Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Housing and Urban Development) Share this | Hansard source

I move:

That the Senate—

(a)

condemns the Howard Government for its failure to address the widely acknowledge affordability crisis in Australia’s rental and home ownership markets; and

(b)

calls on the Howard Government to show leadership on this critical issue by working with state, territory and local governments, industry, business and the not-for-profit sector to develop a national housing strategy.

I move this motion to highlight Australia’s housing affordability crisis and the fact that the Howard government has done nothing to prevent or even manage this crisis. In fact, one of the government’s millionaire members, Malcolm Turnbull, made the comment recently that he thought that the talk of interest rate rises was overblown. He took the view that it was overdramatised. It was not surprising to hear the reaction of eastern suburbs families. The Daily Telegraph of Wednesday, 9 August, described Mr Turnbull—and some very unparliamentary terms were used which I am not used to using—as an ‘idiot’. I am quoting directly from the report. Eastern suburbs families called him, the report says:

… “out of touch” for saying that rate rises were over-dramatised.

However, it did reflect an attitude within the government that interest rates were not really a problem. It is quite frightening, when you think about it, that a person with Mr Turnbull’s considerable resources should treat the question of rate rises, particularly on mortgages, as a matter that has been overdramatised. It demonstrates how one of the people whom the Prime Minister is seeking to personally groom to take over the leadership position in the Liberal Party treats these very important questions.

Of course, it fits the pattern of the government’s behaviour on these questions. There is no minister for housing and no minister for urban development in this government. There is no national strategy anywhere within this government to deal with the question of housing—and, of course, there is absolutely no interest in these questions. When interest rates go up, it is understandable that the government has no interest in that matter. It explains why the government needs to understand the shifts in the housing market over the last 10 years and how little understanding of that has been expressed by the government. This Howard government is alone in failing to understand just how significant the housing affordability crisis is in this country.

On 24 and 25 July of this year, an alliance of industry, unions, not-for-profit organisations and community sector organisations held its second housing affordability summit in as many years. That summit brought together all the key players involved in the housing industry. They all agreed that there was a serious problem in this country and that the problem in fact was getting much worse. In Saturday’s Age, the columnist Shaun Carney concluded:

No force in Australian politics is stronger than the aspiration to home ownership.

I think it is an important point that he makes, and it needs to be understood just how critical this issue is to the Australian people.

Earlier this year, I recall asking Senator Minchin, in his capacity as the Treasurer’s representative in this chamber, what the national government was doing about the housing affordability crisis. His response was that the government was not doing much, that it was all a problem for the states. He took the view that interest rates were higher under other governments last century, and as a consequence we should be satisfied with the circumstances that we now find ourselves in.

Of course, we have now had two additional interest rate rises. It is much harder to maintain this rhetoric in the face of the consensus that exists among economic commentators and social commentators about the significance of these increases in interest rates. The situation clearly indicates that there are more families who are in housing crisis now than there ever have been in the history of this Commonwealth.

There are a few basic facts that need to be understood. Firstly, more families have mortgages today than 10 years ago. But that does not mean that more people actually own their homes. In fact, the proportion of households with mortgages has come at the expense of outright homeownership. For the first time, in 2003-04 more Australian families had mortgages than actually owned their houses outright: there were 150,000 fewer outright homeowners in 2003-04 than there were in 1995-96. The number of families who own their homes had fallen by 150,000. And when you add the two groups together—people who are paying off their loans and those who own their houses outright—the proportion of owners and buyers in the housing market has actually fallen. It is one of the great myths of Australian politics, I suppose, that the Howard government has been good for homeownership. The truth is that any accurate analysis of the statistics shows that that is not the case.

The second reason that interest rates hit harder today than they did 10 years ago is the fact that house prices have now gone up dramatically. We have seen house prices in Australia increase from about three times average incomes to around six times average incomes in the last 10 years. We are paying for an increase in the asset values. That is welcomed by some homeowners, and I think that is all very clear from any reading of the league tables that are produced in our major newspapers. But the fact is that, for many young Australians, the increase in asset prices has meant that they have had to rely on their parents and others to assist them with gathering a deposit in a way that we have not seen in the history of this country.

There are many young people in this country today, sons and daughters of good citizens of this country, who have been effectively locked out of the housing market and locked out of one of those fundamental presumptions we have made in this society about the right to homeownership, as a result of the changes in the housing market and the failure of this government to appreciate those changes and to devise a public policy setting that allows people to participate in that market.

It is not just homeowners; think about people who rent. About a third of Australians rent. You find that, in a tight rental market, landlords will invariably seek to take advantage of their particular situation. We have seen that the interest rate costs have been passed onto renters. Once again, young people, people who do not have the money for a deposit or people who choose to live in rental housing are now having to pay much higher costs for that accommodation. It now takes the average homebuyer over 26 per cent of their income to pay their home loan. That is a slight fall, I acknowledge, from the 28 per cent that prevailed for the last two years, because some asset prices in some particular cities have decreased. That is in the grossly distorted markets such as Sydney. But the fact remains that the levels that are reached now—the 26 per cent of income—are levels approaching those in existence only for a very brief time when interest rates were as high as 17 per cent.

I remind senators that interest rates were at their very highest in this country under the treasurership of John Howard. They were way in excess of 18 per cent—much higher than the much quoted figure of 17 per cent. But, if we look at the question of interest rate payments, these alone take up about nine per cent of household income. That is the current situation. These figures have been going up over the last two years. And it is not just a minor aberration on any graph that any economist chooses to produce. This is a continual stream, a continual index of misery for Australians who are faced with paying these exorbitant costs just to keep a roof over their heads.

So the evidence is very clear: the proportion of first-home buyers in the market has fallen again. The evidence is equally clear that it is becoming increasingly difficult for young people to get to buy a house. The evidence is equally clear that there are an increasing number of people who are being forced out of their houses as a result of defaulting on their loans.

That is the private market. If you consider the situation with regard to the public market then, again, we have a record low level of assistance from this government. There are many people in Australia who rely upon the public sector to assist them with their housing. The Howard government, when it was elected in 1996, preferred to abandon public housing. It had an ideological obsession and a hostility towards public housing. There has been a 30 per cent reduction in real terms in the amount of money that the Commonwealth has provided for the Commonwealth-State Housing Agreement. In 2004-05 the commitment under the Commonwealth-State Housing Agreement was $941 million. There are rumours circulating throughout the government and non-government sectors that this government does not intend to renew its commitment to the Commonwealth-State Housing Agreement for the next period.

What we have seen is that the state governments, as a consequence of this 30 per cent reduction, have reduced dramatically the number of public housing units that are available. Despite the extraordinary growth in demand and need, some states have had to reduce the number of units that are actually available. Some states have seen considerable reductions in the number of units available. There are currently 26,000 people on the waiting list in Queensland.

The most needy people are being forced into public housing, while the opportunities for them to secure housing have been reduced. So people are being forced to stay longer with the public housing sector and are not able to move out of the sector. Therefore, as a consequence, there is a slowing down of the number of people who are getting access to public housing. Increasing the target of housing to only the very poorest, to the most in need, has produced a situation where there have been increasing numbers of people with reduced income participating in public housing. This has meant further strain for the states on the financial capacity of the state housing authorities to meet the demand for public housing because they cannot charge higher rents for public housing.

There are debts still hanging over many of the state housing authorities which have been there for considerable amounts of time. The state authorities are required to pay debt repayments back to the Commonwealth. In some states, the amount of debt repayments is only slightly less than the amount of money given each year by the Commonwealth. My recollection is that in South Australia the amount of money provided by the Commonwealth is some $68 million per annum; the amount of debt repayment is $64 million—a $4 million gap with which the state of South Australia is required to fund or find assistance to fund refurbishment and the purchase of new stock. In an environment where housing stock is increasingly obsolete, built for a different era, a different family structure, different social circumstances—three-bedroom houses, four-bedroom houses—the number of people coming forward are predominantly those who have one person in a housing unit.

Extraordinary demands have been placed on the state housing authorities with virtually no increased assistance to meet that increasing demand from the Commonwealth. The Howard government claims to have spent significant amounts of money on rent assistance over the past decade, but the seriousness of the situation has increased from the 1978-79 period. It is equally true that the real increase is less than three per cent because the Commonwealth has tightened eligibility from the period which introduced such programs. It has seen a reduction in spending of about 10 per cent or some $200 million on the commitments that it gave in 1996-97.

When you add up the amount of money on rent assistance and the changes in the Commonwealth-State Housing Agreement, you find that spending in real terms for housing programs has fallen by eight per cent. The record low levels of affordability in the private rental market have further eroded the capacity of rent assistance to alleviate housing stress in an environment where already a third of rent assistance recipients pay more than 30 per cent of their incomes in rent. The response from the government is to talk about a limited review of rent assistance. They have no real intention of addressing these issues in a fundamental root and branch manner. We know that the government have made it perfectly clear that their intention is to blame the states for the current situation.

Think for a moment about the situation with Indigenous housing, where there are acute problems, pronounced problems, for Indigenous Australians. Overcrowding is an international scandal. More than a quarter of Australia’s Indigenous population are aged 15 and they are living in grossly overcrowded situations: 17 people per house is not uncommon. We know that Indigenous Australians are disproportionately represented amongst the homeless—they account for 2.4 per cent of Australia’s population but 8.5 per cent of the nation’s homeless and 19 per cent of people sleeping rough.

ATSIC has indicated that we need at least $2.2 billion over 20 years to clear the housing backlog. Housing ministers have estimated the figure is probably closer to $3 billion, and the government’s response has been to privatise Indigenous land and say that you can get access to commercial loans, particularly where people have average incomes of $12,000 per annum. We know that is a ludicrous response; we know it is not likely to ever meet the needs of getting a house, particularly given the additional costs of $250,000 to build such a house. I urge the Senate to support this motion and I am sure it will not be the last time that we canvass these issues. I am sure that members of the opposition are fully behind this, but I trust the government understands how serious the situation is.