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

My question is to Senator Cormann, the Minister representing the Prime Minister. In an article in yesterday's Australian Financial Reviewentitled 'First home buyer risk riles banks' it is revealed that big banks want to charge higher interest rates under the Morrison government's First Home Loan Deposit Scheme. Can the government guarantee that borrowers who use the First Home Loan Deposit Scheme will not be charged a higher rate of interest?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

I can reassure Senator Gallagher that loan pricing is a key evaluation criteria the National Housing Finance and Investment Corporation will consider in selecting the scheme's panel of lenders. A number of lenders, including small lenders, have already indicated through the market-sounding process that they are prepared to offer products under the scheme that do not charge first home buyers more, and that is what we want to see. In approving lenders for participation in the scheme, the National Housing Finance and Investment Corporation will assess impacts on competition as well as the attractiveness of each lender's loan products in terms of interest rates and fees. Lenders participating in the scheme will continue to be subject to existing responsible lending obligations, including ensuring that loans are only extended to borrowers who can comfortably service the loan.

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Gallacher, a supplementary question?

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

How will the measures that the government will undertake actually ensure that no user is charged a higher rate of interest?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

I've just provided that information to Senator Gallacher. The First Home Loan Deposit Scheme is administered through the National Housing Finance and Investment Corporation, which of course has gone through a market-sounding process, and it's very clear from that process that there are product offers available under the scheme that do not charge first home buyers more, which is what we want to see. I would also make the point that the government made a commitment to this scheme in the lead-up to the election and which we are now delivering. The scheme is to be administered, as I've indicated, through the National Housing Finance and Investment Corporation, which will partner with lenders to deliver the scheme. The NHFIC has commenced the procurement process to establish an initial panel of lenders. The panel will have no more than two of the four major banks and is designed to meet the government's expectations that smaller lenders will play a significant role in the scheme to facilitate competition.

Scott Ryan (President) Share this | Link to this | Hansard source

Order, Senator Cormann. Senator Gallacher, a final supplementary question?

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

The article also reveals that big banks have queried whether the government's scheme will be up and running by the promised start date of 1 January. Can the government guarantee that the scheme will be fully operational by 1 January 2020?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

The government remains, indeed, on track to make the scheme available from 1 January 2020.

Penny Wong (SA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

On a point of order, Mr President. I think the time has expired.

Scott Ryan (President) Share this | Link to this | Hansard source

At 2.08 we started, Senator Wong. That was my note. I'm looking at the Clerk, whom I think agrees. Senator Antic.