Gerard Rennick (Queensland, Independent) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Gallagher. The 1937 banking royal commission recommended that the central bank should always control the volume of credit in the system. This wise policy saw housing ownership reach record levels after the war, until the mid-1980s, when Paul Keating recklessly reversed this policy by lifting foreign capital controls. This saw foreign debt held by the four major banks increase from $8 billion to almost $800 billion by 2008. This doubled the price of houses relative to income, lifted household debt to record levels, forced households to put two parents back into the workforce and lowered Australia's education rankings. Will the Labor government reverse this reckless neoliberal policy and use capital controls to limit household debt to sustainable levels and increase housing affordability so that future Australian generations can afford to buy a home?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

No, the government isn't planning on reforms such as the one outlined by Senator Rennick. Our focus on housing affordability is on the supply side. That is the area of pressure which we are experiencing in the housing market right now. There are simply not enough houses to match the demand for houses.

We do believe the government has a role to play to ensure that we are delivering the right type of housing for the demand that's out there. That involves making sure that we have funded services that are dealing with homelessness and people who need a particular support in that sector. Then, in the social and affordable housing sector and the community housing sector, it involves making sure that there is accommodation and that suitable projects are happening there. Then it involves looking at how we can support renters through rent assistance; we've put in a big increase there. Beyond renters, we're looking at how you support people into homeownership. Our Help to Buy Scheme, which is stuck in this Senate, would support tens of thousands of people into homeownership, with the government providing the necessary support. And we are ensuring that we're working with the states and territories to unblock all of the barriers and the bottlenecks that exist with the delays in infrastructure and enabling works to get housing developments open.

So that is the plan that we have, Senator Rennick. I accept that it's not your preferred plan, but that is the plan that we have been working on for the last two years, since we came to government. We do believe there's a role for the government to intervene and to be actively involved in supporting the areas of demand in the housing system, but we prefer the path that we've gone on, which is focusing on supply. It would be great if the Senate would support some of those bills that have been locked in here for way too long.

Sue Lines (President) Share this | Link to this | Hansard source

Senator Rennick, first supplementary?

Gerard Rennick (Queensland, Independent) Share this | Link to this | Hansard source

Australians don't want foreign social media companies controlling their free speech, yet that is exactly what happens with our banking system, whereby the government allows domestic banks to borrow unsecured credit from foreign banks with no controls in relation to earnings capacity or security. Will the Treasurer take responsibility for the volume of credit in Australia rather than allowing it to be controlled by foreign central banks?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

We have a highly regulated banking system in Australia. It is highly regulated, it is well capitalised and it has functioned well, particularly in times of crisis where we have seen failures in other economies, particularly of big financial institutions. We have not seen that here because of not only the capitalisation they have but also the highly regulated environment that they operate in. We believe strongly in a competitive and profitable banking sector, we believe it's good for the economy and we believe that the regulations that exist now are appropriate.

Sue Lines (President) Share this | Link to this | Hansard source

Senator Rennick, second supplementary?

Gerard Rennick (Queensland, Independent) Share this | Link to this | Hansard source

There are two types of capital: debt and equity. Companies issue new equity all the time against income producing assets. Will the Treasurer, using Australia's sovereign equity in its untapped wealth, create an infrastructure bank to provide capital to state and federal governments to fund nation-building dams, roads, rails, ports and power stations, instead of using foreign debt?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I thank Senator Rennick for the question. We certainly believe the Commonwealth has a role in nation-building infrastructure. That's why we have a very significant infrastructure program that Minister King is rolling out, and we do have a role to play in water security, in national highways and in other important projects. We believe the way that they are being funded right now is appropriate. It's funded through the budget. There's always more demand than we can meet through that, but we wouldn't be looking to establish a fund such as the one Senator Rennick outlines.

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

I ask that further questions be placed on the Notice Paper.