Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Hansard source

First of all, I thank the various senators for their contribution to this debate. The introduction of the First Home Saver Accounts Bill 2008 and related bills marks an important new beginning in housing policy in Australia. Homeownership is important to the wellbeing of Australians, and the accounts will help more Australians to once again realise the dream of homeownership. The biggest barrier to homeownership is saving for the deposit. First home saver accounts will provide a tax-effective way for Australians to save through a combination of a 17 per cent government contribution and a low 15 per cent tax rate on earnings. For example, a couple who were both earning average incomes and putting aside 10 per cent of their income into individual first home saver accounts would be able to save more than $88,000 after five years. That is almost $13,000 more than they otherwise would have.

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

I would also like to clarify some points raised by opposition speakers in relation to the bill. It was suggested that the first home saver accounts do not allow for fluctuating incomes. That is not correct. In order to withdraw money from a first home saver account, contributions of at least $1,000 must be made in each of at least four financial years. The requirement is not that contributions must be made in the first four financial years or even four consecutive financial years. Individuals will not have their accounts closed if they are unable to contribute for a year or two. If an individual finds themselves in a position where they are unable to contribute for a year or so, their account will remain open. When they are again in a position to be able to contribute, they may do so. The government contribution will be paid on any amount of personal contributions up to a maximum of $5,000 per year. It is not necessary to contribute a minimum of $1,000 to receive a government contribution. There is no requirement for an individual to hold an account for four years before they receive a government contribution.

A speaker referred to comments made about the level of complexity of the first home saver accounts in response to the consultation paper issued by the government in February 2008. The government has listened to industry and the community. The final policy design announced by the government in the 2008-09 budget has simplified the overall operation of the first home saver accounts for individuals, account providers and the tax office. These changes will make it easier for account providers to offer the accounts and for account holders to understand how they operate. The most important of these changes is the flat 17 per cent government contribution on the first $5,000 of personal contributions, which has streamlined and simplified the contribution arrangements. First home saver accounts will receive significant tax concessions, along with government contributions designed to assist individuals to save for their first home. Given these benefits, it is important that there be laws and compliance measures in place to ensure first home saver accounts are being used solely to assist with the purchase of a first home. The government has worked with the potential providers to ensure compliance costs are minimised.

Once again, I thank those who contributed to this debate. I commend the bills to the Senate.

Question agreed to.

Bills read a second time.