FIRST HOME SAVER ACCOUNTS BILL
The issue of First Home Saver Accounts is a matter of vital importance to my electorate of Mitchell. It is a fact that one of the main contributors to unaffordable housing in Australia is state and local government taxes and charges. Also, as new-found conservatives on the benches opposite will note—understanding conservative economics as they do, with all their new-found interest in such topics—you cannot escape supply and demand inequities in the market. One of the biggest shortfalls of the legislation before the House today is that it does nothing to address supply problems.
The 2006 census showed that my electorate of Mitchell has one of the highest proportions of mortgage owners, one of the highest proportions of McMansions and one of the highest rates of couples with dependent children in Australia. Indeed, Western Sydney and north-western Sydney are facing housing affordability issues. Whilst this bill is a very small step and may help some Australians obtain their own house in the future, it is going to produce results that are, at a minimum, four years away. It is not going to do anything to address the very serious problems with supply and demand now, and they are the pressures that are pushing up housing prices. Indeed it would not be unfair to say that this legislation is tinkering around the edges of this problem rather than tackling some of the big picture issues related to affordable housing.
The Minister for Families, Housing, Community Services and Indigenous Affairs, in her presentation to the House, mentioned that she had received some letters despairing about unaffordable housing in Australia and referred to it as a crisis. Indeed there is a crisis. I was on the phone to a real estate agent in my electorate today who was advising me that they were despairing for older Australians and for people who were already struggling with rental problems in Sydney. The minister argued that she would welcome increased demand and that it would be a good thing. I think that is a great ignorance of supply and demand and market economies, because you cannot welcome increased demand in the current environment in Australia for housing without addressing supply issues. In the current environment in Sydney, where there is a rental crisis and a housing affordability crisis, it is extraordinary for a minister to say that there should be an increase in demand without addressing supply-side problems. In fact, you could observe that it would be a disastrous effect of this legislation if that were to take place. However, we do recognise that this bill is a small step that will, down the track, have some impact upon this problem.
The members opposite have spent some time outlining their view that the former government really did not do a whole lot in relation to this issue. I say to you, Mr Deputy Speaker, that this crisis has come about as a direct result of the policies of state and local governments and has been a while in the making. This problem has been building, and the first home owners grant was one step that the Howard government took in relation to addressing unaffordable housing at the time. Of course, we now know that it has not overcome state and local government charges and levies, which we know are almost a third of the cost of a new house in Sydney. I will say that again, Mr Deputy Speaker, because I think it is worth saying again: the crisis in affordable housing is such that a third of a cost of obtaining a new house in Sydney is government taxes and charges—a full third.
If you take into account the second third of costs, which I think would be the result of state government policies of underbuilding, of urban consolidation without thought for the expansion of the population and how you meet that expansion—in other words, we are underbuilding housing; we are not releasing enough land—you could almost estimate that half of the cost of a new house would be the direct result of state government policies. In this bill, while we have some very fine measures to encourage a culture of savings—which goes to the heart of how we change the long-term thinking of Australians, how we get them to think ahead about their needs in the future in terms of housing and owning their own houses—they do nothing to address those issues of land release and underbuilding.
My electorate of Mitchell has gone through this whole ideological obsession of state Labor governments across Australia—and their environmental departments, which I might make some reference to—with locking up land under this contention that we have somehow run out of land in this country, that somehow we have such a huge population and our cities are expanding at such a rate that we have to do something to curtail growth. We have heard a lot about this. We have heard a lot about urban planning that says that if we do not curtail the size of cities our country will be overwhelmed with undesirable greenhouse gases and other elements.
I saw a very good and effective presentation by an urban planning expert, Wendell Cox, who demonstrated on a map of Australia that if you condensed all of the urban land into what it represents it is a small circle on the map of Australia—so small that it is quite amazing to think that state governments have contended for so long that we have to do something to curtail the expansion of our cities. In fact, if you look at the problems in many countries overseas, such as the United States and other areas, you will note that we have no problems with density or urban planning that some of the state government planning departments contend.
At the moment there are hearings underway in which the Senate Select Committee on Housing Affordability in Australia is taking evidence that relates to some of the provisions in this bill and what the problems are that this bill is attempting to deal with. In it you will hear that areas like Campbelltown and other large areas in Western Sydney are really suffering under this crisis. A proposal which says that in four years time you may be able to access some money that you have saved and some money that the government has given you to reward you for saving and that will somehow alleviate those pressures that are there in Western Sydney right now is not realistic by itself to deal with some of those problems.
Indeed, if you look at Sydney today, an average mortgage is around half a million dollars. We know that about 30 per cent of income can often be paid in rent or to service mortgages. There are many challenges in the suburbs of outer Sydney, and I sometimes think that the Minister for Housing and, indeed, the member for Grayndler, who come from inner city electorates, do not understand that out in the suburbs—out in the suburbs of Western Sydney, in the north-west and in the south-west—there is a real challenge associated with the cost of living. That challenge includes transportation costs. We know the member for Grayndler is funding a western metro line in his electorate through the budget at the expense of the outer suburbs of Sydney—the north-west, the south-west and Western Sydney.
One of the other problems that this legislation does not address is the public housing stock. We also know that state governments have been reducing the size of the public housing stock across Australia. Much public housing has been sold off. It has not been replaced. Indeed, in the Senate select committee hearings on housing affordability we are hearing about some of those problems, which are also adding pressure to the housing affordability crisis.
In looking at the specific provisions of the legislation it is important to note that there is a lot of complexity in some of the arrangements for these accounts. There are some confusing settings. If you asked an Australian family at the moment to put aside money to save for their future so that they could buy their first home, and you said, ‘We ask you to put aside a minimum of $1,000 a year’—this bill provides that it has to be $1,000 per year, every year, for four years—‘even if something happens to your circumstances that alters your ability to do that,’ from what I have heard so far I am not sure and not clear what the intention would be for them suffering a penalty for a change in their circumstances.
We know that people’s circumstances change rapidly in the modern world. Some years people can afford to put aside money one year. In other years they may not be able to do so. Our modern world moves at an enormous pace, and I think if you also said to that same person or family putting aside money, ‘You will not be able to access that money at any time during those four years; you will have to wait until the end of that process, until you had lodged your tax return at the end of the year, to access that money,’ then that again would be an unrealistic impost upon families and people who are doing it hard and looking for a solution to the affordable housing crisis.
Those provisions of this legisaltion could have been improved because, if you allowed more flexibility into those arrangements, people who are genuinely struggling would appreciate the ability to contribute one year but not contribute the next year. Perhaps they could take an average of people’s contributions over the years. But not being able to access that money earlier will mean that there is no alleviation of the circumstances that are there at the moment. The pressures are real. They are substantial. They exist today. Indeed, I do not think this legislation will go to addressing those pressures that are there right now.
Without the flexibility to access the money earlier, what if a person finds within the four years a house that is affordable and within their target income or wealth level, something they would like to invest in? Again, I think the settings are quite confusing about what the government is willing to support and not support. I do not know that we should be penalising people for not waiting out the four years and therefore not accessing the government contribution.
One of the other statements the minister made was that one of the problems was that the Howard government did not release enough land in its past 11 years. I consider that to be an extraordinary statement from the Minister for Housing. I had the opportunity to check with the Parliamentary Library as to how much Commonwealth land there is which could be released for use by the Commonwealth, not regarding land that is already locked up. They had to get back to me and did so quite quickly—as they do. Sheepishly they indicated that there was no reliable figure for how much land the Commonwealth owns in Australia and that, furthermore, this was something the Howard government was looking at inquiring into to put together a comprehensive and detailed package so that people would know. I would ask the minister what she was referring to when she said that the Howard government would not release land over its 11 years in office. The Parliamentary Library cannot tell us how much land there is under Commonwealth management, as no reliable assessment has been done. An old valuation put it at $7.4 billion, they inform me, but that valuation must be well out of date, because the Sydney airport—just the airport alone—which recently sold, went for almost $5.6 billion. I do not think that that comment by the minister added anything to the debate in general about this issue. I think the Howard government’s attempts through the First Home Owner Grant, which was the first of its kind—an innovation in government policy—went a long way to recognising that we had some building problems because of state governments and we were attempting to address them. Certainly there is a further attempt to address this through this scheme but, again, for some of the reasons I have highlighted, it fails to address the supply-side problems, state government regulation and state government taxes and charges and to immediately tackle some of the problems that are facing people who have problems with their incomes and affordable housing at this time.
If you look at some of the other measures before us today, you will see that Labor has not put a lot of thought into this scheme in the sense that it is long on spin and short on detail, something we are becoming quite used to from this government. Housing affordability has put many Australian families into crisis. The scheme the government is proposing today could be seen as an administrative nightmare, because it is a very complicated mess. There has been some contention that it could drive up rents for Australian families. The National Rental Affordability Scheme, which has also been proposed, has a lot of detail in it that may well add to the problems in the rental market at the moment, and that is of grave concern. I mentioned that when speaking to real estate agents in my electorate, and there is a sense that people who are facing a severe crisis with their rents and who have to make some very difficult choices are already on the breadline, so anything that adds to the problems in the rental market at the moment should be avoided. You really do not want programs or measures which, you could argue, will add to the cost of housing and the cost of the rental market rather than address the supply-side issues.
So, really, it is very simple. My central contention today to those members sitting opposite is that, as economic conservatives, having come across and joined us in supporting the operation of the free market and rejecting the socialist objective that for so long they have held so dear, they would understand that you cannot support demand-side policies without increasing supply. The supply of housing stock is critical. The minister’s statement that the demand going up was a welcome development is an extraordinary statement in the context of this legislation. We cannot welcome extra demand on the housing market at this time without addressing supply-side measures. I think the opposition spokesperson on housing’s comments in relation to supply-side schemes are very important and something members opposite should take notice of as supporters of the operation of the free market. Supply and demand are very important and, if you do not have supply and demand in check, when you have massive demand for housing and massive demand for rental properties but not enough supply, you will put pressure on price. That is just a quick summary for those members opposite who may be new to market economics about what happens when you have demand out of control and supply—
Government members interjecting—
Mr «HAWKE» —Yes, you are struggling with supply. Price goes up. So, when we are thinking about future legislation and looking at measures we can take to address the housing affordability crisis that has been created by state Labor governments, we ought to look at supply-side measures that will deliver real downward pressure on price. An increase in supply will mean a matching with demand, which means the price will even out. Let us think about those sorts of things.
As I said, my electorate of Mitchell has one of the highest proportions of couples with dependent children, one of the highest proportions of mortgages in Australia and one of the highest proportions of what are termed McMansions. Housing affordability is a real concern to those people in my electorate. The rental crisis is striking fear into the hearts of many people across Sydney, especially Western Sydney, and we need to take measures in this parliament to address those problems and really take over the jobs of the states, which have failed badly in ensuring that there is sufficient supply in Australian housing markets to ensure we do not have a crisis. I will be supporting these bills because they take a very small step towards dealing with this problem. It will be four years down the track, but anything that encourages greater savings and encourages people to think about their future housing requirements and to understand that with a lack of supply they are going to have to take their saving responsibilities very seriously is something that I support as the member for Mitchell and that I know the opposition supports.
So I would strongly say in conclusion that without a complex response to this problem, without thinking about all of the supply-side legislative issues, we may not make a big dent on the housing affordability crisis quickly enough for the likes of many people in the outer suburbs of our metropolitan areas and those families that are doing it tough. But that ought not to stop us from supporting these bills and trying those very small measures that this government has been able to come up with. But I would recommend a handbook on market economics to those opposite for future measures.