Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Hansard source

I rise to speak on the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008. These bills will set the framework for Labor’s National Rental Affordability Scheme, which is a scheme designed to address the acute shortage of affordable rental properties in the Australian housing market. The scheme is a key plank in Labor’s $2.2 billion plan to combat the housing affordability crisis that many working families and older Australians are currently facing.

The last time the parliament sat, I was very pleased to have spoken on the bills giving effect to Labor’s First Home Saver Accounts. During my speech on that occasion I noted to parliament a number of trends that underlined the problem that many home owners and renters were currently experiencing in the housing market. Firstly, we have seen declining rates of home ownership, with fewer first home buyers over the last decade. In the past week the government has announced an enhancement to the first home owners grant scheme, partly in an endeavour to improve the opportunity for first home buyers to buy either an existing or a new dwelling. The second trend that has been evident for some time is that Australia has had a declining availability of rental properties, especially affordable rental properties. Thirdly, there has been a decline in the availability of social housing. And finally, there has been a declining availability of affordable housing more generally throughout the market.

I would like to concentrate today on the situation facing those renting, given, obviously, that rental affordability is the subject of the bills before the House. However, firstly I would like to outline some statistics that show how hard and unaffordable it has become for some people to enter the housing market. Official statistics show that it has never been harder for first home buyers to purchase a home in Australia. The hard truth is that, to enter the market with an average priced house, young families now need a six-figure income. In 1996 at the start of the Howard government, the average house cost was about four times annual wages, but at the end of the Howard government period it was no less than 7½ times the annual wage. Many factors have contributed to that outcome.

A typical first home buyer now spends about a third of their income on mortgage repayments. This compares to a figure in 1996 of less than $2 in every $10 earned being spent on mortgage repayments. That is quite a significant increase in the proportion of income spent on mortgages. That is a function of increased house prices and also interest rate movements. Not surprisingly, given these statistics, the proportion of homes being bought by first home owners has declined from 21.8 per cent in June 1996 to 17.1 per cent today. These facts are especially relevant to the bills before us today because the inaccessibility of the housing market to first home buyers has increased the number of people who are renting and who are active in the rental housing market. This in turn has driven up demand and the cost of renting. In my electorate of Charlton, the vacancy rate in rental housing is still less than two per cent, so it is an extremely tight marketplace.

Recent research by the National Centre for Social and Economic Modelling has found that 1.1 million low and moderate-income families around Australia are under housing stress. These families are typically in the bottom 40 per cent of all earners in Australia and are paying more than 30 per cent of their income on housing costs. That is, 220,000 more families are experiencing housing stress now than in 2004, just four years ago. That figure of 220,000 includes 70,000 renters. It is also a big problem for older Australians who are already under some severe cost-of-living pressures. Nationally, the number of older people in low-income rental households is expected to more than double from 195,000 at present to 419,000 by 2026. I should make a correction to the statistic I mentioned a moment ago: it is about 700,000 renters in 1.1 million low and moderate-income families who are experiencing housing stress.

Rental vacancies in the Newcastle and Lake Macquarie region, where my electorate is located, are now below two per cent. In fact, this is so throughout the region, including in my electorate. The member for Shortland, who is in the chamber with me today, has a neighbouring electorate and her constituents would experience exactly the same problems. To put it into perspective, a rental vacancy level of three per cent is considered to be a tight market with a very high level of demand. So when you are in a marketplace with vacancy rates of less than two per cent, it is virtually impossible for many people to find housing, and it is little wonder that there is extra demand on the social welfare organisations in the region related to housing availability. In my electorate of Charlton, the 2006 census found that nearly 3,000 renting families, or nearly 40 per cent of all renting families in the electorate, were spending over 30 per cent of their income just to pay the rent, and nearly 10 per cent of that figure is made up of older Australians. Not too long ago I held a housing affordability forum for seniors in the southern part of my electorate, in Morisset. The intensity of concern about this issue amongst the community is extremely sobering indeed and it is why public policy action is urgently needed to address this problem.

Despite all of these trends emerging over the previous decade, there was little action and little public policy initiative by the Howard government to address these issues. In fact, when you have a look at it, you see there was no policy response of any consequence at all. However, a Labor government is not going to stand back and do nothing about these circumstances. The government will work very hard to address the housing affordability crisis. We have a particular concern, represented by the values of the Labor Party for more than a century, for people in lower and middle-income areas who are experiencing stresses such as this. At the last election Labor set out a comprehensive plan for housing. It held a housing affordability summit while in opposition, drawing together many parties who have an interest in the housing market to try and come up with some solutions. Upon winning the election, Labor dedicated a Minister for Housing to get to work on government solutions to the affordability problems.

As a government, we are committed to a coordinated approach to housing policy to increase the supply of affordable housing so that all Australians have a decent place to live. This is why the government delivered a $2.2 billion housing affordability package in the May budget. That package included the following: firstly, the $512 million Housing Affordability Fund to lower the cost of building new homes, with an emphasis on proposals to improve the supply of entry-level housing; secondly, the $150 million A Place to Call Home initiative to build hundreds of new homes for the homeless across the country; thirdly, the $1.2 billion investment in new first home savers accounts, which will help hundreds of thousands of potential first home buyers to save a bigger deposit through a superannuation style, low-tax savings account; and, fourthly, the National Rental Affordability Scheme, which is the subject of the bills before us today.

In addition to this, the Prime Minister and the Treasurer, in their recent announcement of the government’s Economic Security Strategy, have outlined an increase in the first home owner grant, as I noted a few moments ago. Under that initiative, first home buyers who purchase established homes will have their grant doubled from $7,000 to $14,000, and first home buyers who purchase a newly constructed home will receive an extra $14,000, taking their grant to $21,000. That boost came into effect on 14 October, and all contracts entered into by 30 June 2009 will be eligible for that new assistance—and I know already from inquiries to my electorate office that this is a popular initiative. It tips the scales for some young home buyers in particular who are wishing to enter the housing market, to make it affordable for them to become first home buyers.

I would now like to turn to some of the detail of the bills that are before us today. As outlined by the Minister for Housing at the introduction of the bills, the Rudd government’s National Rental Affordability Scheme will create up to 50,000 new rental properties across Australia. The scheme is a supply-side initiative, as rental affordability pressures are being driven by a poor supply of affordable rental properties. That is, the intention of this scheme is to stimulate investment in the development of more affordable housing for the rental market.

The scheme will be initially allocated $623 million in its first four years. It will operate by providing incentives to participants to build new dwellings for renting to low- and moderate-income households at a rate of 20 per cent below market rent. The incentive is made up of a Commonwealth contribution of $6,000 per dwelling per year for 10 years and a state or territory contribution in the form of direct financial support or an in-kind contribution to the value of $2,000 per year for 10 years. That is an $8,000 incentive for investors. The incentive can be provided in the form of a refundable tax offset or payment.

The details of the scheme will be contained within regulations which are currently being drafted by the Office of Legislative Drafting and Publishing. It is desirable for this administrative detail to be contained within the regulations, as it will allow greater flexibility to address changing circumstances and conditions in the rental market. That is, the administrative arrangements for this scheme must be flexible enough to be able to reflect changing conditions in the rental market.

As outlined by the minister, the bills also will make amendments to the Income Tax Assessment Act 1997 to provide for the refundable tax offset and to ensure that state and territory contributions to entities participating in the scheme are non-assessable and non-exempt income for tax purposes. The bills also ensure that there are no capital gains tax consequences as a result of the incentives paid under the scheme. The minister has also undertaken to release the regulations as soon as they are drafted—which will be very important as they will provide some further detail on the operation of the scheme to potential investors. If the scheme is successful and market demand is strong enough, the government will seek to create a further 50,000 properties from 2012. The minister has also committed to a review of the scheme in its early years in order to ensure that it is delivering the desired results, and changes would be made if they were needed.

In addition to this and in recognition of the rental problems faced by older Australians, which I outlined earlier, the government has made Aged and Community Services Australia a partnership facilitator for the scheme. This will help ensure that the voice of senior Australian citizens and pensioners, in particular, is being heard in the policy deliberations and that the scheme delivers affordable housing suitable for older Australians. I am very hopeful that this scheme will prove to be a huge success, because it is badly needed within the rental market to alleviate the pressures that I was describing earlier. I encourage businesses within the Newcastle and Hunter region to consider investments of this kind that will be not only rewarding from an investment standpoint but also offer a significant social benefit to the community.

I was speaking with one of the property investors in the region recently at another event that I convened in my electorate about this scheme. He has taken a particular interest in it and has indicated to me that the type of incentive that the scheme will provide is sufficient, in his view, to affect the calculus of the investment decisions that developers such as him will make in looking at investment in accommodation that could qualify under the scheme for this assistance. It is very important to have that feedback from at least one developer in the local region, a developer who believes that investment decisions by his firm could well be influenced in the direction of providing affordable rental housing in the region. I will be monitoring that closely because making sure that this scheme works on the ground is critical to its success. I have sat, in other circumstances, as a director of a significant bank that is a large home lender, and on many different occasions I have looked at how investment can be made in affordable rental housing. Without structured incentives such as this scheme provides, it is often very difficult to ensure that the best return is going to be achieved on behalf of those who have placed their trust in the directors of an investing organisation. So we will be watching very closely how the scheme works and making adjustments to it if it is necessary to ensure the success of the proposal.

Addressing the housing affordability crisis means addressing a social and economic problem that has been ignored for far too long. There is nothing more basic to a family than being able to have a roof over their heads that is safe, secure and affordable. Without affordable housing, people do not have a place from which to go to work, to send their kids to school, to establish themselves in a community, to build their financial security, to achieve the self-esteem that derives from working or to have much-needed stability for their families. Insecure households, without secure and affordable housing, typically experience serious social problems. There is another important reason why it is desirable that this scheme works to its maximum. For older people in particular, in the later phases of their life, the last thing that they need is to experience the insecurity of not being able to afford their housing. It is a very important social and economic goal for this country that those on fixed incomes, such as pensioners, have affordable housing that offers them the security that is necessary and which they deserve after having contributed to society throughout their working lives. For us as a government, that is a goal that is extremely important to pursue—the security of people in the later stages of their lives so that they do not have to worry about the affordability of their housing and the security of their home. By encouraging low rent and affordable housing, Labor’s National Rental Affordability Scheme will go some way to providing much-needed housing relief for many working families and older Australians.

I would also like to take the opportunity to thank the Minister for Housing, the member for Sydney, who made a visit to my electorate in the not-too-distant past to discuss these issues with seniors in my community and to hear their views about how such a scheme could be structured. People were very pleased to have the ability to exchange their views with the minister about these issues. Given the acute housing problems experienced in the electorate, I was certainly pleased that many of my constituents were able to take up that opportunity. It was a pretty packed forum.

I am also pleased that I am part of a Labor government that, after a decade of neglect of this area of public policy, is acting on these issues and is demonstrating its commitment to the values that the Labor Party has long held to help people in these circumstances. But I think that all of us are aware that we need to make these schemes work. There is much work that needs to be done and that is why I, along with my colleagues, intend to continue working closely within the government and with the minister to make sure that the scheme does work and that we do deliver solutions to the housing affordability problems that are being experienced not just in my electorate but in many others around the country.

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