Sean Edwards (SA, Liberal Party) Share this | Hansard source

I rise to speak about the important work that the government is undertaking in this space. I acknowledge Senator Day's foundation platform on this issue in coming to this Senate last July, and I agree with him wholeheartedly that there are levers within the economy that should be released to make housing more affordable. Certainly, it does become a regional issue, as areas like Sydney and Adelaide have quite different economic fundamentals. It is a challenge for government; it is a challenge for state government; it is a challenge for this federal government. But, unlike past governments, one size does not fit all. This government is taking a very careful look at housing affordability, and we are quite active in that space.

I will speak firstly about housing affordability. The government recognises that housing affordability is a very real issue, and that is why we are having the debate. It is particularly a sensitive issue for young people and families, and one of the underlying causes of the decline of housing affordability is lack of supply. As Senator Day and I know, in South Australia most of the vast tracts of land of the next development of land, the urban sprawl as we know it, is locked up by the state government. So that is a state government issue; they have the ability to unlock that.

Supply has not kept pace with the strong growth in demand in recent years. And, whilst housing supply is for the most part a state government responsibility, the federal government has committed to produce a white paper on the reform of the federation, working with those same states and territories. Importantly, the white paper is the primary vehicle through which the government will consider housing and homelessness issues.

In July 2012, the states and territories agreed on the recommendations of the Housing supply and affordability reform report with the aim of increasing Australian housing supply and affordability. The government's policy in relation to foreign investment in residential real estate aims to increase Australia's housing stock by limiting foreign investment in established dwellings. Let us be clear: we limit foreign investment in established dwellings. That means that if you come here you have to build something, you have to create jobs and you have to provide for the economy. That is the stimulation we want with foreign investment. The government responded in February to the findings of the House Economics Committee's report on Australia's residential real estate foreign investment network by releasing a consultation paper on options to strengthen Australia's framework. The options include a new compliance and enforcement area in the Australian Taxation Office. We have seen that—it was across the front pages of the New South Wales dailies only last week or the week before. The options also include increased penalties, and an application fee for foreign investment applications came in on 1 March so that the taxpayer does not have to pay for the cost of administering the foreign investment process. The government will move quickly following consultation to ensure that our foreign investment rules continue to support Australia's national interest.

Integral to encouraging housing construction is the provision of adequate infrastructure. You cannot have housing without adequate infrastructure and planning, and this government is a planning government. Investment in infrastructure, through the Infrastructure Growth Package, is a core element of the government's Economic Action Strategy and it comprises no less than $11.6 billion of additional spending on infrastructure. To purport that this government is not interested in housing affordability is a nonsense. The government is working closely with states and territories to get rid of red tape. It is fitting that today we have the Omnibus Repeal Day (Autumn 2014) Bill 2014 going through the other house to get rid of all the red tape and unnecessary legislation and regulation. Red tape holds up the supply of housing and construction. As Senator Day knows, in South Australia, dealing with an approval process for subdivision and planning approval is an arduous and costly task, and its seeming impermeability is a complete disincentive to investment in that state. The state Labor government would do well to reform that as soon as they possibly can.

This all means that we supply more land. It is basic economics: increased land releases will improve affordability for both renters and home buyers. With that in mind, the government has established a red and green tape reduction target of a billion dollars a year in Commonwealth compliance costs for business, individuals and community organisations. The Commonwealth is also involved in housing affordability for low-income households through national partnership agreements with the states and territories. In 2014-15, the Commonwealth will contribute a further $1.3 billion to the states and territories through the National Affordable Housing Agreement to improve housing affordability and homelessness outcomes for Australians and, despite what the previous speaker said about the NAHA, there is a further contribution of $1.3 billion in the budget. The Commonwealth also extended the National Partnership Agreement on Homelessness for one year, providing $115 million in 2014-15. Why did we do that? Because the previous government had not funded it in its forward estimates and it would have fallen off a cliff. We heard that in an inquiry, but we did not hear it in the contributions from the other side.

As I have said, the restricted supply of housing is a significant contributor to high price levels and is largely controlled by state and local governments. Through COAG, they agreed to a range of reforms in 2012 to remove impediments to supply. Sadly, I do not think their endeavour is as profound as it should be. Measures of housing affordability have improved in line with declining mortgage interest rates since November 2011. According to the CBA-HIA housing affordability index, that improvement has been 30 per cent. More recently, measures of housing affordability have started to deteriorate given strong house price growth and subdued growth in household income. Measures to aid first home buyer entry into the market have been found to increase prices at the lower end of the market without inducing significant increases in supply. So you have to be careful what macroeconomic reform you provide to the housing sector and be careful of the effect. I have always found that the more government gets involved in markets the more things go up in price and the more unobtainable they become to the people that most need them. For this reason, governments at both the state and federal levels have reduced or removed purchaser subsidies or similar policies. As part of the 2014-15 budget, the government is abolishing the first home saver accounts because that has had limited effectiveness. In June 2014 there were 49,400 accounts with a total combined balance of $616.8 million. The government also announced in the budget that it will not proceed with the final round of Labor's National Rental Affordability Scheme, as the scheme was poorly designed and has failed to deliver outcomes for low- and moderate-income Australians. I am sure it was well intended, and I know we will hear about it during the contributions remaining, but like everything else—cash for clunkers, GroceryWatch, Fuelwatch, pink batts—it was chaotic at the time. The aim of the white paper is to improve the way our federal system works by being clear about who is responsible for what.

Late last year, I was fortunate to be in Singapore on parliamentary business. They have a scheme which operates to leverage people's superannuation into home ownership—and Singapore is one of the most expensive cities in the world to live. Contesting ideas is what we should be doing in this place, not demonising fresh ideas put up for discussion. I urge all Australians, and certainly all of those people elected to this place, to take everything into consideration. (Time expired)