Alex Gallacher (SA, Australian Labor Party) Share this | Hansard source

At the outset, I'd just like to advise the Senate that the work of the secretariat in this space on the Senate Economics Legislation Committee team is first rate. I commend the report to anyone with an interest in this space. It is exhaustive, extremely comprehensive and ticks all the boxes. As always, the ever-efficient staff have combined submissions and evidence taken in a very cogent, concise report.

We are in support of this attempt to get more first home buyers into the market. We are also supportive of an amendment that we have a much shorter review period than what the government has proposed. We do that for this reason. When we took the evidence from the Treasury and other parties, Senator McAllister vigilantly took on the officials from the Treasury and asked:

… At the time of the announcement, when this proposal was announced, Treasury had not been involved in the preparation of the scheme. Is that correct?

And the answer was:

… This was announced during an election campaign, and we were in caretaker.

She asked:

… So Treasury was not involved in undertaking work relevant to this scheme prior to its announcement?

The answer came back:

… Treasury were in caretaker mode, and, in that mode, we are not able to provide advice to anyone.

She then asked:

Noting your explanation, could you, for the purposes of the record, just answer my question: was Treasury involved in any way in providing advice on this scheme prior to announcement?

'No' was the answer from Ms Wilkinson.

We then moved on to QBE, a very large LMI provider. Ms O'Loughlin said:

… We weren't aware of it at the time of announcement. We saw the announcement, like everyone else did—

Senator McAllister asked:

… So no consultation prior to announcement of this scheme?

Ms O'Loughlin replied:

… Not prior to the announcement, but once the announcement came out.

So, the industry wasn't consulted and the Treasury wasn't consulted.

We went on to do an assessment of the 10,000 first home buyers. A key component of this scheme is to cap the scheme at 10,000 first home buyers. Apparently there are about 100,000 first home buyers in Australia and there are about 205,000 per year who use the lender mortgage insurance process to get into their new household. When asked about the figure, Dr Fotheringham from AHURI, which is a research organisation, replied:

… The 10,000 number hasn't come from any AHURI evidence. I suspect it's more about a scheme funding threshold rather than a demand threshold.

I said:

So the actual figure of 10,000 is not an identified research need; it's just something we decided to do.

And he responded:

… That's right.

I asked the Treasury:

… Can someone point to me the evidence where we arrived at a need for 10,000 as a total number of first-home buyers to target?

Ms Wilkinson replied:

… It was an announcement by the government, during the election campaign, of this program, and 10,000 was announced at that stage.

I responded:

… I understand what was announced. I understand that we support it. I just want to know if there is any evidence or research in the marketplace which underpins a need for 10,000 places, 5,600 places or 12,200 places.

Ms Wilkinson replied:

… That is not something that Treasury has looked at.

So we had an announcement made in the heat of an election campaign. I think it was in the last week of an election campaign. And, look, the opposition said, 'We'll do it as well.' Why wouldn't you try and get more first home buyers into the marketplace? It's a great thing to do. But what we've got here is a piece of legislation—which I think will pass this place, hopefully with an amendment about reviewing it sooner rather than later—that is entirely unclear.

There is no evidence underpinning the 10,000 places. There is no evidence from the Treasury about the need for the scheme in its entirety. When pressed on that issue, the Treasury said, 'We think about 20 per cent of the people who are currently renting properties in Australia would like to buy one.' Well, I think the number is probably higher than 20 per cent. But the fact is that it is capped at $125,000 for a single and $200,000 for a couple. If you do the sums on that, a single person can borrow a tad over $410,000 and a couple can go to $680,000 or $690,000, which will probably buy them something in every capital city outside of Sydney. So it's not underpinned by clear evidence and research, and it's not underpinned by advice from the Treasury or from industry.

Were we to pass this legislation, which we probably will in this next short period of time, the investment mandate, which actually contains the operational mechanisms of the scheme, will not be there. We haven't seen it. The industry haven't seen it. The investment mandate is completely obscured. We don't know what's in it. There's been no draft provided to the committee. There's been no draft provided to the industry. The investment mandate is being worked on for a scheme that comes into place on 1 January 2020. Last I looked, that's in a very short period of time.

Does that mean that first home buyers who know this is coming along will stop buying this year and wait until 2020? Then, we would have an oversubscription, so there would be losers. You don't get the government guarantee on your 15 per cent, so do you wait another 12 months? It's supposed to bring more people to the market. It's supposed to be a boost for people trying to get into their first home, and all of it is completely obscure. There doesn't appear to be any cogent advice from Treasury on it or industry on it. It was an election campaign announcement which is now going to be legislated with an investment mandate yet to be seen.

Once again, that's the calibre of this government. They do things in a very strange and unorthodox way. You would expect a scheme like this to come to the legislation committee to be tested and looked at in its entirety. That certainly hasn't happened. We're not opposed to new home buyers getting a leg up—that's entirely the way it should be—but we should have support from the other side about reviewing this scheme earlier, because there are plenty of people in the industry who are extremely nervous about what's going to come out of the investment mandate and who will be on the panel. These are all matters that are completely unclear. They're at the minister's discretion—they're not allowable or disallowable instruments, so this will pass. The investment mandate will get put out there, and we would hope it is beneficial in the aggregate to the housing sector and first home buyers.