Helen Polley (Tasmania, Australian Labor Party) Share this | Hansard source

I rise to speak on the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008. The financial pressures faced by first home buyers have increased, with the price of an average home rising more quickly than the average annual wage and first home buyers spending a greater proportion of their total income on mortgage repayments than at the beginning of the decade. Housing affordability, as measured by the Housing Industry Association, is at record lows, with mortgage repayments for the typical first home buyer now consuming 31.7 per cent of their gross income compared to 17.9 per cent in 1996.

On 4 February 2008, the Rudd Labor government confirmed its 2007 federal election commitment to establish first home saver accounts to assist Australians aged 18 and over to save for their first home. This measure will be welcomed by those who are struggling with high rent—people who are desperately trying to save what they can out of their weekly budgets for a house deposit. The First Home Saver Account Providers Supervisory Levy Imposition Bill 2008 will enable the minister to impose a separate levy on first home saver account providers. This proposed legislation is consistent with the existing financial sector levy framework that funds the Australian Prudential Regulation Authority supervisory activities on a user pays basis. First home saver accounts provide an additional mechanism for individuals in which a family can save for their first home in which to live. They are an important part of our plan to tackle the housing affordability crisis.

These two bills implement additional parts of the government’s election commitment to assist people to save for a deposit for their first home. Accounts can be provided by banks, superannuation funds, building societies, life offices and credit unions. Specifically, the two bills establish a levy to recover the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission and the Australian Taxation Office costs of regulations that mirror the current retirement savings account model and an unclaimed moneys provision that will be consistent with those applicable to other financial products.

On 8 February this year, a consultation paper was released outlining the proposed features of the accounts and how they would operate. The government undertook an extensive consultation process, which concluded on 7 March this year, and sought comments from the community and industry on the detail of the accounts. The government received 150 submissions from individuals, businesses and organisations. In response to the issues and suggestions raised during the consultation period, the Rudd Labor government has made a number of changes to improve the design features of the accounts. Some of the key changes include: the government will contribute 17 per cent on the first $5,000, indexed, of individual contributions made each year; an overall account balance cap of $75,000 has been introduced; and the upfront contribution of $1,000 has been removed. The government has maintained the taxation incentives—investment earnings or interest that accrue in the accounts will be taxed at 15 per cent and withdrawals will be tax free where they are used to purchase a first home to live in.

According to official statistics, it has never been harder for first home buyers to purchase their first home in Australia. The average home now costs seven times the average annual wage, up from four times the average annual wage just 10 years ago. Nationally, first home buyers, as I mentioned earlier, are now spending 31.7 per cent of their total income on mortgage repayments, up from 17.9 per cent in 1996. The proportion of homes being bought by first home owners declined from 21.8 per cent in June 1996 to 17.1 per cent today. That is why this measure is so important.

The Rudd Labor government has a national housing affordability strategy. Federal Labor’s First Home Saver Account scheme is a key component of that strategy. First home saver accounts will work in conjunction with federal Labor’s existing $1.1 billion worth of commitments to increase the supply of affordable first homes and rental properties. They include the Housing Affordability Fund, which will increase housing supply by providing money for local infrastructure, and incentives for state and local governments to lower development charges. The National Rental Affordability Scheme will provide investors tax incentives to increase the supply of new affordable rental properties across Australia, saving 50,000 low- to middle-income families 20 per cent on their rental bills. And we will introduce a better approach to land release, with all surplus Commonwealth land being freed for housing development or community infrastructure. This measure is to be commended and welcomed by those opposite, as it will help young people to save for a deposit for their first home. It will help young families.

Rising housing prices and higher interest rates over the last three years, have increased financial pressures on households and made it harder to save for a first home. Homeownership is important to the wellbeing of Australians. We need to do all we can to make the dream of homeownership a reality. First home saver accounts are the first of their kind in Australia and will provide a tax-effective way for Australians to save for a first home in which to live through a combination of government contributions and lower taxes.

Saving for a house deposit and maintaining a loan is difficult for young families. That is why the Reserve Bank of Australia’s interest rate cut earlier this month was so welcomed by mortgagees. For some homebuyers it was their first experience of a rate cut, after the 10 consecutive interest rate rises experienced under the Howard coalition government. Families across my home state of Tasmania certainly welcomed the recent 0.25 per cent interest rate cut by the Reserve Bank. This cut took pressure off family budgets. It was the first interest rate cut for seven long years—seven long years of worry and stress for families; seven long years of wondering how to make ends meet. For the average mortgage, the interest rate cut will put more than $500 a year back into the family budget—and, for many Australians, much more than that. For 740,000 first home buyers, this is the first time they have experienced an actual reduction in their mortgage payments.

There is no doubt that the economic challenges that we are facing in Australia today are significant. Labor inherited an economy which has suffered nearly 12 years of neglect from those opposite and was hit with 10 interest rate rises in a row—including eight rises in three short years. Families are still hurting from these increases in interest rates. Those 10 interest rate rises also had a huge impact on the level of economic activity in Australia. Furthermore, when the Rudd Labor government was elected in November last year, inflation was running at a 16-year high.

In 2006, the now opposition leader, the member for Wentworth, Malcolm Turnbull, told families that high inflation was a ‘fairy story’. Unlike those opposite, those of us in the Rudd government have no intention of sticking our heads in the sand and hoping these challenges will go away. We have not hidden from economic challenges in the past and we will not hide from them today.

Our Prime Minister, Kevin Rudd, has made it clear to the Australian people that we acknowledge the various economic challenges we are up against and that we are determined to address them. We have been and will continue to be upfront with the Australian people, giving them the honest answers they deserve. The Rudd Labor government believes in governing for the future; it believes in laying the foundations for the nation’s long-term prosperity. We do not believe in short-term bandaid measures. We, unlike those opposite, have a plan for the future. I am confident and I have every confidence in the Prime Minister and Treasurer Swan to guide us and the Australian people through these tough times.

We have hit the ground running in many areas—in particular, housing affordability. The previous government did not even have a housing minister. Why? Because they did not care about families struggling to make ends meet. In March 2006, housing affordability stood at four times the value of the average annual wage. When those on the other side left office at the end of 2007, it was 7½ times the value of the average annual wage. That is a huge decline in real housing affordability for working families.

We have a practical plan of action to do something about a real need for working families. Our Housing Affordability Fund has been met with much appreciation from the community. I note that the Australian Local Government Association has welcomed the government’s announcement already. Its president, Councillor Paul Bell, said:

We are pleased that funding can be made available to help councils facilitate affordable housing projects. We are particularly grateful that the Australian government are prepared to fund community infrastructure related Housing Affordability Fund projects.

I support this package of bills because I want people in my home state of Tasmania to have the opportunity to buy a home. As Prime Minister Kevin Rudd said in question time on 15 September this year:

The government, in building an Australia for the future, is determined to ensure that whatever can be done to preserve the dream of Australians to one day own their own home does not just remain a dream but can still be a reality.

A home provides security. Home ownership carries with it a raft of social and economic benefits that directly affect individual and family stability, security and capacity. I support these bills because these measures will work towards ending the housing crisis.