Sussan Ley (Farrer, Liberal Party, Shadow Minister for Housing) Share this | Link to this | Hansard source

I am happy to speak today on the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008. May I say at the outset that my remarks will be brief because these are essentially minor and relatively inconsequential amendments to measures that the opposition supported on 26 June this year when the government passed the First Home Saver Accounts legislation. I will make a couple of points, however, in order to illustrate what we are becoming increasingly convinced about on our side of the argument—that the first home saver accounts are not really going to achieve what they have set out to do and are going to make limited if any inroads into addressing the housing affordability crisis, as it is commonly being called, in Australia today. I do want to acknowledge that the government is not just relying on this measure but is about to introduce National Rental Affordability Scheme legislation into the House. Yesterday the Prime Minister and the Minister for Housing made, I think, the third launch of the Housing Affordability Fund. So there are two other measures. I will deal with them on another occasion because I think they will be similarly ineffective.

The first home saver account is essentially designed to encourage young people to save for their first home. It is quite inflexible in its design and operation. I think that its inflexibility is what is going to cause trouble and make the account unattractive to those who would provide it—namely, banks and other financial institutions; and to those who might use it—young people who, particularly in today’s modern, integrated global economy do not pretend to lay out their life path in the clear, deliberate fashion that previous generations might have done. They demand flexibility, and if they are putting money away in an account, they need to know how they may get it out. The problem with the first home saver account is that once you have put your money into it, it is very difficult to get it out—in fact, it is not possible. As I said when the bill was introduced, yes, there is a taxation advantage. The sensible thing would have been to say, ‘You give up that taxation advantage retrospectively if you withdraw your money from the account.’ But that is not possible. You cannot withdraw it; it needs to be rolled over into superannuation. This is a superannuation style account. Rolling it over into superannuation is fair enough—we all need to encourage people to save more for their retirement—but that may not be the option that a young person typically will choose at that time in their life. I just think it is going to add up to a fairly serious disincentive.

There are other disincentives too, which I will briefly go through. There is a $75,000 cap on funds over four years. That is not adequate to keep pace with rising house prices. Having caps on the accounts is not practical because house prices, incomes and lending criteria all change over time. The First Home Saver Accounts measure is unlikely to do much to help. If we can just focus on the substantial reason why we are facing the crisis we are now, it is that limited land supply, induced by restrictive land release policies of state and local governments, is the main reason for rising housing costs. Government taxes, fees, levies, charges and compliance costs are adding enormously to the cost of new housing, and now represent one-quarter to one-third of the cost of a new house and land package. So if one-quarter to one-third of the cost of a new house and land package is taxes going to governments, then all of our efforts must be directed towards that proportion of the cost of your new home. By adding more heat, if you like, on the demand side of the equation, in giving young people a bit more money, maybe, to go and put a deposit on their first home, you are not addressing that problem in any way. It is a supply side problem. I mentioned the other two measures the government has in place; they are addressed to the supply side, so it has recognised that—but they will not work either.

This measure will not necessarily make entry level housing more affordable for first home buyers. In fact, it could potentially have the effect of increasing house prices by giving people more money to spend without real increases in the supply of new homes—essentially leaving young people worse off. The problem is that, over the long term, residential property appreciates at an average rate of 10 per cent a year. Therefore, the savings accumulated in the first home saver account are unlikely to keep up with the increase in the property market itself. Further, if the property market does dip, the first home savers cannot access the money for four years, so they may miss a prime opportunity to buy.

What government co-contribution are we talking about? I remind the House that we are not talking about a great deal. The maximum government co-contribution you could get into this account for $5,000, which is the maximum you can deposit in a year, is $850. It is very hard for young people to find $5,000 to put away in their accounts. We really want to help those who are struggling and probably cannot find $5,000 a year to save and put in their accounts. My concern has always been that the increase in the value of your home and the inflation rate is going to outstrip the meagre co-contribution and the costs that you may face in having the account with the account provider. Without any increase in housing supply, there is a risk that, over the life of the first home saver account, any savings made by account holders will be outstripped by the increase in the price of a first home.

As I said, the government will pay a contribution of 17 per cent of the first of $5,000 saved each year—a flat rate for everyone. In effect, an apprentice who earns $10,000 a year will get an $850 co-contribution. A person earning $180,000 will also get an $850 contribution from the government. That is better than the initial proposal we had, which saw the person on $180,000 getting a whole lot more. I am pleased that we have evened that out, but it is still relatively inequitable if somebody on a higher income gets the same contribution of taxpayer dollars as somebody on a much lower income.

Another problem: I see that you must also deposit $1,000 over four separate financial years in order to be able to withdraw your money. If plans change, you cannot access your money unless you roll it into superannuation. Optimising the first home saver account initiative will require products that are attractive to—and, more importantly, understood by—young people. Each additional layer of complexity in the regulatory framework will reduce returns to savers, dampen competition and choice and slow the arrival of these products to market. They are already late. They were announced, initially, as being open for business at least a month ago. They are now due in two weeks. I had a look on the website to see if there were bells and whistles associated with their launch in any of our banking or financial institutions. I did find the ABC bank offers first home saver accounts, but then I found that the ABC bank does not exist; it must be some learning or assessment tool that resides online. However, I understand that some credit unions will be offering the accounts and I have been told that some banks will also be offering the accounts.

I have been told that banks are desperate for deposits. Anything that the banking sector can do and that we can do to encourage young people to save has got to be good, so that is the reason, essentially, that we agreed to the passage of this legislation in the first place. We do want young people to save for their own homes. We do want to change the savings culture. It was very disingenuous of the Treasurer when he introduced legislation in June to come up with some figures that had savings of $88,000 from a typical couple. It was very disingenuous, because that money would largely be their own savings effort, irrespective of this legislation. When people are examining it closely, when they are really getting down into the fine print, they are thinking, ‘This is all too hard’—and they are right.

Back to the subject of these bills, which, as I said, are minor and relatively inconsequential amendments to the legislation that was passed in June. Essentially, this legislation includes: various provisions to make the scheme more operational; a system for dealing with unclaimed money—of course you need that; amendments to secrecy and information-sharing provisions between the ATO, APRA and ASIC, and, given that there are taxation implications, there are probably implications associated with the Child Support Agency too, and you need to have the appropriate flows of information—quite sensible. A framework, which I understand is not prescriptive at this stage, is also introduced to deal comprehensively with family law situations, so that if a separating couple has a first home saver account as an asset shared between them then there are provisions for how it is to be dealt with under family law.

The changes also introduce a framework for imposing a levy on first home providers to provide funding for APRA, the Australian Prudential Regulation Authority, to carry out its supervision of financial institutions which offer these accounts. This is consistent with the user-pays approach that APRA has. It is actually modelled on the retirement savings account supervisory levy, so that those who offer an account have to pay for APRA to supervise the management and running of that account.

I am not sure whether financial institutions will pass that cost on to those who take the first home saver account deposits; I suspect the accounts would become even more unattractive if they did. But it is worth noting that something that in everyone’s individual case is small—we are talking about kids with a bank account to save for a first home—has just turned into a legislative, bureaucratic and red-tape nightmare. I know that, even with the best will in the world, we all hate red tape but we seem to end up absolutely tied up in knots with it. But this is just crazy because the amount of red tape associated with this measure is going to have people running a mile from it.

So the final measure that is contained in these bills and that involves the supervision of APRA should certainly ring alarm bells in all of us. Although we want financial integrity and we want people to offer the correct financial advice to those who take out deposits and accounts, and we do not want any bad people in the system ripping people off when it comes to bank deposits, we really do have to be careful that we do not swing too far in the other direction. As I said, this is consistent with the existing financial sector levy framework, but it is a nightmare to administer and it is highly costly. I conclude my remarks by saying that the coalition supports these bills and looks forward to their entry onto the lending and financial scene in two weeks time—and I particularly look forward to seeing the take-up rate.

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

Labor is committed absolutely to helping people own their own homes. For the overwhelming majority of Australians, owning your own home is one of life’s great milestones. It provides security; it provides satisfaction; it provides sanctuary; and it is a boundary around our families. Within a family home there are usually thousands of happy family memories and experiences.

The biggest step in home ownership is the first. I know that because I am still paying for my first home today. Just a few years ago I took that very big step. For many, buying a first home 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 for this transition. That is why Labor is committed to the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008, which are a very significant part of the federal budget’s efforts towards helping first home buyers.

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 homes. Labor’s first home buyers account policy will be helpful for young families in buying their first home. It will also help older families who thought they had missed out on that opportunity to buy a home; it will resurrect their hopes. Any individual can open an account if they are aged 18 years or over and, of course, under 65. These accounts will operate very flexibly. They are designed to be accommodating and to meet the needs of individuals and families, following a detailed consultation process with consumers, the finance sector and the housing industry. The benefits from these accounts will be derived from a combination of government contributions and low taxes.

There are four key ways that consumers will benefit from these accounts. Firstly, contributions to these accounts will not be subject to tax. Secondly, investment earnings or interest will be taxed at a minimal rate of 15 per cent. Thirdly, withdrawals for the purposes of purchasing a first home will be tax free. And, finally, the first home saver account balances will be exempt from the income and assets test. Withdrawals from a first home saver account 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 upfront contribution of $1,000 has been removed. So we actually have a significant improvement to the benefits in these accounts above and beyond what we promised at the federal election.

There are a couple of other important issues to do with these accounts. Contributions may be made by the account holder or by 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 Australian Taxation Office. The government will contribute 17 per cent of the first $5,000 indexed for 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. This is a very good scheme. It has been very well thought through and will help many working Australians to make that first step of buying their own home. I will point out one important thing about the federal seat of Corangamite: the federal seat of Corangamite is a very attractive place for young first home buyers to invest and make that first contribution in their lives. This account will certainly help those individuals to be able to acquire their first home. Transferring the account balance into superannuation for individuals may also apply if those individuals’ circumstances change.

A wide variety of providers will be able to offer these accounts. Public offer superannuation providers, life insurers, friendly societies, banks, building societies and credit unions will be able to offer these accounts. Banks, building societies and credit unions will be able to offer deposit accounts and superannuation providers, life insurers and friendly societies will be able to offer investment linked accounts. Over the first three years, federal Labor’s first home saver accounts will help around half a million people with their first home purchase. That is a lot of help to a lot of people. But the impact and benefits of Labor’s first home saver accounts are broader than just those individuals. It is good for the overall Australian economy. Federal Labor’s first home saver accounts will also help boost national savings, with these accounts anticipated to hold around $6 billion after the first three years of operation. Another legacy left to this government by the now opposition included, of course, the skills crisis and rising mortgage interest rates.

As I said, it was only a few years ago that I was saving a deposit for my first home with my wife. I know how hard it was then; today it is even harder. With escalating housing costs over recent years, saving for a home loan deposit is very tough. It is one of the greatest obstacles to buying one’s first home. This policy will help thousands of Australians to overcome this barrier. It will help more Australians save a larger deposit, and a larger deposit will reduce the debt burden for young first home buyers. It can, for example, help them avoid incurring costly mortgage insurance.

I would like to point out something else. As good as this scheme is, it is not all we are doing to help first home buyers. This policy goes together with a range of other initiatives that will further assist in dealing with housing affordability. As an example, I would like to point out Labor’s housing affordability infrastructure fund, which provides a very significant contribution to helping bring down the cost of housing and land acquisition. Labor, through the housing affordability infrastructure fund, is offering to assist councils to meet the costs of some community infrastructure and services that will help bring down the cost of land. Through these initiatives you can see what a difference Labor is making in government. The government is taking up very early on the policies that we took to the federal election to help working families.

This government has a very strong work ethic in helping people meet the costs of buying their first home. This is a government that knows what matters to working families. This is a government that is creative, a government that has policy initiative. What a difference an election makes. What a contrast we have today. Contrast 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, trying to shore up their own job security—with a united, new 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 problems that first home buyers face in Australia today. I commend the bills to the House.

Kay Hull (Riverina, National Party) Share this | Link to this | Hansard source

I rise today to speak about the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008. I want to speak about issues specific to the Riverina because at the present time it is having some difficulties with the higher costs of housing and rentals and the critical shortage of opportunities for housing.

It is getting tougher to cope not only with the rising costs of buying a home but also with the costs of renting a home. According to the Country Week New South Wales Rental Affordability Survey 2008, the average cost to rent a two-bedroom unit in the major regional centre in Riverina—Wagga Wagga—is $220 a week, which is significantly higher than Albury, a similar sized city on the New South Wales-Victoria border, where the average is $140 a week. High prices prove to be a huge challenge for people who are looking for somewhere to live, particularly when the rental market has so few rental properties and prices are so high. The higher rental prices mean that it is becoming increasingly difficult for future homeowners to have any money left over to put towards a savings plan for a new home. They are paying higher rental prices, which means that their actual savings are less. It is becoming increasingly difficult for them to put that money away into a home saver account. There is the ever-increasing cost of fruit and vegetables, groceries, petrol, electricity and gas. All of these things are adding together to put a question mark over whether or not this program will have any advantages and whether people will be able to partake in the process.

If you go back and look at our first home buyers grant, you will see that the difference is quite extraordinary. From its inception, our first home owner grant scheme in New South Wales has been a vital help for those who are purchasing their first homes. In my electorate there has been a significant take-up of the grants, and I will give the House some figures from the New South Wales Office of State Revenue, which distributes the grants. In Wagga Wagga, the largest regional centre in the electorate of Riverina, between 1 July 2000 and 30 June 2008 the first home owners grants totalled 3,505, at a value of $25.5 million. During that same period, 3,738 homeowners were able to take advantage of First Home Plus—which provides exemptions or concessions on transfer duties et cetera that are associated with the purchase of a first home or residential land. That has brought the total first home benefits, in Wagga Wagga alone, between July 2000 to June 2008 to $40.9 million. So almost $41 million has been provided to first home owners in just one regional centre in my electorate. That is in postcode area 2650, which is a centre of 60,000 people. That is a pretty extraordinary take-up of the first home owners grant that was put in place by the former government.

Wagga Wagga was ranked ninth in the top 20 postcodes in New South Wales for claiming the grants. In fact, it is the only regional centre on the list. It goes to show just what significant issues finding rental accommodation and the cost of rental accommodation are—that people were able to put themselves in a position to take advantage of the first home owners grant. They were also able to take advantage of First Home Plus, and that got them a very good start in their own homes. They are actually paying money into equity in their own bricks and mortar rather than paying extraordinarily high rents to somebody else’s retirement and savings plan. They have been able to utilise those schemes to get themselves into their own homes. I think that having the previous first home owner grants gave our first home owners confidence and extra assistance to realise the dream of owning their own homes.

In New South Wales, for the year ending 30 June 2007, there were 48,281 first home owner grant scheme payments issued, totalling $337.9 million. It is very interesting to compare this with the take-up of first home owner grants that we have seen in the past and note the difference. It is very interesting to note the lack of interest from financial institutions in this new plan, because it was real estate agents and financial institutions who were encouraging, assisting and being very involved in the first home owner grants. But you do not see that interest happening in the financial institutions. I read an article just last week in the Courier-Mail, which stated:

Of almost 200 banks, credit unions and building societies in Australia, just 14 obscure outlets mostly close to teachers—

so you would have a teachers credit union—

police—

or you might have a police credit union—

and those in the Cypriot community have expressed any interest with the banking regulator regarding the accounts.

I think it is very interesting that people are thinking ‘This is simply not going to work’, because—let me tell you—if financial institutions thought it was going to work they would be in there immediately. It is quite strange, because you think of the process of home buying happening in a financial institution and yet we do not see any of these banks, the major banks particularly, coming in here and deciding that they want to be part of this program. Life insurers and super funds can also offer the first home saver accounts, and so far the Labour Union Co-Operative Retirement Fund is the first to show any real interest in this. It begs the question: is this an ill-thought-out plan—policy on the run? You might just trash a policy for the sake of trashing it and replace it for the sake of replacing it, but has the replacement got the value of the trashed policy? Probably not, I would suggest. I am sure that member after member in this debate will say, ‘You have got foreclosures on houses and people who should never have gone into houses,’ et cetera, but you have got an enormous number of people who do have homes and who are keeping up their payments, and they have been given a tremendous start in being able to own their own home and appreciate not having to pay out good cash to somebody else’s retirement fund.

I noticed that my colleague the shadow minister for housing, Susan Ley, was standing at the dispatch box earlier. Just recently Susan came into Wagga Wagga to meet with various groups in the city to discuss housing issues. There were fabulous ideas put around the table. I brought in people from the housing industry, from public housing and others, and it was very interesting on all levels. One particularly interesting thing was when we visited the Wagga Wagga women’s refuge. They were the ones who were saying that the crisis in housing is so bad that far more people were finding their way to the refuge in order to seek accommodation for longer periods of time. They were very concerned at the shortage of public housing.

The Minister for Housing, the Hon. Tanya Plibersek, has many times raised in this House the continuing issue of the housing crisis and the problems associated with housing. I sent a copy of a newspaper article to the minister one day, because I was infuriated by it. I had been in here listening to the minister doing her job, advising us of the plight of homeless people and the housing shortage, and the very next day there was an article on the front page of my local Daily Advertiser about a disabled couple who lived in public housing. The New South Wales government was selling the home they had been in for 20-odd years. These people were told: ‘Out you go. We’re going to sell his house.’ But where were they going to go? Where were they going to put them? The couple were basically saying, ‘Where are we going to go?’ I was very concerned. I grabbed the article and sent it off to the minister. I said to her: ‘You’re talking about the plight of the homeless. I’m listening to what you’re saying. I’m very concerned, compassionate and caring about this issue, because many people are experiencing it.’

But the problem lies with the states as well. With all the dollars that have been given to the states for public housing, you would think there would be more public houses available. But instead we have fewer houses on the books. The increase in funding that the former government gave to the states to increase public housing availability, build new public housing and replace public housing has been negated by the fact that the public houses are sold off—in this particular case, by the New South Wales government. I think that is a travesty, a social injustice. I do not understand how you can be getting more money to put toward public housing but have fewer houses on the books than when you started. The continuing mismanagement is an indictment of the New South Wales Labor government.

It was interesting to hear from Housing NSW about the plight of these people. As I said, finance and mortgage brokers and real estate representatives met with the shadow minister during her visit. They outlined some really significant critical issues, including homelessness and the fact that affordable rental was simply not available in many of the areas across my region, let alone Australia. According to the Australian Bureau of Statistics 2006 census of population and housing figures, 29.6 per cent of occupied private dwellings in Wagga Wagga were fully owned, 33.4 per cent were being purchased and 32.2 per cent were rented. There were 3,277 private dwellings rented through a real estate agent, 1,625 rented from another landlord type—an owner, the person who collects the rent, or community housing—and 1,287 rented from the state housing authority, Housing NSW.

Recent reports in the Daily Advertiser about the public housing rental crisis have really concerned me. Housing NSW residents in Wagga say that the rent increases they are enduring are absolutely unreasonable and the ongoing maintenance problems are of extraordinary concern. The reports stated that the rent on a Wagga Wagga resident’s one-bedroom unit in Edward Street had increased by 45 per cent, and another resident had received notice that her rent will rise to $205, up from $155. This is the third increase this particular resident has had in four years. Her kitchen needs fixing and her windows, doors and many other things need repairs and maintenance. I am concerned that the amendments in the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 will not go far enough to alleviate the housing shortage and the strain on young people trying to afford their first home.

In speaking on this bill today, I want to raise issues that are of concern to many of the people that I represent—and I am sure that many other members have very similar circumstances. I want to question the reality of the program. I want to question whether the rules, guidelines and criteria need to be looked at in order to make it function properly. Where in fact are we are up to with respect to public housing? The last government was looking at a competitive tender process for the delivery of public housing directly through the Commonwealth rather than through the state process. In the state process, most of the money is chewed up in mismanagement and maladministration—particularly, as I said, in New South Wales. I urge the government to consider how they can be sensibly involved with the private sector in the construction of affordable public housing for low-income earners. The government should ensure that the private sector constructs this purpose-built public housing in a timely and responsible way. This will enable many smaller communities to remain sustainable by offering rental options in the public-housing arena.

There are certainly difficulties in my electorate of Riverina with regard to the public housing numbers. But rather than just trashing the first home owners grant and replacing it with the first home savers grant—which does not seem to be of great interest to the boffins who determine whether this legislation will be successful and whether it is worth while putting together the administration to deal with this type of legislation—maybe we should provide this help for a particular sector and put more emphasis, more thought and real muscle into delivering public housing in conjunction with the private sector in order to relieve the housing shortage.

We are always talking about the budget surplus being under threat, but the budget surplus that was left by the previous government could be utilised in a socially just way by enabling people to access public housing. And there is no better way for them to get access to it than entering into joint venture contracts with the private sector to deliver public housing to those who are most vulnerable. In speaking to this bill, I urge the government to seriously reconsider and determine how they will tender and enter into a public-private partnership to deliver some very timely public housing for vulnerable people.

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

I rise to support the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008. The government’s first home saver accounts provide an additional mechanism for individuals in a family to save for a first home in which to live. The proposals in this bill are consistent with the existing financial sector levy framework that funds the supervisory activities of the Australian Prudential Regulation Authority, APRA, on a user-pays basis.

This bill implements an additional part of the government’s election commitment to assist people to save for a deposit on their first home against a background of high home prices and high interest rates. The following are key features of the first home saver accounts. The government will provide a 17 per cent matching contribution on personal contributions, up to $5,000 a year, with an annual maximum of $850. Account holders must save for part of four financial years—that is, the minimum period can be two years and two days, if an account is opened on 30 June in any year, and the maximum contribution limit is an account balance of $75,000. Interest can exceed this amount. Account holders contribute from after-tax salary. Government contributions and withdrawals are not taxed, and earnings in the account are taxed at 15 per cent, like superannuation. Accounts can be provided by banks, superannuation funds, building societies, life offices and credit unions.

Two bills are being debated today. One of the bills establishes a levy to recover, firstly, the APRA, ASIC and ATO costs of regulation that mirror the current retirement savings account model. Secondly, it provides for unclaimed money provisions that will be consistent with those applicable to other financial products. Thirdly, it allows for an exchange of information between the ATO, ASIC, APRA and the states and territories. Fourthly, it contains amendments that facilitate the operation of accounts under family law.

The First Home Saver Account Providers Supervisory Levy Imposition Bill 2008 introduces a framework for imposing a supervisory levy on first home saver account providers. The levy will recover on a user-pays basis the cost of the Australian Prudential Regulation Authority prudently supervising financial institutions that offer first home saver accounts. The proposed levy is modelled on the supervisory levy for retirement savings account providers and will be administered as part of the existing financial institutions supervisory levy framework. The financial institutions’ supervisory levies are set by the Treasurer annually.

The bill will ensure that a scheme for dealing with unclaimed money will be put in place. This is similar to how other non-superannuation investments are treated. Where first home saver accounts have been inactive for seven years and where the provider has been unable to contact the account holder, any money in those accounts will be paid to the Commonwealth. Individuals who are later found will be able to make a claim for their money. The unclaimed money provisions will ensure that the first home saver account providers are not required to service small, inactive accounts. This is expected to ease the compliance burden for providers.

In relation to family law, an amendment is being made to allow individuals to access information about their partner’s first home saver account without the need to formally commence legal proceedings. Amendments will be made to ensure that payments under a family law obligation—for example, to an account holder’s spouse—receive the same treatment as if paid to the account holder.

Other amendments are being made to provide protection to providers who, in good faith, act in relation to a family law obligation and to ensure that contributions made to first home saver accounts under family law obligations which breach the account balance cap are not paid directly to the account holder.

An amendment has been made to the withdrawal rules to provide better protection to individuals who are unable to meet the occupancy rules due to circumstances beyond their control and to ensure that individuals who misuse their first home saver account money cannot avoid the misuse tax by recontributing.

It is pleasing to note that, as of 19 July 2008, eight credit unions and cooperatives had advised APRA that they intend to offer first home saver accounts, which will provide real choice to consumers, and it is almost certain that more of them will offer these accounts in the future. Major stakeholders are broadly supportive of the first home saver accounts. Constituents in my electorate, especially young couples and renters, are over the moon at being able to set up these accounts and make the dream of home ownership a bit closer to reality in the near future.

As of 1 October, constituents can get cracking on saving a deposit, with the government by their side with an attractive option in the first home saver account. To be eligible to open one of these accounts from 1 October, you need, firstly, to be aged over 18 and under 65 years; secondly, to have a tax file number you can quote in your application; and, thirdly, never to have owned a home in Australia that has been your main residence.

If you are eligible, this is what you need to do. Firstly, you must choose the provider you want to have your account with and read its product disclosure statement. Banks, building societies, credit unions, life insurance companies, friendly societies and trustees of publicly offered super funds can all offer first home saver accounts. Secondly, you should remember that your first home saver account must be an individual account, not a joint account. However, if you want to buy a home jointly you can do so, even if none of the other owners has a first home saver account. Thirdly, you must make contributions from your after-tax income. You cannot salary sacrifice into a first home saver account.

I am pleased to support legislation that provides incentives for prospective home owners to own their own home. I would like to draw the attention of the House to the fact that in the seat of Dawson there is less than one per cent rental availability. This is due to various pressures. First and foremost, we have a mining resources boom which has attracted many workers from all over the country. This has taken up virtually all of the rental supply. This government has offered a real helping hand to children in the seat of Dawson who are turning 18 and want to start saving for their dream home.

The resources boom brings many benefits and also causes some interesting social situations. For example, a family would have to pay $350 per week to rent a very basic three-bedroom wooden Queenslander on an 800-square-metre block of land in the centre of Mackay, in the seat of Dawson. With those constraints, people need a helping hand. The Rudd Labor government has done something incredibly positive which over the last 12 years was totally ignored. We have created a housing ministry. We have a Minister for Housing. That is how seriously the Rudd Labor government takes the housing situation. We have not just paid the problem lip-service or thrown it to the ravages of the free market and said, ‘It’s not our concern.’ We have stepped in and said: ‘We are taking this very seriously. We are creating a special ministry for housing.’ Tanya Plibersek is doing a fantastic job in going round the country to find out the real needs of working families, single people and young married couples who are looking to own or rent low-cost, affordable housing.

In the seat of Dawson, while the mining surpluses that are coming through are adding to the bottom line of this nation’s economy, we have people who are struggling. But this government has said: ‘We are going to step in. We are going to do something very constructive.’ There is no better way to do that than to have a special ministry for housing. That is how seriously we take the situation.

This bill is a practical means of encouraging people to save and for us to set an example for our young people that saving is very important. All parents should be setting an example for their children in how to save. This government has said: ‘We are going to give you an incentive to say: “Yes, I want to put some money away. I have a goal, a vision, a dream” And guess what? The Rudd Labor government is going to help you achieve that. We are going to help you in the steps to owning your own home.’ The great Australian dream is to have your own home—to either build, design, redecorate or refurbish one. There is nothing more important to our society and our culture than to be in control of our destiny.

The role of government is to help people who are not wealthy. The role of government is to say, ‘Yes, let’s give a hand to those who really need it.’ We have lots of interesting constraints in our society. Some of them, ironically, come from the second boom that is happening, particularly in the Bowen Basin area and also in the electorate of Dawson, which I represent. We have practical measures on the table right here, right now to deliver for the people of Dawson. I am so proud to stand here today in this House and say this government has a housing minister; this government has a determination and a political will to truly do something to give ordinary working people a hand up, an incentive to save and a chance to realise their dream of home ownership. I commend the bill to the House.

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

Whilst the coalition supports the First Home Saver Accounts (Further Provisions) Amendment Bill 2008, I am personally disappointed that this bill is the hallmark of the government’s strategy to assist people to save to enter the housing market. This is it; this is all there is. I fear this bill will fall tragically short of Labor’s rhetoric. I can guarantee the House it will fall tragically short of the member for Dawson’s rhetoric as to what indeed this bill can achieve. This bill does not solve the key problems. It does not increase the supply of affordable housing and it includes a range of significant structural flaws. You would think that the Treasurer would understand the fundamentals of the shortfall of supply versus demand in the housing market. Property prices are set by supply and demand. This is basic high school Economics 101. We know that the Labor state governments are predominantly in charge of releasing new land for housing developments, and history has quite conclusively shown that they have dragged their feet for years as new home owners and prospective purchasers have struggled to enter the market.

Labor went to the election with this policy as an election promise, copying but missing some of the key elements of the coalition’s election promise. A comparison is always interesting. Labor’s policy says you must be 18 years old to have an account. The coalition went to the election saying any child can have an account and you can open an account for your child once they have been born and make contributions and assist so that when the child comes of age they will have a healthy deposit for a house. Clearly, Labor are not very big on long-term vision. They are not really big on allowing children to build up a nest egg for a home, as one has to be 18 years old. Labor’s policy has no restriction on who can make a contribution, but all contributions must be made from post-tax amounts. Prior to the election, the coalition said that parents, or indeed relatives, could receive a tax deduction up to a certain amount to encourage them to put money into the savings accounts of their children. I guess Labor are not very big on encouragement.

There are a range of structural problems that Labor’s bill does not take into account. First of all, it is dealing with the demand side of the equation when the problem is squarely on the supply side of the ledger. The Labor states must release more land. It is patently that simple. In the great electorate of Fadden, on the northern Gold Coast, the Bligh Labor government’s South East Queensland Regional Plan, steeped in failure when it was conceived, refuses to release a range of land that is currently being used for cane farming. It refuses to release it for the cane farmers to do anything else but farm cane. The vast majority of cane farmers are not interested in continuing to farm cane in the area; they want options to use their land for other purposes. The Labor state government will not give them the freedom to make a choice as to their land. It dictates that they must use it for cane farming.

Labor states must get rid of stamp duty on first homes. A number of Labor states have followed the abhorrence of the Rudd Labor government’s politics of envy by pushing up the higher stamp duty on higher priced houses to allegedly subsidise lower priced houses. Clearly, Labor believes that we should tax the rich and give it all away in this wonderful utopian collectivism. Why don’t the Labor states simply get rid of stamp duty on first homes?

Councils must advertise the infrastructure costs across the life of any investment rather than smacking 30 per cent on the price of a house and land package by putting those infrastructure charges upfront. Hopefully, with the enormous change to the Labor councils in New South Wales, with swings of 20 per cent against Labor incumbents, these councils may actually get the message.

In terms of the bill, first home buyers who fit into the following categories are also unlikely to benefit. Those who intend to purchase a home before 2012 are unlikely to benefit from the bill—staggering, I know. Those who are intending to draw on alternative sources for a home deposit, such as family support or an inheritance, are unlikely to benefit from the bill. Frankly, neither are those who cannot save money—being those who do not have the capacity to save by virtue of their incomes or those who do not have the discipline to save. I will reflect in my comments on those who do not have the capacity to save because of higher prices. It is interesting to reflect that, prior to the election, the Rudd government led the Australian people to believe they would bring down grocery prices and petrol prices. Clearly, these things have gone up. No-one can debate that point. in this bill, those who cannot save money because of the cost of living increases are penalised. Those whose incomes are already given concessional tax treatment, although they may still receive some benefit from a government contribution, for the most part are unlikely to be beneficiaries of this bill.

We must ask the question: why is this bill saying that you must be 18 years or older to open an account? I was at the Australian Defence Force Academy at the age of 17. This bill would be saying to me, if I were still a member of the Australian Defence Force: ‘I’m sorry but you don’t have the maturity and common-sense to go forth and open a first home buyer account.’ Soldiers can enter the military at 17. Theoretically, they can be sent on operational deployments. But, no, they can’t open a first home saver account! They are responsible enough to go to war but not responsible enough to save money and to receive a government contribution through this bill. It is patently ludicrous.

There are many 15-, 16- and 17-year-olds who want to save money for a house. Many young people who are working long hours to pay their way, to contribute to family budgets, want to save for the future. But clearly this Labor government believes that every teenager is working only so they can buy Billabong shorts and a Rip Curl shirt. Obviously, they do not want to save for a first home because they are not allowed to have an account and receive a benefit from the first home buyer savings account. It is patently ridiculous in the extreme. People who are working should have and must have the opportunity to open an account and receive a government benefit—and saying they must be 18 years old or more is a nonsense.

The government is capping the contribution at $75,000, which is odd because this equates to a 20 per cent deposit for a $300,000 home excluding other on-costs. Let us look at the cost of housing. I refer the House to the Courier-Mail of 9 September last year. Overall, the median price in Brisbane increased to $434,000 in the last quarter—ahead of Melbourne, at $420,000, and close behind Sydney, at $525,000, and Perth, at $446,500. Nearly a third of Brisbane suburbs, 43 out of 151, now have a median price above half a million dollars. Yet I remind the House that the cap, at $75,000, equates to a 20 per cent deposit for a $300,000 loan.

I will talk about the Sunshine Coast hot spots. Buddina is up by 24.9 per cent to $585,000. Alexandra Headlands is up by 24.5 per cent. In Mackay, in the seat of Dawson, which is held by the astute member we have just heard from, the median price for homes at Shoal Point, on the northern beaches, rose by 20.9 per cent—double the average for the city—to $535,000. Glenella also broke the half a million dollar mark. On the Gold Coast, my home, where the mighty electorate of Fadden is, the median price is $420,000, which is $130,000 more than this $300,000 cap. The government has put a $75,000 cap on it, which is 20 per cent of the $300,000. The cap needs to be increased.

One has to question also the cost of administering the first home saver accounts, because the cost is not known. It is expected, though, that the financial institutions will incur most of the cost, as the bill refers to a levy upon those institutions. What has been the response from the nation’s financial institutions? I refer the House to an article by Alex Tilbury in the Courier-Mail on 12 September—four days ago. It reads:

The Rudd government’s great hope to overcome the housing affordability crisis by offering first home buyers beefed-up savings accounts looks set to be a huge fizzer.

The silence is deafening from the finance sector, just two weeks out from the 1 October deadline when the accounts were set to hit the market.

Of almost 200 banks, credit unions and building societies in Australia, just 14 obscure outlets—mostly close to teachers and police—have expressed any interest with the banking regulator regarding the accounts.

Life insurers and super funds can also offer them and so far the Labor Union Retirement Cooperative Fund is the first to show any interest—

I can only assume that is because the government has actually told them to—

Fiona Reynolds, Chief Executive of the Australian Institute of Superannuation Trustees, said, ‘Many super funds had put the first home saver accounts in the too-hard basket. These products are welcome but, under the proposed legislation—

the legislation that we are debating here today—

the costs of establishing and running a first home saver account are simply too high for many super funds. The accounts were first lauded in February and later in the May Budget by Treasurer Wayne Swan as a great saviour to help new buyers get on to the property ladder. Yet InfoChoice spokesman Steve Anderson said that there had not been a peep out of any of the major banks regarding these new products because they had been deemed to be too expensive and too complex. Finance industry sources said the accounts had to be created using a trust structure similar to superannuation, and the government’s reporting was too onerous and too complicated.

As if that were not damning enough, the article continues:

But Mr Swan’s spokesman was adamant—

I am sure he was—

that “a few banks and various other institutions are going to offer the accounts” from 1 October. But he declined to name any.

Perhaps he could not think of any.

Opposition housing spokeswoman, Susan Ley, told the Courier-Mail people did not have to have $1,000 to open an account. That is a change from the initial policy introduced. I think it smacks of desperation by the government they’ve had to lower the threshold.

That sums up the Courier-Mail’s view of the legislation, which I think hits it on the head—14 small outlets have taken the accounts up. None of the big four banks, the bulk of the banking institutions of this country, have picked up this ‘saviour’ that the Treasurer put out. So I called my local bank on the Gold Coast. I called the NAB. I spoke to the senior banker there and he had not heard of it. He had not heard of this saviour for people saving for houses. He said he would call me back after he had checked with his national headquarters. Half an hour later he gave me a call back to say that, yes, they were aware of it and were considering what to do next. That was the Gold Coast NAB’s view on this particular piece of legislation, which is rushed, complex and onerous. It puts fees and charges on the banks and has so far inspired 14 small banks.

May I encourage the government to look at the opposition’s policy, which was simpler, more flexible, less onerous on fees and charges, allowed anyone of any age to have an account established and allowed a tax deductibility for those accounts. Before you sacrifice the savings of people wanting to get into their first home, before you limit the number of banking institutions because of poor policy, look at what the coalition put forward.

In conclusion, limited land supply induced by the restrictive land release policies of Labor state governments and local governments is one of the main reasons for rising housing costs. Government taxes, fees, levies, charges and compliance costs at the state and local level are adding enormously to the cost of new housing and now represent close to a third of the cost of a new house and land package. Before this hypocritical federal Labor government stands up and blames everyone but themselves, may I suggest they call their moribund state Labor counterparts and ask them to do something about land release and these costs. The supply of land to build entry-level first homes is in no way keeping up with the demand. By adding more dollars to the demand side of the equation, you are simply giving people more money to spend in an already extremely tight housing market. Whilst we support the intent of the bill and the direction in which it is going, it falls far short of the rhetoric from the Labor Party and far short of what it could have been if it had been sensibly thought through. It does not even begin to address the supply side issues and is restrictive on who can access the accounts. It appears that the banking sector are voting with their feet. Two weeks out from the start of the accounts, the big bankers, the big entities, the major players are silent. Silence is acquiescence. It is all a little too hard.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

When I listen to the member for Fadden, I am reminded of a young fellow who played football with me once: he was not sure which team he was going to support, which jersey he was going to put on and in which direction he was going to run. I am looking forward to the member for Fadden actually casting a vote on this issue because all I heard was negativity, rhetoric and opposition. One wonders how he would go, and how much he would wax lyrical, if he truly believed in the legislation he was going to support in this House. This is great legislation, and it is part of a great scheme which will help the people in my electorate tremendously. I support the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008.

During the 2007 election, and when I ran in the 2004 election, people spoke to me on numerous occasions about housing affordability. Growing up in Ipswich, I know how important housing affordability is to the local residents. Ipswich was a depressed area for a long time. It went through some very difficult and dark days, particularly in the 1980s, when industry was fleeing, when railway workshops were closing down and when coalmines were closing down—when it just seemed everything was going badly for Ipswich. Fortunately, in the last 10 to 15 years things have turned around. With the injection of money from the Rudd Labor government, with great foresight from the Ipswich City Council and with an integrated strategy from the much-maligned Queensland government—as my friend the member for Fadden would say—we are seeing a great rebirth in Ipswich. The First Home Saver Accounts scheme in this legislation will help enormously those battling people in my area who have struggled with housing affordability for so long.

What we have seen in the last few years in the federal electorate of Blair—in Laidley, just west of Ipswich, in Gatton as well, in the old Boonah shire and in Ipswich in particular—is a growth in population. Ipswich is now 155,000 people. It grew by 5,000 last year—4.6 per cent growth per annum. Just over a week ago Ipswich was recognised as the fastest-growing region in South-East Queensland. The Lockyer Valley, which makes up 25 per cent of the population of my electorate, is also growing. We are seeing housing estates grow up everywhere. Just recently the Queensland Times reported that one developer was building 1,400 new homes in the most eastern part of my electorate at Redbank Plains. So housing affordability is high on the agenda for the people of Blair.

We have seen, for example, a new prison being built in Gatton, meaning thousands more jobs. The Woodlands estate is going to double the size of Gatton township, which is an important regional hub in South-East Queensland. Young people and older people who do not own their homes, who want to get into the market and who are struggling with rising rents are looking for some break, for some opportunity and for some help. Under repeated interest rises under the previous government they got none. Instead, what they got was effectively an attack on their wages and conditions with Work Choices. Those people know that under the Rudd Labor government help is at hand, and it is coming in the First Home Saver Accounts scheme.

It is interesting that just south of my house in Ripley Valley there are 100 square kilometres which will house 120,000 people in about 50,000 dwellings in the next 20 years. The Ripley Valley master plan task force—established in partnership with the local community, Ipswich City Council and the state government—is quite incredible. Ipswich will grow by 205 per cent by 2031, according to the latest data. One can see that, for the people who live in the Ipswich area, assistance in the form of first home saver accounts is immeasurably important. We will see a lot more development as a result of the housing in the area. Ipswich has 43 per cent of all available industrial land in South-East Queensland. There are two universities and the RAAF base at Amberley, which is becoming a super base. So there will be more and more jobs and more and more people. Beside Flinders View, where I live at Ipswich, there are hundreds more houses being built. The RAAF base, which currently has 2,500 personnel on it, will have 3,200 by 2009. By 2015 it will have 4,000. You can imagine the housing boom in my area—it is quite extraordinary. The Rudd Labor government’s commitment to first home saver accounts is so important for my electorate.

The First Home Saver Accounts Bill 2008 was passed earlier this year. That primary legislation is being amended by this bill. I remember campaigning on this legislation and on this issue in the federal campaign. I was extraordinarily pleased when, on 4 November 2007, it was announced by the then Leader of the Opposition, Kevin Rudd, housing spokesperson, Tanya Plibersek, and shadow Treasurer, Wayne Swan, that a Rudd Labor government would help aspiring first home buyers in my electorate to save for a deposit. My dad was a cleaner in the meatworks and my mum was a shop assistant. The idea of owning a home was so important to them in the 1960s in Ipswich. So many people could not afford it. I grew up in a working-class family who struggled all their lives. This sort of measure really helps and it irks me to see the member for Fadden criticising the federal government for this sort of measure—blaming the states, blaming everything under the sun. The Howard government had nearly 12 years to do something like this and they did not do it in all the years they were in office. It has been left to the Rudd Labor government, as has so much in law reform, in health and savings policies, in helping the workforce and workplaces, in helping the skills crisis and in structural redevelopment, to do the hard yards.

This particular legislation helps to overcome the greatest obstacle to buying a first home and that is simply saving for a deposit. It is hard when every week you have to look at the pennies—if you cannot buy football shoes for your kids, if you cannot afford to buy textbooks and if you have to choose the kind of food that is eaten. I remember when I was growing up having to eat certain foods because my folks could not afford to buy other types of food. They could not afford dental care and health care. This sort of legislation, this sort of scheme, will help kids who, like me, grew up in working-class families to get the kind of assistance they need to get decent housing.

The first home saver accounts will build on arrangements for superannuation—and superannuation is another great Labor initiative. We have a superannuation industry in this country because of the Hawke-Keating Labor government, and we should never forget it. We should never forget the fact that it was a Labor government that increased pensions. It was Bill Hayden, when he was the social security minister, who increased the pension from 19 per cent to 25 per cent of the average weekly wage. Was that percentage increased under the Howard government? Was it even looked at? No. Issues like this, issues like housing affordability, were not looked at. What did they do? They tried to privatise everything. They deliberately ran down the stock of public housing. That is what they did. They made housing affordability more difficult, but under the Rudd Labor government we will look at helping in terms of housing affordability.

I will tell you something: the Howard government really have form when it comes to housing affordability. Listen to these facts—these are the official statistics in relation to housing affordability. The average home now costs about seven times the annual average wage. That is up four times in just 10 years of the Howard government. In 1996 housing affordability was about four times the average salary and now it is seven times the average salary. Nationally, in 2007, first home buyers were spending 31.7 per cent of their total income on mortgage payments, up from 17.9 per cent in 1996. The proportion of homes being bought by first home owners declined from 21.8 per cent in June 1996 to 17.1 per cent at the time of the election of the Rudd Labor government. So let us not have the opposition spokesman come into this House and lecture us about housing affordability, because they did nothing about it for about 12 years.

It is the Rudd Labor government that will increase the housing supply by providing incentives for local infrastructure and giving state and local governments incentives to lower development charges through our Housing Affordability Fund. We are the ones who are bringing in 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 on their rental bills, and I commend Minister for Housing for the initiative.

These particular bills before the House talk about a number of things, and I will go through them in detail. They include a system for handling unclaimed moneys, amendments to secrecy and information sharing between the ATO, APRA and ASIC, dealing with family law proceedings, and various amendments to make the scheme operational. The government is investing $1.2 billion over four years in the First Home Saver Account policy. As I say, it is part of our financial support to boost the housing stock of this country and to help people. The amendments made in these bills ensure secrecy provisions in the First Home Saver Accounts Act and enable APRA and ASIC to access required information while maintaining and protecting people’s privacy. APRA and ASIC each play a role in the administration of the First Home Saver Accounts Act and they will receive that sort of information in the course of performing their functions. This amendment bill will provide that the information they receive will have the same protection as the governing legislation under which they operate.

The bill will also provide for a system for implementing and dealing with unclaimed moneys, just like other investments but not superannuation. Where first home saver accounts have been inactive for seven years and where the provider is incapable of locating the account holder, that money will pass to the Commonwealth via ASIC. Effectively it becomes bona vacantia, as we say in law. If those individual account holders come forward, if they are found, they can claim their entitlement to that money. Under the legislation, ASIC will publish information about unclaimed money to permit people to search for their unclaimed money and they can then ask to be paid by ASIC.

In respect of the family law proceedings I referred to, there is an amendment to permit parties to access information about their former partner’s first home saver accounts without the need for recourse to litigation. In December 2002, in a bipartisan way, legislation was passed in relation to family law proceedings so that parties to family law disputes could have access to information about the balance of superannuation accounts, effectively bringing in a super-splitting arrangement that could be undertaken by way of a binding financial agreement or by way of a court order. In those circumstances, parties could then get a split of the superannuation and it could be done in a way that was fair and equitable to all concerned. Previously, superannuation was only treated as a financial resource and not capable of being split. So the amendments in these particular bills ensure that first home saver accounts are treated the same way as superannuation for family law purposes. Effectively, what will happen is that there can be a split of the first home saver accounts in the same way. And there is protection, of course, for the providers in those circumstances because, just like there was protection for the trustees of the superannuation funds, there needs to be protection for the holders of the scheme.

There are numerous credit unions and cooperatives which have signed up to this scheme. I am not going to name them all. I note that the member for Fadden mentioned a number of them. I just want to talk about a couple of key features of this particular scheme, which will help my electorate so much. The federal government will provide a 17 per cent matching contribution on personal contributions up to $5,000 a year—that is, an annual maximum of $850. Account holders must save for part of four financial years. Account holders must contribute from after-tax salary. Government contributions and withdrawals are not taxed and earnings in the accounts are taxed like superannuation at 15 per cent. Accounts can be provided by banks, superannuation funds, building societies and like institutions.

I am very pleased to speak on this bill because it will make an appreciable difference to the lives of my constituents. It will help give struggling families in Ipswich, the Lockyer Valley and the old Boonah shire the capacity to save for a deposit. It will give them a start in life. It is a socially just and equitable measure. It is all about the Rudd Labor government giving people a hand up, giving them the kind of help and assistance they deserve. It is about a fairer Australia, a just Australia, a decent Australia, and I commend the bill to the House.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

While the government is putting in place a range of policies and measures to help young people achieve the Australian dream of owning a home, those opposite are still trying to get their house in order. It is the never-ending drama of ‘Whose turn is it to be the leader now?’ How much of a turn will the member for Wentworth have on the Liberal Party’s leadership merry-go-round before option B resurfaces, or do they go to D or E? In contrast, and thanks to the strong leadership on this side, the Rudd government is getting on with the job and giving assistance to people to save for a home. Unlike the opposition, which squandered 12 years of opportunity to help struggling families who aspired to own their own homes, we are taking real action.

It is no wonder families are finding it difficult to pay higher interest rates. They had 10 interest rate increases in a row under those opposite. One of the reasons for those interest rate increases is thanks to the last two budgets of the previous Treasurer. As the Financial Review exposed last week, Treasury papers from the International Monetary Fund’s visit to Australia in 2007:

… reveal plainly how Costello’s last two budgets fanned the flames of inflation.

A further quote from the article states:

… the threat of renewed stagflation has come about because Costello practised a dangerous brand of pro-cyclical fiscal policy—increasing government spending while the economy was booming.

A dangerous brand of policy is what the member for Higgins gave us, and that led to 10 interest rate rises in a row for working families across this country. That is about $400 a month that they were slugged with. On this side of the House, we have positive and decent policies that are going to assist people in trying to reach that dream of owning their first home.

The good thing is that the Rudd government is taking action to curb the inflation legacy left to us by the member for Higgins. We are doing that by maintaining surpluses and addressing productivity constraints by investing in education and nation-building infrastructure. We are also helping aspiring first home buyers save a larger deposit by establishing new, low-tax, first home saver accounts. We also have an inquiry going on into bank and non-bank competition to make sure that there are enough players in that competitive market so that downward pressure will be put on interest rates. We are looking at ways in which people with home loans can switch between those home loans so again the competitive pressures of the market will help force down interest rates, making it more affordable for people to own their first home or to own a home.

The electorate of Dobell is blessed with many beautiful features, but one of the things about Dobell is that we also have a large proportion of people who have mortgages. We have a large proportion of young people who moved to the beautiful Central Coast so that they could afford to buy a home. Because of the policies the member for Higgins gave us, I am finding that people in my electorate are struggling to make their mortgage payments and those who are looking to enter the market are struggling to raise a deposit.

Today I am supporting the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 because this bill helps to make it easier for those looking to buy that first home to get that deposit. The first home saver accounts make a number of changes to assist in this way. There is a scheme for dealing with unclaimed money. There are amendments to the secrecy and information shared between the ATO, APRA and ASIC. It deals comprehensively with family law situations. There are various other amendments to ensure that accounts operate as intended.

A scheme for dealing with unclaimed money will be treated similarly to other non-superannuation investments. First home saver accounts which have been inactive for seven years and where the provider has been unable to contact the account holder will be paid to the Commonwealth. Individuals who are later found will be able to make a claim for their money. The unclaimed money provisions will ensure that first home saver account providers are not required to service small, inactive accounts. This is expected to ease the compliance burden for providers.

Amendments are being made to ensure the secrecy provisions enable agencies to access information they require while also ensuring privacy is protected. Provision is also being made for information sharing on first home buyers between the Commonwealth and the states and territories.

In the area of tax, first home saver accounts will not need to be reported in relation to tax file numbers and Australian investment income reports. First home saver account reporting is covered by a separate system.

An amendment to the definition of separate net income has been made to exclude investment returns on first home saver accounts and the government first home saver account contribution from its calculation. Separate net income is used as an income test for a small number of tax offsets, including the dependent spouse tax offset.

Other technical amendments are being made to ensure the taxation of first home saver accounts and first home saver income operates as intended. For family law matters, an amendment is being made to allow individuals to access information about their partner’s first home saver account without the need to formally commence legal proceedings.

Amendments will be made to ensure that payments under a family law obligation—for example, to an account holder spouse—receive the same treatment as if paid to the account holder. Other amendments are being made to provide protection to providers who, in good faith, act in relation to a family law obligation and to ensure contributions made to the first home saver accounts under family law obligations which breach the account balance cap are not paid directly to the account holder.

There are a number of miscellaneous amendments. These include one made to the withdrawal rules to provide better protection to individuals who are unable to meet the occupancy rules due to circumstances beyond their control and to ensure that individuals who misuse their first home saver account money cannot avoid the misuse tax by recontributing. There is an amendment to ensure that first home saver accounts which do not have a tax file number cannot be contributed to superannuation but instead remain inactive. Similarly, an amendment is being made to prohibit any first home saver accounts from being used as security for a borrowing or a payment from a first home saver account from being assigned. A provision is made to ensure that first home saver accounts holders are unable to transfer between providers in order to withdraw their money from a first home saver account using various provisions of the Corporations Act 2001 without meeting the four-year rule. A provision is made allowing APRA to seek injunctions against individuals purporting to offer first home saver accounts.

The First Home Saver Account Providers Supervisory Levy Imposition Bill 2008 introduces a framework for imposing a supervisory levy on first home saver account providers. This levy will recover on a user-pays basis the cost of the Australian Prudential Regulation Authority prudentially supervising financial institutions that offer first home saver accounts. The proposed levy is modelled on the supervisory levy for retirement savings account providers and will be administered as part of the existing financial institutions supervisory levy framework also applying to authorised deposit-taking institutions, general and life insurers and superannuation funds. The financial institutions supervisory levies are set annually by the Treasurer.

The major stakeholders are broadly supportive of the first home saver accounts. If anyone had been listening to the contribution from the other side, they might not have known that the coalition are also broadly supportive of this legislation. It would be refreshing if they actually came to this chamber and spoke positively about the legislation that they intend to support rather than continually attacking the Rudd Labor government for its tremendous initiative that is only going to benefit those trying to save for their first deposit.

During consultation on the initial set of legislation, concerns were raised about some of the features of the accounts. Some ADIs did not support the model to tax first home saver accounts in a manner similar to retirement savings accounts. Amendments being made by the First Home Saver Accounts (Further Provisions) Bill 2008 provide greater certainty for ADIs as to how first home saver accounts will be taxed. Superannuation trustees were concerned about the requirement to use a separate trust from their current superannuation trust to offer first home saver accounts. Comments during targeted confidential consultation on the current set of legislation were minimal, reflecting the relatively mechanical nature of the changes proposed.

Let us look at the key features of this initiative. The government will provide a 17 per cent matching contribution on personal contributions up to $5,000 a year—that is, an annual maximum of $850. Account holders must save for part of four financial years—that is, the minimum period can be two years and two days if an account is opened on 30 June. The maximum contribution limit is $75,000; interest can exceed this amount. Account holders contribute from after-tax salary. Government contributions and withdrawals are not taxed, and earnings in the account are taxed at 15 per cent, like superannuation. Accounts can be provided by banks, superannuation funds, building societies, life offices and credit unions.

I remind the House that, over the first three years, first home saver accounts will help around half a million first home buyers save a bigger deposit by establishing superannuation-style low-tax savings accounts. These accounts will help boost national savings and therefore help to fight inflation, with the accounts anticipated to hold around $3.5 billion in savings after three years. Some indicators suggest that home loan affordability in Australia is currently at a record low. There are also predictions that home loan affordability will decline still further in the immediate future in response to the record high inflation that the Rudd government inherited.

The proportion of median family income required to meet average home loan repayments across Australia increased by more than eight per cent over the last 12 months. A similar increase has been seen in the proportion of median family income required to pay weekly rent for a home. I have heard firsthand many stories of struggles with housing affordability in my electorate on the Central Coast. While the home-building rate has slowed in the region, the demand for housing has remained steady. The gap in supply and demand has grown wider. Coupled with that is the fact that so many of my constituents have to travel major distances to their jobs in Sydney and Newcastle, adding higher costs to their weekly budgets and therefore further pressures to their lives. Of course, the task of saving for a home deposit will be that much more difficult for these people, but the incentive to do so is being provided under the new First Home Saver Accounts legislation. In this context of declining home loans and rental affordability and higher house prices, many would-be first home buyers are experiencing difficulty in saving a deposit. This is partly reflected in the declining rate of first home buyer participation in the housing market.

One of the greatest obstacles to buying a first home is saving that first deposit. This Rudd government initiative, the first home saver account, will allow a couple—each on an average wage and saving 10 per cent of their income—to save a deposit of around $64,000 over five years. This $64,000 deposit is around $14,500, or 30 per cent, more than could be achieved by saving through an ordinary deposit account. This is a great initiative. A 30 per cent increase in the deposit that young couples are going to be able to make so that they can enter the housing market is a concrete step that makes the Australian dream of owning your first home that much easier. A larger deposit will also reduce the debt burden for young homebuyers and can help them avoid the often costly mortgage insurance that comes when you are buying that first house and your deposit is smaller than you probably want.

The new first home saver accounts will build on the arrangements for superannuation, allowing potential first home buyers to access similar tax breaks on their first home savings and unlock higher returns. May I present two scenarios which show what can be achieved through the first home saver account. Under the first scenario, where the saver merely meets a target of achieving the maximum government contribution each year, the individual will have around $28,200 in August 2012 to contribute to a house purchase. Of this amount, $21,750, or 77 per cent, will have been saved by the individual and nearly $3,400, or 12 per cent, will have been earned in interest, and the net contribution of government will be around $3,080, or around 11 per cent. If the First Home Saver Account scheme were not in place, and the savings were the same, this individual would be around $4,340 worse off due to lower after-tax interest earnings and no government contributions.

Under the second scenario, where the saver meets a target of achieving the maximum government contribution each year and invests in order to ensure the account value is at the maximum threshold by 1 January 2013, the individual will have around $80,500 in August 2012 to contribute to a house purchase. Of this amount, $64,250, 80 per cent, will have been saved by the individual, with around $43,750 needing to be deposited when the first home saver account is first opened. Nearly $14,900, which is around 18 per cent, will have been earned in interest and the net contribution of government will be around $1,403. If the First Home Saver Account scheme were not in place and the saving levels were the same, this individual would be around $6,130 worse off due to lower after-tax interest earnings and no government contributions.

Savings with Labor’s first home saver accounts will receive preferential tax treatment in two ways compared to ordinary savings accounts: savers will be eligible for a low tax rate of 15 per cent on the first $5,000 of income they deposit in their account each year, rather than the ordinary tax rate they would pay, and interest earned will be taxed at 15 per cent or less. In an ordinary savings account, both contributions and interest earned on savings are taxed at the individual’s relevant income tax rate. As a result, the tax benefit provided by the first home saver account will enable most first home buyers to save substantially more than they would have otherwise. In addition to the first $5,000 in tax preferred contributions, $5,000 a year may be contributed towards a first home saver account from after-tax income without any further tax having to be paid on that contribution.

This is a great announcement; this is great legislation that goes in a very meaningful way to making housing affordability a reality for many, many young couples. While the Liberal Party’s inflation legacy has made it harder for working families, especially first home buyers, to save a deposit and buy themselves a home, the government’s measures and policies are showing our commitment to families and couples who are trying to live the dream of owning a home. The first home saver accounts deliver and improve on a key election commitment and bring the dream of homeownership a step closer to reality for hundreds of thousands of Australians while still assisting in the fight against inflation. I commend both bills to the House.

Sharon Grierson (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

I also rise today to support the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Supervisory Levy Imposition Bill 2008. These two bills implement additional parts of the government’s election commitment to assist people to save for a deposit on their first home. That commitment was a true Labor commitment, a true Labor policy, providing people with practical assistance so that they can participate in the wealth of our society. In fact, it takes me back to the Whitlam days. I remember well the Glebe project and the emphasis on affordable housing. It was a wonderful legacy that the former Prime Minister Gough Whitlam created and it is wonderful to see it live on in the new Rudd Labor government.

To refresh the memory of the House, the first home saver accounts legislation received royal assent on 25 June this year. Under this scheme, the government will provide a 17 per cent matching contribution on personal contributions of up to $5,000 a year. That is an annual maximum contribution of $850 from the government, a real boost for people struggling to save for their first home. Account holders contribute from after-tax salary, and government contributions are not to be taxed. Earnings in the account will be taxed but at 15 per cent, the same as superannuation.

The government will contribute to an account of up to $75,000 but interest may exceed this amount. That certainly contrasts with the bonus first home owners grant that the Howard government gave, without any limits or asset tests at all. I well recall the impact of that grant of pushing up house prices, particularly in Sydney and New South Wales—a most unwelcome development from a poor policy that certainly did not target very well the people who needed it most and that punished everyone in Sydney trying to get into the housing market.

In this policy, account holders must save for part of four financial years, in effect making the minimum period for an account to be open two years and two days. I think that saving experience is very important to prepare people for a mortgage obligation. It is great to think you can save a deposit to buy a house, but that is where all the expenses begin, not end. This is a policy that will assist people to establish a saving pattern that they can continue when they can afford to buy their home and then have to meet their mortgage obligations.

With this scheme we are trying to achieve a real incentive for people to ensure that they also have a good deposit saved when they look to buy their first home and that they are then able to manage a realistic mortgage. We know that mortgage stress is a real problem. One of the reasons for this is that over recent years people have perhaps been taking on mortgages without the necessary financial foundation, borrowing the whole amount of the house price. We saw in the last few years practices where whole-of-house-price loans were extended to some and low-doc loans were made readily available. Of course that had its most extreme manifestation in America, where the subprime crisis finally occurred.

I recall the Governor of the Reserve Bank of Australia being asked and answering questions on the use of low-doc loans and whole-of-asset loans. Both governors over the last few years have expressed their concern, but they also expressed confidence in our banks. I think we are now, having seen this situation in America, feeling some relief that our banks are well regulated, even if there have been areas that we wanted tightened. I congratulate the Reserve Bank. It is a difficult time for it. We are very grateful for the work it does.

It is the case that the smaller the deposit a potential homeowner has the more they will have to borrow and the more they will have to repay. These conditions that we saw over the Howard government’s tenure—10 interest rate rises in a row—have been the last straw for many mortgagees, unfortunately including many first home owners. These interest rate rises added about $400 a month to repayments on an average mortgage. It is very hard for people to increase their income, certainly not at a time when their outgoings have been so high.

Earlier this month I drew the House’s attention to the growing number of writs of possession issued in my local area. In the Hunter region writs were being issued at the rate of almost one a day over the two years to February this year. That is an indication of a personal tragedy for any family that has their home repossessed. It is certainly a sign of the stress households are under. All of the almost 15,000 households with a mortgage in my electorate would have breathed a sigh of relief after the Reserve Bank’s decision to cut rates earlier this month, but it will be only a brief sigh of relief as mortgagees assess the up to $50 a month saving on their repayments against other cost-of-living factors, which we know are also contributing to tough times for many Australians. That is why this First Home Saver Accounts scheme is so important in helping to set potential homebuyers on a more sustainable footing before they make this most important of investment and life decisions.

There are a few points I would make on the details of the legislation. Firstly, the supervisory levy imposition bill, as its name suggests, will establish a levy to recover the regulation costs of the Australian Prudential Regulatory Authority, the Australian Securities and Investments Commission and the Australian Taxation Office. It is cost recovery that I think will be welcome because, if those funds are translated into greater regulation and greater compliance checks, that will benefit everyone. This regime will mirror that which is in place for the current retirement savings account model. It is important that we have a strong and coherent supervisory regime in place, and this user-pays model to levy those institutions offering first home saver accounts is a sensible one.

The further provisions amendment bill also contains a number of provisions to improve the operation of the scheme. We have introduced unclaimed money provisions that will be consistent with those applicable to other financial products. First home saver accounts that have been inactive for seven years and where the provider has been unable to contact the account holder will be paid back to the Commonwealth to hold for any future claims. Obviously, individuals who are later found will be able to make a claim for their money. These provisions will ensure that providers are not required to service small inactive accounts, thus reducing the compliance and administrative burden of the scheme on those providers. Provisions to deal with the exchange of information between various entities have also been included in this bill, simplifying that exchange. These provisions will ensure agencies such as the ATO, ASIC and APRA, as well as the states and territories, can access the information they need while also ensuring the privacy of account holders is absolutely protected.

In the area of family law an amendment is being made to allow individuals to access information about their partner’s first home saver account without the need to formally commence legal proceedings. Amendments are being made to ensure payments under a family law obligation—for example, payments to an account holder’s spouse—receive the same treatment as if paid to the account holder. Other amendments are being made to protect providers who act in good faith in relation to payments made under family law obligations.

Finally, miscellaneous amendments are being made to the withdrawal rules to provide better protection to individuals who are unable to meet the occupancy rules due to circumstances beyond their control. We all know that people’s work and family situations can change dramatically and suddenly, so I am pleased with these amendments that recognise that and do not punish participating individuals when situations arise that are outside their control. Having said that, though, the government is making significant financial contributions to these accounts, so we are rightly moving to ensure that individuals who misuse their account money cannot avoid the misuse tax by recontributing.

These two bills are significant additions to strengthen the legislative regime around the First Home Saver Accounts program—additions I believe will be of significant value to people wanting to buy their first home. The accounts can be offered by banks, superannuation funds, building societies, life offices and credit unions. I understand that there has been significant interest from these institutions in offering first home saver accounts. I am pleased to be able to inform the House that Hunter United Credit Union, in my electorate, will be one of the first, and I am hoping to be able to join them in the launch of this product in Newcastle in the near future. I am sure they will provide an excellent local option for people in my region saving for their first home. I particularly encourage our building societies to sign up for this program.

I take this opportunity, in mentioning building societies, to pay tribute to Steve Porges, the former CEO of Newcastle Permanent Building Society. Steve has been lost to us in Newcastle; however, we know that he is well placed as the new national CEO of Aussie. I look forward to seeing the work he will do there. He has a real commitment to affordable housing, one that he and I have discussed many times, and I know that he will always be looking for those opportunities to advance affordable housing options to customers. Good luck, Steve, and thank you for your work in Newcastle.

Because the Hunter is a region where many people really do aspire to the financial and relationship stability that can come with owning your own home, it is hoped that other institutions will participate. You can see in fast-growing new areas in my region, like the 5,000-lot Thornton North urban release area that will become the new suburb of Chisholm, that homeowning is something prized by the people of Newcastle and the Hunter.

The Rudd government knows how tough it can be to afford to buy a home, and we believe that these first home saver accounts will help people—often young working families—to achieve this dream. I commend the Minister for Housing for bringing this scheme to fruition. We know that Minister Plibersek is a hardworking minister. I know it because she recently visited Newcastle to talk to the community about this policy and other policies in the housing portfolio. She certainly went beyond the time commitment we would have expected. She had been to many functions and had given so much of her time. It was very generous of her.

We are looking for a suite of very important initiatives to help people in all kinds of housing situations, including first home buyers, the legislation we are currently discussing, and renters and homeless people. I note briefly that the minister and Prime Minister yesterday announced the guidelines for the National Housing Affordability Fund. The Housing Affordability Fund is a Rudd government initiative that invests $512 million over five years to target the planning and infrastructure costs that are incurred when building new housing developments. Tens of thousands of new home buyers are set to directly benefit from the fund, with savings coming from grants of up to $10,000 per home, reduced holding costs and contributions from other levels of government. This policy will encourage the building of much needed housing developments for Australians. Once again, this is an excellent Labor policy. It represents the real, practical policy solutions that were so sadly missing while housing affordability was always off the previous government’s political radar.

While in Newcastle Minister Plibersek also talked about the National Rental Affordability Scheme with several stakeholders in my region. It was something that particularly interested property investors and community housing providers in the area. This is the $623 million scheme to encourage the building of up to 50,000 new rental properties across Australia. Under the scheme, the Australian government and state and territory governments will offer incentives to institutional investors and housing providers to build 50,000 new rental properties, which will be rented out at 20 per cent below market rate. In order to stimulate investment, the scheme will offer investors a Commonwealth incentive of $6,000 per dwelling per year refundable tax offset or payment and a state or territory incentive of $2,000 per dwelling per year in direct or in-kind financial support. As I said, the feedback that Minister Plibersek and I received at our Newcastle stakeholder roundtable on this scheme was extremely positive, with many suggesting that the incentives would make all the difference for them in deciding to invest in affordable housing developments.

I note the report on the weekend that the government had received almost 250 proposals under the first round of the scheme. That is a fairly good indication that this policy has a great deal of appeal. I know that affordable rental accommodation is a big issue in my electorate, particularly for young people coming to Newcastle to study at university. Facing vacancy rates of just 1.5 per cent, people are certainly finding it hard to find a place to live. As we know, when vacancies are tight, rents go up. So people are finding it hard to find a place they can afford. That is why this is such good policy. It will make about 1.5 million people eligible to apply for the new affordable housing stock that is being created.

Nearly 50 per cent of people coming to homelessness services are private renters in financial difficulty. We should remember that important figure. The people who are now facing homelessness were perhaps once able to rent and meet their financial commitments. That has certainly changed since rents and house prices have escalated. The National Rental Affordability Scheme will help with the massive homelessness problem we face in this nation. So will the Rudd Government’s specific policies in this area, including $150 million over five years to build 600 homes across Australia for families and individuals who are homeless and $100 million for long-term supported accommodation for people with disabilities. While in Newcastle, Minister Plibersek spoke at two forums about these policies and about the government’s white paper process, which will include a comprehensive national action plan to reduce homelessness by 2020.

I have outlined some of the government’s initiatives in several areas of housing because they are interlinked. Helping homeless Australians, helping renters and helping home buyers are all policies in the great Australian Labor traditions of social justice and nation building. It is important to remember when we are in our electorates that security is extremely important to our constituents. Most people have very little security. The only asset most people own is their home; the only savings they generally have are in the superannuation fund. The only other security they have is a job. These are all issues that we understand and will continue to address with policies like this. I am very proud to support this legislation and I am also pleased to give my support to the First Home Saver Accounts (Further Provisions) Amendment Bill 2008 and the First Home Saver Account Providers Levy Imposition Bill 2008. I commend the bills to the House as a reflection of true Labor policies and the work of the Rudd Labor government.

Debate (on motion by Mr Dreyfus) adjourned.