Scott Ludlam (WA, Australian Greens) Share this | Hansard source

The Greens will be supporting the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008. The bills make some minor legislative amendments to support the smooth functioning of the government’s first home saver accounts. The primary legislation implementing this policy was passed with the support of the Greens, so we will not be opposing these bills. The first home saver accounts are a central component of the government’s efforts to address housing affordability and homelessness. I note that the scheme will absorb around half of the $2.2 billion of new funding that the government has allocated to address housing affordability and homelessness. For this reason it is important to recognise the limitations of the scheme and to make sure that our resources are properly targeted.

The median house price has increased from four times the average annual income to six to seven times that income. It has created housing stress right through the market and it has made it harder for people to get into their first home. The rental market is also becoming untenable for many, with one in 10 low-income households in private rental spending more than half of their income on housing. In May 2008 the Minister for Housing announced that 100,000 Australians were homeless. Given the gravity of these problems and the enormous impact that they are having on the lives and welfare of so many Australians, it is critical that the government channels public resources toward solutions that will have the greatest impact and will target the greatest need.

First home saver accounts have the potential to assist first home buyers to save for a deposit on a home loan and thereby avoid getting into trouble with undercapitalised mortgages that they cannot afford. This is undeniably helpful for people who can afford to contemplate purchasing a house. Because the savings in first home saver accounts can only be withdrawn to purchase a first home, rolled into superannuation or withdrawn when the account holder turns 60, they are really only of use to people with enough money to seriously contemplate purchasing a house or who can afford to divert a portion of their income to long-term savings in order to benefit from this government contribution. As the government contribution is a percentage of the amount saved, those people who can afford to contribute more will receive greater government assistance. As there is no means testing, there is nothing to prevent people who have sufficient financial means to secure a home loan unassisted from still benefiting from this scheme.

The eligibility criteria exclude people who have previously built or purchased a house to live in, but they do not exclude people who own a house that they built for investment purposes. The 15 per cent tax rate on earnings from a first home saver account is good for higher income earners who ordinarily have their income taxed at a higher rate, but is not beneficial for lower income earners who may have all of their income taxed at this rate anyway.

As Senator Bernardi pointed out, first home saver accounts do not address the shortage of supply of affordable housing, yet they have the potential to increase demand in the medium term when account holders are able to access their funds and seek to make a purchase. In isolation, increased demand obviously has the potential to further inflate house prices. Essentially, the first home saver accounts assist largely the same people who are already eligible for a first home owners grant, which is estimated to cost the Commonwealth an additional $1 billion in 2008-09. It is worth while assisting people to purchase their first home and assisting them to get on a financially sustainable footing, but I would argue that spending half of the $2.2 billion of new money allocated to housing affordability and homelessness in the 2008-09 budget on this scheme is quite disproportionate and does not give due regard to the grave need of those people who are simply too poor to benefit from a measure such as this—notably, people struggling to meet the cost of private rental accommodation and people without a home at all.

The people experiencing the most serious housing stress are low-income families in private rental accommodation. According to a study commissioned by the Australian Housing and Urban Research Institute, 65 per cent of low-income private renters are experiencing housing stress at the moment. Approximately half of private renter households in housing stress experience severe housing affordability problems. That means they are forced into making decisions they would not otherwise make, such as missing meals or letting kids miss out on school activities. The Salvation Army reported to the recent Senate inquiry into housing affordability that the vast majority of clients seeking assistance from their emergency relief centres were in private rental accommodation and were paying on average slightly more than half of their entire income on housing. As the Australian Housing and Urban Research Institute study observed, many in private rental no longer aspire, or are no longer able to aspire, to homeownership.

I welcome the fact that the government is pursuing measures to address these needs through the National Rental Affordability Scheme and the Housing Affordability Fund and by building homes for the homeless. These are important initiatives and they are a welcome indication of the government’s concern for people in housing stress, but they are not receiving anywhere near the same degree of public funding as the first home saver accounts. In order to provide some more resources for these measures, I will be moving two simple amendments in the committee stage which are aimed at targeting first home saver accounts at those most in need. The Greens would like to see this measure means tested and targeted so that it cannot be accessed by people who already own an investment property. The money saved should be directed to those in greatest need who cannot afford to yet purchase a home—low-income earners in rental accommodation and homeless Australians.