Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

The National Rental Affordability Scheme Bill 2008 and related bill are important bills, legislation that, with some quite clear concerns, the opposition is prepared to support. Quite clearly, those concerns have been listed in the Hansard by the member for Cook, and I will not waste the time of this place in repeating them, but I must add that I endorse them entirely because they are sensible and they raise issues that I think have been overlooked by the government, particularly in the administration of this proposal. I note that in the second reading speech the Minister for Housing says:

We may need to make improvements to the scheme before it is expanded.

Of course, maybe some of those improvements need to be applied before the scheme is commenced. Notwithstanding that, we are also advised that the timetable that the government has set for itself is primarily being maintained.

Fundamentally, it is a proposal to provide a $6,000 per annum tax offset or grant—in the case of the grant, to non-profit organisations. I note this, although it is not very clear. I quote from the second reading speech:

Unless a participant is an endorsed charitable institution, the incentive is to be made available in the form of the refundable tax offset.

If the business has made no money—and I note the present circumstances—it appears it gets no help. Maybe that tax offset is in fact a rebate, where the ATO can send that person a cheque by that means of delivery, but that is unclear to me. I thought, coming to this debate, that an investor, not being a not-for-profit institution, could receive $6,000 cash a year to assist them in providing rental, as it will be at a suggested 20 per cent below the market at any point in time. That in itself also raises some difficulties I would like to draw to the attention of the House.

The reality is that, in administrative terms, if the cash is not available for someone or some industry that has, for instance, negatively geared the arrangement—in other words, borrowed money, as is frequently the case in rental matters—then I think we should be told whether that tax offset can occur as a rebate; in other words, the ATO sends a cheque notwithstanding. It is easy to assume that everyone will make a taxable profit.

Furthermore, I am not able to clarify in my mind whether local government is seen as a not-for-profit institution. I draw the attention of the chamber to the fact that throughout my electorate the great shortage of rental accommodation is for public servants. Some might shrug and say, ‘That’s somebody else’s fault.’ Well, we have abandoned the blame game, and local government in my electorate—I think particularly of the town of Tammin—is desperate to get some quality housing so it can actually get schoolteachers, policemen and other such officers to attend in their town.

The tenant eligibility criteria table indicates that a single person, typically the young graduate schoolteacher who comes to rural electorates on their first posting, has an annual income limit of $39,351 and an upper income limit—and I do not know how that differential is calculated—of $48,189. But one of the first actions of the newly elected Liberal state government in WA has been to increase the first-year salary of a schoolteacher to $50,000, so they will not be able to get subsidised rental accommodation in a rural area where, of course, unlike in the cities, other accommodation is simply not available.

Someone might want to tell us how that is going to be resolved and whether there is an inadequacy in all of this. This particular table does, of course, give instruction and advice as to what low- and middle-income earners happen to be. I would say that, more particularly in cities like Sydney, people on those limits as provided to us would be very low income earners in a relative sense. That raises this question: is a fixed amount of $6,000 applicable from state to state, from city to city, considering the huge differential in building costs?

Might I add that Australia’s biggest public housing home builder, BGC, resides in Western Australia. BGC was so hated by the previous state government because the proprietor took the view that you could choose whether or not to join the union, and yet the business was vertically integrated and was providing public housing of acceptable quality cheaper than anybody else. The previous state government created a provision that no tenderer in WA could have more than $5 million worth of work on at any one time, just to get this bloke. Their own agency manager went berserk. The builder had to take them to court for the right to continue to provide more houses for the dollar. Can you imagine that circumstances—a state government reducing the number of houses that could be constructed, primarily from Commonwealth funding, so they could try to force a particular builder to make everyone join the union even though most of his people would earn about double what they would ever get if they were on any form of award structure because they are subcontractors. As I said, the business was vertically integrated. The builder won the court case and the minister involved then had to resign, but he came back through the back door later on and resumed his job as a minister until they lost government recently.

So eligibility is a serious matter, and I think that the eligibility criteria that identify people in that category will be found to be too low. But then we also discover that the states are going to make a contribution of $2,000. They will rip out somewhere between $100,000 and $150,000 in upfront charges and costs for the development of land. And, remember, this has to be new properties; you cannot subdivide a large old-fashioned house and make two duplexes out it, so you have to go out there and develop building blocks where the state governments, through their decrepit planning arrangements, cause you to achieve very substantial interest charges after purchasing the lot and getting to the point where it is actually delivered. They have headwork charges and all sorts of other costs that, as I said, add somewhere between $100,000 and $150,000; then they will be the eventual recipients of the GST on the property and will give back 2,000 bucks—excuse me! The reality is—and I hope I have a few moments to speak further on headwork charges and all these other matters, and possibly better alternatives—that the states should have been obliged to match the Commonwealth. Furthermore, by any measure, a contribution on their behalf of around $50,000 might have been sincerely altruistic.

They have made an art form of pushing up the cost of land, and everybody knows, from a substantial series of surveys, that the cost of building a house has in real terms been reasonably stable. Yes, some people have increased that cost by wanting three bathrooms and things of that nature—bigger houses—but the actual construction cost has substantially stayed where it was in real terms. This blow-out in costs that is putting people under mortgage stress—it was never interest rates; they used to be 13 and 14 per cent for housing under the Hawke government—has been driven by the avariciousness of state Labor governments in ripping money out of residential land development. That, I think, is something that the government should address, because it was the Howard government that gave the states the GST for the purpose of addressing their own responsibilities. All they have done is to employ more and more people. There were an additional 5,000 public servants in Western Australia in the last year of the Carpenter government. And what was their job? To tell people what they cannot do. I cannot find anybody in the Public Service today at state level who ever gives people the incentive to get out or the encouragement to do something. You, Mr Deputy Speaker Secker, might note how that has occurred in the rural sector. We used to have a department for agriculture; now it is the very department that goes around like a copper trying to fine farmers for clearing a bit of land or something of that nature.

There is a further concern when it comes to this admission by the government that we may need to make improvements to the scheme before it is expanded. I moved to the town of Carnarvon in 1958 and there was, because of the nature of the territory—it was a flood-prone little town stuck on the only remaining bit of sandhill, which was 11-foot above sea level—a block of very old houses that were privately owned and thereafter every new house was built by the then state housing authority. So everybody occupied them—business people, all sorts of people. But people got these houses—and I have seen it elsewhere—when their income was below the figures that have been quoted in this legislation. So, when someone on $30,000 a year gets one of these houses and then mum goes to work and they are over the limit, do you kick them out? Do you tell the private owner that they are no longer entitled to their $6,000 incentive? Do you tell one of the church bodies to go there and kick these people out? I can find nothing that addresses that issue. How long are people allowed to stay in subsidised housing if, as we hope for everybody, their income increases by one means or another? What are you going to do about it? I hope the following speaker says we have all this under control, because I have seen it in public housing. I have seen how difficult it is. Those people are typically very good tenants. They pay their rent on time and they do everything right, but they should have gone out and bought their own home, because their circumstances have improved or, in some cases, they were given housing because no other housing was available. In fact, in that town of Carnarvon, I as the Shire President and others intervened and built levee banks and things and developed 500 blocks of land as a council so that people could own their own house, and of course that is the ultimate ambition of most Australians.

These are issues of concern that are not sufficient to cause me to oppose the legislation but do raise very big ifs in terms of the administration. In fact, to refer to a personal experience, I made a note on this many years ago. I was in business—I had a profitable business—when Malcolm Fraser brought in the investment allowance just prior to my buying two brand spanking new road trains. When I say ‘buy’, I mean that I bought them under lease finance. I outlaid upfront $2,000 for each of these vehicles. They were to operate north of the 26 parallel, and I got a $40,000 tax cut for both of them. On paper that made me a pauper and my son became eligible for the then university study allowance. I had outlaid $4,000 and got an $80,000 tax cut. How does that work? Are you poor if you paid no tax? How is that going to work? These are the issues. Maybe I am doing the government a favour. They can go back and rewrite the rules before this program moves too far.

There are many sorts of tests that you apply in these matters. I have made the point that I hope that local government, particularly rural local government, will be treated as not-for-profit organisations and be involved. I think we are going to have great difficulty, with the returns that are suggested, getting substantial commitments from the private sector. I, of course, would not discourage that and I hope it occurs.

In closing, having made those remarks—and I support all the amendments that are proposed by the member for Cook—I want to make the point that I believe we are barking up the wrong tree in attempting this. The first responsibility is to get the price of land down. Then many other problems would disappear. Typically in the past, state governments saw it as their responsibility to provide services. Today they want to apply taxes even to the roads they have not built and may never build. As I said, it has become an art form—and that should be changed.

I think the Commonwealth, as a pilot scheme, should take one of the large areas of land it owns—Defence or otherwise—and teach the states a lesson. They need to have an area of land sufficient for it to be self-supporting. It could generate its own electricity, including from the garbage collected. There would be included sufficient solar panels to meet the electricity need. Each block would have in its development costs a large underground rainwater tank et cetera. You could do everything. You could treat the sewage on site. I represent a small country town of 2,000 or 3,000 people and we have our own sewerage plant. You would tell the states to get lost.

Furthermore, and I believe it is financially possible, you would not sell the land—that is when the states rush in and get their stamp duty—but you would rent it. You would rent it on a weekly basis and at an opening price that is pretty attractive. You would issue a bankable document to say that the city works on leased property, although you would pay freehold prices for it upfront. People then would only have to find the cost of construction of a house in the first instance. You could give them an opportunity within that lease to pay market value for that land after 10 years, or whatever—at which stage of course the state governments would be in there with their stamp duty grab. But that is another issue.

It is a fact of life that you could create a facility within Australia to teach the states a lesson and you could run it along those lines. You could have private involvement and, of course, they would wait for their profit. It would be a great opportunity for superannuation companies, particularly the industry ones, who would be creating a lot of work for their members. These sorts of opportunities need more development than I could give you in the time available today, but I have done some of the figures. It is a really cheap house, because you do not burden the land with the state’s rip-off and, what is more, you do not oblige people to pay for it in the first instance and attract the stamp duty and other fees that go with it. You run it as Commonwealth property; that is why it needs to be leased, not sold. I think we should look further at some of these ideas, rather than the types of schemes that are promoted. I think the government will find this a very difficult scheme to administer.

Mike Kelly (Eden-Monaro, Australian Labor Party, Parliamentary Secretary for Defence Support) Share this | Link to this | Hansard source

It is a great pleasure to speak in support of the National Rental Affordability Scheme Bill 2008 and related bill, which were introduced into this House by the Minister for Housing, the Hon. Tanya Plibersek. I think all Australians will have cause to be grateful to the minister for presenting such critical legislation at this time in our economic and social circumstances.

The National Rental Affordability Scheme Bill is designed to assist some of the millions of Australians who missed out on the benefits of the years of growth that Australia enjoyed following the economic reforms of the Hawke and Keating governments. The failure of the Howard government to see that the benefits of economic growth flowed to all Australians, and not just to those who were already well off, means that large numbers of people are still struggling. Once again, it is the Rudd government which is taking the necessary action to see that the benefits of prosperity are enjoyed by all Australians.

During the bleak Howard years, the government fashioned a governance landscape devoid of ideas. They sat here fat, dumb and happy and coasted on the back of economic growth, assuming that everything would always be fine. They never addressed the underlying, unfinished business in our economy and society. The Rudd government understands that growth is not enough: there must also be equity in the distribution of the benefits of growth.

While house prices in Sydney’s eastern suburbs and on the North Shore have doubled and doubled again, in the rest of Sydney rents have risen sharply and the availability of rental housing has fallen. The same thing has happened in all Australian capital cities, as well as in many regional areas such as those I represent in Eden-Monaro. As Australia’s economy and population have grown and as house prices have increased, people on average incomes have found it more difficult to buy a home. Between 2000 and 2005, the average price of a home in Australia’s capital cities increased by 170 per cent. Not surprisingly, many young families who in the past would be buying a home are now unable to do so and they are staying in the rental market.

The total number of rental households has increased from 1.5 million in 1995 to 2.1 million today. This increased demand is keeping rental vacancy rates very low—below two per cent in Sydney—and is pushing up rents across all the capital cities and in many regional towns. In the June quarter of 2008, rents across Australia increased by 2.2 per cent in the quarter, the largest quarterly rise since 1989. The increase for the whole of 2008 is expected to be 7.7 per cent. This is of course higher than the rate of growth of average weekly earnings and higher than the rate of inflation.

Rents overall are now on average 60 per cent higher than they were in 1990. This may not be a problem for higher income people living in inner city apartment towers, but it is a big problem for working families living on average or below average incomes and trying to raise a family, juggle work and family and send kids to school, all the while paying a quarter or a third of their income on rent. This is a problem not just for the capital cities but also for areas such as Eden-Monaro, where employment is increasingly concentrated in the seasonally dependent tourism, hospitality and retail sectors. Many people working in these industries, earning average or below average incomes, need to find rental accommodation at a reasonable rental rate close to where they work. At present, many of them cannot do so. This is hampering the efforts of many young Australians to find jobs and start families and is also hampering economic growth in these areas. As a consequence of the seasonal nature of the employment on the South Coast of New South Wales, there is significant underemployment, which makes it very hard to budget for a rent that does not follow this pattern. There are those in rental accommodation who are sometimes turned out to make way for holidaying tenants who pay higher short-term rents.

This year, an important study by the National Centre for Social and Economic Modelling found that rental stress was affecting an increasing proportion of Australians. Rental stress is said to occur when households have to spend more than 30 per cent of their income on rent. The study found that nearly 300,000 Australian households—more than 10 per cent of the total 2.1 million households in rental accommodation—are already suffering from rental stress. Since average household size is about 2.5, that means that about 750,000 people are living in households affected by rental stress. The centre estimates that this number will continue to increase sharply if nothing is done.

The centre also found that rental stress is higher in non-metropolitan Australia than it is in the capital cities, and is highest in Queensland and New South Wales. The reasons for this are fairly obvious. These are the areas where an increasing number of Australians want to live. We are seeing a steady shift away from the capital cities and into coastal areas such as those I represent on the South Coast of New South Wales. Anyone who has visited towns in my electorate can see why people want to live in them, as many sea and tree changers increasingly are doing.

An additional factor in my electorate is that it borders the ACT. Canberra has the highest rents of any large Australian city. This means that an increasing number of people who work in Canberra are looking to rent in Queanbeyan, Bungendore and Jerrabomberra, and this is squeezing the housing supply and pushing up rents in these towns. As population and employment in towns in Eden-Monaro have grown, the provision of affordable rental housing has not kept up. With house prices in the capital cities booming, investment has gone into building inner city apartment towers for the well-off and new homes in the suburbs for private buyers, not into rental housing for people on average incomes and particularly not in regional areas. That is quite understandable; investment goes where the profits are likely to be the highest. The Rudd government understands this, while the previous government did not. That is why Kevin Rudd announced during the election campaign that he would make housing affordability, particularly for renters, a priority for a new Labor government. That priority is even more important now that economic uncertainty may affect the availability of private investment capital for rental housing.

In Eden-Monaro there are 8,700 households renting and, of them, over a third are suffering from rental stress—they are spending more than 30 per cent of their incomes on rent. Anyone who has tried to raise a family on an average or below average income while paying more than 30 per cent of their incomes on rent will know how tough that is. I certainly know it. I know it from what people in Eden-Monaro told me during the campaign last year and what they have told me since I was elected.

I also know it from my own personal experience. In 1966, when my father’s business partner ran off with their funds, my father was declared bankrupt and we lost our home. This led to a downward spiral in our family circumstances that seemed to have no bottom. Our family became homeless, and I will never forget living in my aunt’s garage in a row of five beds and surviving for some time on the charity of the St Vincent de Paul Society, including the bed I slept on. This situation led to my father falling back on alcohol, resulting in domestic violence, my mother eventually suffering two nervous breakdowns and my sister attempting suicide. I finally drifted away at the age of 16 and was eventually taken into the home of a couple of friends. Homelessness can be humiliating, soul destroying and the cause of family disintegration and relentless misery. We need to bend all our efforts to avoid such human wreckage in our society. Needless to say, I do not want to see the scenario depicted by the National Centre for Social and Economic Modelling of a further rapid rise in rental stress over the next decade played out in the towns of my electorate.

Rental stress contributes to a variety of other social problems: substance abuse, child neglect and abuse, poor school retention rates and crime. These all impose costs, social and financial, on the community as a whole. It is the responsibility of government to see that this scenario is prevented. I do not think the Howard government, with its faith that the market will always provide what the community needs, really understood that. In the absence of leadership from the previous government my community typically decided to get on with the job as far as it was within their power to do so.

In Queanbeyan a dedicated and hardworking team were determined to do something about the 50 to 100 homeless associated with mental illness. They formed a board under the patronage of the Hon. Sir William Dean, our former Governor-General, and galvanised our community behind the Home in Queanbeyan project to build long-term housing for these people, with associated treatment and support rolled in. So far, they have raised over $400,000 in public money and $250,000 from the NSW government through the efforts of my colleague Steve Whan, the hardworking state member for Monaro. I am pleased to say that the Rudd Labor government has committed to support the project with $2 million.

One of the benefits of the Home in Queanbeyan project is that it has challenged the paradigm of homelessness and mental health management and has forced the NSW government to rethink its approach. It has also produced the added benefit of enlisting community responsibility and participation in a move away from the disengagement that has been an unhealthy feature of modern society. I salute all involved in the Home in Queanbeyan project, whose public spirit and compassion adds depth to the worth of our community.

Another example of this spirit in Eden-Monaro is the Bega Eco-Neighbourhood Development project, or BEND project, reflecting in fact some of the comments of the member for O’Connor that we just heard. This is a wonderful meshing of community managed affordable housing, the promotion of renewable energy, energy efficiency, water self-sufficiency and localised food production. They have benefited from federal assistance in relation to their creative water solutions and are now looking to draw specifically on the affordable housing programs that have been introduced by the Rudd Labor government. This project combines community concern to assist those in housing crisis with inspiring creativity and imagination. The BEND team are truly leading the nation as to the art of the possible and local self-help.

Another way of easing the housing problem is through greater supply. I am pleased to have been able to assist in this respect by helping to create the circumstances in which the key Googong and Tralee developments in the Queanbeyan area may now be able to go ahead. This included resolving the 20-year dispute over the Googong Dam and the water supply for the future expansion of Queanbeyan and the ACT. This took a great deal of personal effort and the invaluable assistance of the Minister for Finance, the Hon. Lindsay Tanner, and the Minister for Home Affairs, the Hon. Bob Debus. I would like to express here my gratitude and that of my community for their support, along with the support of the Chief Minister of the ACT, Jon Stanhope. I have greatly enjoyed working with Jon to the mutual benefit of our communities and wish him well in the upcoming ACT election.

In relation to the Tralee development proposal, I believe we are close now to achieving an outcome acceptable to all parties and I was pleased to play a role in this process, particularly in ensuring realistic information was available. In addition, in my portfolio role with respect to my responsibilities for the Defence Estate I have been working with my colleagues toward the release of surplus Defence land to ease the supply situation nationally, which goes to the other comments of the member for O’Connor in relation to the overall price of land. This is part of a comprehensive national strategy by the Rudd Labor government—the sort of strategic approach that has been so sadly absent over the 12 years of the Howard government.

The Rudd government does understand the need for a constructive role for government in tackling the housing problems that Australia faces. We are not suggesting a return to the housing policies of the 1950s, with government building and owning high-rise apartment blocks or suburban housing estates. We want to see the private housing industry build the houses and flats that people want. But we acknowledge that at present the incentives provided by the market are not producing enough investment in rental housing for average- and low-income working families, and particularly not in regional areas like Eden-Monaro. That is why this bill is so important and so welcome.

This bill will establish the National Rental Affordability Scheme to encourage large-scale private investment in rental housing by offering an incentive to participants. It aims to increase the supply of affordable rental dwellings and reduce rental costs for low- and moderate-income households. The scheme will offer incentives to providers of new dwellings on the condition that they are rented to low- and moderate-income households at 20 per cent below market rates.

The bill provides for a refundable tax offset or payment to the value of $6,000 per dwelling per year, provided there is also a state or territory contribution in the form of direct financial support or in-kind contribution to the value of $2,000 per dwelling per year. The incentive will be provided each year for 10 years to complying participants and will be indexed in line with the rental component of the consumer price index. The scheme is estimated to cost $622.6 million over four years.

The modelling that underlies the bill calculates that the provision of these incentives will lead to the construction of approximately 50,000 additional new rental units by 2012. Since it is a condition of participation in the scheme that these units must be rented to people on below average earnings and at a rent below current market levels, this scheme is targeted at those that need it most. It will not be a scheme which mostly benefits those who are already well off, unlike so many of the uncosted, uncapped giveaway schemes of the Howard government.

The minister has estimated that 1.5 million Australian households will be eligible for tenancies under this scheme. Of course, 50,000 units will not accommodate 1.5 million households, but the construction of these units will serve to reduce pressure in the rental market and help restrain the rise in rents. The scheme will thus make a contribution to housing affordability across the board.

I should also point out that this bill is not an isolated measure but part of the government’s overall housing strategy, which included $2.2 billion worth of housing commitments made in this year’s budget. The announcements this week, I might add, of the increase in the first home owners purchasing grant to take this scheme from $7,000 to $14,000 for already constructed homes and $21,000 for homes to be constructed have been very welcome. That is most welcome news in my electorate, I can assure you. This is combined with the pension assistance. That assistance will benefit 25,000 pensioners in my electorate and assist with the imposts of their housing costs.

There would not be such pressure on the rental housing market if so many Australians had not been pushed out of home ownership by the 10 rises in interest rates under the Howard government. Hundreds of thousands of young Australian families who would have liked to start buying their own home could not do so because of skyrocketing house prices and high interest rates. These interest rate hikes had a greater impact than at any time previously because, with larger sums having to be borrowed to break into the market, the proportion of disposable income consumed by a mortgage was much higher.

That is why the Labor Party held a housing affordability summit before last year’s election. Kevin Rudd, Wayne Swan, now the Treasurer, and Tanya Plibersek, now the Minister for Housing, met with economists, developers and industry representatives to hear ideas and develop solutions. One of the proposals that came out of that summit was the Housing Affordability Fund. The fund tackles two major impediments to housing supply: costs which result from planning delays, and the impact of infrastructure charges. The Housing Affordability Fund will give local councils the chance to improve housing affordability in their communities.

The Housing Affordability Fund has been welcomed by local government and the housing industry. Mr Wilhelm Harnisch, the Chief Executive Officer of the Master Builders Association, said:

The HAF is a welcome return of the Commonwealth into this vital part of the Australian social fabric and the economy. There has been a decade of policy neglect in addressing the supply side barriers and the HAF is supported by industry as a first and vital step in redressing this area of policy neglect.

Let me repeat that: ‘a decade of policy neglect’. That is not me talking and it is not the minister talking; that is the verdict of a leading representative of the private housing industry. That is a pretty damning judgement on the previous government, a supposedly pro-business government, from someone who is in a position to know and who has no political axe to grind.

The minister said in her ministerial statement last month that the Rudd government was elected to tackle the problem of housing affordability and that since last November the government has taken that mandate seriously and delivered on its commitments. I am very proud to be part of a government that is delivering on its commitments. The people of Eden-Monaro sent me here to be part of such a government, to see that the benefits of Australia’s prosperity are made accessible to all Australians, whether they live in Bellevue Hill or Bega, in Toorak or Tumut. I take that mission seriously and that is why I am very pleased to commend this legislation to the House.

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Sustainable Development and Cities) Share this | Link to this | Hansard source

I rise to speak on the National Rental Affordability Scheme Bill 2008 and associated bill and to commend to the parliament the opposition’s amendment, which seeks not to decline to give the bill a second reading but to point to a number of opportunities to improve this scheme to make it more attractive, to have the interconnections between this initiative and others and the private market work better to make available more affordable housing.

I commend the opposition’s amendment to the House. It takes account of a range of factors such as the scheme’s seeming bias towards outer metropolitan developments, given the scale of eligible projects and the number of units that are concerned with that. It also encourages recognition of different land and development costs in different locations. There is also recognition that there is a need for people to evaluate the proposition that is put before them through this measure against the commercial opportunities of not participating in the measure. Some would say those benefits and costs are finely balanced—but I will touch on that a little bit later.

There is also an issue about responding to particular areas of housing stress—not stress in the mortgage sense but stress in the lack of availability sense, particularly for the aged community and those looking for accommodation that is within reach of support services. That goes to an issue that is very relevant in the electorate that I represent, the electorate of Dunkley, and particularly for the Frankston North community. Many Pines residents have been in their public housing units for many years and now their circumstances have changed. They have occupied the family home. Given the horrendous waiting lists for public housing in Victoria, you can imagine that any tenant that has secured the emotional and financial benefits of a public housing home would not be keen to let it go. You often see, particularly in areas within my community, public houses that are more family orientated being occupied by a much smaller household.

One of the propositions that I have advanced for some years now is the concept of housing conversion—recognising our different housing needs through different stages in our lives and better responding to circumstances. Yet, given the scarcity of public housing, you can understand why there is a locked grip on any kind of public housing, even if the three or four children that may have occupied it with the parents or single parent have long flown the coop. They do not want to let it go, because of the uncertainty over having some other kind of accommodation. I will come back to that in a moment.

Something I would particularly like to draw attention to is the interconnection between affordability and sustainability. One of the most appealing opportunities about any kind of measure of this nature is that it is a chance for us to send a clear signal to the building industry that sustainability attributes are highly valued—to not simply say that we are interested in them but insist upon them as part of the process. This means factoring in sustainability attributes in the design and in the technology that is employed—the use of solar powered hot water, even photovoltaic electricity generation systems, water efficient appliances and fixtures and fittings, the thermal orientation of a home to minimise the need for energy to adjust the climate inside, and the use of building materials that are complementary and look to manage the climate within that area.

All of the sustainability attributes where we as a nation have enormous opportunities should not be put on the table as ‘it would be nice if’ but as ‘this is what we are looking for’. That is not only because it is the right thing to do. Sustainability contributes to affordability, not just in the build phase with the selection of materials and the like but also once a dwelling unit has been established, as those sustainability attributes make its tenancy more affordable, with reduced water and energy costs and a better quality of the environment in which people live. More particularly, it sends a strong signal to the building industry and the market generally that these things are within our reach. They are entirely commercially viable, readily accessible, ready-to-be-deployed attributes. A leadership role from the Commonwealth when we are making these sums of money available would mean that we would be inculcating sustainability principles and objectives in the work, not simply mentioning them as an aside. I will come back to this in a moment.

The National Rental Affordability Scheme Bill basically puts forward a number of incentives and, as previous speakers have said, captures the elements of the ALP election policy. What is not being said is why we have got to the point where we are. Previous measures—particularly through the Commonwealth-State Housing Agreement, which saw $10 billion invested in public housing to support the efforts of the Commonwealth and the states over a decade—saw a few dozen extra properties become available. That is a national scandal. It is outrageous that, with the Commonwealth government providing that financial assistance and with the enormous demand, the excruciating waiting lists and the lack of hope and even promise, people well able to benefit from public housing cannot actually get anywhere near the front of the queue. To think that $10 billion was consumed over a decade with only several dozen extra dwelling units available across the continent is an absolute scandal.

I am not surprised Labor members with strong connections with state and territory Labor governments are happily avoiding a conversation about that. That is a decade of $10 billion of resources and we have very little to show for it. It is a credit to Mal Brough, the former minister, who went out and said, ‘Surely there are better ways,’ because that methodology is not going to deliver the outcome. He was a forward-thinking minister who said, ‘Let us try and see if there are new opportunities to bring about change and see if there are new ways of the Commonwealth interacting with the community, with the private sector, with housing organisations and with institutions, and let’s see if we can also give some encouragement to the state and territories to lift their games.’ That may well be the genesis of this bill. I am not claiming we would have gone about it the same way, but the need to do something different was unavoidably obvious when you looked at the money spent for the opportunities available for affordable housing under more traditional public housing models.

This bill deals with a refundable tax offset and other taxation issues related to the scheme. Its aim is to encourage large-scale investment in new housing by offering an incentive to participants in the scheme to increase the supply of affordable rental housing dwellings at reduced rental costs for low-, middle- and modest-income households. The idea is there are incentives available and they are outlined in the bill. Essentially, they look to secure a 20 per cent reduction in rent under the market value in return for the provision of about $8,000 in annual financial incentives—$6,000 from the Commonwealth and $2,000 from the states and territories—over a maximum period of 10 years. These incentives may be in the form of tax offsets or direct financial payments depending on the applicant’s eligibility. We note, and the Bill’s Digest draws out, the clear distinction about who may be eligible project participants, and that is something we hope to learn more about as the regulations are developed.

There are a range of phasings to bring online these scheme-induced dwelling units, with the ambition of some 50,000 incentives being available over the next four or five years. A considerable amount of funding has been made available and the scheme has been welcomed by the development industry and the community housing sector, so all of that sounds pretty good. That is encouraging at this stage.

I would like to just talk about a couple of aspects within the bill. Firstly, the commercial incentive is something that will need to be weighed up. The taxation or direct payment incentives in return for a discount on the commercial rent of 20 per cent will need to be evaluated by prospective scheme participants, and at this stage the commercial sector is working through the extent to which that is an attractive proposition or not. There is something that certainly I would encourage the minister to consider. Whilst those three avenues of incentive—whether capital gains tax relief, tax offset or non-assessable for tax purpose grants from states and territories, or in kind—are canvassed in the legislation, what is less evident is where the direct payment mechanism is for those that are not taxable, for the charitable organisations that may be involved. The advice I have had is that that is not canvassed in the legislation as it is drafted, and I would certainly encourage the minister to examine that just to satisfy the parliament that that is addressed adequately in the framing of this legislation.

A second issue goes to the composition of the scheme. The shadow minister, my friend and colleague Scott Morrison, has outlined how the way it has developed might in fact skew activity to the outer metropolitan and peri-urban parts of our community. I, for one, would think that is a positive, because I represent outer metropolitan peri-urban communities, but one of the things that we have found is the strong feeling of community connectedness that many people have with the areas within which they have grown up or spent much of their lives. We need to have a nimbleness within the scheme to bring about an availability of rental accommodation supported by this scheme, right across the continent—particularly in some of the inner- and middle-urban areas, where that threshold of dwelling units or houses may be difficult to achieve.

There is also an issue about the conversion of established properties. I have touched on an example in my own community in the Pines, where the type of housing that best suits a person’s needs may change over time. There should be scope to have that recognised or even to have established properties fully renovated at some expense, with a graduated incentive to recognise that investment. The net outcome should be a far improved opportunity for affordable rental accommodation. That idea has taken hold with some of the commercial property developers. If we are seeking to have the scheme appeal to that group, it might be worth hooking the scheme to a wagon that is already moving. That area could be examined also.

Another point is the issue of sustainability. The prospectus is circulating, and that is necessary because scheme eligibility is actually retrospective. The notional start-up date is 1 July 2008, even though we are not quite through the legislative and regulatory mechanics. The prospectus is circulating, and it seeks to tantalise people to become involved. It asserts that the offset and cash incentives will:

... make renting more affordable in two key ways, an overall increase in the number of rental dwellings and through the fixed term rental discount of 20 per cent.

That is a good call, but I wish it said there would be three-way attractiveness. It should deal with the sustainability issue. As an incentive it should be recognised and embraced—and not as in ‘it would be nice if’ but as in ‘this should happen’. The prospectus seeks to appeal to potential investors by suggesting that investing would help investors point to their social responsibility. They could report to their investors that they are doing the right thing and that the decisions that have been made are triple-bottom-line investment inspired. This should include sustainability. This would affect affordability at the point of entry, and the rent that would flow from it would be a factor. Also, affordability of occupying the tenancy would be improved because of reduced energy cost and reduction in water use. Hopefully, there would be some net gain in photovoltaic or solar electricity generation. That would be my sense. This is an opportunity that should be picked up. I encourage those present, particularly the officials present, to see whether there is scope to embrace that in the regulations. I understand the draft regulations are still being worked upon.

The prospectus, under the selection criteria and alongside ‘accessibility’, touches on ‘sustainability’ as a desired outcome. It points out at some length what the accessibility virtues of a proposal might be but does not tease out the sustainability virtues. When we go on further we see that there are some priority areas of interest. Again, all of that is heading in the right direction but I think we need to be more assertive about it. I think there is a need for leadership in these areas. We need to say, ‘No, it’s not satisfactory to build quick, readily constructible but less sustainable dwelling units just to secure this opportunity.’ We should be using the investment by the taxpayer to not only deliver the outcomes that we aspire to through this National Rental Affordability Scheme but secure something for the broader community. We could make greenhouse gains and water efficiency gains. I point to those, because everybody is talking about them. This is an opportunity to actually do something about them.

Part of my role as shadow minister for sustainable development and cities is to make sure that, where we are making enormous commitments of taxpayer resources, sustainability principles are embedded in our thinking and decision making, not just tacked on the end. There is an opportunity to do that. I urge—in the positive and constructive way in which I am seeking to raise these issues—the government to embrace these concepts and to see that they become embedded in processes like this. We have put forward a proposal that would see included in this scheme some of the rebate schemes that are available through other portfolios so that occupants would have an as-of-right ability to access them. That would be fine, but that would place the onus on the occupier. We should be saying to the developers, the proponents of dwelling units, housing developments and the like, ‘Under this scheme we expect you to do those yards and do them smartly.’ I would urge the government to take account of that. I point to that because this is what should be going on.

We look around and we see bodies of work—even Professor Garnaut’s body of work but more particularly the McKinsey work. That looked at climate change abatement opportunities in Australia. It highlighted that in the areas that are not only the most cost-effective but also cost-positive—that is, there is a net benefit for making these investments—you see things like residential heating and ventilation efficiency, refrigeration efficiency, lighting efficiency in residential areas and standby savings. These are just to name a few. There are also things like the handling of air and residential water heating efficiency.

We should acknowledge—and I again emphasise that this is not something we would like to or will take into account, as it currently is positioned under the draft regulations—that these are must-haves. Go and do your work proponents that make sure you do these things, and that will be something that the Commonwealth values. This is what the Sustainable cities report recommended, a bipartisan position. This is what the earlier work of the committee that I chaired, which looked at what sort of commercial signals we could send to see the uptake of these more sustainable technologies, was associated with. This is also the logic of the Australian Sustainable Built Environment Council, a peak body involving the Building Products Innovation Council, the Australian Institute of Architects, the Green Building Council of Australia, the Planning Institute and the Property Council. All of these people are calling for that kind of work, and we should make sure that sustainability is inculcated and embedded in the thinking of all areas of the Commonwealth and not simply bolted on as an afterthought or left to some other portfolio to pursue. There is an opportunity for all of us to do that and we should do something about it.

I will just illustrate the point. You can look at a place like California. Not too many people are living in caves in California. It is a lifestyle that is not that unfamiliar to ours, but contemplate the fact that the state of California has a little under twice the population of Australia and its GDP is almost twice that of Australia, yet it uses the same energy that we use. Australians consume twice the amount of energy for the same GDP output. To put it another way, Californians get twice the GDP output for the same amount of energy that we use. Why is that the case? It is because the kind of argument that I have been putting about inculcating sustainable thinking and opportunities into everything that we do is something they have been doing for some years. This is not some strange, remote, mung bean, hydroponic, bok choy inspired idea; this is reality—this is happening in places with a lifestyle not much different from our own. So why don’t we step up? Why don’t we say this matters? When we are using taxpayers’ money, why don’t we embrace the opportunities to pursue the very worthwhile, virtuous objective of pursuing sustainability objectives in parallel, to complement this measure? There is commercially viable, economically justifiable, proven, ready-to-install capability to achieve that goal. It will actually add to the objective that this measure seeks to pursue.

This is the same thinking that should accompany the recent stimulus package announcement about the First Home Owner Grant. If we are going to make more money available, why not reward and encourage the uptake of these technologies so that people benefiting from that Commonwealth taxpayer funding—and deservingly so—actually get additional gains, and so do we as a continent? The stimulus argument around upping a grant for an established dwelling is a little bit harder to follow, although it may make that transaction more achievable and it may be a confidence measure, but in terms of activity there is not really a clear link. There would be, though, if you said additional funds were available because we are looking to purchasers of established homes, first home buyers, to actually embrace some of this technology, put in the solar hot water services and make sure water efficiency is part of it. Let’s not miss this opportunity; there is a chance to do this with this measure.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak to the National Rental Affordability Scheme Bill 2008 and associated legislation. This bill will provide new principal legislation relating to the Australian government’s National Rental Affordability Scheme. The object of the bill is to increase the supply of affordable rental dwellings and reduce rental costs for low- and moderate-income households. The scheme encourages large-scale investment in affordable rental housing by offering an incentive to providers of new dwellings on the condition that they are rented to low- and moderate-income households at 20 per cent below market rates. That has to be a major incentive to people aspiring to own their own home for the very first time. I think that is just a fantastic thing that this government has done. It is a pragmatic approach to a problem of supply. We are addressing this problem head-on, and it is something that has not been addressed head-on for the last 12 years in any serious, concrete fashion.

The incentive comprises a Commonwealth contribution of $6,000 per dwelling per year and a state or territory contribution in the form of direct financial support or in-kind contribution to the value of $2,000 per dwelling per year. This must be a great incentive to people wanting to own their own home. The incentive can be in the form of a refundable tax offset or payment. The incentive will be provided each year for 10 years to complying participants and will be indexed in line with the rental component of the consumer price index. That is a very important feature. It is locked in and tied in to the consumer price index so that it does not lose value over time.

The National Rental Affordability Scheme is a key part of the government’s $2.2 billion affordable housing package. This is real policy in action. It is pragmatic, well worked out and well researched with all sides and all key stakeholders. This is a really pragmatic approach to a very real need for a rental affordability scheme. This will help people save for their first home, lower housing infrastructure costs and build new homes for the homeless. I do not believe there would be one Australian across this nation who would not say that that is a noble cause of government. Let us face it: surely the game plan for all members of this House, on both sides of politics, would be to home the homeless. There can be no higher calling for government than for the citizens of this nation to have a roof over their heads, one that is affordable and within their means, and to have the ability to pay for it. This scheme delivers on one of the government’s key 2007 election commitments and a COAG agreement from May this year.

The bill provides for the establishment of the National Rental Affordability Scheme by regulations. It is desirable for most of the administrative detail of the scheme to be in the regulations rather than in the bill. This provides the flexibility required to address changing circumstances and conditions in the rental market, including determining market rent, tenant eligibility criteria and acceptable periods of vacancy.

The Prime Minister, the Treasurer, the minister and I are committed to this agenda, because we have heard firsthand from the families, singles and pensioners who are struggling to buy or rent a home and from the young Australians who are giving up on homeownership. It is just not affordable for them; it is beyond their means. We as government are putting out a hand and saying, ‘Hey; we’re giving you a hand-up. We’re not giving you a handout; we’re giving you a hand-up.’ That is the role of government: to help people, to lift people up, to improve people’s lives. This is a pragmatic way of doing it, and there can be no greater calling of any government than to do that.

We have heard this firsthand and from the grassroots in my community when the Community Cabinet was held in Mackay earlier this year. The cabinet understand firsthand the real issues affecting everyday working families in my electorate and, through laws such as this one and others like the first home owners account scheme, are delivering for the people of Dawson who are doing it tough. I remind members that Mackay was severely affected during the floods of February 2008. I know people personally who are only just beginning to go back to their own homes. The dislocation is beyond belief—it truly is—and we have not even begun to measure the psychological trauma of not being in your own home for so many months, from February through to October. It really is a tragic thing to be homeless or to be in a home or accommodation which is not yours, not of your choosing and not of your design. It is a terrible place to be; it is a terrible dislocation. There are over 8,000 homes that were affected in Mackay during the floods. Housing, affordable housing and affordable rentals are very important issues in my electorate of Dawson.

It should also be pointed out that in my electorate of Dawson there is less than one per cent rental availability. Rents are commonly in the region of $350 a week for a basic, standard, wood-built Queenslander with three beds. That is tough for an average family on an average income, but there is nowhere else to go. So, while there are many in Mackay who are paid well for the difficult work they do and can afford to rent and purchase homes, there are many on minimum wages and many pensioners who are unfortunately left behind. That is the sad fact and the reality of what is going on in the seat of Dawson, particularly in the city of Mackay.

We on this side of the House understand that we all need a roof over our heads, a place to call home, and the result of a booming economy and skills shortage is that there exist stresses in housing affordability which make life tough for many renters. Low- and moderate-income earners in Dawson pay a lot in rent to house themselves and their families. Vacancy rates in Dawson are at critically low levels, and rents are increasing faster than other everyday living costs. Australians who in the past would have rented as a stepping stone to buying their own home are now finding it much tougher to do that. It is virtually impossible. There is no ability to save. All disposable income is being paid out on the very high rents due to the lack of supply of rental and new stock being built. Increasing the supply of affordable rental properties is a major priority.

Why? Consider the statistics. Today the average house costs 7½ times the average annual wage, compared to four times in 1996—a major difference and a major contributor. The typical home buyer now spends a third of their income on housing costs, almost double the proportion they were spending in 1996. Rental vacancy rates are now below two per cent in most capital cities around Australia, with some cities, such as Mackay, below one per cent. Households in the bottom 20 per cent of earners that are lucky enough to achieve home ownership are spending two-thirds of their income to pay for the privilege. That is very hard for the battlers. These are the people that this government stands up for, these are the people that this government cares about, and these are the battlers who this Rudd Labor government has made clear and decisive action for in these policies. That is why the pragmatism of what we have here today must go forward to help these very needy people. It is urgent and it is essential that this bill goes through as quickly as possible.

In many suburbs in my electorate, while it does fluctuate from suburb to suburb and town to town, rents are some of Queensland’s highest. It is not unusual for a rental for a basic three-bedroom, brick-built home to be advertised from $400 per week. A basic, unfurnished two-bedroom flat is over $300. This is amazing. We are talking very basic accommodation here with the real prices being paid possibly higher than this. I cannot stress enough how tough it is to rent in the seat of Dawson, particularly in the city of Mackay. It is so hard for people to get their own basic accommodation. We have had reports in the Daily Mercury in Mackay over the last year or two of people so at wits end, with nowhere to go and nowhere to rent, that they have been living in their cars. That is atrocious: people living like Third World citizens in the First World town in a First World country—in an economy which is booming.

What did the previous government over the last 12 years do to stimulate house building that was affordable, to create a stock of affordable, rental accommodation? Very little, because we are having to address these problems head-on. I am pleased and proud to be a part of this Rudd Labor government which has instituted a housing minister. Why? Because over the previous 12 years there was no housing minister. That shows you the priority the other side of politics put on this. They did not even have a minister to analyse and focus on the needs of the homeless in our community. That is appalling and it is an indictment on the history of the last 12 years of government.

But we are addressing this with progressive and pragmatic measures. We have a fantastic Minister for Housing in Tanya Pilbersek. I held a housing forum with key community stakeholders in Mackay. She came along and listened to reports from community housing groups that people who had lived in cities like Mackay all their lives had to leave town. Why? Because they just could not afford to live there any longer. They could not afford to live in the town of their birth any longer because they simply could no longer afford to pay the rent.

Housing stability is important to families and important to the economy. The National Rental Affordability Scheme will provide incentives for investors to focus on building more affordable housing, which is a good thing; but even better, it will provide to tenants rents with a 20 per cent saving on market rental rates. This is good news for the people of Dawson, good news for the city of Mackay and good news for the towns of Proserpine, Airlie Beach, Bowen, Ayr and Southern Townsville. It is good news that we have policies which are going to reduce the average rent, down 20 per cent below the market rental rates.

It is important that a broad range of participants should be involved in this scheme, and the legislation enables that. Tenant eligibility requirements are broad, with more than 1.5 million Australian households now eligible to rent dwellings under the scheme—1.5 million are now empowered by this government. This is good news for Australian people who are doing it tough, good news for the battlers who are finding it hard to pay affordable rent—1.5 million Australian households are now eligible. That is fantastic.

The Queensland government, under Premier Anna Bligh, has demonstrated its commitment to this important new initiative by providing a $2,000 contribution to the national rental incentives and by matching the Commonwealth’s rate of indexation. This is excellent. The government expects new partnerships to emerge between institutional investors, property developers and community housing agencies in the rollout of this scheme.

The government’s resolve to pass this bill is clear. The question is whether the opposition will pass this bill or those on the other side will disallow the legislation to pass in the other place. I wonder which way the wind will blow for the opposition—and often their decisions are blowing in the wind. The Australian people are sick and tired of an opposition intent on blocking key budget measures and key election commitments made by the Rudd Labor government, using their numbers in the Senate to harm and hinder the Australian economy and our budget, let alone the will of the Australian people, for the sake of a headline, a sound bite or something on the nightly news. Opposition for opposition’s sake is despicable.

We have seen selfish acts of self-interest from honourable members of the Liberal and National parties of late, smug opportunism and simply making policy on the run on anything from denying low-income earners a tax break to keeping Medicare dental patients in limbo. I hope for the sake of working families in my electorate of Dawson that those on the other side will join with the government and provide certainty in relation to providing incentives to build affordable rental houses in Dawson. The scheme will have a positive impact in Dawson, where incentives support building of affordable rental housing. It is an election commitment we are delivering. It is good news for Dawson, it is good news for the people of Australia, and I commend the bills to the House.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Dawson for his spirited contribution to the debate on this important legislation. We live in interesting times indeed. I also rise to speak on the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008. The National Rental Affordability Scheme is part of the government’s $2.2 billion affordable housing package, which has now risen by $1.5 billion—through the first home owners scheme extra measures announced most recently by the Prime Minister and the Treasurer—to total $3.7 billion of packaging to try to deal with the affordable housing issues that face our communities, to help people save for their first home, to lower housing infrastructure costs and to build new homes for the homeless.

Like all pieces of legislation before the House, the rental scheme bill attempts to deliver on one of the government’s key 2007 election commitments. We look to the other side to support our commitment to the Australian electorate by supporting this legislation. The National Rental Affordability Scheme will provide $623 million over four years to increase the supply of affordable rental housing across Australia and to lower rental costs for those already struggling to make ends meet. The funds will see the construction of 50,000 new affordable rental properties across Australia to help alleviate the current rental stress on medium- and low-income earners. This is something that all members in this House are aware of. These are people who we deal with on a daily basis in our offices and this is a pressure that is continuing to build in our community. There is also an option under this legislation to build a further 50,000 properties after 2012 if demand remains strong. I suspect, given the conditions that exist at the moment, that demand will continue to remain strong.

The eligibility requirements for the scheme are pertinent to my electorate of Braddon on Tasmania’s north-west coast. Eligibility will of course include people currently living on the pension, including aged pensioners, disability support pensioners and carers, all of whom were recipients of added assistance most recently announced by the Prime Minister and the Treasurer in the national Economic Security Strategy. The government has also extended eligibility to low-income working people, for example families where the main breadwinners earn only a modest wage.

This component will be welcomed in my home state of Tasmania where many pensioners live, where wages are traditionally lower when compared with the national wage and where single-income families are very common. This is particularly the case on the north-west coast. Tenants in these properties will still be eligible for rental assistance through Centrelink. This government predicts about 1.5 million households across the country will meet the eligibility criteria for this scheme. There are two big government incentives which will be delivered every year for 10 years for every new home built and then rented out at 20 per cent below the market rate in each particular area.

Firstly, the scheme will provide a $6,000 incentive from the federal government for each residence in the form of a refundable tax offset or payment. Secondly, the state and territory governments will provide $2,000 each year for each residence, which will be provided through a cash payment or in-kind financial support. The community housing sector will help with tenancy management of the new properties.

To talk about what this scheme will mean for my electorate I want to spend a bit of time looking at the current rental market in Tasmania in relation to the average income. In 2006 the census statistics from the Australian Bureau of Statistics indicated that the median weekly income for a Tasmanian aged 15 or above was about $398 after tax. Casual, part-time and full-time employment were combined to arrive at this statistic. This compared to about $466 on the mainland—I reiterate $398 after tax compared with $466 on the mainland. The median weekly family income was $1,032 in Tasmania compared with $1,171 throughout the remainder of Australia.

Debate interrupted.