Brett Raguse (Forde, Australian Labor Party) Share this | Link to this | Hansard source

I will continue my remarks on the First Home Saver Accounts Bill 2008 and related bills, which I commenced prior to question time. In doing that I will not go through a range of points but I will continue on the theme of the importance of this particular legislation for the electorate of Forde. It is an area in south-east Queensland that is under intense development and there is a lot of economic activity. We are seeing what I would suggest are some of the worst examples of the lack of home availability and affordability.

This bill will go some way towards relieving some of the pressures, certainly on young families. It is very much about providing solutions. I will reiterate some of the features of the bill before I give relevance to the concerns within my electorate. This is about the Australian dream—people getting into their own homes and having the ability to save their deposits. Essentially, the price rises in Queensland in particular have been quite horrendous. The criteria in this bill cover more than just young people; they cover all people who qualify to buy their first home. The biggest hurdle for those wishing to buy is saving for their deposit. The Rudd government recognises this and will provide $1.2 billion over four years to help first home buyers save for their first home. First home saver accounts will provide a simple, straightforward and effective way for Australians to save for their first home. I will give a little detail about the bill before I talk about the benefits of this legislation.

The first $5,000 of individual contributions to these accounts each year will attract a 17 per cent government contribution, providing more assistance to average income earners—a great incentive for our next generation of home buyers who may currently feel denied the opportunity. They have felt the pressure of trying to get a start in the market. For every $1,000 contributed the government will provide $170 tax free. Earnings will be taxed at a low rate of 15 per cent and withdrawals will be tax free when used to buy or build a first home in which to live. The accounts will allow a couple, each on average earnings and saving 10 per cent of their incomes, to accumulate a deposit of $88,500 after five years. This is about $12,600 more than would have been possible by saving for the deposit on their own. I am so concerned about these issues of housing generally that I have a separate motion before the House to discuss them further at some stage. The relevance of this bill is that it allows the government to give some relief to young families.

It is all about the great Australian dream—owning your own home. I bought my first home when I was 21. It cost me $19,000 and I was on a salary of about $15,000. So the house price was a little more than one year’s salary. Today house prices are about seven times annual salary. This is particularly true for the residents of my electorate who are finding it very difficult to enter the market. We should also understand that this is a raft and clarifies very much the Rudd government’s approach to young families and families who need relief. It is a piece of the jigsaw to give relief to workers and their families. The Howard government probably ignored these warning signs. I know that for a long time we called for a relief in public housing in Queensland. Even that would have certainly given us some relief. I heard the opposition speaking this morning about rent assistance and how rent assistance funds should be channelled into some other scheme. Essentially, we are stuck with that process—people who are dependent on that particular rent assistance scheme. This is another era; this is a complete approach to providing affordable housing through savings.

We have heard many times in the debate over the budget—we hear it from our Prime Minister and from our Treasurer—that it is very much about putting downward pressure on inflation, which is then going to put downward pressure on interest rates. In that environment the culture of saving is very, very important. Re-engaging young people with the ability to buy their home through an assisted program of savings has to take top marks. It is interesting to note that the opposition probably do not quite understand that our total approach to this is about providing a whole range of approaches. One of the challenges, of course, is that the availability of land is always going to have an effect on the prices of houses. It was suggested that maybe the government should look at plans. We have done that.

Our raft of proposals in this bill and in other legislation talks about our first home saver accounts, which I have just spoken about. We also have our Housing Affordability Fund, which will increase housing supply by providing money for local infrastructure and by giving state and local governments incentives to lower development charges. That is directly in response to some of the challenges that were made this morning by the opposition. We have the National Rental Affordability Scheme, which will provide investors with tax incentives to increase the supply of new affordable rental properties across Australia, saving 50,000 low- to middle-income families 20 per cent of their rental bills. Further to that we have a better approach to land release, with Commonwealth surplus land being freed for housing development or community infrastructure.

The pressure is no more obvious than in south-east Queensland where, with the economic boom—the resources boom—and a lot of people moving to Queensland, this whole raft of options will give us in Queensland and certainly in the seat of Forde some relief. We really are looking for solutions but there is negativity coming from the opposition. While generally they support this plan, they want to pick off individual points and drill down into some of the aspects of the bill without understanding that this is part of those four other proposals that I mentioned. As an example, in my own family I was very pleased that on 31 May my nephew and his wife, Mitchell and Jess Raguse, had their first child. They are a young family who want to get their own home. I know that they were very, very excited by the prospect of this particular piece of legislation. They are already trying to save furiously for their first home, so this bill is certainly going to give them some relief on that.

I mentioned that this is not only about the mortgage stress but about the whole supply and demand. The opposition challenged us today by talking about the bill as not being a solution to supply. The reality is that it is all about providing new housing. Young people will have the option to buy an existing home or to build their own home. Of course, one reason we have major issues with rental property and rental availability is that there are just not enough properties available. So any encouragement to build more homes to get young people and others into their own homes will then free up that rental market. In fact the rental market in my electorate of Forde has probably been most affected, with increases of up to 60 per cent in 18 months. It is quite phenomenal. The First Home Savers Accounts Bill and associated bills are an important start for young Australians and for working families who want to make the great Australian dream of owning their own home a reality. This bill will, I believe, promote the culture of saving, which is a necessary tool to help put downward pressure on interest rates and inflation while giving Australians an opportunity to own their own homes. For these reasons, I commend these bills to the House.

Alex Hawke (Mitchell, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the First Home Saver Accounts Bill 2008, the First Home Saver Accounts (Consequential Amendments) Bill 2008 and the Income Tax (First Home Saver Accounts Misuse Tax) Bill 2008 before the House, as a matter of vital importance to my electorate of Mitchell is the issue of affordable housing. 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:

Government members interjecting—

Alex Hawke (Mitchell, Liberal Party) Share this | Link to this | Hansard source

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.

Mark Butler (Port Adelaide, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for Mitchell for that short course in market economics. The First Home Saver Accounts Bill 2008 and related will begin to rescue the Australian dream of homeownership from the wreckage of the Howard government. Housing affordability, whether in the form of homeownership or rental accommodation, plummeted under the previous government. It is a simple matter of record. True to form, that one-trick pony of a government could think of little more by way of a response than a lump sum cash handout without paying any regard to the complex factors at play in this question and without paying any regard whatsoever to the challenges faced by renters.

Australia is by no means alone over recent years in having to grapple with a housing bubble. After the dotcom bubble burst and share market investment became temporarily less attractive, low interest rates around the world drew money into the residential property market. The Economist magazine tells us that residential property prices in the developed world rose by over US$30 trillion from 2000 to 2005. That increase was equivalent to about 100 per cent of the combined GDP of those countries and represents in percentage terms the biggest asset bubble in history. We know that Australia’s price increases were right at the top of that table when measured in percentage terms.

By any measure, this period caused housing in Australia to become overvalued, a great benefit no doubt to those who managed to get over the rope bridge before it burned through but the core of the challenge that we now face for so many other Australians, particularly in younger generations. The standard method of measuring whether housing stock is over- or under-valued is using the price-rent ratio, the property market’s equivalent of the price-earnings ratio used in the share market. By 2005 the price-rent ratio for Australian residential property was 70 per cent higher than the 25-year average to 2000, an increase in the ratio that far outstripped other overheated property markets such as in the US or in the UK. Logic and experience tell us what happens when the price-rent ratio is so far from the average. Prices stagnate or even fall, or rents rise, or perhaps there is a combination of those.

While some overseas markets have seen prices begin to fall, in some cases quite dramatically, by and large in aggregate terms the effect in Australia has been more on rents. Unfortunately for aspiring homeowners, though, the moderation in the housing market that started a few years ago came just at the time that the Howard government’s run of 11 interest rate rises on the trot was beginning. As a result the housing affordability index continued to fall under the previous government’s housing policy. The most recent index published by the Housing Industry Association and the Commonwealth Bank saw a record low result. The HIA reports that the average home loan repayment across Australia is now $2,799 per month or $33,588 of post-tax income every year. While repayments at that rate are simply out of the question for many working families, the deposit now needed for an average house has also become a major barrier to entering the market. Using the traditional deposit rate of 15 per cent, the average Sydney house now needs a deposit of $83,000, the average house in Melbourne requires a potential buyer to find a deposit of $69,000 and in my own home town of Adelaide you will need $54,000.

As one would have predicted looking at the price-rent ratio in 2005, we have also started to see very significant rises in rents. This impacts negatively on two groups: firstly, those Australians who are long-term renters; and, secondly, those who would follow the traditional path in this country of renting while you save a deposit to buy. Higher rents, combined with higher prices for consumer goods, generally make it harder again to young Australians to save a deposit to get into the market.

This budget and these bills in particular provide new hope to those Australians who are struggling to find affordable rental accommodation and struggling to save a deposit to buy. These bills constitute an important element of a $2.2 billion package contained in the budget targeting housing affordability. The centrepiece of the package reflected in these bills is the enhanced first home saver accounts. This policy will help Australians saving to buy to build their deposit in a tax effective way. The first $5,000 of individual contributions to these accounts will be matched by a government contribution of 17 per cent or $850, or $1,700 for a couple who are both making that level of contribution. Earnings from the account will be taxed at the discounted rate of 15 per cent and withdrawals will be tax free when used to buy a home or to build one. A young couple both making such a contribution would over five years or so be able to benefit by well over $10,000 towards their deposit.

The second element to the package is the National Rental Affordability Scheme. That scheme commits $623 million over four years to encouraging the construction of rental housing priced at least 20 per cent below the market rate. It is clear, in spite of the member for Mitchell’s lecture on market economics, that government intervention or at least support is needed to stimulate growth in affordable housing. In my own state of South Australia, the Rann government has legislated a quota of 15 per cent affordable housing in new large housing developments. This scheme will build on schemes like South Australia’s to ease the pressure on renters.

Finally, the housing package outlined in the budget contains a number of measures to boost supply. We know that supply has been running well below demand in recent years under the leadership of the Howard government. We also know that the previous government paid no real attention to supply-side measures. True to form, they preferred to sit on their hands, point the finger at state governments and avoid any real leadership. But, given the shadow minister’s exposition on supply-side economics earlier on in this debate, that might actually have been a blessing. I was not sure that I had heard the member for Farrer correctly, so I checked the Hansard. Indeed, it does appear that the shadow minister thinks we should draw a lesson on housing supply from the plasma TV market: everyone wants one, demand has been skyrocketing, but prices have come right down on plasma TVs, so why doesn’t it happen in housing?

On this side of the chamber we suspect the question of housing supply might be a little more complex. Some time ago, the new government announced a review of its land holdings to identify new housing opportunities and assist the member for Mitchell on the question he asked the Parliamentary Library. The budget also delivers $500 million over five years to cutting a range of supply-side costs. These are meaningful supply-side policies. Australians will look back on the Rudd government’s housing affordability package as the first step in bringing the dream of homeownership back from the brink. These bills constitute the centrepiece of that package, and I commend them to the House.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

I rise to not oppose the passage of the First Home Saver Accounts Bill 2008 and related bills, despite their limitations, as anything that encourages people to save is a welcome and good thing. The facts of the bill are that you must be 18 years old to have one of these new first home saver accounts. There is no restriction on who can make a contribution to your account, although all contributions must be made in post-tax amounts. To ensure that the taxation incentives are appropriately targeted, there is an overall balance cap of $75,000, noting it is indexed annually by $5,000. Government contributions are only paid on the first $5,000 each year—indexed, of course. Payments can only be made from a savings account to purchase a first home if personal contributions of at least $1,000 have been made in at least four consecutive financial years. You cannot use the funds from this account for at least four years. A government contribution is payable for an individual for a financial year on personal contributions up to $5,000 indexed per annum, and the rate of contribution by the government is 17 per cent. Funds are taxed at 15 per cent.

They are the facts. That is the basis of the government’s proposal. Whilst we will not oppose it, as all savings are good, I think that the government has missed the mark and not provided the full potential that this bill could possibly bring. For a start, the bill the government brings to the table deals with the demand side of the equation. And whilst I am sure the Labor government believes in big government—it believes in giving outcomes to people—we believe in giving people opportunities, getting them to the door, giving them as much incentive as possible and allowing market forces to rule. There is no commensurate supply-side equation in the bill, and the supply-side equation is fundamental.

The Labor states must release more land. It is a statement of the absolute bleedingly obvious. I am faced with the farcical situation in my electorate, the seat of Fadden, where around Woongoolba, the vast cane-growing areas, the average farmer is making something like $20,000 to $30,000 a year and is going broke. Out of 60 farmers, 55 of them are not interested in farming anymore, yet in the south-east Queensland plan the Labor state government has demanded that the area stay for primary production of cane. No-one is interested in actually growing cane—the price they are getting is dismal and there is no way to make a living. That land could easily be changed in the south-east Queensland plan to bring up more supply of land.

Labor states must get rid of stamp duty on first home purchases. It is a farce for Labor states to continue to charge a tax on people struggling to get in their first home. City councils must amortise infrastructure costs across the life of a land investment, because at present almost 30 per cent of the costs of a development house and land package are the infrastructure costs leveraged by local city councils.

If states released more land—obviously with a greater supply of land, prices come down; it is simple economics—if the states got rid of stamp duty for first home buyers and if the councils amortised their infrastructure charges, housing prices could be reduced by as much as 30 to 40 per cent. That would put a dent in the issues and the difficulties of first home buyers entering the housing market. Labor has talked up cooperative federalism—Labor from door-to-door across state and federal governments—and yet it still cannot get the states to get rid of stamp duty on the purchase of first homes or release more land. Cooperative federalism has failed the first hurdle.

While a major deficiency of the bill is that it deals with the demand side of the equation and not the more extensive supply side, there are other deficiencies. The bill only allows for someone to open a bank account if they are 18 years old. I suggest that this is based on the logic that someone finishes school when they are 18. I finished year 12 when I was 16. There are many people who finish school when they are 15. This bill is saying to people who finish school at 15: ‘I’m sorry, you can’t save for a house. We don’t want you saving for your first house. You’ve got to be 18 to save for your first house, because your government knows best.’ I entered the workforce at 16. This bill would have prohibited me from enjoying the benefits that this bill purports to offer because apparently I would have been too young to save for my first home. If that is what this government thinks about the capacity of young people to save for their first home, may I suggest to Kevin 07 and team: go back to the drawing board.

Furthermore, the bill is capped at $75,000. This equates to a 20 per cent deposit for a $300,000 home, excluding other costs. Let me shatter the little bubble that the Labor government lives in: an article in the Courier Mail on 9 September 2007—six months ago, so these numbers are on the low side—said that overall the median price in Brisbane six months ago increased to $434,000, ahead of Melbourne at $420,000 and close behind Sydney at $525,000 and Perth on $446,000. This bill caps the amount you can have at $75,000, which is a 20 per cent deposit for a $300,000 house, and yet in Queensland the average house in Brisbane is $434,000. I say to the government: you are $134,000 short; your $75,000 is too low. Nearly one-third of Brisbane suburbs—43 out of 151—have a median house price above half a million dollars, but only five out of 151 suburbs are below $300,000. So if the $75,000 limit capped for these accounts in this bill, and all good financial commentators say a deposit should be 20 per cent, was available to someone with one of these accounts—if they were over 18 of course, because heaven forbid, if you are below that you could not possibly save for your first house and enjoy the benefits that this bill would offer—only five out of 151 suburbs would be able to have the pleasure.

Other Sunshine Coast hotspots, getting a more rounded view of Queensland: Buddina, up 24.9 per cent to $585,000; Alexandra Headland, up 24½ per cent to $644,000; in Mackay, the median price for homes at Shoal Point on the northern beaches rose 20.9 per cent—double the average for the city—to $535,000; and at the Gold Coast, where I hold the seat of Fadden, the median price of $420,000 six months ago was up 6.3 per cent. Considering the cost of entering into a home, considering the fact that this government will not touch the supply side of the equation because clearly it is a little too hard to take on the big scary Labor state governments, why cap the amount at $75,000? It is literally too little. It must be a minimum of $100,000 or more. And why cap the contributions that the government will pay a percentage on at $5,000? Where did the $5,000 come from? The figure needs to be higher to keep pace with the rising price of housing. It needs to be somewhere around $10,000. Furthermore, the government must review why it intends to tax the earnings. While I understand the 15 per cent rate is in line with the rate of superannuation, if this is such an emergency as the government purports it to be—I acknowledge the housing crisis means it is difficult for people to get in—and this government is so flush with funds courtesy of the member for Higgins and the financial discipline of a previous government, why tax the earnings in the accounts? Why not allow the earnings to be untaxed and to grow at a more rapid rate?

Furthermore, there is no incentive for parents to save for their children and take a long-term view. This looks like a short-term, politically expedient symbolic view of a hapless Labor government. Why not allow parents to save for their children? Allow the accounts to be open for any age child, to give the incentive for parents to make sacrifices now so their children will be able to afford a house when they come of age. Why not allow accounts for any age? Why not allow a tax deduction for people who contribute funds, up to a limit, into the accounts of their children or others? By providing a tax deduction, it will get a greater degree of dollars and cents flowing into accounts to assist people to purchase their first home. So while the bill is not opposed, it lacks in so many areas. The government must consider the supply side of the equation. It must take on the Labor state governments. The 18-year-old level at which an account can be opened is ridiculous considering so many people start work at a younger age. It is saying to them, ‘I’m sorry, we don’t believe you’ve got the capacity to save and we’re not going to help you.’ It is another means test that this budget looks at putting in place, but rather than a means test by the politics of envy on those who apparently have too much money for this Labor government to be pleased with, this is saying, ‘You’re not old enough to be able to save for a house.’ The cap at $75,000 is too low. The cap at which government will pay a contribution of $5,000 is too low; it should be $10,000. Tax on the earnings of 15 per cent will simply lessen the amount of money and the incentive for people to put dollars and cents into those accounts, and there is currently no incentive for parents to save for their children.

I was communicating with constituents Nadine and Kirk Hamilton last week. It was interesting because they reflected on this and other budget measures. They are paying more for health insurance and are dreading the Medicare surcharge going up as private health insurance will soar above 10 per cent increases in premiums. They cannot save for their children through various accounts like the first home saver account and enjoy the government contribution because apparently their children are too young for this government. They note the increases of rent and the difficulties of housing affordability coming through, and also note the inadequacies of this legislation. While it has the framework, the bones, the architecture of something remotely decent, it falls over in so many areas. On top of that, with the government unsure about what they are doing with the $4.7 billion Conroy city-centric plan, these people cannot even get ADSL in the city. The average people like Nadine and Kirk Hamilton, who work hard, who love their families and who are the backbone of a nation, look at this bill and say it has not gone far enough. It has not extended to the areas where it needs to. It has not reached anywhere near its potential. So, while the bill is not opposed, I encourage the government to take a good, hard, solid look in the mirror and look at areas where it could be substantially improved for the benefit of all Australians.

Mike Symon (Deakin, Australian Labor Party) Share this | Link to this | Hansard source

I rise in strong support of the First Home Saver Accounts Bill 2008 and, rather than pick holes around the edges, I want to say I think it is a very good package all up. Together with the other two bills, the First Home Saver Accounts (Consequential Amendments) Bill 2008 and Income Tax (First Home Saver Accounts Misuse Tax) Bill 2008, this bill implements the Rudd government’s 2007 election commitment to introduce a first home saver accounts scheme. It is an initiative that makes it easier for families to put money away for a deposit to buy their first home by giving them access to low-tax accounts. From 1 October 2008, thousands of young families from across the country, many from my own electorate of Deakin, will be able to edge closer to that dream of owning their first home through this initiative.

It is a dream that has become more and more distant over recent years as housing affordability has decreased. The prices of properties have increased much faster than wages. Many families need a scheme such as this to help them achieve the very Australian dream of owning their own home. The great benefit of an account such as this is its concessional tax feature. You save money, rather than putting it into a bank account where you find out, at the end of year, that you have to pay marginal tax at the full rate on the small amount that you have been able to save. That is a great benefit and one that more and more people will see as the scheme rolls on.

I talk to many young house hunters and many young families as I get around Deakin between Canberra sittings. I talk to locals who are looking to purchase homes in the growth areas of my electorate around Croydon, Ringwood and Bayswater North. I know these areas very well. I grew up in the local area and I have lived and worked there my whole life—and I have seen it change. In that time it has gone from an area with open spaces—there were even farms and orchards around—to being almost fully developed. But, because it is 30 to 35 kilometres out from the city of Melbourne, housing prices there, whilst expensive, are in the range where first home buyers think they may be able to make a purchase if they shop wisely. So this type of scheme is particularly relevant to a seat like mine. These are the mortgage-belt suburbs of Melbourne’s outer east and they are examples of the very places that first home buyers want to settle in.

These people tell me how hard it has been for them to save a deposit as they try to lock money away whilst they deal with spiralling rents—and it is almost impossible to rent in eastern Melbourne now; we have a vacancy rate of one per cent—with the increasing costs of living and with the cost of running two cars. If you are going to live that far out from the city, you actually need two cars out there because public transport does not always go to where you need it. Quite often many of them are travelling 70 kilometres or more to and from work each day. That is a cost, and all that comes out of the family budget. One of the first things to go in that case is savings for a house, because you are looking after your week-to-week expenses. First home saver accounts help in that regard because of the tax advantages that come with them.

There was no sign of a helping hand for first home buyers from the former federal government. We have heard a lot in here today about things that might be wrong with particular little points of this scheme but nothing about what should have happened in the previous 12 years. There was no helping hand, there were no new ideas and there was no strategy to help these aspiring young first home buyers get their foot in the door. First home buyers in Deakin have a friend in this new Rudd government, a government that is acting on the housing affordability crisis. First home saver accounts are just one part of the government’s $2.2 billion package to tackle the housing affordability crisis. The first home saver accounts, the National Rental Affordability Scheme and the new Housing Affordability Fund now come together as a complete strategy to help young families save that deposit and get into their first home.

First home saver accounts will provide first home hunters with a simple, tax-effective way to save for a place to call home, through an effective combination of low taxes and Rudd government contributions. The government will contribute 17 per cent on the first $5,000 of contributions made into individual accounts each year. That means that a typical couple in Deakin, each earning an average income, will be able to save a deposit of more than $88,000 after five years if they exercise discipline in their savings. Depending on returns, that can be up to $12,600 more than if they had saved their money in an ordinary deposit account. A key feature of the accounts is that parents and grandparents can make contributions to their children’s and grandchildren’s accounts, with all benefits flowing to the home saver. That means a bigger deposit and a faster start to buying their first home and planning the rest of their lives. It is by getting into their first home that most young families can begin to map out the rest of their lives. They can make big decisions, like having children and deciding which local schools they want them to go to and which community they want them to grow up in. They now have the ability to do so with greater confidence, knowing they finally have a federal government going in to bat for them, a government that is putting in place first home saver accounts that will mean real dollars for them at the end of the line.

This can be shown by having a look at how the average young family in Deakin will benefit in dollars and cents. Let us look at a mum and a dad with two kids, aged four and six, as an example. Dad works full time and earns $60,000 per year, while Mum works three days per week and earns $27,000 per year. They work hard and set aside 10 per cent of their combined income into their first home saver accounts in 2008-09, putting away $8,700 split evenly between their accounts. This will mean that both of them will receive about $1,480 of Rudd government contributions. And, if they keep working hard to put money away at that rate, in five years they will have a combined balance of $64,800 for their home deposit and be $10,100 better off than if they had put it in a regular deposit account. There are real dollars in this scheme, giving young house hunters more money in the bank and cutting down the time before they can start their house hunting.

The Rudd government has consulted widely with the community on the design of this policy to make sure that it is as fair and accessible as possible. The Rudd government has improved the first home saver accounts to include the flat 17 per cent contribution for all individuals, to make sure that people on average incomes get better returns on their savings. We have removed the planned $1,000 up-front contribution so that accounts can be opened up without the need for existing savings. That is particularly important to parents who might want to open up an account for one of their adult kids but who do not have $1,000 at hand to do so. This bill now calculates the four-year rule from the financial year in which the account was opened, in order to reduce compliance costs. It also introduces a 14-day cooling off period to give people the chance to change their mind, although with such a good scheme I would not think that there would be many doing so. We have replaced the $10,000 annual contributions cap with one overall account balance cap of $75,000 indexed. This cap includes personal contributions, government contributions and earnings and, when the cap is reached, earnings and any outstanding government contributions are still able to be credited to the account, although no further personal contribution is permitted at that point. The ASIC, the ATO and APRA will work closely with the industry to minimise the reporting requirements as much as possible to make accounts easier to use and understandable for the end-user—those that are saving the money.

It is anticipated that these changes, aside from making first home saver accounts fairer and more accessible, will also increase savings in accounts from over $4 billion to around $6.5 billion over four years. This is another example of the new Rudd government doing things smarter and delivering fresh ideas that produce results and which net massive savings at the same time. It is perhaps a good idea to place the gains for first home buyers and young families through this initiative into the basket of all the other benefits flowing to them from the Rudd government. I commend this bill to the House.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to 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—

Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. The member for O’Connor, who it seems has been here a very long time, is meant to address members by their seat or by their title. When he just says, ‘The member over there,’ and has a go at someone’s youth, for whatever reason—

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

The member has made his point. The member for O’Connor will refer to members by their seat or their title.

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

Thank you for that bit of advice. He is one of those who shunted someone else out—and that makes for two of them in the room. The fact is that I did not refer to him as anybody. I said, ‘I don’t know his seat.’ I did not call him ‘Bill Smith’. The point of order was frivolous. I was saying that the member over there, whose seat I cannot name, was shaking his head when I said that if you live in Sydney or Melbourne and you have a mortgage then you are not rich on a gross family income of $150,000—particularly when you look at the tax rates that are applicable at those higher levels. I make that point as an example of how difficult it is for people to acquire homes.

There are no practical responses to addressing the cost of the building block for a new house. We all know that the cost of a finished new home package flows through to those houses previously constructed. Unless governments are prepared to find alternative means, I put it to this House that providing people with leases that can be converted to freehold as their financial circumstances improve is a sensible proposition and not one warranting an interruption to my speech. I think it is a very positive idea that people should think about because it removes what has become the most expensive part of the process. If state governments went back to their responsibility for providing services and not trying to be paid in advance by 50 years for some of them then in fact this particular proposal would have some meaning. I point out that an aggregate amount as mentioned by the member for Deakin would be half what the state government rips out in the development of a building block.

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

It is my pleasure to rise in support of the First Home Saver Accounts Bill 2008 and related bills and to support the initiative contained therein. It is an initiative that will encourage a new savings culture, particularly amongst young people. The member for O’Connor was reflecting upon experience and lack of experience. I must say that some of us in the House probably have a little more recent experience of the challenge of saving funds to acquire our first home. In the context of my experiences, I wish to add my voice in support of these bills because I know that the initiatives contained within these bills provide a genuine incentive for people to save over a period of time in a responsible way to prepare themselves for the task that lies ahead in owning and purchasing a property. It is a lifetime commitment for most people. The typical time frame for a mortgage is 25 years, and many mortgages are now being taken out over a 30-year period. This is a long time frame that the typical family or couple might be looking at in preparing to save for and ultimately own their own home.

The criticism that has been levelled by those on the other side that the four-year lock-in period—the four-year rule—is something of a considerable disincentive or disadvantage that potential homeowners might face lacks substance. The very people who will be most willing to take up the offer of a first home saver account are the people that this initiative is targeted towards, and that is an indicator of what will be the success of the policies contained within this bill.

If you are looking to save a deposit over a short period of time, this may not be an attractive proposition to you, but, as we have heard from many speakers on the other side, it is difficult to save enough money to secure a deposit and own a home, particularly in our major cities, whether it be Sydney or Melbourne. As someone who hails from Western Sydney, I have to respond to the member for O’Connor’s suggestion that only those with over $150,000 in their household income can own a home or pay off a mortgage in Sydney. There are plenty of people in my community doing it tough but in an honest and consistent way. They are working hard and bringing home modest incomes; we have a median income in our electorate of $50,000-odd. We have a rate of homeownership in the vicinity of 30 to 35 per cent. Clearly, many people on incomes of far less than $150,000 are rising to the challenge, albeit a very difficult challenge, of paying off a mortgage with a view towards owning their own home. As many speakers in this debate have said, one of the great elements of the Australian dream is being able to buy and own a home and being able to raise a family, if that is your wish and inclination, within a home that you have acquired through the efforts of your labours.

I wish to respond to a number of the comments that have been made by previous speakers on the other side. I make this general observation: we have seen in this debate something we have seen in other debates and we will continue to see. There is no question that housing affordability is a big problem. We all recall the member for Higgins denying that there was a housing affordability crisis; it was not that long ago. Those on the other side have come around in recent times. It has taken only a fairly devastating election defeat for them to see the error of their ways, and now they appreciate that families in suburbs such as those within my electorate have been doing it tough for a range of reasons when it comes to owning their own homes and sustaining the mortgage repayments required. Now that those on the other side have recognised that this is a problem, they say, ‘This bill will not be a comprehensive response to the challenge of housing affordability.’ They are right. This bill on its own will not be a comprehensive response to the challenge of housing affordability, but thankfully this is not the only bill that the government intends to bring forward as an integral part of a comprehensive strategy designed to make housing more affordable over the medium term. We could come into this place and suggest that this bill is going to make the difference, but in the end these are complex problems that require multifaceted solutions.

This bill is one of the facets that we wish to bring forward. This proposal will be of significant assistance to people wanting to save money. Being able to contribute up to $5,000 a year, having a co-contribution from the government of 17 per cent of the contribution and then enjoying the benefits of earnings taxed at the concessional rate of 15 per cent will deliver real benefits and provide a real incentive for people to save over the medium term. It will not only prepare people for seeing a bank manager and securing a loan but also demonstrate a savings history that will hold them in good stead for paying off their mortgage throughout the course of their loan.

I support the first home owners grant and this government will keep it in place. Apart from being one-off compensation for the effects of the GST, it is an important payment that is factored into every first home buyer’s considerations in preparing themselves for a mortgage. But if there was a downside to that proposal it was that it handed over the money in one hit, allowed some people to get a mortgage without establishing a savings history and made them more vulnerable to the ultimate increases in interest rates that we have all experienced. Those on the other side who claim credit for the first home owners grant do not recognise that there were some inherent flaws in the way in which the scheme operated, and that is one of them. The other was that it was inherently inflationary in its impact. Because it brought a surge of new home buyers onto the market in a very short space of time, it drove up house prices.

I note that the member for Farrer said she was very concerned that this policy might achieve the same result. Unlike the first home owners grant, which led to that initial flood of first home owners into the market—many of whom have subsequently found out that, having not established a savings history, it has become a lot more difficult to sustain the consecutive increases in interest rates that have prevailed in the time since—and drove up the cost of housing, this proposal will not lead to that inflationary effect, and that is why it is a very sensible policy. It encourages a savings culture and sends a clear message to potential first home buyers that it is a difficult business. It is not easy. Anyone that has ever had a mortgage and had to pay it off will know that it is not easy. You need to be prepared for it and you need to save for a deposit that you can bring to the table when you first secure the mortgage.

The other point that those on the other side have not reflected upon is that in recent years we have seen a massive increase in the number of people obtaining a mortgage with a very small deposit. There has been criticism from the other side that the amount on offer—potentially up to $75,000, or $88,000 if you factor in the additional earnings over time—is insufficient to cover the cost of a deposit. In recent years, we have seen many people getting a mortgage with a deposit that is nowhere near that amount, so it is a bit rich for those on the other side to say that there is insufficient money for a deposit when the reality tells a very different story.

As opposed to a system that encourages people to get themselves into a situation where they have a mortgage that is almost the same amount as the value of the house that they are currently living in, this is a policy that encourages people to get some runs on the board—to save some money over a period of time—so that, when they are in a position to enter the first home owning market, to take on a mortgage, they will have been through some of the preparation that is required in order to prepare them for what lies ahead. I think that this is a good policy. It is one that I support. It is only one measure but, when you combine it with some of the other things that we are doing—whether it be the Housing Affordability Fund or the National Rental Affordability Scheme—you see a package of policies. Those on the other side have criticised the lack of supply-side policies. Do not forget that we are currently undertaking a comprehensive review of Commonwealth owned land, with a view towards determining whether or not some of that land could be or should be released to assist in opening up supply in the housing market. When you combine all of these things, you start to see some semblance of a comprehensive policy designed to attack the housing affordability crisis.

Those on the other side can reflect upon the 11½ years that they had to address this issue, and they will not be able to come up with more than one comment. The only thing you hear from them is ‘the first home owner grant’. But the first home owner grant on its own did not do anything to address the massive challenge of the housing affordability crisis. You need a range of policies. That is why we have a package of policies of which this is an important part, and it is one that many people in my electorate will get great benefit from. It is in that vein that I support the bills.

Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

I embrace the opportunity to speak tonight on the First Home Saver Accounts Bill 2008 and related bills, on what is a very important issue. We have that old catchcry ‘the great Australian dream’. I say, ‘Long may it live.’ We should be pursuing these sorts of things. I strongly believe that it is everyone’s right in this country to have the opportunity to buy a home, if they wish to, with land—somewhere for the kids to play, somewhere to run a dog if they want that. These are the important things in life. This is a key thing. It is right up there with jobs.

I would like to go back a little bit in time to cover the points in relation to this bill. The first house that I ever bought was back during the Keating government period. Unfortunately, it was not for me or my wife to live in; it was actually for my parents-in-law to live in. It was because my parents lost their business during the time of the high interest rates that the last Labor government delivered. Due to good management, we had a bit of a deposit, and the price of houses was a lot lower then—in fact, I think this house was $108,000 in a reasonable suburb in Perth. Of course, there was no-one there to help us at that time. There were no opportunities for first home buyers or anything like that. The last Labor government forced us into that purchase. In listening to a lot of what has been said today, and I think will be covering some things the member for Lindsay said, I find it incredible that the Minister for Families, Housing, Community Services and Indigenous Affairs can lecture us—I might even say, give us a sermon—about how much this government has done and how little the last government allegedly did.

I want to speak on this bill because of the past and the future. In the same way that this new government continues to espouse its revisionist propaganda, I know that they have regressed, and will keep regressing in the future, to the catatonic mantra of ‘11½ years of neglect’ that we have just heard. Just because you keep saying it again and again, it does not mean you are telling the truth. The new government is very fond of rolling out a denial of any action by the last government, a denial that any of those actions by the Howard government actually added value in this country. But there is an extensive list of very good things that the Howard government did. The minister asked, at one point today: what did the last government actually do? ‘Give us one point,’ I think she actually said. The member for Lindsay mentioned that point already, so I am surprised that the minister asked. The answer, of course, is that there was the introduction of the first home buyer grant.

Just to deal with what the member for Lindsay said. I think he said, ‘11½ years of housing affordability crisis.’ I do not know where he was during a lot of that 11½ years, but my house that I bought is now worth twice as much as I paid for it. In 2001, I do not think anyone was actually talking about a crisis—certainly not in Perth. Maybe there was a crisis in Western Sydney at that time, but certainly there was not in Perth. There were a number of places around the country where you could do quite well. You could afford a house in most cities and it was not too much of a struggle. But things have changed, obviously. There have been the issues of the mining boom in Western Australia—a lot of people coming in, increased demand for a limited stock—but I will get to that in due course.

I mentioned before that there was a great deal of denial that the former government had done anything right. I sometimes wonder whether, apart from the revision of history that seems to be taking place with those employed by the government in the ministerial wing, at some point there will be some rewriting of history books to reflect the new realities. This rewriting of history by the Rudd government does tend to take you back to the days of school, where I remember reading George Orwell’s 1984. It seems to be pretty similar: the past has been rewritten into a new reality and badged as the truth. In every portfolio area, it is as if the past never existed—or at least the past where $96 billion of government debt was never eliminated by the good economic management of the Howard government, which did, of course, occur; or where the number of young Australians in apprenticeships was increased threefold by the Howard government; or where there are over 2 million more jobs in the economy now than there were back in 1996. So the government is now rewriting the reality that I recall.

Let us go back to the past for at least the homebuyers. At the time I bought my house I was a captain in the Army and did not have access to the First Home Owner Grant—it did not exist at that point in the Paul Keating period. Suddenly I had to buy a house to keep a roof over the heads of my parents-in-law. I am not upset by missing out on the First Home Owner Grant. When we were looking to buy our own home, the one we wanted to live in, we then made additional sacrifices. We went without things. That is the way we have always approached things in our family. My circumstances are probably no different from those of a number of other people in Western Australia and other places around the country. We all know that adversity can affect to anyone. I know that that certainly has occurred. When my wife and I bought our house—the one we live in—back in 2001, we did stretch ourselves, but we had a built-in capacity to address interest rates changes and put together a deposit. We made sacrifices to meet our financial obligations, but what made it harder were state government taxes. The only place these taxes have gone in recent times is up. To my mind, that is just one of the elements which the government has not confronted.

I want to see success. I want to see the first home savers fund work, but the government needs to concentrate, to put the heat on or throw acid on state governments to come through and make a contribution. That remains the major impediment to the government in confronting housing affordability. It is good to give more people more money. That is good for increasing demand, but more land is required so that houses can be built. It is not just a matter of whether the government is still thinking about selling off SAS land over in Perth or wherever else—maybe kicking the reserve out of Karrakatta. I would hate to see that happen. I do not know what the government’s plan is.

When the government is talking about what Commonwealth land can be sold, that worries me a little bit because the states control most of the land and they need to pull their weight. At this point, I cannot see the government putting the pressure on or throwing the acid on state governments. I think we will see more of that in future or at least refusal to act to get the states to pull their weight.

It is important that I get back to the bills before the House. I draw inspiration for my next comments from the First Home Saver Account fact sheets for account holders. The fact sheets describe the scheme as ‘simple’ in the first paragraph. The first section of the sheet concerns me on two counts. Firstly—maybe this is being facetious—any document that this government puts forward as a fact sheet is immediately suspect. I would like to look firstly at the eligibility section. I know this point was made earlier by the member for Fadden, but why does commencement have to start at age 18, when locking in good savings and budgeting practices should commence earlier than that at 16? Kick people off in their economic lives by concentrating on what is really important rather than mobile phone plans or trying to buy that V8. They should be encouraged to concentrate on something where they can really make a difference to their long-term security, and buying a house is it. Why does it have to be age 18? I think you can get past the limitations that have been suggested on this matter.

My next point—this is the one I really want to draw attention to, and I can see the minister’s advisers over there—is regarding the dot point, which says: ‘not having previously bought or built a first home’. In my extensive consultation with the people of my electorate before and since the election, I am afraid to say I have learnt that not all marriages survive in Cowan. I am sure it is the case in every other electorate. We know that some people cannot continue to live together. While that is regrettable, it is not something that can be avoided in all cases.

Alby Schultz (Hume, Liberal Party) Share this | Link to this | Hansard source

Order! I direct the member for Cowan to address his remarks through the chair.

Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

Sorry, Mr Deputy Speaker. I will look more forthrightly toward you. I recall many occasions on which a man or woman have told me about the circumstances of their marriage ending. It was always the case that one party in the relationship ended up with the house, the significant asset, while one did not. I think it is reasonable to say that the information regarding assets is held by a federal government body such as the Child Support Agency or by the Family Court and it is probably possible to determine who did the best out of some of these matters. With regard to eligibility, I ask the government why there cannot be some flexibility with regard to access for first home buyers or savers—flexibility to consider that some former partners from broken relationships want to get back on their feet and get some assets behind them. I therefore speak today for these forgotten people. I speak for the lady of Polish origin whom I met one day in Ballajura who raised this specific issue with me. I also speak for the lady in Marangaroo, not far from Rawlinson Primary School, who also raised the issue of her friend.

What about some flexibility to help these people get on their feet again? They had a house, they have lost that house and now they have no options for support. The First Home Owner Grant is not there for them and the first home saver account is not there for them either. It seems to me that this is a great opportunity to extend it a little bit. It might be a little difficult, but the facts are there. Somewhere within the bureaucracy we would know what sorts of circumstances they are truly in. It is a good opportunity to help people who are up against it later in life. It would be good to get some help for those people.

On the savings side, which we have been lectured on recently, in tightening up the legislation I would also like the government—and I am not sure if this is covered; I did not find it in the fact sheet—to, when eligibility is determined, take into account homes that are gifted to a person. After all, if you have a house, you have an asset that someone who is struggling to save does not have. You have that advantage, and that should be taken into account.

On the point of withdrawals for a first home purchase I believe that further clarification is required. The holder of the first home saver account clearly has to live in the house for six of the first 12 months. I worry that a person who is a fly in, fly out worker may not be able to achieve compliance on this point. Therefore, I hope that there is some flexibility for those who face these sorts of employment conditions. I have made some commentary on the fact sheet. I recall that the government claims that as many as 500,000 people will benefit from the scheme. I wonder if the beneficiaries are individual account holders. Are their families included in that number?

I want to look further forward on the matter. I want to look beyond savings and at the capacity to pay. The member for Lindsay has raised points in this area. In the end, the size of the deposit will be irrelevant if the capacity to service the eventual home loan is not there. To emphasise that point, I draw on an article in the Australian Financial Review from 8 May this year by Rohan Alexander. Mr Alexander suggests that the result of this scheme will be that families will qualify for loans that they could not ordinarily afford. The point being made is that saving a deposit over four years indicates a certain capacity of the family involved to service the interest on a particular loan amount. Because the 17 per cent government contribution applies only to the raising of the deposit, there should be provision for the eventual loan application to not consider the government’s contribution, as it would otherwise distort the figures regarding how much the family can repay.

Mr Alexander’s next point leads on from there. If the circumstances of these people are degraded—for whatever reason—the number of foreclosures would rise. Given that the government predicts 134,000 fewer jobs in the coming financial year, and possibly more losses in the years to come after that, we can assume that no income in the house would be a significant change in people’s circumstances.

At the end of the day, we still have no acceleration in the release of land by states and no benefits for supply. I call on the government to put the pressure on the states to do so. The sale of Defence land, if that is the plan, is not going to cut through in the end. What we will have with this system is more people with a deposit competing in a competitive market. This is an inflationary risk.

Obviously, we are not going to oppose this bill. There are some areas in which it needs refining. The point that I would make in particular one final time is that all aspects of the problems of housing affordability and the pursuit of the great Australian dream need to be addressed. We must look at what incentives can be put out there for a change in savings. Some people in this country need to change their savings patterns. We need to look at what the federal government can provide in the way of more land. Most of all, what we need to do is get the states to increase the supply of land. We also need to address the issue of state government charges and taxes. At the moment, these are the important points that the government—by the looks of it—are not interested in looking at. Somewhere along the line, they might have to tread on the toes of the state governments, call them to account and ask them why they have not been doing more to address the housing affordability problem.

Being from Perth, I obviously cannot speak for those who live in other cities. Things picked up about five or six years ago. They picked up because there were a lot more people coming into the state. People were immigrating from overseas and from across the country. They were pursuing the mining boom. The amount of land that is out there has not kept up. These are the problems that need to be addressed.

Amanda Rishworth (Kingston, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to rise to support the First Home Saver Accounts Bill 2008 and associated bills. The introduction of the first home saver account legislation not only delivers on one of the Rudd government’s key election promises but also provides a real practical measure to help thousands of young Australians get a step closer to the Australian dream of home ownership. This is something that the previous government seemed uninterested in doing anything about. They sat back and ignored this growing crisis without any strategy. They had their head in the sand when it came to housing affordability.

Those on this side of the House know that housing affordability is placing significant strain on our neighbourhoods. That is why this government has placed, and will continue to place, housing affordability firmly on the national agenda. This is in stark contrast to those on the other side who for the majority of their time in government did not even have a housing minister. There is not a week that goes by that someone in my electorate of Kingston does not bring up with me their concerns about housing affordability, whether it is anxiety about how to pay the mortgage if there is another interest rate rise or where to find rental accommodation or how to pay a rental bond.

One of the many young people affected by the housing affordability crisis in my electorate is Danielle. She is a 20-year-old woman living in Woodcroft who earns about $35,000 per year. Danielle had recently embarked on what many young people want to do—that is, move out of the family home and share a house with friends. For Danielle this only lasted a short time as she found it almost impossible to pay rent and afford food and petrol, let alone save for a deposit to purchase a home. She has had to move back home with her parents who help subsidise her living costs. This, unfortunately, is a too common story around my electorate.

Australia’s housing market is one of the least affordable in the developed world. Over the past decade the price of an average house has risen from five to 7½ times the average annual wage. Also over the past decade, average weekly rents have risen by approximately 82 per cent and, according to the National Centre for Social and Economic Modelling, 1.1 million low- to moderate-income households are paying more than 30 per cent of their disposable income. This is an approximate 20 per cent increase since 2004—and it is our young Australians who are at the greatest level of housing stress.

Homeownership has historically been an essential part of wealth creation and economic security for families in this country. The high cost of rent makes it very difficult to save for a deposit for a new home. There was a time when renting was only a temporary measure for families who were saving to buy their first home. However, this is no longer the case. One of the most significant barriers between young people and homeownership is that challenge of saving for a deposit. With the cost of rent taking a huge chunk of the weekly budget, it is near impossible for individuals or families to save for their own home. The government’s first home saver account will help young people and families in this task. It will help young people like Danielle. This initiative is particularly important in my seat of Kingston, where a significant proportion of the population is aged between 18 and 30—the stage in life where most people are starting to think about buying their first home.

The first home saver account will be able to be offered by banks, credit unions and superannuation funds, and it is expected that account holders will be able to choose from a number of institutions with a number of different investment options. Account holders will receive a 17 per cent government contribution to their account on the first $5,000 of individual contributions. This will mean that a person who contributes $5,000 in their first year will receive a government contribution of $850. Account holders will continue to be eligible for government contributions in subsequent years, until the account holder withdraws the balance to purchase a home or if the account reaches the balance cap of $75,000 indexed. Over time, and with the effect of compound interest, the government’s contribution will build and become a substantial component of the final account balance upon withdrawal. Investment earnings or interest on these accounts will be taxed at a flat rate of 15 per cent. This gives a considerable concession to the majority of young families who pay a marginal tax rate of more than 15 per cent.

I believe that one of the best features of these new accounts is that parents and grandparents are able to make contributions on behalf of their children. It is often parents who express to me their deep concern about the housing affordability crisis and the impact it will have on their children’s future. They fear their children will never be able to achieve the dream of a family home. Many of these parents and grandparents around Kingston want to take action to help their children save for a deposit but they cannot afford to pay their children a lump sum at once. Under this new program the government will pay the 17 per cent contribution for payments made by parents or grandparents into their children’s accounts.

The Rudd government has a broad agenda on housing which considers the whole spectrum of housing issues. This ranges from the chronically homeless to the needs of aspiring homeowners and to those who own their own home but are burdened by significant debt. In addition to our home saver account, the government has announced a number of other innovative initiatives. These initiatives are part of a $2.2 billion package to tackle housing affordability and homelessness. As mentioned previously, rental accommodation has become extremely expensive. The Rudd government’s National Rental Affordability Scheme aims to deliver up to an extra 50,000 new affordable rental homes over the next four years and another 50,000 if the demand remains strong into the next decade. This will be achieved by providing incentives to investors to deliver affordable rental properties at 80 per cent of prevailing market rates. This initiative will help ease the burden on renters and has certainly been warmly welcomed by the community housing sector in my electorate who already invest in housing and rent these properties well below the market rates.

Another initiative in this budget which will assist with lowering the cost of buying a new home is the $512 million Housing Affordability Fund. The new fund will help pay for the infrastructure for new developments, such as water, sewerage and transport, and help streamline development approval processes around Australia. This fund will help lower the cost of building new homes and reduce supply-side barriers to developing new housing. This is particularly significant for my seat of Kingston, which sits in the outer metropolitan area of Adelaide where many new houses will be built over the coming years.

The Rudd Labor government is taking the issue of housing affordability seriously. We have a challenge ahead of us which has been severely exacerbated by the years of neglect by the previous government. The first home saver accounts are one step to help ease the burden of housing affordability on young people and young families. I commend the bills to the House.

Yvette D'Ath (Petrie, Australian Labor Party) Share this | Link to this | Hansard source

I rise in support of the First Home Saver Accounts Bill 2008 and related bills. The first home saver accounts initiative, which was announced by the Labor Party during the election and delivered in the 2008 budget by the Rudd Labor government, fulfils an important promise made to the Australian people.

This is an exciting and innovative initiative that will make a difference to many people’s lives. During 2006 and 2007, while meeting people on doorsteps, at mobile offices and at many public forums around the electorate of Petrie, the message was clear. Young adults were concerned that they will never be able to afford their own homes. Parents of young children, like me, were equally concerned about their children’s future ability to own their own homes. And many older Australians expressed deep concern about their children’s and grandchildren’s future opportunity to own their own homes.

I heard this message, as did Wayne Swan, Kevin Rudd and the entire Labor team. It was clear that more needed to be done. That is how this initiative came about—listening to the community. That is how many great ideas originate—from the local community. It is a practice that I strongly support. The benefits of community involvement and the gathering of ideas were recently evidenced when I held a 2020 schools summit in my electorate. Twenty-three schools, over 70 students and over two dozen principals, teachers and parents came together to discuss important national topics and also topics that were equally important to our local community. This forum once again reinforced the overwhelming benefit of gathering ideas from your local community. There is no doubt that it is government’s responsibility to make the hard decisions, but there is no reason why such decisions should not evolve from the ground up. That is what consultation is about—not just talking but listening to our communities. At the Petrie 2020 schools summit one of our discussion topics was housing affordability. I thank all of the students, principals, teachers, parents and chairpersons for their fantastic efforts and contributions not just to this topic but to all of the important topics that were discussed at that summit.

The First Home Saver Accounts Bill 2008 has come about through extensive consultation with the Australian community. The benefits of the bill now before the House are unequivocal. Many of us in this chamber had the benefit of buying our homes at a time when house prices were much lower and overall cost of living was much lower. Saving for a deposit for your first home has never been easy for the majority of workers. It was and is still not uncommon for couples to call upon their parents to assist with the raising of sufficient funds to cover a five per cent deposit, even when your first home may have been only $100,000.

According to the Real Estate Institute of Australia, the median house price for outer Brisbane is now $355,000, which is a 24 per cent increase in the past year. For other dwellings, such as units and flats, the median price is $276,800. These prices are as at the December quarter 2007. While these prices are good for existing homeowners, these rapid price rises make it harder than ever for aspiring first homebuyers to break into the market because they cannot save a big enough deposit in an ordinary bank account. That is why the Real Estate Institute concluded in Brisbane:

Housing affordability continues to decline

…            …            …

... leaving many would-be first home buyers locked out of the market.

Focusing even more on my electorate of Petrie, which is in outer northern metropolitan Brisbane, there are 12,639 rental dwellings within the electorate, according to the census data. According to the ABS 2006 census data, the median gross weekly income for individuals within the electorate of Petrie was only $484 and for families it was $1,196. When you consider the median price of houses or other dwellings and the median gross weekly income, it is understandable that many people in my local community are facing financial pressures.

In addition to the everyday cost of living, many people saving for their first home are currently renting. According to the Real Estate Institute of Australia, for the December quarter 2007 the median rental price in Brisbane was $300 per week. Individuals and families seeking to save for a deposit for their first home are paying these rental prices on the incomes identified. This and other costs facing families and individuals create significant impediments to people raising sufficient funds to have a deposit for a first home. These figures show the immense financial pressure that people in outer northern metropolitan Brisbane are facing.

First homebuyers have been shut out of the housing market. In March 2008, across Australia, first homebuyers accounted for only 16.4 per cent of all home purchases, which is less than one in six of all home purchases. This compares to 26.1 per cent, or over a quarter, of all home purchases in July 2001. In Queensland the proportion of first homebuyers is now only 15.3 per cent. This rate has halved since August 2000, when 30.4 per cent of all home purchases were by first homebuyers.

The first home owners grant and the first home savers account will assist those most in need in our community to obtain their own home. This is despite the views we have heard today from the member for Fadden, who is praising the credentials of the member for Higgins and the previous government. This is the government that did nothing to encourage or to assist individuals to save. What they did do was provide consecutive interest rate rises and irresponsible spending. Although the member for Cowan thinks it is good to have somewhere for the kids to play and the dog to run, it is a little bit more basic than that. It is about actual home security; it is about having a roof over your head for you and your family.

My concern is also for our young adults coming out of school now and into the future. Those of us who are a little bit older remember the days when we left school. We did not have mobile phones and we did not immediately get credit cards. We had little debt for the first few years of our working lives other than maybe paying board to our parents or possibly paying rent in a shared house or unit. Times have certainly changed. Most young adults have a mobile phone before they leave school. Many are committing to phone plans at the age of 18 and credit cards are very much a part of our society now. The damaging effects of early debt that young people are accumulating are multiplied for those who progress from secondary school to further education. This is why many young adults are staying at home longer.

Only last week the Courier Mail ran a story about more and more young adults choosing to live at home. The story appeared on Tuesday, 27 May. I would like to read to the House some of the opinions of these young adults:

After living independently in Japan for nine months in 2005, Rhiannon Holland returned to Australia with little money to support herself.

Knowing she wished to pursue a university degree, Rhiannon’s parents, aware that the average price for a rental property was $220 a week, invited her to move back into the family home at Aspley.

“The advantages are not having to worry about the money expenditures,” Rhiannon said. “I haven’t come across any disadvantages, bar the occasional privacy issues. But I see this as my parents’ house, not as my own.”

…            …            …

Alana Wells, 18, of Scarborough, is a full-time university student studying business and earns $292 a week as a part-time receptionist.

“My weekly income goes towards paying off my laptop for university, which is $100 a week,” she says.

“I save over $70 and the rest of the money pays for my entertainment and travel.”

According to Donna Wells, Alana’s mother, most parents don’t have a problem with their adult children living at home.

“As a parent my role is to support Alana so that she’ll have a career and a stable lifestyle,” she says. “The workforce is competitive and living at home allows Alana to save money and devote time to her studies.”

…     …         …

Twenty-year-old Dean Muller moved out of his family home in Bracken Ridge to a flat in Newmarket, closer to his university, but discovered he did not have enough time to concentrate on his studies. After six months, he was back living at home. “I was working two jobs at the time and it just became too much,” he says.

…            …            …

“You can save much easier living at home. Moving out was a nice awakener to reality, with bills that you’ve never heard of before, not to mention shopping for groceries, cooking your own food every night; all little things you take for granted when you live at home with your parents.”

Celia Lucas, 19, works full-time as a marketing and events coordinator and graphic designer for Sherrin Group in Brisbane and lives in Redcliffe with her parents, despite the fact she has to drive 35 minutes to work.

“I like where I live and it’s convenient,” she says. “I live right on the beach, near my friends and it’s cheaper than moving out.”

Celia earns $630 a week, $80 of which goes to her parents for board, which is a fair deal, she says.

“Mum and Dad do so much for me. Paying board is really good training because I know to allocate a specific amount of money each week.”

The article talks about four young adults, who all live in the electorate of Petrie and who also make the point that anyone who labels them as bludgers is misrepresenting them. The article talks about the benefits of young adults staying at home for longer or, in some of the cases that I have referred to, moving back home. I can certainly relate to their circumstances as I am also one of those people who, as a young adult, moved back into my parents’ home at the age of 18, because of the costs of renting on a low income. I congratulate their parents for ensuring that these young adults get the support they need, and also, as the article reflects, the parents are ensuring that these young adults are learning the life skills that they will need once they are out of the family household. I do hold concerns about how equipped our young adults are to plan and save for the future with such debt that I have referred to building up at such a young age. I am very supportive of schemes that assist people in saving. We need to teach our young adults and people saving for their first home the importance of personal responsibility. Teaching people to save teaches them to be responsible with their income, and it teaches them to be independent and self-sufficient.

The First Home Saver Account scheme not only assists people in saving for a first home but it teaches people the important life skills of budgeting and saving into the future—something that the previous government failed to assist with. This is not a skill that we should presume everyone has. Juggling financial obligations is not easy. The less money coming into the household, the harder it is to balance the competing costs; thus the importance of budgeting is heightened. The benefit of learning to save is that it will also equip these people to balance their finances better once they are in their own home. As we all know, the costs do not end when you buy your first home. There are new costs—of maintaining the home and paying rates—that previously the individuals or couples have not had to manage. The Rudd Labor government’s first home saver accounts do more than simply help people to save and teach them the importance of saving. The government itself contributes to the savings, further assisting them in achieving the aim of homeownership. This is achieved through the government providing additional assistance through a government contribution of 17 per cent on the first $5,000 of contributions for all individuals. The first home saver accounts are low-tax accounts to help young Australians realisethe dream of homeownership.

With housing affordability an issue that needs short- and long-term solutions, having these accounts offered from 1 October 2008 will allow immediate savings to be accumulating from this year. One of the key changes that the Rudd Labor government made to this scheme, since the release of the discussion paper and based on the community consultation, was to ease the criteria to open accounts. The new first home saver accounts will allow individuals to open an account without having existing savings and will allow parents to open an account for their children. In addition, parents and grandparents will be able to make contributions to their children’s and grandchildren’s accounts—with all benefits flowing to the home saver. As I said at the beginning, this initiative is exciting. It gives opportunity to those that otherwise were struggling to see a future that included them owning their own home. The Rudd Labor government, Treasurer Wayne Swan and I understand the anxiety that the uncertainty of not being able to own a home creates in young adults, parents and grandparents. This bill is a Labor bill—a bill to provide long-term benefits to people in our communities and a tangible benefit to deal with the increasing cost of living and the difficulty this places on the potential for homeownership. I have pleasure in commending this bill to the House and I look forward to encouraging many in my electorate to take up this opportunity.

Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the First Home Saver Accounts Bill 2008, the First Home Saver Accounts (Consequential Amendments) Bill 2008 and the Income Tax (First Home Saver Accounts Misuse Tax) Bill 2008. They are bills aimed at dealing with an emerging social problem, and that is that the costs of homes over decades have risen to such an extent that many young people find themselves in a situation where purchasing their first home is an almost unattainable aspiration. If no action is taken we are heading to a generational divide of, on the one hand, the affluent older generation holding property which increases in value over time and, on the other, a younger generation without real property whose net worth is being eroded by the cost of housing for themselves and their families.

In my electorate of Robertson families are paying, on average, 29 per cent of their income on servicing their mortgage. They are the lucky ones, as they have already entered the marketplace. Those who still have not yet bought their home are in an even more difficult situation with a larger, almost insurmountable barrier. With a median house in New South Wales now costing $385,000 and even on the Central Coast a median house is $364,000, a 10 per cent deposit is a huge amount of money and many people are not able to accumulate this sum. Despite reduced clearance rates and negative publicity about the housing market, in recent years the annual rate of increase in property is still 4.8 per cent. We are certainly at risk of shutting people out—people who are not in the real property market but completely outside.

I bought my first house 20 years ago at a cost of about $80,000. That was not an unusual figure. Houses were available at that price both where I bought on the Central Coast and in Sydney. Certainly a 10 per cent deposit was reasonable. You could save and you could do it. Now I do not know how anyone does it, particularly people on low incomes. I am lucky enough to deal with a number of young people, and to know them quite well, particularly through my involvement in soccer. There are many young people in their 20s and early 30s who still do not have any idea of when they might buy a home. I find it very difficult to assure them that some day they will be able to do this. That is why I am so proud to be part of a government that is trying to find a solution to this problem. It is part of delivering our promises. I am very pleased to see that this government, this Kevin Rudd Labor government, takes its commitments—its commitments generally and in particular commitments made during the election—very seriously. This legislation is delivering on our promise to make housing move affordable, particularly for the younger generation.

This legislation assists saving for a deposit with a combination of tax concessions and government contributions to the first home saver account. This is about this government delivering, as I have said, in a very practical way. This home saver accounts bill and the consequential amendments establish a regime for first homebuyers saving for their deposit. To be eligible to establish a FHSA a person: must be aged between 18 and 65 years, must not have previously owned a home, and must provide their tax file number.

The legislation also does not allow such an account to be established before 1 October 2008, when this legislation comes into effect. Only one such account can be opened by each eligible individual to ensure that individuals do not double up on the concessions available on the account. The maximum contribution to the account is $75,000.

Generally an individual can have or have had only one of these accounts unless the account was closed for a number of specified reasons: the money was paid into another FHSA; the contributions to the account were refunded because the account was set up under an unsolicited offer under subsection 992A(4); there was a defective product disclosure document under section 1016F; or the account was closed within the cooling-off period.

There are a number of institutions that can provide these accounts, and they are already regulated. They are authorised deposit takers—essentially banks—life insurance companies and registrable superannuation entities, RSEs, that are authorised to offer FHSA accounts.

The manner in which payments can be made from this account is specified under part 3 division 3 of the bill. These are limited if an account holder wishes to retain the benefits this account is entitled to. The usual authorised withdrawals are for: acquiring a qualifying interest in the person’s main residence when they are under age 60—the account holder must also have contributed at least $1,000 in at least four financial years; transferring to another first home saver account; or making a contribution to the account holder’s superannuation fund. This is in fact compulsory where the account holder becomes ineligible to hold the account, which happens upon the purchase of a home, of course.

The benefit of such an account for an individual is twofold. Firstly, a government contribution is made to a saver account on annual contributions of up to a maximum of $5,000 at a rate of 17 per cent. This maximum is indexed. The minimum government contribution is $20. Where the calculation determines a lower amount then the contribution is rounded up to that $20 amount. The contribution, thus calculated, is paid directly into the account after the lodgement of the individual’s tax return or of their statement where they are not required to lodge a tax return.

The second benefit of a home saver account is the tax concessions. The contributions to such an account are not taxed, coming from after tax income, and the earnings on the account are taxed at a rate of 15 per cent rather than the marginal rate of the individual, which would generally be substantially higher. This tax concession extends to the withdrawal of funds. No tax is payable where the funds are withdrawn to purchase a home or where an account is closed and the balance of a fund is paid to a superannuation account.

As I have said, this is a decision of the government made in pursuit of an election commitment but is far more important than that. This is about delivering equity in our community—equity between the younger and the older generation. It is also ensuring that we do not create a group of individuals and families who have no home and do not have the security that that provides. I commend the bill to the House.

Darren Cheeseman (Corangamite, Australian Labor Party) Share this | Link to this | Hansard source

I listened very intently to the contribution of the member for Robertson to this debate on the First Home Saver Accounts Bill 2008. In fact, the circumstances she described for people in their 20s and 30s are identical to the circumstances of many people in my electorate and certainly were the circumstances that I found myself in several years ago.

Labor is committed absolutely to helping people own their own home. For the overwhelming majority of Australians, owning their own home is one of the great milestones in life. It provides security. It provides satisfaction. It provides sanctuary. It is the boundary around the family. Within a family home there are usually thousands of happy family memories and experiences. The biggest step in homeownership is the first. I know that because I am still paying off my first home loan. Just a few years ago I took that very big step. Buying a first home for many is a great leap of faith. It certainly was for me. It is a time when families take on a large debt and many families need support and assistance to make that transition. That is why Labor has committed a very significant part of its federal budget towards helping first homebuyers.

The Rudd government will be investing around $1.2 billion over four years in the First Home Saver Accounts initiative. Labor’s first home saver accounts are a policy breakthrough. They are the first of their kind in Australia and will provide a simple, tax-effective way for Australians to save for their first home. Labor’s First Home Saver Accounts policy will not just help young families; it will help older families who have missed their chance of owning their home. It will resurrect their hopes. Any individual can open an account if they are aged over 18 and under 65. These accounts operate very flexibly. Following a detailed consultation process with consumers and finance and housing industries, they have been designed to accommodate and meet the needs of individuals and families. The benefits from these accounts will be derived from a combination of government contributions and low tax cuts.

There are four key ways that consumers will benefit from these accounts. Firstly, contributions to these accounts will not be subjected to tax. Secondly, investment earnings or interest will be taxed at a minimal rate of 15 per cent. Thirdly, withdrawals for the purpose of purchasing a first home will be tax free and, finally, first home saver account balances will be exempt from the income and assets tests. Withdrawals will also be tax free where they are used to purchase a first home to live in. An overall account balance cap of $75,000 has been introduced, but the initial stipulation of an up-front contribution of $1,000 has been removed. So we have actually significantly improved the benefits in these accounts above and beyond what we promised at the election.

I have a couple of other important issues to do with these accounts. Contributions may be made by an account holder or another party, such as an employer, on behalf of the account holder. The government will make additional contributions which will be paid directly into the account after the individual has lodged their tax return and the provider has submitted the relevant information to the ATO. The government will contribute 17 per cent on the first $5,000 indexed on individual contributions made each year. This means an individual contributing $5,000 will receive a government contribution of $850. No minimum annual deposit is needed to keep the account open. All I can say is that I wish this policy had been around when I purchased my first home just a few years ago.

This is a very good scheme. It has been well thought through. Consideration has been put into people’s changing circumstances. For example, if an individual’s circumstances change during the life of the account so that they no longer wish to purchase a first home, they will not be able to access the account but can transfer the balance into superannuation and then close the account. By transferring the account balance into superannuation, individuals may apply to access the superannuation through early release provisions of severe financial hardship, compassionate grounds or terminal illness. A wide variety of providers will be able to offer these accounts such as public offer superannuation providers, life insurers, friendly societies, banks, building societies and credit unions.

Over the first three years federal Labor’s first home saver accounts will help around half a million first homebuyers to save bigger deposits. That is a lot of help to a lot of people. The impact and benefits of Labor’s first home saver accounts are broader than to individuals. They will be good for the overall Australian economy. Federal Labor’s first home saver accounts will also help boost national savings, with the accounts anticipated to hold over $6 billion in savings after three years. This is attacking one of the fundamental problems with our economy—our ratio of savings—and is another legacy left to this government by the now opposition along with the skills crisis, rising mortgages and interest rates. As I said, it was only a few years ago that I was saving for a deposit for my first home. I know it was hard then, but today it is even harder. With the escalating housing costs over recent years, saving a home loan deposit is very tough. It is the greatest obstacle to buying a first home.

This policy will help thousands of Australians overcome that barrier. It will help more Australians save a larger deposit. And a larger deposit will also reduce the debt burden for young homebuyers. It can, for example, help them avoid incurring costly mortgage insurance. I point out something else: as good as this scheme is, it is not all we are going to do for Australians wishing to buy their homes. This policy goes together with a range of other initiatives that will further assist with housing affordability. As an example I point to Labor’s housing affordability infrastructure fund, which provides a very significant contribution to helping bring down the cost of housing and land. Labor, through the housing affordability infrastructure fund, is offering to assist councils to meet the cost of some community infrastructure and services so as to bring down the cost of land and house purchases.

Through these initiatives you can see what a difference Labor is making in government. You can see a government that is up early, thinking about how to help working families. This is a government with a strong work ethic, a government that knows what matters to working people, a government that is creative and a government that has policy incentive. What a difference an election makes. What a contrast we have today. There is the fading memory of the tired Howard-Costello government, tied up in policy knots, tangled in ideological obsessions, twisted inward with factional positioning and leadership jockeying and trying to shore up their own job security whilst abolishing job security for workers. Contrast this with a united, new Labor government with well-crafted and targeted policies, looking decades ahead and rebuilding Australia after a decade of neglect. Labor’s first home saver accounts are not just good policy in themselves. They are a sign of Labor’s creative thinking and our commitment to tackle the real needs of working Australians. I commend this bill.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to support the First Home Saver Accounts Bill 2008 that has been presented by the government, and I congratulate the member for Corangamite on his remarks. I start by talking about a report that was released only a year ago by the Urban Development Institute of Australia. I quote some of the statistics that were produced in that report, because those statistics highlight the dire straits that many Australians are in in respect of being able to buy their first home. Between 1984 and 2006 house prices rose across Australia by 493 per cent, whilst over the same period incomes rose by only 183 per cent. Between 1984 and 2006 outright homeownership fell from 41 per cent to 33 per cent. And in the 10-year period from 1996 to 2006 average mortgage payments rose from $780 per month to $1,300 per month. Today that figure is even higher. In fact it is much higher, sitting at over $2,000 per month. Not surprisingly, between 2001 and 2007 the first homebuyers’ share of the market dropped from 23 per cent to 16.6 per cent, and the figure is at about that point right now—that is, the share of first-time buyers entering the market has dropped by almost 30 per cent over the six-year period from 2001 to 2007. Interestingly, but not surprisingly, the steepest price hikes in the cost of housing occurred in the years immediately after the introduction of the GST.

So the great Australian dream of owning your own home is becoming a near impossible dream for too many Australians and, in particular, young couples wanting to begin their new life together in their own home. That is why it is important that all three levels of government work constructively together in order to ease the housing affordability crisis and why I speak in support of the government’s First Home Saver Accounts Bill. This bill provides very real tax benefits and savings incentives for first homebuyers who are saving their money to buy their home. It creates an incentive for people to save money and it encourages a disciplined commitment in managing money, which is exactly what will be required when the next step is taken and a home loan is taken out.

Owning your own home is not just an idealistic dream. It has widespread benefits for both the homeowner and the local community and for the broader Australian community. Firstly, homeownership creates stability and security within the household. It establishes the best environment in which to raise children as well as creating a sense of achievement and raising the self-esteem of the new homeowner. But it also creates stability in the local community because it encourages commitment to the local community and builds community pride and community spirit. Homeownership is an investment in the local neighbourhood. For governments, it means less reliance on public housing, less social disruption and less homelessness. There is a secondary benefit in helping people move into their own home. The housing sector is a significant contributor to the Australian economy, providing about 20 per cent of our gross domestic product. A decline in housing construction will have serious negative effects on our economy.

In my own electorate of Makin around 30 per cent of the population are what I would call younger people who would aspire at some stage to owning their own home. Many of these people hope to one day own their own home. When I was campaigning for the 2007 election I was frequently approached by both parents and young people who expressed their real concerns to me that homeownership was becoming out of reach for so many of them. What is just as frustrating is that as home prices rise so do the rents, and therefore those people who are renting are never able to save up any money because of the rents they pay and they find it even more difficult to achieve their dream of owning their own home. That is why this bill will be welcomed by so many Australian families.

I want to briefly respond to some of the comments that I have heard from members of the opposition with respect to this bill and the constant game of blaming the state governments for the reduction in public housing stock. The reality is that, in the 12 years of the Howard government, federal government funds for public housing declined markedly and so state governments were left to manage the stocks they had with far less money. It is not the fault of the state governments if they are trying to manage a public housing stock when they had their public funds reduced by billions of dollars. That is the first point I want to make about that matter. The other point I will make is this: opposition speakers have frequently talked about what I would refer to as urban sprawl and making more land available in particular by the state governments. Firstly, whilst state governments certainly hold some land, the reality is that about half of it is owned by private owners. Therefore, it is not just the state governments that have land available which could be released for the building of homes.

There is an additional issue relating to urban sprawl. As the mayor of a council in the outlying areas of Adelaide for 10 years, I understand exactly what urban sprawl means and the impacts it has on housing and living costs. In fact, one of the initiatives I put to my council at the time was for the council to get involved in a housing scheme which could be described as a shared equity scheme, in order to try and help people get into their first homes. When that proposal was publicly reported, the telephone lines at the council were overrun with people inquiring about how they might be able to access a new home under the scheme.

The points I really want to make are these. When you go out into the outer suburban areas, what you immediately do is add to the cost of living for the people who go out there. Whilst the house prices might be lower, the cost of living is higher and the transport costs of those people getting to their workplace are higher, so the affordability factor is in fact lowered. In addition to that, whilst the house price might appear to be lower up front, what inevitably happens is that the infrastructure required to service those new housing allotments has to be borne by someone. Either it is paid up front, as many developers now cost it into the cost of their blocks of land, or it is added on to the council rates, because the councils, under pressure to provide the necessary services and infrastructure required by new homeowners, have to take out loans in order to provide that infrastructure. That in turn means that every year those people in the outlying areas are paying higher council rates because they have to pay for the infrastructure that is required to service their needs.

I will use another example of when it quite often does not serve the purpose that it appears to. The example is this: people who live outside the CBD in most capital cities are inevitably further away from most of the services that they rely on. Because they are further away from those services, it costs them money to get there. Of even more concern is that there were people in the northern suburbs of Adelaide—and I expect it would be the same in many other parts of Australia—who were not going to tertiary education or universities because the cost of getting there and the time it took them was making it prohibitive. In other words, it was just compounding the cycle of disadvantage by having people living further out from where all the services were.

For all of those reasons, this bill is welcome. It is welcome because it is by no means the simple and only solution to fixing the housing affordability crisis facing Australia. The problem arises because of a number of factors. Therefore—quite properly—there needs to be a number of responses. That is what the Rudd government is doing, with a $2.2 billion housing affordability package that includes investments in public housing and public infrastructure and tax incentives for housing investments. It is those kinds of initiatives that will ultimately make a difference to the affordability of homes by people in this country. For those reasons I commend the bill to the House.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the government’s First Home Saver Accounts Bill 2008, which implements Labor’s election commitment to introduce first home saver accounts. The government is introducing first home saver accounts to provide a simple, tax effective way for Australians to save for the purchase of their first home in which to live through a combination of low taxes and government contributions. People in my electorate welcome this bill because they know that the option of starting a first home saver account will bring the dream of homeownership closer to a reality for hundreds of thousands of young Australians.

The proposed first home saver accounts are low-tax saving accounts to help Australians realise the dream of homeownership. Since this government came to office, my electorate office has ironically been flooded with inquiries about the scheme we are introducing today. I am happy to say that the wait will soon be over and that the detail will undoubtedly satisfy those many constituents who have shown a deep interest in this measure. Many people in my electorate aspire to own their own home. It is part of the great Australian dream, whether they aspire to a house or a unit and whether it is in the city or in the great number of suburbs or towns in my electorate. Thanks to the Rudd Labor government implementing yet another election commitment, aspiring home purchasers will have the option and an incentive to save and turn aspiration into reality.

This proposed scheme rewards those who save to purchase a home of their own. The government is legislating an attractive deal with the first home saver accounts. We are proudly supporting and encouraging Australians to save for their first home. We in the Labor Party understand that one of the biggest barriers to homeownership is the saving of the deposit. This bill offers potential first homebuyers saving for a deposit added financial incentive to purchase their first home. I am proud to be part of a government that is introducing into this place measures to boost savings for people in Dawson. I am proud to be part of a government that fulfils every one of its election commitments—and, in this case, has not just fulfilled its commitment but improved it.

Working families in my electorate have been doing it tough, having endured 12 straight interest rate rises, with inflation now at a 16-year high, and having had 11 years of those opposite spending like drunken sailors, with the member for Higgins asleep at the wheel on the economy and ignoring key investments in infrastructure and skills during an unprecedented minerals boom. In what was to be his final term in office, the former member for Bennelong was more worried about his own legacy than everyday working people.

There is finally some good news, finally a decision by a government that will do something about getting money in the bank that will help people to get a key in the door of their first very own home. Homeownership will always be a part of the Australian dream, and the Australian Labor Party understands this. A home saving plan is one part of showing that we understand, but it is our commitment to responsible economic management that will also get more people into their own homes. We are committed to move on and do what members opposite failed to do in the 11 long years they occupied these benches and address our nation’s skills shortage, build on our capacity by investing in essential infrastructure such as roads and ports, and invest in our young people by putting money into schools and universities. The budget has proved we are getting on with the job of building and growing the economy to meet the challenges of the 21st century with confidence.

This legislation shows that we are serious about delivering for the people of Dawson, serious about encouraging saving and serious about assisting people to own their first home. We are serious about tackling the inflation legacy left by the National and Liberal coalition government. This bill goes above and beyond our election commitment made to the people in November 2007. It takes into account improvements arising from the consultation process to make the accounts simpler and fairer.

In summary, the government will contribute 17c to the dollar up to $5,000 invested in a year into the home saver accounts. This means an individual contributing $5,000 into a home saver account in one year will receive a government contribution of $850. Tax on investments in a first home saver account is capped at 15 per cent, up to an indexed $75,000. By combining own savings, government incentives and tax treatment to boost the deposit, we have made these very attractive accounts for first homeowners, and I know there will be a lot of happy savers in Dawson come 1 October when banking institutions and other eligible finance providers can begin offering first home saver accounts.

Through consultation, we have removed the stipulation in the election commitment that there be a $1,000 up-front contribution to open an account, allowing savers the choice of how much money they have to begin saving for their first home. The potential for these accounts to be used for something other than first home purchasing is minimised with the stipulation that any funds not used to purchase a first home must be transferred into superannuation. Flexibility is ensured as people can freely transfer from one first saver fund to another. Savings into home saving accounts are anti inflation, as young people are saving already. Under the scheme, a couple each earning average incomes and saving 10 per cent of their pay would be able to save more than $85,000 after five years of disciplined saving. This is up to $14,000 more than what they would have saved otherwise, depending on returns. To conclude, it is estimated that these changes will increase savings in accounts from over $4 billion to around $6.5 billion after four years—a tremendous achievement. On behalf of the people of Dawson, I wholeheartedly endorse these bills.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

in reply—I want to thank all honourable members who have made a contribution to this debate on the First Home Saver Accounts Bill 2008 and related bills. The introduction of the First Home Saver Accounts marks an important new beginning in housing policy in Australia. The accounts will help young Australians to once again realise the dream of homeownership. Of course, the biggest barrier to homeownership is saving a large enough deposit. The first home saver accounts will help a couple on average earnings save a deposit of more than $88,000 over five years, which is almost $13,000 more than they otherwise would have been able to. The 17 per cent government contribution together with the low 15 per cent tax rate on earning on a first home saver account will make these accounts attractive to many first homebuyers.

Federal Labor’s First Home Savers Accounts scheme is also part of our responsible approach to economic management as it encourages young Australians to save some of their hard-earned income. The accounts represent a key plank in the government’s root and branch strategy for tackling housing affordability. After 12 years of neglect, housing policy is once again getting the attention it deserves from the Australian government.

Contrary to the view of Sussan Ley MP, the member for Farrer and opposition housing spokesperson, the first home saver accounts are supported by other measures which will increase housing supply. These include: the Housing Affordability Fund, which will increase housing supply by providing money for local infrastructure and giving state and local government incentives to lower development charges; the National Rental Affordability Scheme, which will provide investors with tax incentives to increase the supply of new affordable rental properties across Australia, initially saving 50,000 low- and middle-income families 20 per cent on their rental bills; and a better approach to land release, with all surplus Commonwealth land being freed for housing development or community infrastructure.

The start date for the accounts has been delayed until 1 October 2008 to allow providers more time to develop products. But, contrary to the claims of Sussan Ley, first home savers will not be disadvantaged by the deferral as they will still be entitled to the full annual government contribution on the first $5,000 of personal contributions in 2008-09.

The former government never took housing seriously. Housing stress mounted and more and more young Australians were locked out of the housing market, but they did nothing about it. Our government has established a Minister for Housing and has acted to introduce the first home saver legislation, demonstrating the importance the government places on housing policy.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.