Paul Scarr (Queensland, Liberal Party) Share this | Hansard source

I want to put some facts on the record in relation to the Housing Australia Future Fund Bill 2023 and what is being proposed. There is a lot being said about this bill, the $10 billion Housing Australia Future Fund, in the public sphere, but it is important that everyone understands what is actually proposed in this bill. What is proposed is that the government goes out today and borrows $10 billion, then gives that $10 billion to the Future Fund to invest—not in housing, but just to invest. It could invest in shares—Australian shares, international shares, government bonds here and overseas et cetera—and then the return from those investments, up to a particular cap, would be invested in housing. Does anyone see any problem with that?

The obvious problem is what happens after you borrow $10 billion at, say, four per cent interest, because we're in a high inflationary environment, then the Future Fund tries to invest that money to generate a return. There will only be money going into housing, and all of the laudable goals which have been referred to by the Labor Party, if that fund generates a positive return. In a high inflationary, economically difficult environment, one would have thought the risk that that return won't be generated to enable investment in social housing is heightened. Thus, you could get the perverse outcome that, when social housing is most needed, your investment in the housing fund, in shares, bonds et cetera, is low and doesn't produce the return to enable you to invest in the social housing you desperately need at that point in time. That's the perversity, from a policy perspective, of what's being proposed.

The government has the option now to, say, borrow—everything the government does now is based on borrowings—$500 million today, rather than $10 billion, issue that money in grants and get houses start being built today. They could do that now. But what they're proposing is to borrow $10 billion, give it to the Future Fund to invest in shares, international equities, domestic equities, bonds et cetera, and then only the return from that investment will go into housing. Why? Why are they proposing this?

If you want to know the dangers of it, all you need to do is look at the Future Fund's annual report 2021-22. The Future Fund is the fund which will be investing this $10 billion in shares, international equities et cetera. What happened to the returns in the Future Fund in the period up to 30 June 2022? All you need to do is have a look at the report from the chairman in the foreword. This is what he says:

In a year in which global equities and global bonds fell by more than 10% each and where the Australian stock market fell 6.5%, the return of -1.2% was a pleasing outcome.

In the period up to 30 June 2022, if that $10 billion had been borrowed by the government and given to the Future Fund, which then went out and invested it in domestic shares, international shares, bonds et cetera, its pleasing outcome would have been a minus 1.2 per cent return, not even taking into account inflation. It would have gone backwards, and, at the same time, you would have had to pay interest on the borrowings. No houses. Increased debt. Increased interest payments. None of those laudable goals achieved. That's why those opposite are opposing this piece of legislation.

With due respect, I've heard the Greens put forward the same argument with respect to the non sequitur that goes to the heart of what is being proposed. You're borrowing $10 billion today to invest it in shares, in a very difficult economic environment, and only if it generates a return will anything be invested in housing. That doesn't make sense. Look at the minus 1.2 per cent for the Future Fund for 30 June 2022. The Future Fund also invests in other future funds in relation to a range of areas. What were those results? The Medical Research Future Fund delivered a return of 0.1 per cent per annum in 2021-22. Say there's a bond issue that finished yesterday at 3.25 per cent interest. If you borrow $10 billion at 3.25 per cent interest, that's $325 million interest a year and then you generate a 0.1 per cent return on the $10 billion, which doesn't go anywhere near to covering your interest and so there's nothing that goes into housing. You're actually going backwards. The pool of funds to invest is going backwards; it's diminishing.

The Aboriginal and Torres Strait Islander Land and Sea Future Fund returned negative 0.2 per cent for the year. The Future Drought Fund and the Emergency Response Fund delivered returns of negative 0.2 per cent per annum and negative 0.1 per cent per annum. The DisabilityCare Australia Fund delivered an annual return of negative 0.4 per cent. So they all went backwards. Every single fund which the Future Fund managed, for the period up to 30 June 2022, went backwards. They had a negative return. Plus, you've got to pay the interest on the $10 billion of debt which you borrowed up-front. Does it make sense to you?

Instead of borrowing $10 billion, you could arguably borrow $500 million today, and invest that $500 million directly into housing. Isn't that a better idea? And yet those opposite are wedded to this proposal of the $10 billion big sugar hit. What is this about? When you put forward that logic it seems pretty straightforward to me—based on fiscal policy, based on economics policy, based upon risk management and cost-benefit return—that what the government should be doing is working out how much it wants to invest today, in terms of those laudable housing goals, and actually borrowing that amount to be spent today. That makes sense. But they're not doing it. They want the big hit of being able to say, '$10 billion housing fund,' as if $10 billion is going to be invested today in housing.

What I've just outlined demonstrates conclusively that you may get nothing invested in housing because it all depends upon the return in the markets and, even worse, you may go backwards. So you borrowed an extra $10 billion. That's inflationary. That puts upward pressure on interest rates. It necessarily has to put upward pressure on interest rates because you're going out into the market and borrowing $10 billion instead of $500 million. So you've got to find extra homes for that money. You've got to find people who are prepared to bid into that bond issue and take the $10 billion instead of the $500 million. So, potentially, you've got to make it more attractive for them. They've got greater leverage. Supply and demand—it's basic economics. It puts upward pressure on interest rates. Then, at the end of this process, you might not have a single dollar to actually invest into a social housing project—not a single dollar. It doesn't make any sense at all.

That basic lack of logic, going to the heart of what is proposed by the government, has not been explained by any of those sitting opposite. All we hear, as you heard from Senator Green before I rose to my feet, are passionate and, no doubt, good faith assertions that we've got to do this today in order to provide homes to worthy people in the community who need housing. There is a chronic shortage of housing in this country at the moment. There's no question about that. But there's no explanation as to why this is the right model when the government could go out today and borrow, say, $500 million or $1 billion instead of $10 billion and immediately invest that money into housing and not put that investment in housing at risk that the Future Fund will not get returns on the markets when it invests the proposed $10 billion. That lack of logic that goes to the heart of what is proposed by the government has not been explained.

There's been much toing and froing between the Greens and the Labor Party and we've sat back, we've eaten our popcorn and watched the show this morning. But in terms of delivering policy results on the ground for those who need that social housing—women and children escaping terrible domestic violence, veterans, the elderly—there is no explanation as to why the government doesn't take the more prudent approach, which I think ticks all the boxes. It's not as inflationary, it doesn't put as much upward pressure on interest rates and there's more certainty with respect to the delivery of social housing in a more timely manner. There's no explanation as to why that can't occur. Analysis has been undertaken. What would have happened if this legislation had been passed in the month after the new government got elected? Based on those current statistics, in terms of the future fund, there would have been a loss of approximately $370 million on that $10 billion, a loss, when in fact the government could borrow a more prudent and modest but still substantial amount—$500 million, a billion dollars—and invest that in social housing today. That is not what is proposed.

It's very, very important that the people of Australia understand what is being proposed by the government today. It is not a situation where the government is proposing to put $10 billion directly into housing today. The government is proposing to borrow $10 billion and get the future fund to invest that $10 billion in the share market, the international share market, or government bonds, equities, private equity, whatever it is; and then only the returns from that $10 billion will go into providing housing. That's the risk, and that goes to the core of the objection that the coalition has with respect to this policy.

In my remaining time to speak, I want to correct the record. Those opposite, now they are on the government benches, are fond of saying that the previous government did nothing in its nine years in government in relation to anything. I just want to put on the record, in the time I've got available to me, our initiatives with respect to housing when we were in government. The coalition's housing policies supported more than 300,000 Australians to purchase a home. We supported more than 21,000 social and affordable homes through the establishment of the National Housing Finance and Investment Corporation. There were 21,000 social and affordable homes supported by the coalition government through the National Housing Finance and Investment Corporation. After nine months in office the government haven't built one; they haven't contributed to one. In nine years of government we contributed to 21,000 social and affordable housing units.

Under the coalition, the number of first home buyers reached its highest level for nearly 15 years—a record number in nearly 15 years. It went from approximately 100,000 a year, when we came to office, to nearly 180,000 in our last year in government. An extra 80,000 Australians became first home owners during our last term of government—a fantastic result. In addition, the National Housing Infrastructure Facility established a $1 billion perpetual facility to finance critical housing-related infrastructure to speed up the supply of new housing through the provision of loans and grants and through making investments. We also established the Affordable Housing Bond Aggregator, providing cheaper and longer-term finance to registered community housing providers.

The National Housing Infrastructure Facility was a landmark coalition achievement, with $2.9 billion of low-cost loans to community housing providers for 15,000 social and affordable dwellings, saving $470 million in interest payments which could then be reinvested in affordable housing. We unlocked 6,900 social, affordable and market dwellings through our $1 billion infrastructure facility and we supported more than 60,000 first home buyers through the home guarantee schemes—and I've personally spoken to people who took advantage of the Home Guarantee Scheme to buy their first home. We protected the residential construction industry, with more than 137,000 HomeBuilder applications. Lastly, through our First Home Super Saver Scheme, we helped 27,600 first home buyers accelerate their deposit savings through super. They were typically young Australians who could access their super—because, after all, it's their money—and then invest that to pay for their deposit on, invariably, their first home.

That's the roll call of achievement of the coalition government. If those opposite want to get up and say the coalition government did nothing, those listening to the debate should compare those comments with the actual facts on the record.