Claire Chandler (Tasmania, Liberal Party) Share this | Hansard source

I rise today to welcome and support the National Housing Finance and Investment Corporation Amendment Bill 2019. This bill will amend the National Housing Finance and Investment Corporation Act 2018 to implement the First Home Loan Deposit Scheme and establish a research function within the National Housing Finance and Investment Corporation, the NHFIC. The bill expands the NHFIC's functions to enable it to provide guarantees to improve access to homeownership and undertake research into housing affordability, including supply and demand. The bill also establishes the funding mechanism for scheme claims, and a standing appropriation will provide the NHFIC with the funds it needs to meet claims made on the scheme's guarantees as they arise.

Over the years, we've seen that it has become increasingly hard for first home buyers to save a deposit in order to purchase their first home. This government, the Morrison coalition government, understands the importance of Australians buying and owning their first home and understands that that is a noble aspiration that many Australians seek out. However, in recent decades, it has become more challenging for first home buyers to break into the market. As a young person who, with my husband, has been fortunate enough to purchase my own home, I know just how difficult that can be. Based on the median household income and a 15 per cent saving rate on before-tax income, it takes approximately eight years to save a 20 per cent deposit on a median priced home. That's a long time for a couple or a household that is ready to move into home ownership—where they have secure work and the ability to service a mortgage—to wait to purchase their home, purely on the basis of requiring that 20 per cent deposit, which we know many banks require.

Research indicates that the ability for prospective homeowners to save a deposit is a greater constraint on homeownership for first home buyers than their actual ability to service a home loan. I know from speaking to many people my age that they see the need to have that 20 per cent deposit as a significant inhibitor, particularly when in many cases these young people are already paying a similar or comparable amount of money in rent to what they would be paying in mortgage repayments anyway. But for the need to have that significant deposit, these young people are already in a financial position to service a loan. As a result, young people have to stay in the rental market for longer, taking up a rental property, when in reality they would prefer to be able to purchase their own home and free up a rental property for another couple or family. That's why the Morrison government is backing the First Home Loan Deposit Scheme established through this bill.

I'm very supportive of the intention of this bill to assist young first home buyers, particularly because, as I've said, I've recently gone through that process myself and I understand how difficult it can be. The scheme is designed to help first home buyers enter the market earlier and realise the goal of so many Australians to own their own home. The scheme will provide up to 10,000 guarantees per year to help Australians into homeownership by enabling eligible first home buyers to purchase a modest home sooner. Instead of saving the 20 per cent deposit that I've been referencing, they will only need to save for a deposit of as little as five per cent. The scheme will provide a guarantee on eligible loans for the difference between the deposit paid by the prospective owner and 20 per cent of the property purchase price, provided the borrower has met a minimum deposit of five per cent. We are by no means handing out free mortgages. There is still a requirement that any first home buyers will need to save that five per cent deposit before they are eligible for the scheme.

While many prospective first home buyers have the ability to service a mortgage, it can take a considerable amount of time to save that 20 per cent deposit—as I said earlier, about eight years on a median income for a moderately priced home. Of course, the alternative is that first home buyers, if they don't have that 20 per cent deposit, are instead required by the bank or their lending institution to take out lenders mortgage insurance. Lenders mortgage insurance adds to the cost of borrowing in that the first home buyer would be required to save the five per cent deposit plus the lenders mortgage insurance for the difference. Alternatively, often banks will permit the first home buyer to add the LMI, the lenders mortgage insurance, onto the mortgage as a whole. It sounds good in principle, but in reality all that happens is that the first home buyer ends up paying considerable interest on the lenders mortgage insurance, which is again just increasing the cost of borrowing by adding on to their mortgage repayments. That's why the government is supporting first home buyers and is helping them get into the market sooner.

We know that we can't rely on the big banks to help Australians get a fair deal when it comes to housing. I'm very pleased to see that action has been announced today to direct the ACCC to undertake an inquiry into the pricing of residential mortgage products after the banks failed to pass on the RBA's recent interest rate cut in full. While to the fullest extent possible we should allow markets to function without interference, it's clear that this is a market that has flaws and challenges. I believe there is a role for government to play to support Australians who may otherwise be locked out of the housing market to get into their first home, and that is fundamentally what we're try to do with this bill.

The amendments in the bill will apply from the day after royal assent and are subject to timing of the passage of the bill, allowing for the issuing of guarantees from 1 January 2020, so it's not too far away. Not only will this scheme be good for first home buyers themselves, it will also take pressure off the rental market and will hopefully further stimulate the building of new homes, which, of course, is a key component in housing affordability and creates jobs and apprenticeships in the critical building and construction industry. The scheme builds on the government's comprehensive housing affordability packages announced in the 2017-18 and 2018-19 budgets. The majority of the 2017-18 measures have been successfully implemented and include, for example, establishing the First Home Super Saver Scheme in the NHFIC.

The Morrison government has made a priority of helping Australians into housing, whether it's their own home or a rental property. We're doing that through measures such as this bill, which directly supports first home buyers, but we as a government are also contributing heavily in the range of housing options available to assist with affordable housing. In my own home state of Tasmania, the government has acted to support the unique housing pressures caused by economic and population growth in my state by freeing up the state's historic housing debt, to enable more money to be put directly into building affordable housing in Tasmania. As well as this, through the Hobart City Deal, the government has made a $30 million investment for the supply of more affordable housing for the Greater Hobart area. This funding will facilitate more than 100 new social housing dwellings across Greater Hobart and was greatly welcomed by the sector to help address the issues of housing stress being felt, particularly, in the state's capital.

As I mentioned in my opening remarks, the bill also gives effect to the government's election commitment to establish a research capability within the NHFIC. The bill sets out the framework for the NHFIC's new functions with the core details of the scheme, including eligibility and conditions of the guarantee as well as a research function to be set out in the investment mandate made under the NHFIC Act and issued by the minister. The research function will examine housing demands, supply and affordability in Australia, complementing existing housing related research. I think this is a really important area of research for the NHFIC to be looking into, to ensure that the government is responsive to the challenges of the sector that I discussed earlier in my contribution and that we have the information to hand to enable us as a government to make appropriate decisions to correct any issues in the housing market.

This government, the Morrison coalition government, understands that it's important to Australians to buy their own home, and it's important, particularly for young people that are looking to get out of the rental market and into the homeownership market, for that process to be easy. Obviously, a home is a significant investment to save up for, and we're certainly not saying that first home buyers should be able to enter the market without any requirement to save a deposit, but we recognise that the need for young savers to come up with a 20 per cent deposit before purchasing their own home is a significant ask, one that is acting as an inhibitor to some young people entering the market. As I've said today, it can take eight years for a first home saver to save up the money to do that, and that's why we as a government are addressing this through the establishment of the scheme that we're discussing here in this bill today. On that, it's important for this government to recognise this issue, and we have recognised this issue and put in place a process that will address this. I'm very confident that this scheme will enable many Australians to enter the housing market and achieve the dream of owning their own home. So I commend this bill to the Senate.