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

My question is to the Leader of the Government in the Senate. Earlier in question time the Minister for Finance and Administration outlined some of the recent economic indicators that had come out since the Senate last sat. I noted that the minister neglected to mention the housing affordability index. Is the minister aware that this economic indicator shows housing affordability is at its worst level in decades? Is the minister aware that the Housing Industry Association has said that, if no action is taken, housing affordability in Australia cannot be restored until 2022 at the earliest? Can the minister inform the Senate what the government is doing about the housing affordability crisis in Australia?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

Can I say that, on behalf of the government, of course we are concerned to ensure that Australians who aspire to home ownership are able to achieve it. We certainly have sympathy for those who wish to own their own home who may be having difficulty doing so. As I have previously said in this place and in other places—and as many members of government have noted—there are a whole range of factors that go to housing affordability. One of those is interest rates. Of course, the capacity to borrow money is critically important to the capacity to purchase a home. The deregulation of the financial system supported by us and introduced by the former Labor government—one of the few things which they did that was supported by us and which was very sensible—has meant much more capacity for ordinary Australians to finance themselves into new homes.

It is critical that economic policy settings are such that we do prevent upward pressure on interest rates. Home loan mortgage rates themselves are lower today than they were at any time in the 13 years of the previous Labor government. In terms of the levers available to us, what can we do? We can ensure optimal growth in real wages, and real wages are up some 14 per cent since 1996. We can ensure that policy settings are such that we keep downward pressure on interest rates. As I said, I think we are doing that. We can ensure that there is maximum jobs growth and that there is the lowest possible level of unemployment so that we have as many people in the workforce as possible able to afford homes, and we are doing that.

Among the other factors that go to housing affordability is the available supply of land. Land is one of the critical factors in the cost of purchasing a home. I do not have the figures directly in front of me but, as the HIA said, the actual cost of constructing a home in this country has been kept at a level with very little increase in real terms. What has risen dramatically is the cost of land itself. It is true that, with a growing economy, a growing population and an immigration program of the sort that we are running, there is going to be increasing pressure on land supply. I do not want to be accused of passing the buck here, but the reality is that the federal government—whether it is Liberal or Labor—has no control over the supply of land. That is a matter wholly within the realm of state and local governments. They are responsible for what land is set aside and zoned for residential development. The fact is that the state governments can be fairly accused of dropping the ball when it comes to ensuring that there is appropriate availability of land in our major cities supplied to the market to ensure that you do not get upward pressure on the cost of land and the availability of land.

The state governments can also do a great deal with respect to the taxation of both building houses and purchasing houses. We, for our part, think that they have failed to take advantage of the significant revenue gains they have made with the GST to eliminate or reduce such things as stamp duty on both land purchases and housing purchases.

We are very conscious of this issue. We are concerned about it. From the point of view of the levers which we have control of, we are doing what we can. We are also doing our utmost to urge the states to do what they can to ensure that young Australians can seriously aspire to own their own home. That is a very significant aspiration that all Australians should have.

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

Mr President, I ask a supplementary question. Is the minister seriously telling the Senate and the Australian people that there is nothing extra that can be done at federal level to address the housing affordability crisis? Given the minister’s own statement that there are a whole range of factors that go to housing affordability, are there no other actions the government can take at the federal level to act on any of those factors? Does the minister agree with the Housing Industry Association and others that only a targeted whole-of-government national housing strategy will be able to address the housing affordability crisis? Why will the federal government not adopt a national strategy on this most crucial of issues?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

What is important is that the government address the matters that are within its realm. As I said, they go to overall economic policy, unemployment, real wages and interest rates, which we have been addressing. There are responsibilities that state and local governments need to address. We have brought in things like the First Home Owners Scheme, and that is important. But you have to be very careful not to unduly stimulate demand for housing if there is not a capable, automatic and ready supply side response. It is no good artificially inflating demand for housing through various subsidies if you do not have the capacity for the supply of land and housing to respond to that. The supply of land and housing is totally within the realm of the state and federal governments. Various federal government ministers are working closely with their state counterparts and exhorting them to respond to ensure that the supply side of the housing market does work, because that is where the fundamental failing is. We will continue to exhort our state ministers to do so.