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

Indeed. Thank you, Mr Acting Deputy President. The Prime Minister’s view is stated as follows:

Rising interest rates dominates everything else when it comes to family security. Just a tiny upward movement in interest rates more than devours a few dollars of taxation relief or additional family benefits.

As a consequence of these interest rate rises, we have seen that the media is now constantly reporting the harrowing tales of families losing their homes as a result of mortgagee sales. These stories are prime examples of the Prime Minister’s failure to understand that the changes to the Australian economy over the last decade have created this new reality for Australian families. I think we can forget about academic debates about inflation rates, consumption and various other things when you consider the consequences for families and their budgets and the domestic economy, which is placed under such stress as a result of these interest rate rises.

One thing is for sure: for far too many families in Australia, yesterday’s interest rate rise means that they will in fact lose their home. These are families who are often our most vulnerable in the community. These are families who are often young, who bought their houses during a housing boom and who will, as a result of mortgagee or forced distressed sales, see the value of their property being forced down. The consequences for families in the west of Sydney, for instance, is that young people, young families, who decided two or three years ago that they just could not wait any longer to get into the housing market, will now be forced to sell their houses, where they will lose a great deal of money.

These are hardworking Australians who have got to understand exactly what the Prime Minister’s comment in 2004—that the housing boom was fantastic for the economy—means for them. The situation is now arising where the housing boom has delivered massive windfalls for those who own their houses but, for young families and particularly for first home buyers, there is ever-increasing pressure on them and their family budgets. The windfalls to existing homeowners at the start of a boom, of course, could be fed back into, with the wealthy using the increased value of their mortgage to leverage investment in rental properties and of course competing directly with first home buyers to drive inflationary cycles.

We have a situation where Prime Minister Howard and Treasurer Costello are seeing the housing boom as being fantastic for the economy, while young Australian couples are seeing the dream of homeownership slip further and further out of reach. Young couples in Sydney are putting off weddings and putting off having children while they try desperately to save for a deposit. As we have seen, the goalposts have continually moved. Eventually, the young people have shifted too. I think the former Reserve Bank governor, Ian MacFarlane, has noted the demographic risks associated with the dramatic movement of young people out of Sydney, primarily to Brisbane and Perth. I am only too happy to acknowledge that some of these couples have done well. The deposits they scraped together in Sydney, while nowhere near enough to buy a house there, were enough to get them into a house in Brisbane, Melbourne or Perth—but still with a massive loan.

The housing boom has spread to become a national crisis in housing affordability. And this, of course, is in the period when the Howard government have continued to ignore their responsibilities to Australians with regard to housing. The Prime Minister and Treasurer continue to crow about rising household wealth. We have had the Minister for Finance and Administration in this chamber speak of it on a number of occasions. They do so while at the same time turning their backs on any responsibility for the rising debt levels that have gone with it. So, as we see on so many things, we have an arrogant, out-of-touch government seeking to have it both ways. They want to take credit for the increase in wealth, which they say, of course, is a good thing, but they want to blame someone else for higher prices in housing and higher household debts. If it is not the unions, it is the states, it is local government—it is anyone but, of course, the government itself.

Housing affordability has become an increasingly sore point for ordinary Australian families. The latest figures from the Housing Industry Association and the Commonwealth Bank tell us that, for first home buyers, the proportion of income needed to pay the average first home mortgage is now back to some 29 per cent, just short of the record level of December 2003. That is in an environment where we have actually seen housing prices fall in some parts of Sydney. To put this in perspective, the equivalent figure from September 1989, with 17 per cent interest rates, was less than 28 per cent. For young couples who have taken the plunge into homeownership over the last five years, the huge mortgages they have taken on during the boom have meant it takes two salaries to keep a roof over their heads.

That is in the context where the government says, ‘This is all about choice’—the choice of getting ever-increasing levels of debt. The reality is that young mothers now have to rush back into the workforce before they would choose to be there because it is the only way they can afford to pay off the mortgage. The reality is that house prices give young parents no choice but to work longer hours—including weekends and public holidays—at the expense of having time with their kids. That is in an environment where the government has provided employers with maximum choice, through its industrial relations legislation, to minimise the choices for workers.

A young couple interviewed in today’s Canberra Times have taken on a third job and are worrying that they will not be able to start a family and still keep their home. At the sharp end, too many young Australians are asking: ‘If things are so good, why can’t I afford to pay my mortgage? Why am I about to lose my house to the bank or to some bodgie loan shark?’ This is the hollow boom in full flight. This is the price Australian families are paying for trusting John Howard when he said this government would keep—