Michael Sukkar (Deakin, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill establishes the National Housing Finance and Investment Corporation (the NHFIC), a new independent corporate Commonwealth entity which will improve housing outcomes for Australians, particularly vulnerable Australians who need social and affordable housing.

The finance corporation, which is modelled on successful initiatives in the United Kingdom, will strengthen efforts to increase the supply of housing by encouraging investment in housing, particularly in social and affordable housing. It will contribute to developing the scale, efficiency and effectiveness of the community housing sector and, importantly, will provide loans, grants and investments that complement, leverage and support Commonwealth, state and territory activities relating to housing.

Housing is critical to the social and economic wellbeing of Australians and the economy as a whole. It can impact on employment, education and health outcomes, and it is a significant driver of investment, productivity and economic growth. It's also the main savings vehicle for the majority of Australians.

While housing is primarily a state responsibility, the Commonwealth government nonetheless has an important role to play when it comes to addressing housing affordability and securing better outcomes for Australians, particularly the most vulnerable.

Commonwealth expenditure for housing in 2016-17 totalled $7.6 billion, comprising $4.4 billion in Commonwealth rental assistance and $3.2 billion in housing and homelessness funding, including through the National Affordable Housing Agreement (NAHA) and the National Partnership Agreement on Homelessness.

As announced in last year's budget, the government is currently working on a new, improved funding agreement with the states and territories, being the NAHA or the National Housing and Homelessness Agreement. We are seeking to improve the outcomes of this significant funding, given that, despite the Commonwealth providing states and territories more than $9 billion since 2009, three out of four of the benchmarks under the agreement have not been, or are unlikely, to be met. Around 40,000 Australians are currently on waiting lists for community housing, and an additional 148,000 are on public housing waiting lists.

This new agreement will ask for more transparency from the states and territories and will make homelessness funding indexed and permanent for the first time. The National Housing and Homelessness Agreement Bill, which establishes the framework for the new agreement, as members will be aware, is currently before the parliament.

The initiatives contained in this bill are one part of the government's comprehensive housing affordability plan announced in the 2017-18 budget. This plan will improve outcomes across the housing spectrum.

The government's already legislated a number of the elements announced as part of that plan. Last year, for example, we passed legislation to create the First Home Super Saver Scheme, sadly opposed by the opposition, which will provide a tax cut for first home buyers and enable them to save 30 per cent faster through voluntary superannuation contributions. We are also working to identify and dispose of surplus Commonwealth land that is suitable for housing, beginning with Defence land at Maribyrnong in Melbourne. We have established the Australian Government Property Register to make this process transparent and allow the public to propose better uses for surplus Commonwealth land.

The finance corporation will deliver another important part of this broad housing affordability plan. It will administer the $1 billion National Housing Infrastructure Facility and an affordable housing bond aggregator. These functions will allow the finance corporation both to provide community housing providers with finance and assistance in capacity building and to make loans, investments and grants to improve housing outcomes.

All financing and investment decisions will be made by an independent, skills-based board, with the chair and members appointed by the government for terms of up to five years, which will ensure decisions are sound and commercially based.

Independence of the board's decision-making will cultivate credibility in financial markets and provide the board with the flexibility to perform its functions effectively and efficiently, and to tailor finance to the needs of recipients, mindful of any risks involved. The experience of the Housing Affordability Fund established by the previous government underlies the importance of this independent decision-making process. The Australian National Audit Office found that there were serious shortcomings in the administration of the Housing Affordability Fund and that some approved projects were not selected on a merit basis, or in accordance with the established guidelines.

In line with the practices of other Commonwealth corporate entities recently established, the government will outline its expectations of the Housing Finance and Investment Corporation in an investment mandate. However, the government will not be able to direct the corporation in relation to particular loans, investments or grants, or in relation to any particular project.

Providing the particulars of the Housing Finance and Investment Corporation's activities in the investment mandate rather than in this bill allows the legislative framework to be flexible and nimble and to adjust, within the scope permitted by the bill, to the needs of community housing providers and other recipients of financial support. The bill specifies the matters that will be covered by the investment mandate, including: decision-making criteria; eligibility; limits on the making of loans, investments and grants; strategies and policies to be followed; and risk and return on investments.

The National Housing Infrastructure Facility will help to finance the critical infrastructure that is needed to unlock and accelerate new housing supply, particularly affordable housing. The government anticipates that the infrastructure facility could support the development of 'mixed tenure' projects that combine affordable and private housing and provide broader community benefits, including housing, that enable key workers such as police and nurses to live near their places of work.

The government has committed $1 billion to the infrastructure facility in the form of up to $175 million in grants and $825 million in concessional loans and equity investments. The financial assistance available will encourage and complement private sector and state and local government investment and facilitate the delivery of critical housing-related infrastructure.

Eligible infrastructure projects will include transport links, power and water infrastructure and site remediation works. Eligible recipients will include local governments; state, territory, and local government-owned corporations and utility providers; and of course registered community housing providers.

The Housing Finance and Investment Corporation will need to ensure that it funds projects that satisfy the appropriate regulatory and environmental standards that apply.

The Housing Finance and Investment Corporation will be able to reinvest the capital and earnings gained through the infrastructure facility, allowing it to grow over time. It will be able to tailor its provision of finance to best suit the needs of individual projects, with any concessions calibrated to the particular circumstances of the project, and will provide the minimum amount of assistance required to enable a proposal to proceed.

The Housing Finance and Investment Corporation's other key function will be to operate a bond aggregator for the community housing sector. The bond aggregator will improve the efficiency of financing for registered community housing providers and build the capacity of the sector. It will offer finance tailored to the needs of providers, funded through the issue of bonds, backed, importantly, by a legislative guarantee, which will provide the best outcome for providers.

Community housing providers, as we know, supply subsidised housing for some of Australia's most vulnerable people. The new bond aggregator will give providers greater financial certainty and enable them to improve housing outcomes for their existing clients and build scale to provide services to new clients.

There is a clear appetite from institutional investors, such as superannuation funds, for a new asset class of social impact investments which provide longer term fixed cash flows and deliver better outcomes to the community, and we hope to see this reflected in engagement with the bond aggregator.

The final design details of both the Housing Finance and Investment Corporation and its functions of operating the infrastructure facility and bond aggregator are the result of extensive consultation and the valuable involvement of many stakeholders over, in many cases, a number of years. I'd like to thank in particular the Affordable Housing Working Group, comprised of officials from the Commonwealth, New South Wales, Victoria and Western Australia; and the Affordable Housing Implementation Taskforce; as well as the dedicated officials in my department who have been working on this for some time.

Another important feature of the bill is that it provides a legislative guarantee for the Housing Finance and Investment Corporation's liabilities. The bill provides for the capacity for the guarantee to be withdrawn in the future if it's no longer needed for new contracts. This of course would be dependent on both the corporation achieving sufficient maturity and scale and the community housing sector taking on a large-scale and more prominent role in sub-market rental housing, including through partnerships with the private sector and, again, institutional investors.

To provide certainty to investors it may only be withdrawn by the government on a prospective basis after 1 July 2023 and with at least 60 days notice. The availability of the guarantee will strengthen market confidence and thereby improve the Housing Finance and Investment Corporation's ability to achieve its ultimate purposes.

The corporation is intended to be financially self-sustaining in the medium to long term. The profits and funds returned from its investments, as I mentioned, will be available for reinvestment. In time, it may accumulate surplus funds and be in a position to return a dividend to the Commonwealth.

Finally, the bill provides for a post-implementation review to be carried out three years after the commencement of the bill to ensure that the Housing Finance and Investment Corporation is delivering its intended benefits.

Passage of this bill during the current sitting period will facilitate the necessary preparations to enable the corporation to undertake its infrastructure facility and bond aggregator activities from 1 July 2018.

Full details of the measure are contained in the explanatory memorandum.

Debate adjourned.