Chris Hayes (Fowler, Australian Labor Party) Share this | Hansard source

I too stand to support the Tax Laws Amendment (2011 Measures No. 1) Bill 2011. This bill will proceed with the three schedules. The first, schedule 1, deals with amendments to the Income Tax Assessment Act 1997 to provide an exemption from income tax for those who received the disaster income recovery subsidy paid to victims of the recent Queensland floods and those affected by Cyclone Yasi. The second schedule will amend the Income Tax Assessment Act 1997 to provide an exemption from income tax for category C Natural Disaster Relief and Recovery Arrangements grants paid to small businesses and primary producers. The third schedule deals with increasing the flexibility of first home saver accounts by ensuring people can commit their savings to a mortgage if they purchase a dwelling within the interim period as prescribed. I will speak on that in more detail later.

I know there have been condolence motions and plenty of discussion in this chamber about a range of things, including, regrettably, a lot of debate about a levy to support recovery efforts in Queensland. The simple thing is that we have gone through the worst natural disaster in this nation’s history, not just in respect of the loss of life but also from the washing away of roads, bridges and, to a lot of people, what they saw as their future, their ambitions and what they held for their kids. Mr Deputy Speaker Slipper, you come from Queensland and know what a high proportion of businesspeople there invest in their businesses. It is not all that easy for someone to say, ‘We’re a stoic people and we’re just going to recover from all this; it will be business as usual come 9 am on Monday.’

A lot needs to be done, and a lot needs to be done with assistance from the Commonwealth, because we do pull together—except for our tribal rivalries when it comes to sport and other issues—when it comes to the crunch. On matters such as disaster relief we do hang together as Australians. We support one another and this is another measure of what we do in giving realisation to that. It is more than just a concept; it is what we are as Australians.

Only yesterday I spoke rather briefly on the condolence motion about New Zealand. I referred to the significance of the emerging Anzac Day. Anzac Day is a lot of things, but for me it defines us as Australians and New Zealanders. It defines how we act in adversity and how we pull together and act as a committed nation as we support one another. That is what we set out to do in schedules 1 and 2 of this bill. We will provide income subsidies to be paid to the victims of the floods—disaster relief payments to those who demonstrate that they have experienced a significant loss of their personal and direct income as a direct consequence of the flooding that occurred. These things need to be taken into consideration in providing those exemptions and ex gratia tax payments.

The other aspect is small business. You know, Mr Deputy Speaker, coming from Queensland, about the entrepreneurialism of Queensland when it comes to small business. It is something a lot of people aspire to. They do enjoy the freedom of going out there, particularly in the areas of primary industry and tourism and the downstream activities that support those industries. These are things that should not be lost. It is not about waving a magic wand, conducting all the various donation campaigns. I have got to say that it is very humbling to see in each of our electorates the amount of money that was raised. In my electorate alone, which is the most multicultural electorate in the country, well over half a million dollars was raised. I thought it was very interesting to see all these newly-arrived Australians going out to support fellow Australians. It was a very good, decent and humbling thing to see. But we do have significant responsibilities and we do need the means to do that and to encourage people back on their feet. We talk a lot about mining and the importance of the resource economy that underpins Queensland; nevertheless, the driving aspect for employment in our modern economy is small business. We need to see small business people back on their feet as quickly as possible, and it is part of what we are seeking to do through this provision.

The other aspect of the bill that I particularly support is schedule 3, which makes more flexible the provision of the first home owners grant. The money in the first home saver account will be made available to go into a genuine mortgage after the end of a minimum qualifying period, should the account holders purchase a home and the release conditions be satisfied. The government clearly recognises the difficulties that first home buyers face. The money has to be committed into either a superannuation or a retirement fund, none of which is going to find its way into paying a mortgage. I am actually going through this with my son and his partner at the moment—Jonathan and Kylie. They live at home and, as a caring father, I would like to see them stand on their own two feet at some stage. We are encouraging them to think about going out and using the first home saver account and getting themselves into the real estate market. It does not matter where you come from—the inner city or, where we live, the outer metropolitan areas of Western Sydney.

Affordable housing is something that is fast moving away from our psyche. We know that it is important to be able to get in, if you genuinely want to become a first home owner and have a plan for getting there. Gone are the days when—such as when I was buying a house—you could just roll up to the building society, apply and have the loan that afternoon. You do need, for very good reasons, a savings record. We have just come from the world’s worst economic meltdown, and it is largely attributable to the Americans and their subprime market, which was fuelled by people simply going out and being able to access mortgages which they could never in their wildest dreams ever contemplate repaying. We did see a bit of that start up in this country, where people could go out and borrow 110 per cent of their needs in terms of housing, and you got not only the house but the carport, the driveway and the curtains. We went for a good six months, if not more, with sheets hanging over windows and things like that. The point I am trying to make is that we need a strategy to get there, and this is what we are seeking to do with this legislation. We are trying to make the first home owners grant crucial to making the decision to take up your first home. As I indicated, the price of housing is making it harder for most Australians to realise the dream of owning their first house, and you cannot do that simply by willing it to happen. You need to have a firm strategy, and that is what we are seeking to do.

Currently, where a first home is purchased before the minimum release conditions are met, the first home savers account must be closed and that money goes into your superannuation or a retirement savings account. I have got to say, for a 23- or 24-year-old, it probably does not mean all that much to see the money that you have already saved going away until you hit the wily old age of 60. That is a long way down the track—maybe not for some of us now, but I guess when I was 23 or 24 I thought that was an eternity. The new provisions will allow that money to be paid into a genuine mortgage at the end of that minimum qualifying period. The money can actually be put to use to help sustain the very mortgage that people have entered into.

This change will further assist aspiring home owners by allowing them to purchase their home earlier than they might have originally planned and still be able to put the money towards their new home should their circumstances change. These changes will not do anything to harm the underpinning concessions of the first home savers account. The government will continue to contribute 17 per cent of the first $5,500 indexed to an individual’s contribution made during the year. This means that, if an individual is able to make the maximum contribution of $5,500 into their first home savers account, they will be eligible for the government’s contribution of $935. Where individuals come together to form a couple—as is the case with my son Jonathan and his partner, Kylie—they will be able to pool their first home savers accounts to produce those savings together. Earnings in respect of this are taxed at 15 per cent and the withdrawals will be tax free when used to purchase their first home.

These are things to be encouraged. I know some mocking words were used about the take-up rate being something like seven per cent. If you consider the economic circumstances since 2007 and beyond, it is no wonder that there has been a slow-down in the purchase of real estate generally because of the prices involved. We are trying to do something to make it affordable at that entry level. We do not want to do it in such a way that it overheats the entry-level market; we want to do it in such a way that it actually empowers people to buy their first home, gives them a strategy which can actually help them realise their dream and still enables them to purchase their home without having the price artificially propped up by one-off payments of money. This is a better way of doing it. It actually ensures that couples, when they are moving to buy their first home, enter upon a strategy which is designed to help them not only establish the pattern of saving to attain the mortgage in the first place but also, hopefully, help them establish a long-term pattern of saving. We do need to reduce debt and to do that we need to have a proper saving pattern. I think that is something, coming out of the global financial crisis, that we have all learned and should take to heart.

I think what is being applied here will do wonders for a lot of people, particularly those that I represent in the federal seat of Fowler, which is an area that has much disadvantage in it. For instance, the median household income for Fowler is currently at $51,900, which is considerably below the median household income that applies across the nation at around about $62,000.

The housing prices in Liverpool and Fairfield in outer metropolitan Sydney do not compensate for the lower average earnings. The median house price in Fowler at the moment is $432,500 with a mortgage repayment of $1,796 a month. By my rough calculations, that means that you commit almost half your income to paying your mortgage. That makes it pretty strained. What we are trying to do is establish the entry level strategy for people who are keen to buy their first place and we are also hoping that this will send a message about the value of saving to achieve objectives. I commend all pieces of this bill to the House.

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