Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary for Disabilities, Carers and the Voluntary Sector) Share this | Hansard source

The first home saver accounts and the Housing Affordability Fund are designed to support Australians saving part of their income in order to buy their own home. The coalition supports measures that will improve savings. Any government initiative designed to tackle the current decline in housing affordability is certainly most welcome. We often hear of Australians facing mortgage pressures. However, it is becoming increasingly difficult for young families to afford their first home. First home saver accounts are intended to provide a tax-effective way for Australians to save for their first home. The coalition welcomes these well-intentioned initiatives. As such, we supported the scheme in June of this year.

The First Home Saver Accounts (Further Provisions) Amendment Bill 2008 will implement the remaining aspects of the scheme. The coalition will be supporting this bill, thereby making the system operable, but we have a few comments and a couple of reservations. There can be no doubt that many Australian families are dismayed over rising housing costs. One of the goals for every parent is to see their children being able to afford their own home. I notice there are many students in the gallery today. We would like to see all of them able to afford their own home and able to save in a tax-effective way throughout their lives.

Families and young people really do need every help that government can give them, so that they can continue to save and afford their own home. This was recognised by the former coalition government when last year it committed to a similar scheme, but the scheme we advocated was more flexible in its administration. As well as this, under the coalition proposal last year, children could be account holders allowing for a more substantial deposit to be built up over a longer period, all in a tax advantaged environment, thereby encouraging a culture of saving from a very young age. This is an area particularly close to my heart as I devoted a considerable amount of my preparliamentary life to encouraging savings for children.

The coalition’s proposed scheme last year was to introduce tax-free home saver accounts to provide a simple, tax effective way to help Australians save for their first home. In contrast to Labor’s policy, the coalition’s proposal was to have two types of accounts, one being a tax-free home saver account for children and the other a tax-free home saver account for adults. Under the coalition’s policy, tax-free home saver accounts for children were to be available to all Australians under the age of 18. Parents, grandparents and others wishing to contribute up to a total of $1,000 between them each year could place money into an account. What better way to demonstrate to children the benefits of saving and planning for the long term? The appeal of this initiative was not only that it would have changed the future financial potential of our children but also that contributions would have been tax deductible and savings in the account would have been available to purchase a first home any time after the account holder turned 18.

The coalition recognised the difficulties faced by first home buyers then, and we acknowledge and we recognise the difficulties that continue to confront first home buyers now, which is why we will be supporting the amendments to the First Home Saver Accounts scheme. However, there are factors within the Rudd government’s First Home Saver Accounts scheme that present some concern. The scheme does not really address the decline in housing affordability. The first home saver accounts will not reduce the prices of houses or land. They will allow people to accumulate a deposit in a tax effective manner but they do not go to addressing the real substance of the problem, which is housing affordability. Mr Rudd and Mr Swan can spin this scheme any way they choose, but their government is not tackling the cause of the growing problem—that is, the actual factors contributing to high house and land prices.

This scheme does not address the limited land supply that is a result of restrictive land release policies of state and local governments. In some states—and South Australia, of which I am a proud senator, is one—the Land Management Corporation now has a for-profit objective, and so they have an incentive to reduce the release of the supply of land, which is the significant, substantial cost for first-time buyers. It is an appalling situation and it is something that, quite frankly, this legislation does not address. It makes a mockery of the cooperative federalism model that the Rudd government has championed so loudly.

The principal reason for rising house costs is that the land supply has been restricted and this has caused prices to rise accordingly. We also have enormous government taxes, fees, levies, charges and compliance costs—all adding enormously to the cost of new housing. We are advised that these now represent a quarter to a third of the cost of a new house and land package. A quarter to a third of the cost of a new house and land package is taken up in taxes, fees, levies, charges and compliance costs—unnecessary burdens in many instances. The Rudd government’s first home saver accounts will not solve the housing affordability problem because they will not increase the supply of affordable homes. They will only increase the amount of money that potential home buyers will have to spend. If all potential home buyers participated as fully in this scheme as they possibly could, they would all be on a level playing field, which would only drive the cost of first homes up in an inflationary market because they would all be there at the same starting point and would be able to bid accordingly.

The first home saver accounts are currently restricted at $75,000. As a result, with the Rudd government failing to address the actual cause of increasing housing prices, we can expect house prices over the longer term to continue to rise, and this figure of $75,000 as a percentage of a house price will steadily decrease in relation to the overall cost of purchasing a home. There are also restrictions in this bill on accessing the saved money for a period of four years. That in some instances may restrict people from purchasing a home at the best possible time in the property cycle. We may see a market turn. We may see that many first home savers miss out on a key opportunity to buy. We also recognise that the government will pay a contribution of 17 per cent of the up to $5,000 saved each year. This is a flat rate for everyone involved in the scheme, so it stands to reason that those on high incomes who can save the most amount of money will get the most benefit and will be able to compete more effectively in what is currently a very tight property market.

Problems associated with this include the clause in the bill that the individual must deposit $1,000 over four separate financial years in order to be able to withdraw their money. This can present difficulties for some individuals. I understand that there is an incentive to encourage people to save in a continuing and ongoing manner. But if people put money into these accounts and for some unforeseen or unexpected reason they cannot continue to put $1,000 aside for four separate financial years, they would have no access to their money. If their plans change or their circumstances change, they cannot access their money unless they roll their money into their superannuation and take their chances with early release provisions.

As well as these factors, the first home saver accounts cannot be used to purchase property until after 2012, because you have to have them for four years and the scheme does not take into account those who have already commenced saving for their first home. We should be offering every support to those people who have been doing the right thing in a non-tax-advantaged environment. Of course, those who are on low incomes or in debt are obviously in no position to save and they will not benefit from the scheme. They have once again been overlooked by the Rudd government.

The first home saver accounts will have to be easily accessible and understandable for young people in order for the scheme to carry out what it is designed to do. The fact that we are revisiting this scheme and making amendments to it indicates that it was not well considered in the initial instance. Every additional layer of complexity in the regulatory framework will not only reduce the return to savers but reduce the participation of savers, diminish competition and decelerate the arrival of these important and valuable products onto the market.

Whilst the coalition supports the amendment bill, there are some concerning factors. We call on the Rudd government to further investigate these issues in the near future for the benefit of young Australian families. The coalition will work cooperatively to see benefits for young Australian families and to help those who want to do the right thing and save for their first home. We want homebuyers in this country because there is no greater investment in one’s family than giving them a place called home. We will be supporting these bills, as I have indicated, but we believe that the Rudd government should be doing more.