone bills and texting accounts that they cannot pay? Where are they going to get the money from to put into a home savings account? Most of them give up the dream of owning a home not because there is no financial savings incentive program in place but because the cost of the home far outweighs their ability to purchase that home.

The cost of housing has risen so much that young people just feel that they are totally alienated from the market. Young people feel that they have been let down in times gone by. Even though the property prices in areas like mine have reduced by 10 or 20 per cent through the market crashes that have occurred, property is still unaffordable. It is unaffordable when a group like Landcom, a government instrumentality designed to promote and provide affordable housing, now holds some of the most expensive land in the region. The average price of a block of land provided by Landcom is in excess of $300,000. In my area, the cost of a block of land at a new estate around Koala Shores at Tanilba Bay is $130,000.

When we talk about housing affordability, more important than a savings scheme would be to reduce the taxes, the charges, the levies and all of the other costs kept by government from developments. In fact, if Landcom were doing what it should be doing, it would be providing land to the marketplace without government taxes and charges. If it were indeed going to fulfil its obligation to provide affordable land to bring competition into the marketplace, it would live by its original charter. Its original charter was to provide affordable land. I can remember people camping out for nights and lining up in queues to make sure they had the opportunity to be the first ones to bid for that block of land. But that has got lost in the government’s desire to be a commercial entity—not a competitive entity, a commercial entity.

The Minister for Housing stands up and says that the problems with housing are going to be fixed because the Rudd government has appointed a housing minister. That will not fix the problem; action will. As she sits around the COAG table with all of the planning and housing ministers, she needs to make sure that they reduce the taxes, the levies and the burdens applied upon land development to make that land competitive. She needs to make sure that restrictions on property development are lifted and that the period of time applications are held in planning departments of both the state and local governments is reduced.

One thing that seems to have been obfuscated in this whole issue is the actual holding costs in undertaking developments. A developer will acquire the parcel of land. They will then proceed with the planning, the environmental impact statements, all of the due diligence required and then put it to council. Council might sit on that development for six, 12, 18 months or two years and beyond. All that time that developer is building holding costs. You do not need to be Einstein to work out who pays for those holding costs. It is not the developer. Those costs are passed on to the home purchaser and that drives up the cost of property in that area.

If the minister really wanted to affect the cost of housing, particularly in New South Wales, she would get whoever the New South Wales planning minister is this week to sit down, go through the issues in relation to Landcom and make it competitive by a reduction in the taxes, charges and profit that it makes. That would then bring other developers into line in a commercial and competitive environment to make sure that they are not overcharging and to make that land affordable. It even gets ridiculous—Landcom in a promotion of their house and land packages now offer a free fishing boat. This is a government entity that is designed to make housing affordable but to promote their commercial land sale packages they are offering a free Quintrex 395 boat with the next seven lots sold. I know what the punters want. They do not want a free boat, because they would not have time to use it. They would not be able to afford the petrol to put into it as they are paying the inflated prices for this property.

Around 40 per cent of the cost of land is involved in fees, charges, taxes and compliance costs. If a government wanted to do something serious—remember it is not the federal government that gets those fees, taxes, levies and charges; it is local and state governments—they would bring pressure to bear on state and local governments to clean up their acts, to be more competitive and to look at an opportunity to be can-do governments. If indeed they have a genuine heart of concern for people to have affordable homes they would drive this issue singularly. But they do not, because they have their hands in the pockets of the battlers. It is the battlers, at the end of the day, who pay all of these passed-on costs. My colleague the member for Charlton said in a speech yesterday something that I do agree with:

In 1996 the average house cost was about four times the annual wage, and today it is no less than 7½ times the annual wage. A typical first home buyer now spends a third of their income on mortgage repayments. This compares to a figure in 1996 of less than $2 of every $10 earned.

In that time costs in providing the land have escalated. Delays in development in New South Wales, while Frank Sartor sat on his hands, have driven costs up. There have been restrictions on opening up green belt areas. As our population increases the only way that you will address the situation is to open up further land development. If people are opposing increases in the height of buildings, the only other direction you can go to provide accommodation is outwards. We have the double effect from those who claim to wear their environmental heart on their sleeve. They do not want you to go up and they do not want you to go out. The question is: where do you want to put the people?

In looking at this bill we support the idea of increasing savings and providing an incentive for people to save. If this bill is to address the issue of housing affordability and availability for young people then the core root of the problem needs to be addressed. These days in development, when a developer puts in a lot and the sewerage comes through, the developer has to pay all of the costs in providing that sewerage to that house. If they happen to be the first developer into that multiowned development site, they pay all of the costs. It is more logical for the person who is collecting the fees for sewerage and water to install the infrastructure and then for the individual lot owner to pay a connection fee.

Groups like Hunter Water in my area are state owned corporations with a profit motive and they need to earn a profit to return to the state government. Well, I say government is about providing services to the people; government is not about making profit out of the people. And the sooner government gets out of the business of being in business and allows private entities to provide commercial competition, the better—then real progress on these issues will be made. If we had competition in the marketplace, at least, in the provision of water and sewerage then prices would be much different. But, no: our consumers, the people that we represent in this House, all pay the penalty.

What I would like to see is an urgent meeting, with all of the COAG ministers and heads of local government authorities sitting down to map out a real plan that will address the issue of housing affordability. What needs to be taken to this issue is a clean sheet of paper. We need to start from the very beginning: a greenfield site. We should look at all the costs that are involved in providing housing and work out a way to make that housing more affordable. But, no. What do we have? We have bandaid measures like: ‘Let’s have a little home savings account.’ That is good in itself, but it will not address the issue because people struggling to buy houses usually struggle to put away extra money into savings accounts. As I said, they need to go back to the very beginning and address the issue: what is driving up the cost of housing? It is supply and demand. And when governments are a part of that supply chain, and want to make a commercial return and a profit on being part of that supply chain, it just falsely inflates the prices.

So in supporting this bill I urge, on behalf of my constituents, that governments look at the issues. Very shortly, just around where I live, another couple of thousand home sites will be developed—the new town called Chisholm. But when I look at the cost of the infrastructure that is going in there, which is being borne and should be borne by the broader state entities, who then seek a long-term return on their investment, the cost of that housing will be high; it will be very expensive. And if there are delays in rollouts and in the approval of development applications for parts of it then that will increase the demand on a very specific area. What we need is more global planning, with long-term consideration of population growth throughout Australia, and even support and establishment by the federal government of new areas away from major cities that will open up large greenfield sites to further development of housing, to industry and to population, thereby shifting the pressure of population from our capital cities and major regional centres to the new centres being established. That is how you address it.

If everyone wants to live in the one town on the one block of land and it becomes a supply and demand game then prices will become falsely inflated and unsustainable. And the reason why people’s property assets have been deteriorating is simply that the prices have been largely falsely inflated through supply and demand. So if we were to increase supply, spread demand and make land more affordable, and if the governments at local and state level got the taxes and charges down to realistic levels, then it would truly benefit all Australians. I commend this bill to the House.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the two bills before the House, the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008. Unlike the member for Paterson, I took the time to actually do some research before rising to speak on these bills. I understand that those opposite would have been a little bit busy over the last couple of days, but he would have been guided by the joint media release coming out from the Prime Minister, Kevin Rudd, and the Minister for Housing and Minister for the Status of Women, basically detailing a program that maps out what the member for Paterson was complaining about. So it is unfortunate that he is not here in the House so that we can set him straight on what he was talking about.

It was interesting to hear his comments, because one of the great claims to fame of the coalition’s time in government and of the member for Higgins’ time as Treasurer stretching back to 1996 was the elimination of government debt. And while those opposite would have us believe that it was because of their shrewd economic management, it was actually more to do with the sell-off of public assets like Telstra and also those significant reforms made by the Hawke and Keating governments.

However, that is only half the story. At the same time as John Howard and Peter Costello were flogging off assets to reduce government debt, household debt was on the rise—and I mean on the rise and on the rise. When the Howard and Costello Show left office, household debt had reached a record $650 billion—up more than $70 billion or 12 per cent since 2002. And the ratio of household debt to disposable income had risen to 110 per cent—higher than in the United Kingdom and higher than in the United States of America. For the economically illiterate amongst us, that means that for every $100 we earned we owed $130. So, while government debt is nil, the burden has been shifted onto households, with every man, woman and child in the country owing about $32,500 on average. That means that my three-year-old son owes $32,500, on average. It will come as a shock to him; I have not broken that news to him yet!

At the same time, the cost of home ownership has risen beyond the reach of many young families. In the Australian Bureau of Statistics article ‘First home buyers’ it is reported that the average mortgage of first home buyers rose from $165,400 in 1995-96 to $310,000 in 2005-06. That is nearly a 90 per cent increase in 10 years. Obviously, that is not too bad if you are a home owner—if, say, you have a house in Point Piper or wherever, that is not too bad because, obviously, it is an asset that is accumulating value. Obviously, it is not so good if you are a renter—very tough if you are a renter or if you do want to chase that dream of owning your own bricks and mortar.

In Australia we often talk about that great Australian dream of owning your own home. But what does that mean? I just want to unpack that concept for a minute. I remember seeing a show on the ABC, I think it was last year or the year before, and the name of the show was Race—the Power of an Illusion. It was all to do with African Americans in the United States and talked about that progression from slavery to the present where we might soon have an African American President. It talked about how that had been such a difficult journey for African Americans in the United States.

The final episode talked about how important inheriting bricks and mortar is in giving people an opportunity in life. It seemed to make the point that—I apologise to the makers of the show if I am recalling it incorrectly—in communities into which African Americans moved, sometimes the housing values would decrease. If there were too much of an African American community in an area, the housing values would decrease and, therefore, people would not be able to keep up the mortgages and then pass on a capital item to their children. It is certainly something to be explored another day, but it goes to show how important bricks and mortar are in giving Australians an opportunity to improve their lot in life. It does not matter if you grow up in a single-parent household renting in Sydney; you can go on to accumulate great wealth. Often it is about that ability to have an asset and then pass that asset on to your children over the years. It is like how MPs in some places, I hear, pass on their seats to their children, Mr Speaker. That does happen in some places!

That capacity to pass on an asset to your children is what the great Australian dream is all about. It reminds me of a poem about how important it is that, when we build something, we pass it on. It is a poem by Percy Bysshe Shelley that many people would have studied at school—I am sorry to stir up old memories for those who had poetry flogged into them. I will read it and then return to it. The poem says:

I met a traveller from an antique land

Who said: Two vast and trunkless legs of stone

Stand in the desert. Near them on the sand,

Half sunk, a shatter’d visage lies, whose frown

And wrinkled lip and sneer of cold command

Tell that its sculptor well those passions read

Which yet survive, stamp’d on these lifeless things,

The hand that mock’d them and the heart that fed.

And on the pedestal these words appear:

‘My name is Ozymandias, king of kings:

Look on my works, ye Mighty, and despair!’

Nothing beside remains: round the decay

Of that colossal wreck, boundless and bare,

The lone and level sands stretch far away.

Obviously that poem is about how hard it is for a human to pass on a lasting legacy. Every Australian, when they take on a mortgage, is trying to do something for their family, to do something for themselves, to pass something on to their children et cetera. Many people have studied the poem and the line, ‘My name is Ozymandias, king of kings’. It is amazing how something can be constructed that people think will last forever, but then, as the poem says, ‘Nothing beside remains: round the decay/Of that colossal wreck’. It is probably not dissimilar to Peter Costello’s attack on the Howard legacy with his memoirs coming out, attacking the legacy of John Winston Ozymandias. For the former member for Bennelong, history will judge him differently depending on who writes the history. His former Treasurer has started that process.

To return to that idea of the great Australian dream, it is about passing on security to our children. That is why this legislation before the House is so important. It helps those people on the margins who might not be able to put away enough money to put down a deposit. With the great Australian dream such an important part of Australian culture, it begs the question: what was the coalition government doing to support young families and help them to save for their own home over those 12 years that it was in government? Today many young families are struggling to pay the rent, let alone to save for a deposit on their first home.

As we have seen from the United States mortgage crisis, if you do not get the balance right it can have serious consequences for the rest of the economy. When the United States sneezes, we get the flu over here, so it is very important to get the balance right. I notice the member for Paterson, in his laissez-faire approach to economics, was happy to increase supply and demand with the stroke of a pen here and a bit of number crunching with the New South Wales Minister for Planning there, but it is a much more complicated balance. So many of the jobs in our communities flow from what goes on in the housing sector. I know that in Queensland, where it is still booming even though the market has tightened a little bit, it is still incredibly hard to track down a builder, an electrician or, God forbid, a plumber if you need one. It is a very important part of the economy to make sure we get right, and that is a lesson we can learn from the United States. Thankfully, we have had much better prudential regulation, so we have been spared some of the onslaught that is going on over there.

That is why the Rudd government is introducing these first home saver accounts—to help young people save a bigger deposit for their first home. Obviously, the bigger the deposit, the smaller the mortgage. The smaller the mortgage, the less likely that borrowers will fall into mortgage stress. The passing of the First Home Saver Accounts Bill earlier this year ensured that these accounts would be available from 1 October—not far away at all. Last week, in the suburb of Moorooka in my electorate, I had a meeting with a couple of credit providers to see how they were approaching this initiative. All but one of them were definitely going to be taking on these first home saver accounts. Even though it was only introduced into the parliament not too long ago, they liked the concept, they liked the idea and they thought it was a great product to take to their customers. But for the fact that they had to get the technology right—get their accounts and information processing systems up and in place—they would all be ready to go by 1 October. They were very impressed with this product.

Through the First Home Saver Accounts the government will match 17 per cent of personal savings up to $5,000 a year. That is an annual government contribution of $850. Account holders contribute from after-tax salary and earnings and they are taxed at 15 per cent, the same as superannuation. Government contributions and withdrawals will be tax fee.

The two bills before the House amend the First Home Savers Account Act to finetune this framework. The First Home Saver Accounts (Further Provisions) Amendment Bill introduces changes in four main areas. Firstly, it makes amendments to ensure that the secrecy provisions enable agencies such as the Australian Taxation Office, ATO, the Australian Securities and Investments Commission, ASIC, and the Australian Prudential Regulation Authority, APRA,  to access information while ensuring that privacy is protected. It also allows for information on first home owners to be shared between the Commonwealth and the states and territories.

Secondly, the bill introduces a scheme for dealing with unclaimed money. It might seem hard to believe that people could forget where they have left money, but it does happen. Having worked in the mining and unions sectors, I know that people do move from job to job and leave behind unclaimed money. We do need regulations. The scheme will treat non-superannuation accounts, such as a bank account, the same way that unclaimed money is treated. If an account has been inactive for seven years and no contact can be made with the account holder, the funds will be paid to the Commonwealth. This measure will ensure that first home saver account providers will not have to service small, inactive accounts indefinitely. The bill also ensures that payments under a family law obligation—that is, to an account holder’s spouse—will receive the same treatment as if paid to the account holder. Finally, the bill also makes technical amendments to ensure that taxation of first home saver accounts operates as intended.

The second bill—the First Home Saver Account Providers Supervisory Levy Imposition Bill—will enable the minister to impose a separate levy on account providers. This levy will cover the costs of APRA’s supervision of the financial institutions offering first home saver accounts.

I read a report in the Courier Mail recently that questioned the efficacy of first home saver accounts. The article said that few banks or credit unions had signed up to offer the accounts. That might have been a little premature, because since then the ANZ Bank and quite a few credit unions have signed up. As I said, representatives of significant credit unions and building societies in my electorate with whom I met indicated that they will definitely be signing as soon as they get their ducks lined up. It was reassuring to have the meeting and to see how supportive the people at the front line were of these first home saver accounts. Many credit unions in my electorate will be offering the product.

The first home saver accounts bills build on many other Rudd government initiatives designed to tackle the housing affordability crisis. We have heard all about the benefits of long-term saving rather than short-term spending. That is the problem which we are trying to address and which has crept into our society over the past 10 to 20 years. Some of the other initiatives include investing $512 million over five years to cut the planning and infrastructure costs of new housing developments. This is the information that the member for Paterson seemed to be unaware of. It is certainly part of our assault on red tape.

In my former life as both an articled clerk and a solicitor, I was always shocked about the costs that could creep into the purchase of a house. It is funny because if you said to someone, ‘Can you pull out another $500 so that I can buy some beer,’ they would blanch. But when people are buying a $400,000 house, they do not get up in arms about the $1,000 here and $500 there that is requested because it is a relatively small percentage of the total cost of the house. Thankfully, the Rudd government has got up in arms about it and is doing something positive by investing $512 million.

What will this do? It will reduce costs for new home buyers so that effectively they will receive grants of up to $10,000 per home by working with the local governments and the states. That $10,000 rolls off the tongue pretty easily. What does $10,000 represent? I did some testing last night at the local bottle shop. It would buy 312 cartons of beer at $31.95 a carton—that is what I paid last night. Those 312 cartons represent 7,511.74 beers, which would be more than five beers a night for four years. I suggest that that would keep anyone happy. Alternatively, if you went to a restaurant—I will not name it, but let us say a Scottish fast-food restaurant—you could get a large meal every night for 1,438 nights. If beer or fast food are not your cup of tea and you just want two litres of milk at $3.50, that is eight years worth of milk, or 2,857 cartons. So, $10,000 is not inconsequential.

I welcome the announcement made by the Prime Minister and the Minister for Housing on Monday when they released the guidelines for this program. A lot of them have flowed out of the National Summit on Housing Affordability. These initiatives, ideas and innovative projects have flowed from that. Not only are we helping first home buyers; we have also set up the National Rental Affordability Scheme, providing $623 million to help create 50,000 new affordable rental properties across Australia. Contrast this with the Howard government’s approach, which was about giving a boon to landlords and not extending a helping hand to those in the community who are doing it tough. Over the next five years this government will spend $150 million to build up to 600 new houses and units for individuals and families who would otherwise be sleeping rough.

This is a multipronged approach to tackling the very complex and difficult issue that is the housing crisis. I am proud to say that the first white paper commissioned by the Rudd government in January this year dealt with this complex issue. One of the first tasks the member for Bonner and I had as new MPs was to talk to people who were doing it tough. Tackling homelessness was one of the first initiatives of this government with heart. We were trying to do what we could to address this very complicated problem after too many issues had developed over the years. I am a very strong supporter of first home saver accounts because I believe they will be a significant benefit to young families in my electorate of Moreton. This is a substantial initiative and I commend the bill to the House.

Kerry Rea (Bonner, Australian Labor Party) Share this | Link to this | Hansard source

It is with great pleasure that I rise to speak on the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008. These bills provide very important additions to the government’s First Home Saver Accounts policy. They provide greater certainty and security over these new accounts for both providers and account holders. These amendments enable APRA to collect levies to fund the supervision of the accounts. They ensure that privacy for account holders is maintained. They ensure there are the necessary arrangements to protect the interests of those people who have direct access to the accounts when it comes to issues of family law being upheld. It is very important and very necessary to ensure the proper administration of the accounts and that account holders and account providers can benefit from this exciting new initiative with confidence.

Most importantly, though, these amendments allow the proper implementation of the government’s first home saver accounts. In short, they enable many Australians to make their dream of owning their own home a reality. The statistics are frightening. Housing affordability in Australia is at historic lows. A typical home now costs 7½ times the average annual wage, compared to four times the annual average wage in 1996. The average first home mortgage has more than doubled in less than eight years from $123,000 to around $246,000. The typical home buyer now spends around one-third of their income on housing costs. The proportion of median family income required to meet the average home loan repayment has increased by 8.3 per cent since March last year—since only last year.

The term ‘mortgage stress’ was very unfamiliar to us but it is now a very common phrase. It is in this context that the Rudd Labor government have recognised our responsibility to provide whatever incentive and assistance we can to enable people to own their own home. It is now a possibility whereas last year and the year before it was a dream that not many could achieve. From 1 October, many more Australians will be able to start saving towards their own home. Recent events in America have rocked the financial world. They involved Lehmans, Merrill Lynch and Bear Stearns—names that belong to the world of high finance, which many ordinary working families in Australia did not feel they had any connection to. But now they are very real. The current financial uncertainty has developed as a result of many Americans taking on mortgages they simply could not afford in a desperate attempt to own their own home. This underlines that the apparently old-fashioned but not so outdated notion that owning your own home provides some financial buffer in a time of economic downturn is actually quite true. It is so important for the certainty of individuals but more importantly the nation’s economic security that more Australians are able to invest their income into their own property.

On a personal level, I believe that using the taxation system as a mechanism to create incentives for all Australians aged between 18 and 65, and particularly for younger Australians, is a very progressive and responsible way to encourage people to save for their own home. Enabling those who are eligible to contribute to a savings account from their before-tax income, and supporting that with an extra 17 per cent contribution from the government based on the first $5,000 of personal contributions made into the account each year, makes sound financial sense. It is responsible encouragement and that is why it will work.

The opposition often laugh when the government refer proudly to Labor’s tradition of nation building. This phrase is used most commonly in reference to our commitment to build the infrastructure we need for our economy and society to prosper. But these first home saver accounts are just as much a part of our commitment to nation building. We are building a nation of people whose hard work can pay off. Our commitment to building a community includes a commitment to individual long-term certainty—and the most fundamental long-term certainty is owning the roof over your head. This initiative will build on those great Labor traditions of providing free universal education and superannuation, which have given so many Australians opportunities they would not otherwise have enjoyed. That is nation building.

The first home saver accounts are a significant $1.2 billion part of the government’s four-year, $2.2 billion commitment to increasing housing affordability for those who are most in need. This $2.2 billion package addresses housing needs for the most vulnerable through to average- and middle-income earners who in days gone by would have assumed that buying a house was a given—but not anymore. That is why the introduction of the first home saver accounts is a critical part of the government’s overall housing affordability strategy. There are a lot of young people out there who are paying rents the size of a mortgage. I know many of them in my electorate and I know many friends and relatives who are in this boat. If it were not for the incredible increase in house prices and the struggle to save a deposit, they could use the rent they pay to invest in their own home. This means that many people out there in the rental market not only do not have the security of a property investment but are placing real pressure on housing opportunities for those who are less financially independent.

Higher income earners clogging up the rental market affect everyone in the housing spectrum. Their staying in the rental market reduces the vacancy rate, which inevitably puts up rental costs due to an increase in demand. That means that many people who are in a position to move out of public or community housing and into the private rental market cannot do so because they simply cannot afford the private rents. In turn that means that those people who have found themselves in need of supported accommodation but are now able to move on, into independent accommodation, cannot do so. Those many vulnerable people languishing in emergency accommodation, desperately in need of more longer term housing, have to wait because there are no vacancies. This then means of course that many people living on the street today would not be homeless except for the fact there are simply no beds for them. We need to move everyone through the housing market in order to be able to provide housing, a roof, for those who are most vulnerable and in most need, particularly in the case of emergencies. That is why this initiative is a fundamental plank in the government’s overall housing affordability strategy, but it must be considered in conjunction with the whole scheme.

The Prime Minister’s announcement of $512 million to bring down housing costs complements the First Home Saver Accounts policy. A fund that will bring down costs associated with housing construction is a practical measure that could see housing costs reduced by up to $20,000. Having served as a local councillor on Brisbane City Council, I know firsthand what a difference funding holding costs, in terms of developers wanting to develop, and infrastructure charges can make to the cost of a house. It is a reality that councils have to charge developers over the infrastructure to provide essential services such as water, sewerage, footpaths and parks. All of those things that we associate with housing and take for granted as going with a house come at a cost. Unfortunately, the costs are often passed on to the homebuyer at the point of sale. This $512 million package will ensure that the homebuyer is relieved of those costs while benefiting from the services. It will assist homebuyers to move into the housing market. I commend this initiative of the Prime Minister and look forward to seeing it implemented throughout the suburbs of Bonner.

But the commitment does not end there. The Rental Affordability Scheme recently announced by the Prime Minister and the Minister for Housing underpins the need to focus on moving people through the rental market as much as on moving those who are able to move out of the rental market into home ownership. It provides $623 million to help build 50,000 new, affordable homes over the next four years. I am sure that the planned provision of another 50,000 by the year 2012 will become a reality because this scheme will be extremely popular. Institutional investors and other eligible organisations will receive a $6,000 refundable tax offset to build new homes for rent, providing that the rent is kept 20 per cent below the market rent. Also, the states and territories will contribute a further $2,000 for each dwelling. This will make a difference to those middle- and low-income earners out there struggling to make ends meet. You simply cannot get on with the rest of your life if you do not have a roof over your head—we know that for a fact. I am pleased that the government is honouring its commitment to make that reality much broader for the Australian community.

I know housing organisations in my electorate of Bonner will welcome this initiative. The Winnam Aboriginal housing association, who provide community housing for a large number of Indigenous people within the bayside suburbs of Bonner, will certainly embrace this initiative. They already do a fantastic job. They have done so at times when housing has certainly not been on the national agenda, still managing to provide housing for many in their community. I know that this package will do a great deal to support them to provide an even better and broader service. Mangrove Housing, also located in the bayside suburbs and based at Wynnum, are also a community housing provider that will welcome this initiative, having also struggled in those difficult times when providing community housing was not a popular move. They are a very innovative and effective organisation. You know that they are one of the very sort of community organisations that, with extra money and a lot of bright ideas from their people, will do a lot more to provide housing to those people very much in need down in the bayside suburbs of my electorate. There is also the Bayside Tenancy Advice and Advocacy organisation, who do so much to support people who are struggling in the rental market as they look for a place to rent. I know the organisation, which supports families in need at very difficult times, will also welcome this initiative. I wish them well for their AGM on Friday, when I know they will be discussing with great enthusiasm this new scheme.

This particular approach to housing—to look at the whole spectrum whether it is finding beds for the homeless, whether it is providing extra support for people to go into the private rental market or whether it is encouraging to buy their own home young people and those other Australians who without this particular savings account would not be able to buy it—is really important to my electorate of Bonner. I believe the electorate provides what is probably a very good snapshot of the housing diversity that we find in many of our major cities. We have the older suburbs of Wynnum, Manly, Lota and Tingalpa, in which we have a lot of pensioners and elderly people, some lucky enough to live in their own home but many who are renting. As we know, support for them is high on everyone’s agenda and there can be no greater support for them than providing subsidies and support for their rents. Public and community housing is stretched right across the electorate. Throughout the suburbs of Holland Park West, Mount Gravatt and Mount Gravatt East, there are significant areas of public housing where families are struggling and doing it tough. Many would be able to move out of that public housing and into the private rental market if they just had some form of support. The government is providing that in the form of rental affordability support. That will then free up that housing for people who are struggling and in need but unfortunately are on waiting lists that are far too long.

There is a whole cross-section of the rental market. Students live around the south-eastern suburbs of Mount Gravatt, Mansfield and Holland Park to take advantage of their proximity to Griffith University, and now, with the wonderful bus way and green bridge enabling access to the University of Queensland, there are even more moving in to rent accommodation around that area. There are a number of high-income earners finding houses in the lovely bayside suburbs of Wynnum and Manly who have come in connection with the port, the oil refinery and other industries around Lytton Road and who may only stay for a short time but are using the rental market to provide housing for their families.

There is the social struggle that we often see with the issue of gentrification. Those bayside suburbs once provided housing for a number of low-income earners. People are now seeing the beauty of Moreton Bay and the value of those bayside suburbs, and the cost of houses there is increasing astronomically. The change in the cost of those houses between the time I lived there as a kid and now is quite extraordinary, and it is an issue that we have to deal with. Hopefully, first home saver accounts and support for keeping those increasing rents below market rent will assist people to stay in their own homes and keep the diversity in those communities that we so enjoy.

There are people living on acreage who, as we know, have often taken out big mortgages, to provide a lifestyle for themselves and their family, which they are now really struggling with. Increasing interest rates and the increasing cost of living are certainly putting some of those people under stress. There are new estates. There are suburbs in Bonner that within three years will have 3½ thousand people moving into them. New housing estates are mushrooming almost overnight, particularly around the areas of Wakerley, Manly West and parts of Tingalpa. These are people who are realising their dream. They are finding housing that suits their family, their lifestyle and their work commitments but they are struggling with mortgage stress; we know that. We want to support them but we also want to give other people the opportunity to buy their own home.

It is really important when you look at an electorate like Bonner—and I know this is reflected amongst many electorates across the major cities of this country—to understand how fundamental this $2.2 billion housing affordability package is to the residents of that area. It is fundamental to the young people coming up through the workforce and the education system to know that when they become income earners there will be an opportunity for them to save and to purchase their own home rather than wasting up to 30 per cent of their income on rent by paying that income to somebody else.

We always know that more can be done. Unfortunately, this government has to deal with the neglect that has occurred over the last 12 years when we had a boom; when we had revenue coming into the Treasury in amounts we had not seen before. If only the opportunity had not been wasted—if the former government had not spent the money on wasteful advertising, fridge magnets, Work Choices mousepads and pens, and all the bells and whistles it believed it needed simply to get re-elected in marginal seats; if those hundreds of millions of dollars had been spent on providing support for people struggling in the housing market, getting people off the streets and into accommodation, giving young people the chance of not simply wasting money on rent but saving for a deposit, because so much of their income goes into the private rental market and therefore they are not able to realise their dream of owning their own home—I believe that the residents of Bonner and the residents of Australia would be far better off and we would all see a much more prosperous future. But I am pleased that the Rudd government was elected just in time, and I congratulate both the Treasurer and the Prime Minister for initiating what is a significant amount of money to a very, very important issue not just for individual security but for the economic and social security of our country in the future.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

in reply—I would like to thank all of those members, including the member for Bonner, who have participated in the debate on the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008. These two bills implement the final parts of the First Home Saver Accounts scheme, following legislation passed in this place in June 2008. The finalisation of the scheme marks an important new beginning in housing policy in Australia, as the member for Bonner was saying. Homeownership is important to the wellbeing of Australians, and the accounts will help Australians to once again realise the dream of homeownership.

The biggest barrier to homeownership is of course saving a deposit. First home saver accounts will provide a tax-effective way for Australians to save through a combination of a 17 per cent government contribution and a low, 15 per cent tax rate on earnings. For example, a couple each earning average incomes and each putting aside 10 per cent of their income into individual first home saver accounts would be able to save more than $88,000 after five years. This is almost $13,000 more than they would otherwise have saved.

The main features of the accounts include the following. An individual can open an account if they are aged 18 or over and under 65, have not previously purchased or built a first home in which to live, do not have or have not previously had a first home saver account and provide their tax file number to the provider. Personal contributions can be made by the account holder or another party and can only be made from after-tax income. The account is supported by government contributions. The government will contribute an extra 17 per cent on the first $5,000 of personal contributions made into the account each year. This will be indexed to average weekly ordinary time earnings. This means that an individual contributing $5,000 will receive a government contribution of $850. There is an overall account balance cap of $75,000, which is indexed to average weekly ordinary time earnings. Earnings can still accrue once the cap is reached. As a general rule, in order to access money to purchase a first home, personal contributions of at least $1,000 must have been made in each of at least four financial years.

Individual contributions are not taxed, as they are made from after-tax income. Government contributions are not taxed and withdrawals to purchase a first home are not taxed. In addition, earnings on account balances are taxed at the account provider level, at the statutory rate of 15 per cent, rather than in the hands of the individual account holder at their marginal tax rate.

I would like to address some of the points that have been raised in this debate by the opposition. Contrary to the member for Farrer’s assertion, $5,000 is not the maximum contribution which can be made to an account. There is no limit to the contributions an individual can make each year. The only limit is the account balance cap of $75,000. The member for Riverina also was mistaken when she said that Labor were trashing the first home owners grant. First home saver accounts will operate in addition to first home owners grants, and having an account will not affect an individual’s eligibility to receive a grant.

Members opposite also made mention of an article regarding the number of potential providers. The media reports are based on a public list, which was maintained by APRA, of those entities which have registered with them to provide first home saver accounts. It is not a complete list of those entities intending to offer first home saver accounts. Discussions with major banks indicate that at least two of the four banks will be offering first home saver accounts from 1 October 2008, and 16 other ADIs, including many credit unions, have registered with APRA to offer first home saver accounts. Some of these credit unions are very substantial financial institutions and should not be ridiculed, as they have been by some.

Contrary to the opposition’s assertions about these providers being obscure, some of the largest credit unions have registered an interest, including the New South Wales Teachers Credit Union, with over 150,000 members, and the Defence Force Credit Union, with over 80,000 members. The banking industry has been supportive of the first home saver accounts, has been working closely with the government and Treasury portfolio agencies and has been ready to offer first home saver accounts from 1 October.

The government’s First Home Saver Accounts initiative is part of Labor’s responsible approach to economic management, as it encourages younger Australians to save. The government is investing about $1.2 billion over four years on the First Home Saver Accounts policy, including administrative costs. This is part of a package of measures, costing $2.2 billion over four years, to boost housing supply and to assist those most in need; namely, first home buyers and renters on low and moderate incomes. This package includes the Housing Affordability Fund, which will also assist local governments to reduce the costs of providing new housing related infrastructure and improving planning processes; the National Rental Affordability Scheme, which will provide investors with incentives to construct rental housing for low- to middle-income households, with rents 20 per cent below the market level; and of course a better approach to land release, with the identification of surplus Commonwealth land to be developed into additional new housing.

Turning briefly to the changes made by these bills, the bills make a number of second order changes, including a scheme for dealing with unclaimed money; amendments to secrecy and information sharing between the ATO, APRA and ASIC; and a mechanism for dealing more comprehensively with the interaction between first home saver accounts and family law. The bills also introduce a framework for imposing a supervisory levy to fund the Australian Prudential Regulation Authority’s supervision of account providers on a user-pays basis.

These measures that the government are taking are aimed at improving the affordability of housing for all Australians. The government are very proud of this very important initiative. It is the first one in our history. It is one that we support very strongly, and we hope that those in the opposition who have been critical will now get behind what is a very constructive measure which will assist young Australians to save for a home.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.