Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Housing and Urban Development) Share this | Link to this | Hansard source

I move:

That the Senate—

(a)

condemns the Howard Government for its failure to address the widely acknowledge affordability crisis in Australia’s rental and home ownership markets; and

(b)

calls on the Howard Government to show leadership on this critical issue by working with state, territory and local governments, industry, business and the not-for-profit sector to develop a national housing strategy.

I move this motion to highlight Australia’s housing affordability crisis and the fact that the Howard government has done nothing to prevent or even manage this crisis. In fact, one of the government’s millionaire members, Malcolm Turnbull, made the comment recently that he thought that the talk of interest rate rises was overblown. He took the view that it was overdramatised. It was not surprising to hear the reaction of eastern suburbs families. The Daily Telegraph of Wednesday, 9 August, described Mr Turnbull—and some very unparliamentary terms were used which I am not used to using—as an ‘idiot’. I am quoting directly from the report. Eastern suburbs families called him, the report says:

… “out of touch” for saying that rate rises were over-dramatised.

However, it did reflect an attitude within the government that interest rates were not really a problem. It is quite frightening, when you think about it, that a person with Mr Turnbull’s considerable resources should treat the question of rate rises, particularly on mortgages, as a matter that has been overdramatised. It demonstrates how one of the people whom the Prime Minister is seeking to personally groom to take over the leadership position in the Liberal Party treats these very important questions.

Of course, it fits the pattern of the government’s behaviour on these questions. There is no minister for housing and no minister for urban development in this government. There is no national strategy anywhere within this government to deal with the question of housing—and, of course, there is absolutely no interest in these questions. When interest rates go up, it is understandable that the government has no interest in that matter. It explains why the government needs to understand the shifts in the housing market over the last 10 years and how little understanding of that has been expressed by the government. This Howard government is alone in failing to understand just how significant the housing affordability crisis is in this country.

On 24 and 25 July of this year, an alliance of industry, unions, not-for-profit organisations and community sector organisations held its second housing affordability summit in as many years. That summit brought together all the key players involved in the housing industry. They all agreed that there was a serious problem in this country and that the problem in fact was getting much worse. In Saturday’s Age, the columnist Shaun Carney concluded:

No force in Australian politics is stronger than the aspiration to home ownership.

I think it is an important point that he makes, and it needs to be understood just how critical this issue is to the Australian people.

Earlier this year, I recall asking Senator Minchin, in his capacity as the Treasurer’s representative in this chamber, what the national government was doing about the housing affordability crisis. His response was that the government was not doing much, that it was all a problem for the states. He took the view that interest rates were higher under other governments last century, and as a consequence we should be satisfied with the circumstances that we now find ourselves in.

Of course, we have now had two additional interest rate rises. It is much harder to maintain this rhetoric in the face of the consensus that exists among economic commentators and social commentators about the significance of these increases in interest rates. The situation clearly indicates that there are more families who are in housing crisis now than there ever have been in the history of this Commonwealth.

There are a few basic facts that need to be understood. Firstly, more families have mortgages today than 10 years ago. But that does not mean that more people actually own their homes. In fact, the proportion of households with mortgages has come at the expense of outright homeownership. For the first time, in 2003-04 more Australian families had mortgages than actually owned their houses outright: there were 150,000 fewer outright homeowners in 2003-04 than there were in 1995-96. The number of families who own their homes had fallen by 150,000. And when you add the two groups together—people who are paying off their loans and those who own their houses outright—the proportion of owners and buyers in the housing market has actually fallen. It is one of the great myths of Australian politics, I suppose, that the Howard government has been good for homeownership. The truth is that any accurate analysis of the statistics shows that that is not the case.

The second reason that interest rates hit harder today than they did 10 years ago is the fact that house prices have now gone up dramatically. We have seen house prices in Australia increase from about three times average incomes to around six times average incomes in the last 10 years. We are paying for an increase in the asset values. That is welcomed by some homeowners, and I think that is all very clear from any reading of the league tables that are produced in our major newspapers. But the fact is that, for many young Australians, the increase in asset prices has meant that they have had to rely on their parents and others to assist them with gathering a deposit in a way that we have not seen in the history of this country.

There are many young people in this country today, sons and daughters of good citizens of this country, who have been effectively locked out of the housing market and locked out of one of those fundamental presumptions we have made in this society about the right to homeownership, as a result of the changes in the housing market and the failure of this government to appreciate those changes and to devise a public policy setting that allows people to participate in that market.

It is not just homeowners; think about people who rent. About a third of Australians rent. You find that, in a tight rental market, landlords will invariably seek to take advantage of their particular situation. We have seen that the interest rate costs have been passed onto renters. Once again, young people, people who do not have the money for a deposit or people who choose to live in rental housing are now having to pay much higher costs for that accommodation. It now takes the average homebuyer over 26 per cent of their income to pay their home loan. That is a slight fall, I acknowledge, from the 28 per cent that prevailed for the last two years, because some asset prices in some particular cities have decreased. That is in the grossly distorted markets such as Sydney. But the fact remains that the levels that are reached now—the 26 per cent of income—are levels approaching those in existence only for a very brief time when interest rates were as high as 17 per cent.

I remind senators that interest rates were at their very highest in this country under the treasurership of John Howard. They were way in excess of 18 per cent—much higher than the much quoted figure of 17 per cent. But, if we look at the question of interest rate payments, these alone take up about nine per cent of household income. That is the current situation. These figures have been going up over the last two years. And it is not just a minor aberration on any graph that any economist chooses to produce. This is a continual stream, a continual index of misery for Australians who are faced with paying these exorbitant costs just to keep a roof over their heads.

So the evidence is very clear: the proportion of first-home buyers in the market has fallen again. The evidence is equally clear that it is becoming increasingly difficult for young people to get to buy a house. The evidence is equally clear that there are an increasing number of people who are being forced out of their houses as a result of defaulting on their loans.

That is the private market. If you consider the situation with regard to the public market then, again, we have a record low level of assistance from this government. There are many people in Australia who rely upon the public sector to assist them with their housing. The Howard government, when it was elected in 1996, preferred to abandon public housing. It had an ideological obsession and a hostility towards public housing. There has been a 30 per cent reduction in real terms in the amount of money that the Commonwealth has provided for the Commonwealth-State Housing Agreement. In 2004-05 the commitment under the Commonwealth-State Housing Agreement was $941 million. There are rumours circulating throughout the government and non-government sectors that this government does not intend to renew its commitment to the Commonwealth-State Housing Agreement for the next period.

What we have seen is that the state governments, as a consequence of this 30 per cent reduction, have reduced dramatically the number of public housing units that are available. Despite the extraordinary growth in demand and need, some states have had to reduce the number of units that are actually available. Some states have seen considerable reductions in the number of units available. There are currently 26,000 people on the waiting list in Queensland.

The most needy people are being forced into public housing, while the opportunities for them to secure housing have been reduced. So people are being forced to stay longer with the public housing sector and are not able to move out of the sector. Therefore, as a consequence, there is a slowing down of the number of people who are getting access to public housing. Increasing the target of housing to only the very poorest, to the most in need, has produced a situation where there have been increasing numbers of people with reduced income participating in public housing. This has meant further strain for the states on the financial capacity of the state housing authorities to meet the demand for public housing because they cannot charge higher rents for public housing.

There are debts still hanging over many of the state housing authorities which have been there for considerable amounts of time. The state authorities are required to pay debt repayments back to the Commonwealth. In some states, the amount of debt repayments is only slightly less than the amount of money given each year by the Commonwealth. My recollection is that in South Australia the amount of money provided by the Commonwealth is some $68 million per annum; the amount of debt repayment is $64 million—a $4 million gap with which the state of South Australia is required to fund or find assistance to fund refurbishment and the purchase of new stock. In an environment where housing stock is increasingly obsolete, built for a different era, a different family structure, different social circumstances—three-bedroom houses, four-bedroom houses—the number of people coming forward are predominantly those who have one person in a housing unit.

Extraordinary demands have been placed on the state housing authorities with virtually no increased assistance to meet that increasing demand from the Commonwealth. The Howard government claims to have spent significant amounts of money on rent assistance over the past decade, but the seriousness of the situation has increased from the 1978-79 period. It is equally true that the real increase is less than three per cent because the Commonwealth has tightened eligibility from the period which introduced such programs. It has seen a reduction in spending of about 10 per cent or some $200 million on the commitments that it gave in 1996-97.

When you add up the amount of money on rent assistance and the changes in the Commonwealth-State Housing Agreement, you find that spending in real terms for housing programs has fallen by eight per cent. The record low levels of affordability in the private rental market have further eroded the capacity of rent assistance to alleviate housing stress in an environment where already a third of rent assistance recipients pay more than 30 per cent of their incomes in rent. The response from the government is to talk about a limited review of rent assistance. They have no real intention of addressing these issues in a fundamental root and branch manner. We know that the government have made it perfectly clear that their intention is to blame the states for the current situation.

Think for a moment about the situation with Indigenous housing, where there are acute problems, pronounced problems, for Indigenous Australians. Overcrowding is an international scandal. More than a quarter of Australia’s Indigenous population are aged 15 and they are living in grossly overcrowded situations: 17 people per house is not uncommon. We know that Indigenous Australians are disproportionately represented amongst the homeless—they account for 2.4 per cent of Australia’s population but 8.5 per cent of the nation’s homeless and 19 per cent of people sleeping rough.

ATSIC has indicated that we need at least $2.2 billion over 20 years to clear the housing backlog. Housing ministers have estimated the figure is probably closer to $3 billion, and the government’s response has been to privatise Indigenous land and say that you can get access to commercial loans, particularly where people have average incomes of $12,000 per annum. We know that is a ludicrous response; we know it is not likely to ever meet the needs of getting a house, particularly given the additional costs of $250,000 to build such a house. I urge the Senate to support this motion and I am sure it will not be the last time that we canvass these issues. I am sure that members of the opposition are fully behind this, but I trust the government understands how serious the situation is.

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

I have to say I regard this motion as a bit of a stunt on Senator Carr’s part. It is obviously an attempt to portray—

Santo Santoro (Queensland, Liberal Party, Minister for Ageing) Share this | Link to this | Hansard source

I reckon you might be right.

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

He is obviously wounded by those words and has rushed from the chamber.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

He had to leave.

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

I am pleased to hear that but, having thrown some grenades and then having left the chamber, I suppose I have to speak to his colleagues rather than Senator Carr.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

Mr Acting Deputy President, on a point of order: Senator Carr has had to leave because he has to attend an appointment back in his home state. I would like to correct the record, given that Senator Humphries appears to be quite happy to be somewhat creative about the reasons for his departure.

John Watson (Tasmania, Liberal Party) Share this | Link to this | Hansard source

There is no point of order.

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

If I move a motion I generally like to be around to gauge some of the debate that follows from the motion, but I accept that Senator Carr has a more important engagement and cannot do that. Having listened to some of what Senator Carr said, I regard his comments as being the usual Labor Party game.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

We will be watching you. You had better never leave when you move something. Go and see your constituents.

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

I do not know why you are so sensitive about this issue, Senator Wong. I think, having put it on the table, Senator Carr needs to know a few things about this matter. First of all, housing policy in this country is not determined exclusively by the federal government. The federal government makes a significant contribution to issues like housing affordability. The federal government makes some important contributions to the financial capacity of Australians directly and indirectly through funding for state and territory governments which in turn influences the affordability of housing in this country. Those are undoubtedly very important matters.

But Senator Carr and Senator Wong would surely be aware that state and territory governments also play a very significant role in questions of housing affordability. To condemn the Howard government without acknowledging the tremendously adverse contribution which many state and territory government decisions are making to housing affordability in this country is myopia of the most extreme kind. I note, to his credit, that Senator Bartlett has introduced an amendment to this motion which at least reflects that housing affordability is a matter determined in part by state and territory governments and which seeks to share the condemnation around. Obviously, I will not support it, because of the condemnation it makes, but I am interested to see whether, when that motion is put, Senator Wong accepts the amendment or not.

The government, as in so many other areas of public life in Australia, has made an enormous contribution, through increased funding, to the affordability of housing in this country. The government has made a number of important decisions which reflect on the capacity of Australians to own their own homes. Of course, most fundamental to the question of housing affordability is the decision of the Australian government to pursue a policy which actively keeps interest rates in this country low. That is what makes housing affordable for countless thousands—hundreds of thousands; indeed, millions—of Australians. If we went back to the 17 per cent, 18 per cent and 19 per cent interest rate policy that was pursued by the Hawke and Keating governments, we would have plenty to complain about on the housing affordability front in this country. But the nature of the complaint today is a lot less dramatic in light of the successful policy to keep rates at a much lower level than that. I do not think many Australians have lost sight of that fact, as the last federal election pretty clearly demonstrated.

But, more directly, with respect to the role of government in providing low-cost housing to people on low incomes, the role of the federal government has been very significant indeed. For the 2003 Commonwealth-State Housing Agreement—the last time that agreement was renewed—the Australian government committed the very substantial amount of $4.75 billion over the five years to 2007-08. It is a significant contribution to assist Australian states and territories to maintain a core stock of public and community housing and to maintain crisis accommodation and housing related assistance, including things like bond loans and home purchase assistance. As of 30 June 2005, over 335,000 Australian households were living in public and community housing. You cannot look at that contribution from the Commonwealth and not conclude that the Australian government has made a powerful contribution to the affordability of housing for those 335,000 households.

The funding allows five years of fiscal certainty for states and territories to provide housing assistance. It is also significant that for the first time it includes indexation so that that amount grows with the cost of living. The Commonwealth-State Housing Agreement bilateral agreements outlining individual state and territory housing priorities are in place as a result of that agreement. The federal government closely monitors not just the inputs in terms of its expenditure under those agreements but also what the state and territory governments are able to achieve using that money to provide for affordable housing across their respective jurisdictions. The government has, very significantly, included in those agreements a performance measure which represents five per cent of annual core funding to ensure Australians are getting value for their taxpayer dollar.

I mentioned that there has been an increase. Combined Australian government rental assistance and CSHA outlays have increased in real terms by $204 million—from $2.822 billion in 1997-98 to $3.026 billion in 2004-05. That increase in assistance for housing should be coupled with the other economic factors which influence the level of poverty and the capacity to afford housing in this country, such as creating more jobs, reducing the rate of unemployment, and growing real wages so that those with earnings have a greater capacity to dispose of their income for the purposes of acquiring housing or maintaining rental accommodation. Factors like that contribute to housing affordability being more and more within the grasp of Australians.

I will concede that one factor working against them is the growth in house prices in this country. Needless to say, house prices very rarely experience strong growth when the economy is not buoyant and when people’s capacity to afford to pay higher prices is not in evidence; rather, it is as more jobs are created in the marketplace, as personal wealth grows and so forth. In a sense, the growth in house prices in this country is a symptom of the enormously strong economy which Australia has experienced in the last decade. Governments can only go so far to offset that phenomenon. We do not—and should not, obviously—regulate the cost of housing. We should not attempt to control prices in that or, arguably, any other area of our economy.

That remains a matter of concern to the government but, to offset the effects of that kind of consideration, we provide for low interest rates for strong employment growth and a buoyant economy with expanding opportunities, we keep government spending at reasonable levels and we provide for confidence in the marketplace. Those things have been delivered handsomely by the Howard government over the last 10 years.

I mentioned before that the picture is not painted exclusively by the federal government, and indeed it is not. Housing affordability—particularly for people on lower incomes—is very much within the purview of state and territory governments. I am sure that other senators can reflect on their experiences of what state governments in their own states are doing, but I wanted to make some comments on what the Australian Capital Territory government is doing with respect to housing affordability.

First of all it is very clear that, as part of the process to acquire greater control over the rollout of infrastructure around housing, the ACT government has pursued a policy of restricting the supply of new land for housing in a way which has dramatically affected both availability and affordability of housing in this territory. You would be hard pressed to find a developer or a real estate agent in this territory who would not tell you that house prices have risen dramatically because the government has quite deliberately decided to turn that tap much more towards off. Indeed, there has been an explosion of housing opportunities in surrounding New South Wales because the supply there is much less limited than it is in the ACT.

Compounding that problem are the ACT government’s other myriad budgetary problems, which have led to a budget delivered earlier this year which could best be described as a ‘scorched earth’ budget, one which has seen dramatic rises in charges to the community and a serious increase in rates, and which also manifests itself in the proposed closure of 39 public schools in the territory—approximately one-third of the total territory public school stock in one fell swoop.

This is a government that clearly has all sorts of budgetary problems, and it is even more remarkable that this is occurring at a time when the ACT economy is absolutely booming. Unemployment has dipped to 2.8 per cent and Commonwealth spending in the ACT is at unprecedented levels. Incidentally, this is a Commonwealth government which is supposed to hate Canberra. It is apparently hating it by showering it with largesse so that the territory economy is going absolutely gang busters. In fact, there is a serious problem finding the manpower to fill the positions which have been created in the city. In the face of all of that, the territory government manages to record a massive deficit and to be unable to keep its dollars in balance.

I mentioned that, as part of the various measures that the ACT government has taken to try to claw back some measure of control over what is happening with the territory budget, it has dramatically increased rates. Rates notices now have been received by territory householders under the 2006-07 budget, and there are significant increases for many suburbs. Some suburbs are experiencing increases in charges of more than 45 per cent. Places such as Oaks Estate, Charnwood, Banks and Harrison are experiencing increases to their combined government property charges ranging between 45 per cent and 64 per cent. The suburbs that I just mentioned are not necessarily silvertail suburbs of Canberra. Some of them are areas where people on low incomes live. Those members of the Senate who have not been out to Oaks Estate recently should go and have a look out there and see what you think about the economic status of the people who live there. When they are receiving rates increases of up to 64 per cent, housing affordability for them is not getting any easier—quite the contrary; it is getting much harder.

On top of that, there is now an objection charge of $64 for ACT ratepayers to contest their rates assessment—unless it relates to a land valuation, in which case there is a $20 fee. That is just typical of the vast range of increased taxes and charges that members of the ACT community are having to face—which of course have to come out of people’s bottom line—and it affects their capacity as citizens to meet other costs, including the cost of housing.

I suspect that that sort of story is being replicated—perhaps not quite as dramatically—across other parts of Australia. When you look at that kind of mismanagement of budgets, it is not hard to realise why some people are feeling the squeeze. In fact, I dare say that what is occurring for many Australians is that the Commonwealth is handing out benefits on one hand—things like baby bonuses, opportunities for employment, tax cuts and other benefits—and state governments are gobbling up those advantages with increased taxes and charges of their own. I have no doubt that there are some Australians who are going backwards in these circumstances.

In the area of the Commonwealth-State Housing Agreement, you cannot look at the figures and not conclude that it is a significant step towards improving the financial capacity of state and territory governments to provide services to those on low incomes. I am proud that the Australian government is assisting people with relief from the cost of housing with measures such as those.

Senator Carr also made reference to the issue of homelessness. He needs to be aware that the Australian government spent approximately $220 million in the 2004-05 financial year on programs for homeless people. The SAAP, the HOME Advice Program, the National Homelessness Strategy, Reconnect and other related programs are covered by that increased allocation. The government has also committed $10 million to the National Homelessness Strategy over the next four years. That commitment reflects a desire to ensure that all Australians are able to take advantage, where possible, of the good economic times which clearly prevail in this country at the moment.

The SAAP 5 agreement between the Australian government and the states and territories was agreed in September of last year. Bilateral agreements with the governments concerned were concluded up until January of this year. Under the agreement, the total resources available to the program will increase by almost $350 million to an estimated $1.82 billion over the life of the SAAP 5 agreement. The Australian government’s financial commitment to SAAP 5 will be $932 million over five years. There is nothing paltry about that commitment to provide accommodation to those most in need. And measures such as the HOME Advice Program and Reconnect have played a seriously important role in easing homelessness in this country.

Before we become too caught up in the shrill condemnation that Senator Carr has brought to the chamber with this motion, we need to be well aware that, firstly, the evidence is pretty clear that Commonwealth government decisions in the last 10 years have brought homeownership and housing affordability within the reach of many more Australians than was the case before this government came to office and, secondly, this motion fails to take into account the very serious problem of state and territory governments clawing back their overruns in costs by hitting homeowners—among others—with higher charges. Their contribution to the lack of affordability of housing in this country is an issue that needs to be much more carefully explored by people such as Senator Carr.

I oppose this motion. This is pure politics. Most people who observe this debate will realise that the Labor Party do not have a record on the question of housing affordability—and I am looking back 20 years ago in particular to what interest rates were like then—that would warrant them moving a motion such as this in the Senate today.

Andrew Bartlett (Queensland, Australian Democrats) Share this | Link to this | Hansard source

As Senator Humphries alluded to in his contribution, I have circulated an amendment. I move:

Omit paragraph (a), substitute:

(a)

condemns the Howard Government and the state and territory Labor Governments for their failure to address the widely acknowledged affordability crisis in Australia’s rental and home ownership markets; and

This is an important debate that we are having today. Obviously, there is political point-scoring going on, as there always is in many of these debates—particularly when there are mixed responsibilities between state and territory governments and the federal government. That always seems to provide an opportunity for people to blame-shift and finger-point. But the issue of housing affordability is an absolutely crucial one. For that reason, I am very pleased that the debate has been brought on today. I do not believe it is one that has had enough attention at national level.

My amendment goes to the first part of the motion moved by a Labor senator from Victoria, Senator Carr, which:

... condemns the Howard Government for its failure to address the widely acknowledge affordability crisis in Australia’s rental and home ownership markets ...

I agree with that: there has not been enough done to address the affordability crisis. But that blame has to be shared with the state and territory governments. For that reason, my amendment includes the state and territory Labor governments in that condemnation for failing to do enough to address housing affordability. We all acknowledge that there is a housing affordability crisis—anybody who is being honest does. Given that housing is a shared responsibility between state and federal governments, it is therefore appropriate that the blame should be shared for not enough being done about it.

The second part of the motion calls on the federal government to show leadership on the issue. That is a part that I agree with, because one of the problems that I believe we face is that there is not enough national leadership on the issue from and not enough national ownership of the issue by the federal government. There is too much of a willingness to push away overall responsibility and to just say: ‘We do our bit at the federal level with interest rates and with the funding for the Commonwealth-State Housing Agreement or rent assistance. All the other bits are the responsibility of the states and all of those bits are the reasons why things have become unaffordable.’ It is simply not logical to do that.

I remind the Senate and the public that housing affordability became such a sufficiently serious issue nationally that the federal Treasurer felt the need to act decisively, and his way of acting decisively to address a matter that was seen as a major problem nationally was to call an inquiry. That got it off the front pages. He called a Productivity Commission inquiry into housing affordability—at least with regard to first-home owners—and then went on with other things.

The problem was that when the Productivity Commission inquiry came down with its report—and the Productivity Commission is hardly a radical left-leaning body; it is a very dry, economically driven and conservative body—that report contained recommendations that applied to the federal government as well as to the state governments. The federal Treasurer must be condemned for his response to that report. Not surprisingly, he wholeheartedly agreed with the recommendations from the Productivity Commission that called on the states to do things like drop stamp duties, deal with matters to do with land release strategies and deal with matters to do with developer charges. The Treasurer was all in favour of strong action on those things, because the states need to be doing something about it. But every single recommendation from the Productivity Commission that went to the federal government level he rejected. That is a clear sign of a failure of nerve, a failure of courage and a failure of leadership in these areas.

There was a recommendation to ‘review those aspects of the personal income tax regime that may have recently contributed to excessive investment in rental housing’, including the capital gains tax provisions and the restrictions on negative gearing. The federal government and the Treasurer rejected that recommendation to examine the impacts of those taxation arrangements on housing affordability. The Treasurer even made the extraordinary statement that there was no conclusive evidence that the tax system has had a significant impact on house prices—quite an extraordinary statement from somebody who tries to profess to be economically literate, as the Treasurer does—despite the key finding from that Productivity Commission report:

Interactions between negative gearing, ‘capital works’ deductions, post-1999 capital gains provisions and marginal income tax rates have lent impetus to investment demand during the housing boom.

That of course lent impetus to the very significant rise in housing prices and the housing affordability crisis. The Treasurer just put on his blinkers and refused to see the obvious truth there. Another recommendation was:

A national public inquiry should be established to examine the housing needs of low income households across Australia, including in Indigenous communities, and the nature and extent of assistance to help meet those needs.

The government did not want that. It did not want a national inquiry to look at the problem holistically, because it does not want to reinforce any perception or belief that this is a federal government responsibility, that it is anything that it should take national leadership on. The continuing calls from people in the housing sector—not only the non-government sector but also the housing industry organisations and the property industry—for a national housing strategy have continued to be ignored by this government.

Other recommendations in the report included examining better targeting of the First Home Owners Scheme. Even that was rejected by the federal government. The fact that a significant proportion of the First Home Owners Scheme goes to higher income earners—the people who are most likely to be going into the housing market anyway—rather than being targeted to lower income earners means not only that it is not applying efficiently but also that, in its own way, it could be contributing to the increase in housing prices.

We have a strange mindset in Australia—or it certainly appears strange to me—where we continually see reported in the mainstream media that, when housing prices goes up, it is seen to be a good thing. Obviously, it is a good thing if you are an investor, but investors are a minority in Australia—though a sizeable minority—with fewer than 20 per cent of people having investments in housing. That is far more, I might say, than many comparable countries like the US or Canada—another reason to point to the tax mix in Australia and the way that encourages investment in housing rather than investment in other more productive areas of the economy.

For the vast majority of people, particularly those who are less well off—the battlers whom this government likes to pretend it has concerns about—it is a very bad thing when the price of housing goes up. But somehow or other, whenever housing prices dip, it is seen, and reported continually, as a bad thing. I recognise that there is a lot of interconnectedness, that the housing and construction industries and all those things feed into economic growth and it is not all black and white, but I do think we need to shift away from a mindset, which is continually reinforced, that somehow continually increasing housing prices is a good thing.

I point to an earlier report of the Productivity Commission’s predecessor, the Industry Commission, which in some ways had a reputation for being even more economically dry than the Productivity Commission. The Industry Commission’s 1993 report on public housing still has a lot of validity today. The very first line of that report said, ‘Housing is a basic human need.’ I think we often forget that when we are looking at housing issues. That should be our starting point when we debate housing and consider housing policy. That is why it should be a national issue and that is why there should be a national housing agenda. It is a basic human need that is not being adequately provided and is not adequately available to many Australians.

I would go further than that and say that it is a basic human right. If we look at all of the other issues that we debate in this place about education, health, employment and all sorts of things, I think they all stem from that starting point of secure, affordable, appropriate housing for people. If you cannot afford housing near where the jobs are, it is harder to get the jobs or you have to spend a lot more time travelling to and from those jobs. If you cannot afford housing near where good-quality education, hospitals and health services are, again, it impedes your chances to have the same opportunities as other Australians. There is also the issue of adequately sized housing. As we all know, that is a big issue in Indigenous communities. The housing crisis there is not only about the number of houses per se but also about the higher number of people who have to live in the houses, because there are not enough houses. That overcrowding certainly provides a basis for many of the other problems that we often talk about with regard to Indigenous communities. So housing is a fundamental right.

I must say in the context of this motion and the amendment that I moved to include the state and territory Labor governments that I perhaps should have amended the motion further to condemn not only the federal government but also Labor at a federal level for their contribution to this crisis. Labor have raised the issue from time to time, and I commend Senator Carr for doing so today, and I think the previous shadow minister, Mr Albanese, when he was covering housing areas, did a reasonable job. But the fact is that major components of the key factors that I mentioned as contributing to the housing affordability crisis at a federal level—the tax mix, particularly the capital gains tax deductions—were supported by the ALP.

The capital gains tax deductions were a key driver of the massive flood of what I would say is overinvestment in the housing market, driving the price of housing out of the reach of first home buyers and lower income earners. That very clearly stemmed from the capital gains tax changes in 1999—changes that categorically and massively benefited the highest income earners in Australia. The changes occurred only because the Labor Party went with them. The Democrats copped an enormous flogging for supporting the GST. I did not support it myself but enough of us did for it to pass. People have their views about how fair or appropriate that was, but if anybody wants to condemn a tax change that was massively tilted towards the highest income earners then it should be that capital gains tax change that was supported by the Labor Party.

That was done in exchange for a promise that was never delivered on. This government not delivering on its promises is hardly newsworthy. Nonetheless, it was done in exchange for a promise to review the taxation treatment of trusts. That never occurred, so we had the massive windfall for the highest income earners and then no action on another area that clearly is a loophole that is exploited by many people who are also high-income earners. It was a double bonus for the top end and, because of its flow-on impacts, particularly in areas like housing, it was a big whack around the ears and a big negative for the lower end.

It is a similar situation with negative gearing. It is quite clear from both major parties in this place that negative gearing is a no-go zone; nobody will touch it. I am not saying that negative gearing should be abolished. To some extent I think it is so entrenched now in people’s investment decisions that it is very hard to touch. But I do think it can be constrained, I think it can be quarantined and I think it can be restricted in ways that would not unfairly advantage people who have invested on the basis of its availability but would at least constrain its clearly distorting effect on the housing market.

The fact is that we spend, in effect, by forgone revenue, more by a long way on tax expenditures on negative gearing than we do each year on the Commonwealth-State Housing Agreement. We provide far more in tax breaks for higher income earners, who can afford to invest in housing, than we provide in housing assistance to lower income earners. Even rent assistance, which obviously is targeted at welfare recipients, I understand now costs more each year than the Commonwealth-State Housing Agreement. I remind senators of the findings of the Industry Commission way back in 1993 that the provision of public housing is a cost-effective way to meet government housing objectives. It is actually more efficient than the very poorly targeted spraying of rent assistance in the private sector. There is plenty of evidence to show that, in part at least, that contributes to driving rents up and basically subsidises investors and landlords rather than assisting tenants.

Public housing funding is a far more efficient way to deliver housing outcomes, yet we are not seeing the increase in public housing stock that we should be. I remind the Senate of the annual report for 2003-04 on the Housing Assistance Act that has only recently been tabled. It takes a long time for these reports to appear in the parliament. It shows that the total number of dwellings has been declining nationally. It is going up in some states and down in others, but the total housing stock is going down, including public housing, community housing, crisis accommodation and Indigenous rental housing. So, in an area that is an efficient way of delivering, we are seeing a reduction in the total availability in the community.

We are seeing a genuine crisis in housing affordability. The Urban Development Institute of Australia released a report just last month highlighting a $100,000 gap between household earnings and the cost of an average home. They believe that it needs somebody—a minister for housing affordability—dedicated to focusing on that. I think there are roles for state governments to do more. Stamp duty, in particular, certainly has a distorting impact in some areas. But there is no doubt that we need a national approach to the housing strategy and that that must include examining the factors at a national level that can drive up housing unaffordability.

This is not just a matter of the housing cycle and the normal peaks and troughs in the price of housing. It is clear in the evidence from the Productivity Commission report that the latest spike, the big increase in housing prices, is outside the normal cyclical nature of the housing market. That has to be addressed. There is no point in calling an inquiry, spending all those resources and having a body go around and absorb all the evidence, listening to people who deal with this issue on a day-to-day basis—there is a lot of expertise and a lot of work being done by everybody else except the federal government in this area—and then ignoring the findings. The findings are quite clear. The Productivity Commission is a very conservative economic body and its findings are quite clear with regard to this.

The statistics are also quite clear: average mortgage payments have risen significantly, despite all the talk about low interest rates. I do not dispute that, although at a global level Australia’s interest rates are quite high by comparison. Obviously, it is better to have them where they are now than to have them at 17 per cent. Despite that, interest rates have to be counterbalanced with the other factors which the federal government is also responsible for which have pushed up house prices. They have meant that average mortgage payments have risen, and risen significantly, even with much lower interest rates.

The number of first home buyers has dropped significantly, which means that fewer people are able to afford to take that first step. If you can get into the housing market, if you are able to get yourself established and buy a home and pay it off, then you are doing well. But more and more people are not able to manage that and that is creating a divided society and a much bigger problem with the haves and the have-nots. The average house price relative to income has almost doubled in recent years. That is a serious problem. It is leading to a significant and growing divide in our community. People can use all sorts of statistics to talk about whether the gap between rich and poor is getting bigger. If you look at net income, it is arguable that it is not. But, if you look at it in terms of overall wealth, it is beyond dispute. The gap between the haves and the have-nots is growing very significantly from year to year. The big driver of that is housing prices. The haves, who have property, who have housing, are doing fine and those who do not are being left further behind.

That is why this is a national issue. That is why the federal government and the state governments should be condemned for not doing more to address it—other than just blaming each other. It is also why federal Labor should stand condemned for continually playing their part in the increase in the cost of housing and continually avoiding some of the hard decisions that are needed. That is what we need, otherwise more Australians will be left out and more Australians will not be able to afford what, let us remember, should be a basic human right: simple, affordable, appropriate, secure housing.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I rise to speak on this extremely important issue. I am glad that Senator Carr has put this issue on the agenda again. One of the biggest problems facing low-income Australian households today is finding affordable, secure and appropriate housing. There are various definitions of affordable housing. I have looked up the Australian Housing and Urban Research Institute definitions. They say there are a number of measures for defining affordability, but they use the 30-40 rule, a commonly used measure in housing research and policy. By this definition, housing is affordable when a low-income household—which they define as being in the bottom 40 per cent of the needs adjusted or equalised disposable income distribution—pays no more than 30 per cent of its gross household income on housing costs. Using the 30-40 rule, estimates for 2002-03 found that 862,000 Australian households experienced housing affordability problems—in other words, in housing stress.

Over a one- to two-year period, many of these households may be able to improve either their income or their housing cost circumstances to alleviate their housing stress. However, a third of households experience housing stress for more than two years. As ACOSS says:

The lack of affordable housing reflects a basic failure in the relationship between housing markets, incomes, employment, investment and the tax and welfare systems. Contributing further is the lack of a national policy framework within which government activity in the housing system can be directed and coordinated.

In other words, these are the areas where government should be involved: the tax and welfare systems and, of course, generating a national policy framework, which is sadly lacking in this country. I think it is fair to say that there is a looming national crisis in housing affordability. I think the benefits of investing in affordable housing, public housing, community housing, are manifold.

A recent Australian Institute of Health and Welfare report on the value of community and public housing articulated this. As I have pointed out in this place before, they demonstrated a very good base of statistics for a very good case for why public and community housing are so important. ABS research shows that the level of housing stress—which I defined earlier—for those renting privately or buying houses is very high with households in the bottom 20 per cent of incomes spending more than 60 per cent of their income on housing costs. The stock of social housing under the Commonwealth-state agreement has fallen 32 per cent in real terms from 1996, resulting in an 11 per cent fall in stock between 1996 and 2005. Over the last five years, the number of households assisted each year has fallen from nearly 40,000 in 2001 to less than 28,000 in 2004-05, a decline of more than 30 per cent.

While there has been some growth in the funding for the agreement over the next two years, this will be less than half the rate of inflation. This means that there is reduced funding for social housing in real terms. It will leave more than 200,000 social housing applicants wondering if they will ever have an affordable place to live. In its first report the Affordable Housing National Research Consortium suggests that, on present trends and in the absence of new policy measures to redress this situation, the number of stressed households will reach one million by 2020. Housing impacts on a person’s ability to find work, education and training. Regions and cities with jobs often have high housing prices and rental rates. Poor housing can also negatively impact on a person’s health and wellbeing.

I am particularly concerned about the housing situation facing Aboriginal people in Australia. This is rather topical, considering the land rights legislation that is currently being debated in this place. Tom Calma in his report on native title states that, according to the Australian Bureau of Statistics, $2.1 billion is required to address Indigenous housing needs. The statistics should scare everybody. It is going to take a long time to make up for the shortfall in Aboriginal housing. Many of us have seen the awful pictures on TV showing levels of overcrowding that non-Indigenous people would find totally unacceptable. I doubt they would be able to deal with it.

The Australian Institute of Health and Welfare in 2005 released its report into Aboriginal housing needs entitled Indigenous housing needs 2005: a multi-measure needs model. In the report some very scary statistics are listed. For example, in all jurisdictions the rate of homelessness is much higher for Indigenous people than for non-Indigenous people. Rates vary in different jurisdictions but the average Indigenous homeless rate is 18 per 1,000, which is about 3.5 times the non-Indigenous homeless rate. Looking at overcrowding, the report found that 10 per cent of Indigenous households lived in overcrowded conditions. One in every three, or 34 per cent, of the Indigenous community housing sector is affected by overcrowding. Twenty-two per cent of Indigenous people live in overcrowded conditions across Australia—again, it varies between jurisdictions. The rate of overcrowding among Indigenous people was 953 per 10,000—six times the rate of overcrowding for non-Indigenous people.

If you look at housing affordability statistics for Aboriginal people, you see that, in 2001, 37 per cent of Indigenous households paid out more than 25 per cent of their income in rent. The proportion of households in affordability need varied by tenure type and was highest among households who were private renters, at 66 per cent, and lowest among those in Indigenous or mainstream community housing, at 16 per cent. Thirty-seven per cent of Indigenous households were affected by the affordability of housing, compared with 30 per cent of non-Indigenous households. If you look at statistics for dwelling conditions and connection to essential services, you see that many dwellings in discrete Indigenous communities have been found to be in need of repair or replacement. In 2001, 27 per cent of dwellings were in need of major repair or replacement. This is one of the major issues in Aboriginal communities. Even when Aboriginal communities can get access to housing, finding funds to be able to maintain their dwellings with is extremely difficult.

The extreme disadvantage faced by Indigenous Australians was also highlighted by the release in July last year of the Overcoming Indigenous disadvantage: key indicators 2005 report by the Productivity Commission. The report once again highlighted the growing gap between Indigenous people in this country and the rest of the Australian population in all its headline and strategic indicators. I remind this place again of the statement by the Chairman of the Productivity Commission, Gary Banks, in which he said:

It is distressingly apparent that many years of policy effort have not delivered desired outcomes; indeed in some important respects the circumstances of Indigenous people appear to have deteriorated or regressed. Worse than that, outcomes in the strategic areas identified as critical to overcoming disadvantage in the long term remain well short of what is needed.

If you go on further to look at other statistics, such as homeownership, you see that Australia has one of the OECD’s highest rates of homeownership, with the 2001 census showing 70 per cent of Australian households were living in fully owned or mortgaged dwellings. This is in stark contrast to the 14.6 per cent of Indigenous households in the Northern Territory that own a dwelling or have a mortgage on a dwelling. This is a scary statistic. Furthermore, the current projections for the rate of Indigenous population growth in remote areas indicate that this problem will continue to worsen. It is access to housing that is the issue here.

There are many different statistics available on housing affordability. I have done quite a bit of research and have found a range of different figures. They vary slightly, but the overall trend is the same—that is, access to affordable housing is getting more difficult in this country. There is an urgent need for the government to take increased responsibility and to take action to address this issue. It is telling that we do not have a minister for housing. We need a national strategy in this country, as was articulated by ACOSS. I understand they are becoming increasingly alarmed about access to affordable housing and what it means for our community. Very often, housing is available at high cost where jobs are, but jobs are not available near low-cost housing. People in those areas often have very limited access to transport. So, if people live where housing is more affordable, they often have great difficulty getting to the area of their employment.

Another issue that will be of growing concern as petrol prices rise is that people’s access from their homes to transport will be increasingly difficult. The work by Griffith University in this area is very illuminating. They looked at the impacts of increasing oil prices—whether it be through just increasing oil prices or the lack of availability of oil through peak oil—and they have identified areas where it will be extremely difficult for people to gain access to transport because adequate public transport is not available. These are low-income areas, so housing affordability will get even worse. Once the impact of higher petrol prices and peak oil start to kick in, we will have an even bigger crisis. As the Affordable Housing National Research Consortium suggested, unless we do something, this issue will get worse. The consortium thinks the number of households stressed—and that is households, so there will be more people—will be one million by the year 2020. There is a clear need for the government to start taking more responsibility for affordable housing—to look at the tax and welfare systems and to develop a national policy framework in which proper, appropriate decisions can be made to address this pressing issue and to deal with this national crisis.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

We are currently debating a motion moved by my frontbench Senate colleague Senator Carr concerning the issues relating to housing affordability. Homeownership is very important—and rightly so—to all Australians. It is central to the Australian ethos. Central to homeownership is the cost of borrowing money to pay for your home: interest rates. It is in this area that we have seen some very worrying movements over the last 18 months.

Before I go into interest rates in more detail, I have to say that where I live, on the north-west coast of my home state of Tasmania, interest rates are not the only issue worrying the local community. I frequently have raised with me the issues of petrol prices, which are putting a real squeeze on the family budgets of low- and middle-income Australia; the recent extreme and radical industrial relations changes, which are designed to reduce the wages and conditions of Australians; and price increases—in particular, food price increases—and, I have to say, not particularly of bananas but price increases across the board. Middle Australia has been feeling much greater financial pressure over the last year in particular, so I think the concern is very understandable.

What have we had from the government in recent times? What have we had from the Howard-Costello Liberal government? This is a government increasingly divided and out of touch and uncaring. Look at what has been occurring in recent months. We have had the Treasurer, Mr Costello, and the Prime Minister, Mr Howard, more preoccupied about who was going to have the top job then focusing on the real everyday concerns of Australians. We had the Treasurer, Mr Costello, effectively calling the Prime Minister a liar and, in retaliation, the Prime Minister, Mr Howard, effectively calling Mr Costello arrogant. On this occasion they were both right, and they are both out of touch.

It is not just Mr Howard and Mr Costello who are out of touch. Look at what has happened in the Senate this week. We have got the ‘minister for parrots’, Senator Ian Campbell, who has been undermining investment confidence by banning a wind farm on the basis that a parrot might hit the wind farm once in a thousand years. We have got Senator Coonan, Minister for Communications, Information Technology and the Arts. What a mess communications is in at the present time. Next week we will have the withdrawal of the privatisation of Telstra because of the shambles. We have got Senator Vanstone presiding over a flood of overseas workers coming into this country. It is not just the Prime Minister and the Treasurer who are out of touch.

There is Mr Turnbull in the other place, referring to the interest rate increases being overdramatised. How out of touch can you get! The government has the gall, after almost 11 long years in office, to try to blame the Labor Party for it—or bananas, and I will get to the bananas a little later. Then there was the earlier contribution from Senator Humphries, the Liberal senator from the ACT. He is out of touch. He still thinks that interest rates are low at the moment. He resorted to the old excuse and spent almost half his speech talking about the ACT government. What did that have to do with the issue at hand? I suppose we can be thankful that at least he did not go on to bananas. But it was the old game of blaming the state government—or blaming the ACT government, in his case.

Let us have a look at what has been happening with interest rates. We have had three interest rate increases since the last election. Interest rates now stand at 7.8 per cent, and that is not low, despite the out-of-touch view of government members on this issue. A small increase in interest rates packs a very big punch now. Why is that the case? At the present time, after the last increase, the average mortgage repayment by an Australian family now stands at $1,685 per month. Compare that to 1989, which this government is very fond of doing. In 1989 the average repayment was $959. So an interest rate increase now packs a much bigger punch. That is because general debt levels are far higher under the Liberal government—significantly higher. If you look at the repayment levels and the proportion of income that Australians are having to devote to paying off their mortgages, it is much higher today than it was back in 1989, a period with which they are so fond of making comparisons.

Recently we had the Treasurer, Mr Costello, boasting on the Sunday program that if you ‘see a single digit in front of your interest rate, that is low’. Interestingly, the transcript of the program was mysteriously airbrushed off the Treasurer’s website recently. He did not want that quote continuing to appear on his website. I think he probably wishes he could airbrush the Prime Minister out of office quite as easily. The fact is that a 7.8 per cent interest rate is not low yet for Middle Australian families. The three interest rate rises we have seen since the last election have added a massive $108 a month to the average new mortgage. This is at a time of dramatically higher petrol prices. Last week I saw some interesting statistics. We heard a lot about tax cuts in the last budget, but, with the interest rate rises and the petrol price rises and the food price rises, the tax cuts that we saw in the recent budget have been wiped out for most low- and middle-income Australians.

I referred earlier to household debt levels today. Household debt now stands at the equivalent of some 150 per cent of household disposable income. Household debt is far higher today than it was in 1989, when it stood at 60 per cent. That is fundamentally why a small rise in interest rates, as the government claims time and again, has such a significant impact. The government is fond of making historical comparisons. We hear a lot about interest rates back in the late 1980s and early 1990s. I thought I should have a look at it historically. If we want to look at history, let us have a look at interest rates going back to 1971—

Rod Kemp (Victoria, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

Senator Kemp interjecting—

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Order! Senator Kemp, you are interjecting loudly while you are out of your seat and you should refrain from doing so.

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

I decided to have a look at the history of interest rates since 1971, because we hear a lot about history from this government. They are constantly in the blame game: blaming the previous federal government after almost 11 long years, blaming state governments, blaming bananas, blaming anything else—but not blaming the government of the day. This is a government that is very fond of claiming credit for good news but distancing itself from bad news. They blame someone else when the going gets tough. They will not take responsibility. So I went back to 1971 and I got the contract for the 30-year fixed-rate conventional home mortgage rates quarterly statistics. Do know what year we experienced the highest mortgage rates in this country? It was in October 1981. That is a fair while ago—

George Campbell (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Who was the Treasurer then?

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

That is exactly right, Senator George Campbell: who was the Treasurer of Australia in October 1981? I would hope that we remember. It was Mr Howard, the current Prime Minister. So, if we want to look at history and we want history lessons, the fact is that the period of the highest mortgage rate in this country was when the current Prime Minister, Mr Howard, was Treasurer of the country, back in 1981. I want to come to some history a little closer to now—that is, at the last election, when Mr Howard said: ‘Trust me, trust me. We’ll keep interest rates low.’ He said:

... the Australian people will make decisions about my credibility. They’ll ... make a decision about who they better trust to keep their interest rates down.

I have to concede, unfortunately, that some of the Australian electorate did trust the Prime Minister. He had the record of Australia’s highest interest rates, back in 1981, and they did trust him. They trusted Mr Howard when he said that there would be no GST—never, ever. They trusted him.

Of course, at the last election we heard nothing about the radical reform of industrial relations. We heard a lot about interest rates and keeping them low, and what do we have today? Very high interest rates from the point of view of the average consumer and household. There was not one mention of radical reform of industrial relations. Of course, we got that dished up to us after the election. There was not one mention of that in the election campaign, but there was the continual mantra of ‘trust me, I’ll keep interest rates low’. What do we have today? As a consequence of today’s interest rates, Australian households have a significantly higher mortgage repayment than they had back in 1989—significantly higher.

This government is fond of making international comparisons when it suits them. We had it today from Senator Minchin. He did not once mention the words ‘interest rates’ this week, but he did want to go to international comparisons. Even on this score, this government’s record is absolutely appalling. If we look at the international experience, what is happening overseas with housing interest rates, we will see that, of the 11 comparable economies, Australia now has the second highest interest rates in the world, at 7.8 per cent. We are exceeded only by New Zealand, at 9.55 per cent. Countries such as the UK, the US, Italy, Sweden and Japan all have housing interest rates lower than us. So, for a government that are fond of making international comparisons, they never want to quote the figures on international interest rates because we have very high interest rates by comparison. They do not want to. They are now severely embarrassed by the three interest rate rises since the election, but, of course, they do not take responsibility. Their mantra is, ‘It’s not our fault,’ or: ‘They’re still low. It’s not our responsibility. We’ll take responsibility when there’s good news, but we won’t take responsibility when there’s bad news.’

I think that is a sign of a government in decay. It is a government that has lost touch and direction. Senator Scullion, you can smile, but the average punter on the north-west coast of Tasmania does not think that the government has any particular direction. We will see what happens at the next election. The average punter on the north-west coast of Tasmania does not think that the government is performing particularly well at the moment when they fill up their car with petrol and try to pay for it or when they pay the ever-increasing bill at the local supermarket. The Prime Minister at the last election proclaimed trust about keeping interest rates low, and what has occurred is that the average family repayment has increased significantly since the last election.

This is an important debate. It is very important that we have affordable housing in this country. Owning your own home is a mainstay, a central ethos, of Australian economic and social life. The Labor Party and I worry deeply about the financial pressures that Middle Australia is currently experiencing. On top of that, we have the industrial relations reform, so-called, which is putting further significant pressure on them. The average family faces cuts in wages and conditions.

This is a government that is out of touch. It is arrogant. It spent a couple of weeks brawling over who was going to get the top job—Mr Howard or Mr Costello. We have had minister after minister failing in their policy responsibilities. In one case, the ‘minister for parrots’, Senator Ian Campbell, acted illegally and got caught out undermining investment in this country. Investment is necessary for economic growth. As for Senator Coonan, the future economic growth of the country is in her hands—the future of our telecommunications system, and what a shambles that has turned out to be. We will have a second minister for communications before long, the way it is all headed. A second minister for industrial relations was appointed to try and explain away the consequences of reform. We will need a second minister for communications before long. One thing that we can safely say is that there is considerable doubt that the Treasurer, Mr Costello, will ever get the top job from Mr Howard, after the events of recent months.

Housing affordability is important, and interest rates and their impact are central to that level of affordability. This government has presided over a very sorry record since the last election. There have been three increases in interest rates, to 7.8 per cent—a significant addition to Middle Australia’s household financial burden—on top of increased petrol prices and food prices, but, as I said, not including bananas. If the Prime Minister or the Treasurer went into the local supermarket and excluded bananas from their household shopping, they would notice the difference—if, indeed, they ever do this. I think they are totally out of touch. They probably do not remember the last time they went shopping. Food prices are increasing. They are the constant worries and concerns of low- and middle-income Australia. What did we get dished up from the Prime Minister, Mr Howard, at the last election? ‘Trust me, we’ll keep interest rates low.’ Well, I hope they remember. (Time expired)

Debate interrupted.