Murray Watt (Queensland, Australian Labor Party, Shadow Minister for Northern Australia) Share this | Hansard source

I'd like to make clear at the outset that Labor senators support this bill. That's because there is currently a housing crisis in Australia. Today the percentage of Australians who own their own home has dropped to its lowest level since Sir Robert Menzies was Prime Minister back in the 1960s. Of course, it is young people, people in their 20s and 30s, who are finding it hardest to get their feet on the property ladder. In Sydney it takes more than 11 years to save for a standard 20 per cent housing deposit. In Melbourne it's more than 10. In Adelaide it's more than eight. In Brisbane and Perth it's more than seven, with similar high numbers in many regional centres around Australia. This is cutting generations of Australians out of the housing market. As research released by The University of Sydney last month revealed, whether someone owned property was the greatest indicator of someone's wealth. There are even specific ways to break up this system based on whether someone was an investor or a homeowner, a mortgage holder or an outright owner. The lowest, according to this research, was renters and the homeless.

It's not just first home buyers though who are doing it tough under this government. Today the number of people in Australia that are behind in their mortgage is at its highest level since the global financial crisis. This is extremely concerning given we are currently experiencing the lowest interest rates in decades. Yet when wages are flat and the cost of living continues to increase is it any wonder that Australians are struggling to meet their repayments?

Renters are doing it tough too. As a report by the Australian Institute of Health and Welfare showed just last week, in 2017-18 11.5 per cent of households spent 30 to 50 per cent of their gross income on housing costs, with another 5.5 per cent spending a staggering 50 per cent or more. Over one million low-income households were in financial housing stress in 2017-18. Today we have more homeless Australians than ever before. The last census recorded the number of homeless Australians as more than 116,000. This is just not good enough. There is no way to put a positive spin on this figure, as at least one member of the government has encouraged us to do.

The bill before us will enable the National Housing Finance and Investment Corporation, the NHFIC, to provide guarantees to improve housing outcomes and undertake research into housing affordability—what the government calls the First Home Loan Deposit Scheme. The legislation does not address much of the detail and administration of the scheme and this will be handled through the investment mandate and developed by the corporation.

We know from the bill's explanatory memorandum and the government's other public commitments that the new scheme will allow first home buyers to purchase properties without the need to pay lenders mortgage insurance or meet the standard 20 per cent deposit requirement. Applicants will only have to provide a five per cent deposit. The scheme is to be capped at 10 per cent purchases per annum and eligible applicants must have earned less than $125,000 in the previous financial year as a single or $200,000 as a couple. The new scheme will be funded through the Consolidated Revenue Fund. As the explanatory memorandum makes clear, the scheme will require an update to the NHFIC's investment mandate and we understand that this will go through a process of public consultation.

This bill was considered by the Senate Standing Committee on Economics. Members of this committee supported the passage of the bill. Labor members of the committee provided additional comments to that report and highlighted some of the issues the government will need to overcome when implementing this scheme. The first was that this scheme may not increase the number of first home buyers and, instead, it will mean that first home buyers will buy properties sooner. This was supported by Mr O'Shaughnessy from the Australian Banking Association who said in oral testimony to the committee:

… I actually think there will initially be a slight bump in numbers—

Of first home buyers—

but, given the cap of 10,000, it will perhaps bring forward a number of potential borrowers who now qualify, where this product is suitable for them. That would be early in the first year of operation, and then I think it would very much settle. I don't think it will have a significant distortive impact on the market.

A similar view was put by Brendan Coates from the Grattan Institute:

It is unlikely to make much of a difference to homeownership rates for young Australians or house prices. Most of those taking up the scheme will probably have bought a house anyway.

As did Dr Fotheringham of the Australian Housing and Urban Research Institute:

As currently written, I think it will help accelerate people to homeownership rather than get to homeownership people who would not otherwise.

Let me state that increasing the speed at which first home buyers can buy a home is a good thing. Increasing the number of first home buyers would be an even better policy outcome. I don't think anyone in this place would disagree with that statement. Labor members look forward to assessing the scheme's development and implementation, paying particular attention to any evidence that there is an overall increase in the number of first home buyers as a result of this scheme.

The second point that is worth raising is that the bill in front of us does not have any real detail of the scheme. It does not include what the price caps will be. It does not provide any detail as to how this will change depending on the regional location. In fact, almost all of the detail of this scheme will be included in an updated investment mandate. The updated investment mandate was not provided to the committee as part of its work. What actually became clear through the hearing was that the government itself had not finalised the draft and all stakeholders were keenly awaiting its publication. While it's understandable that a lot of the detail of this scheme would be included in the investment mandate, it should not be beyond the ability of those opposite to provide the mandate for the committee and the parliament to examine together.

For these reasons, it's important that the scheme is properly scrutinised. In the next 12 months, the scheme could potentially be used to guarantee up to 20,000 purchases. The explanatory memorandum of the bill states that the scheme will be subject to a review in up to three years. We on this side think that this is too long, given the importance of housing for the economy and the struggles currently faced by first home buyers. That's why I have circulated an amendment in my name that will ensure this program is reviewed every 12 months. We on this side do not think this is unreasonable, and I hope the government and crossbench members will support it.