Mark Bishop (WA, Australian Labor Party) Share this | Hansard source

The incorporated speech read as follows—

I rise in support of the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008.

Both bills implement additional parts of the Government’s election commitment to help young people save for their first home.

As we are all aware, saving for your first home is very difficult. Individuals and young couples are just starting their careers. And income levels are yet to reach their peak. Under the previous government there was also 10 interest rate rises in a row.

As a result, around $400 per month was added to the mortgage of the average home. Interest rate rises exacerbate the affordability of home loans for people entering the market. Today average home loan repayments throughout Australia are over $2,000 per month. First home buyer mortgages have more than doubled in the last 12 years. Mortgages of a quarter of a million dollars for first home buyers are the norm.

No surprises there—given median house prices across Australian capital cities are now in excess of four hundred and twenty thousand dollars. It’s not hard to understand why there are declining numbers of first home buyers in the market. In 1991, first home buyers represented 20% of the market. Earlier this year that figure had fallen to just 16.4%. The great Australian dream of owning your own home is becoming more difficult. Australia has a long tradition of home ownership.

In the post war years returned soldiers and immigrants alike staked out their piece of land and built their homes. Home ownership offered security and stability. It still does. We want to keep the dream alive. We acknowledge the Commonwealth has a role to play and this Government has a strategy. Unlike the previous government we have made housing affordability a priority. We do not believe that housing policy should be left entirely to private developers and banks.

In order to have an effective policy which will address the housing needs of all Australian’s, its necessary to have a federal government that is interested and engaged in the policy debate. Making home ownership a reality for young people will require a shift away from rampant consumption and debt, with rental properties on the decline and in many cases rents very high, young adults have found that living at home is a far better option than moving out.

Why pay rent when by staying at home you can spend on yourself. When the time comes to buy a house, parents are increasingly refinancing to give the kids a start, particularly at a time when they thought they would be free of both the kids and their mortgage.

The family home has all the creature comforts. Of course there is the plasma TV in the bedroom, a wireless laptop, latest touch screen phone or PDA and an iPod. In the wardrobe is designer gear and in the driveway a nice set of wheels. Now why would they want to move out?

With credit and charge card debt in Australia reaching almost $45 billion. A ten percent increase over the previous year. And five times the level of debt in 1998. We need to bring back the principal of saving.

In 1996, the cost of a new home represented some four times the average annual wage. Today the cost is closer to 7.5 times the average annual wage. Saving the deposit is half the battle. First home saver accounts are designed to give young people a step up into the property market.

But, home ownership is not just the great Australian dream. It forms the basis of social stability. And the value to our society extends far beyond the benefit to the individual.

In 1996 Hilary Clinton quoted an African Proverb—

“It takes a village to raise a child.”

The proverb means the responsibility lies not only with parents, but also with the extended family, and in some cases the community. It is something to consider as in this century we move towards a more mobile workforce,

With more people renting because of the high cost of housing. Members of the Australia Defence Forces for example, may choose to rent because of the excellent housing provided by the Defence Housing Authority, or because of the relatively short term nature of their postings. We also want people not in work to move to places where employment opportunities exist.

Not everyone will choose to purchase a home. However as a government we need to give strong support to home ownership. Because home ownership builds the communities that we live in. It forms the nucleus that promotes the development of schools and health services, libraries and family centres. Communities and the people who live in them provide us with support, security and friendship. Communities and the people who live in them educate our children in social responsibilities, and care for us as we age. But perhaps as importantly, home ownership builds wealth. As an investment it’s second only to superannuation in securing your future.

If you own your own home there is a fair chance you will do well in a country like Australia. But over the last decade we are seeing divisions in the housing market. There are some who own their own home and have made substantial in roads into their mortgage. Over the years there has been a dramatic increase in the value of their properties. So this group while increasing the equity in their homes, are also reaping the benefits of the capital appreciation of what in many cases is their primary asset.

On the other hand, we are seeing a generation who feel they are condemned to rent for the rest of their lives. Savings and a savings plan are the first steps in reaching the goal of home ownership. And the first home savers accounts will become a foundation for many who believe a home of their own is out of reach. It is hoped that for young people the accounts will help to develop and encourage a culture of saving.

The government will contribute a maximum of $850 per year to accounts. Or a total of $3,400 over four years. The maximum account value is $75,000 plus any accrued interest and government contributions. Investment earnings from the accounts will be taxed at 15 percent. Withdrawals from accounts will be tax free, so long as they are used to purchase a home to live in. The accounts will work in conjunction with the Housing Affordability Fund, which will assist local governments to reduce the cost of water, sewerage, transport and other services for new housing developments. Making more land available at a lower cost. These initiatives go some way to addressing the demand and supply issues that currently stop young people from entering the property market.

After a lengthy consultation process which began in February with the release of a discussion paper, and the announcement of the scheme by the Treasurer in the May Budget. First home buyers can sign up for saver accounts on the 1st October 2008. The intent of the two bills is to address further parts of the Government’s First Home Saver Account legislation.

The bills seek to:

• Establish a levy to recover the APRA, ASIC and ATO costs of regulation, in line with the current Retirement Savings Account model. The levy, which is also attached to life insurers and superannuation funds will be set by the Treasurer each year.
• Implement a scheme for dealing with unclaimed money. The scheme will work in a similar fashion to non-superannuation investments. Where the account holder cannot be located the money will be paid to the Commonwealth after a period of seven years. However, account holders will be able to make a claim for their money at any time. This measure will reduce the compliance burden for providers, where accounts have been inactive for a considerable time.
• Amendments also go to secrecy and information sharing between the ATO, ASIC, APRA and the States and Territories. That is, it will provide access to information required by agencies, while ensuring privacy is protected. It also provides for information sharing between the Commonwealth and the states on first homebuyers.
• There are amendments to deal comprehensively with Family Law matters. The measures will ensure that in the event of a family breakdown, individuals will be able to access their partner’s Family Home Saving account, without the need to resort to costly legal proceedings.

These are all technical amendments. But they will give providers greater certainty of the final of the design scheme. In the Budget the Treasurer outlined more than $2 billion worth of initiatives to help families to get into their own home. They include -

• the $1.1 billion First Home Saver Accounts to encourage savings for home ownership,
• the $359 million Housing Affordability Fund that will deliver more homes, more quickly and at less cost.
• the $622 million National Rental Affordability Scheme that will build fifty thousand new rental properties; and
• a further $100 million has been allocated to build new homes for the homeless.

The initiatives address both the demand and supply problems that exist within our communities. The Housing Affordability Fund will address supply issues in getting housing development sites up. The First Home Saver Accounts tackle the demand problems by helping young people to save enough for a deposit. And the National Rental Affordability Scheme will provide affordable rental accommodation in our cities. This package of initiatives is a comprehensive start in addressing housing affordability. The previous government simply said, not our problem. I commend these bills to the Senate.