Wilson Tuckey (O'Connor, Liberal Party) Share this | Hansard source

I rise to speak on the First Home Saver Accounts Bill 2008 and related bills. Owning a home when one reaches retirement is the difference between a comfortable livelihood and very difficult financial circumstances—more particularly if your sole source of income is the age pension. Every step should be taken by governments to ensure that people have an opportunity during their working lives to become the unmortgaged owners of a home. This can be looked at in a number of ways. The member for Deakin painted a scenario where people, having paid tax on their income, can put money into a special savings account and, if they have a surplus of $5,000 a year, attract $850 in government assistance. They will have paid, if those savings were from a $50,000 income, probably twice that amount in income tax prior to making the deposit. That is a guess; I have not exactly calculated it. If they save $64,000, that will represent approximately half the state government rip-off in the development and purchase of a building block. In New South Wales that is reputed to be over $150,000 and, for the member for Deakin’s consideration, it is probably a little less in the lovely city of Melbourne. The reality is that, compared to the rip-off orchestrated by state governments in the cost of developing a block of land, it is peanuts. Furthermore, for the 18-year-old to whom the government offers some assistance now, what will those costs have escalated to?

The first thing is this. Is this a measure of substance? It sounds good: pay tax on your income, put it in a bank account and, if you can manage $5,000 a year, the government will give you 850 bucks a year. The aggregation of that money is going to be achieved through interest or earnings paid on that amount of money. Is that going to be tax free? No. It is going to be taxed at 15 per cent. But then, of course, that could be attractive, as it might otherwise be paid at 30 per cent or 40 per cent under income tax laws. But you have already paid that. So it is hardly generous, when one looks at the problems involved. I believe it does not address the serious problem.

The other day, I attacked the government for its foolish—which is the best way to describe it—but also unfair choice of certain amounts of money for means testing, for instance, the baby bonus. Quite a few people actually buy a house because they want a safe environment for a baby or two or three—as we encouraged people to have. There is $5,000 out the window if your combined income as a couple exceeds the amount of money you need to buy a house in Sydney. As I note, between 2001 and 2004 the median jumped from $300,000 in round figures to $460,000 in round figures. You are not a rich person in Sydney if you cannot afford a house. Unless you have a combined income of the order of $150,000, it is pretty obvious that you cannot afford to take a significant mortgage on a house—whether you have accumulated $66,000 or $88,000, as the minister referred to in his second reading speech, as a deposit.

Where is the benefit? Reference was made by the member for Deakin to the failings of the previous government. The previous government introduced the first home owners scheme. As I recollect, that was $7,000 with no strings attached. When it came to having to deposit your own money, we did not say that you had to have a deposit of a certain size. We did not say you had to have been banking your money since you were 18. When that money was originally provided the amount was close to 10 per cent of the cost of a house. As significant research has shown, building costs—notwithstanding people’s increased aspirations for what one might now call a home—have been contained within inflation. It is the cost of land that has increased the price of housing.

Australia is a pretty big continent, and the one thing we are not short of is land. But I want to offer the benefit of one of my experiences as a local government councillor in a remote district as to what has changed in the last 30 or 40 years. In Western Australia at the time I wish to talk about, we had a minister for the north west and development who actually believed in the development side of things. He later became Sir Charles Court—at that time he was Charlie Court to most of us—and that was his job. I was the shire president of Carnarvon, a very small town with a population of about 2,000 at the time, 11 feet above sea level at the mouth of a river that can fill Sydney Harbour in four hours when it makes up its mind to run at all, and we had a land development problem. We had used up the land that was 11 feet above sea level and everything else was subject to flooding and had been flooded in quite recent times. Nevertheless, by the nature of the river, we could protect the land with levy banks. Into the town walked two Americans, who said, ‘Look, within a very short period of time we want to bring 200 families to your town to run the biggest tracking station outside America.’ We were pretty anxious that they should come and, fortunately, they did. But we had to get some land.

We went to the appropriate authorities in Perth and we got all these hard luck stories about the availability of finance and who was going to build the levy banks. So I wrote a terse letter to the then Premier, a fellow called Dave Brand, and a little bit later Charlie Court turned up in town with the two relevant ministers for lands and local government. We walked over to the land that we thought should be developed and went through the difficulties, and the two ministers gave us their hard luck stories again. I said to Charlie Court, ‘Will you get out of the road and let our council do it?’ to which he said, ‘Can you manage it, Wilson?’ I said, ‘Yeah, we have borrowing powers. We know all about roads and sewerage and all those sorts of things.’ He turned straight to the other two blokes and said, ‘Get back to Perth, give them the land, give them the approvals and let them get on with it’ We had people building houses within a couple of months on land that did not have a road—did not have anything. But the road was there by the time the houses were finished. By the way, we eventually sold the land—and I am talking some years back—for $2,000 a block. We developed it but made no profit for the council—maybe just a few hundred dollars to cover administration.

Compare that with today. It can take you five or 10 years to get a subdivision. What are the costs to some developer going into the marketplace, paying tens of millions of dollars for land on which the interest rate clock starts ticking on that day and then waiting 10 years to jump the ever-increasing hurdles? How long before it is some thousands of dollars per block? We now have some state governments which cannot live off the GST and want to be paid in advance for the freeway they might build in 50 years time. The concept of headworks charges were unheard of and we have just loaded up and loaded up, and it is the politicians of Australia who must take the blame. So, when a state government wants to rake $150,000 out of the system when it has probably imposed some thousands of dollars in start-up costs, planning costs and the cost of interest, what is the good of this scheme? I am not allowed to use the words I should.

Why are we not looking at other options? The funny thing about that is that the town we are standing in does not sell freehold land; it sells 99-year leases. That in itself is pretty meaningless because the government still expects the purchaser to pay what is virtually the lifetime rent up front and the cost therefore is no different from that for a freehold title. That lease document is bankable and, what is more, is of a nature that may as well be freehold anyway. But who has stopped to think of the concept of developing land which, on a bankable lease, is rented to people at $X a month with a 10-year clause whereby you have a right of purchase but at a market value at that time—10, 15 or 20 years later—and when you have settled your financial affairs? Under those circumstances, the amount of money you borrow is for the construction of the home which, as I have pointed out, is frequently less than half the total cost of a package. If you really want to do something for people and give them access, give them those opportunities. Of course, that requires talking with developers, because developers expect a profit. Of course, in the superannuation area, sometimes they can accept the profit of the land at a later date and a low rental fee in the early period.

More importantly, and I have raised this in my electorate, we have town planning rules around Australia that limit the number of houses that can be built on a farming property. It might be 100,000 acres or hectares, and you are typically allowed to have two houses on it. But, if those farmers, frequently seeking cash flow—and some would be in a better position than others—could do a virtual subdivision of some land on their property and offer it to people for a weekly rent on a bankable lease document and for a respectable period, people could move onto those blocks of land and do as the average farmer does: supply their own septic tank, supply their own water et cetera but probably pay only the headworks charges to get the electricity connected. In fact, if you pick up most Sunday papers, you will see people who manufacture sheds and transportable buildings offering new, adequate shelter—not the most glamorous—from $20,000 upwards.

I wrote to the Western Australian minister for planning about that and she gave me a thousand reasons why it would not work. I might add that some of the town planners on the councils I wrote to did not think that was a good idea either because it cuts them out of the process. But the fact of life is that, if you choose to live and work in a rural area and accept the wages that rural industries and their associated service industries can afford to pay, you do not want a mortgage much over $50,000. So why don’t we encourage those things? If the rent was $20 a week for the block and a farmer had 10 of them, in a drought year he would at least have a cash flow of $10,000 in simple terms. Why do we lack the wit to go through those processes? Why would the minister for planning dismiss that out of hand, saying that it was going to create ghettoes and all sorts of things? It would be 10 blocks on 1,000 acres and, because it would be a lease, it could actually dictate behaviour and the way people lived upon that property to an extent. Think of the opportunities for people. I put some of those arguments to the previous government with a similar lack of success, so I will not compare the performance of each government.

Whilst any scheme is helpful, this particular scheme is not a response that will help people in the short term. There are people out there at this moment who would like to own a home and cannot afford one. The last budget took the baby bonus off most of those couples—where the female partner is pregnant—who could afford a medium-priced house in Sydney.

I see the member sitting over there—I am afraid he has not been around long enough for me to know the name of his electorate—is starting to shake his head and say, ‘If you’re on $150,000 a year, you can afford a house in Sydney—

See this speech in context