Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I seek indulgence for the member for Braddon to make a statement. Once he concludes his contribution in the debate in the House, he will come and ask the permission of the committee to resume his contribution to this debate at a later time.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

I rise to speak to the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008 and in particular, to support the amendment that my coalition colleague the member for Cook has proposed. The government aims in part with this scheme to address the issue of housing affordability in Australia by addressing the chronic shortage of affordable rental housing. It proposes to establish a new asset class to attract institutional investors and not-for-profit organisations to enter into a 10-year contract to build 100-lot rental accommodation that attracts a rental rate 20 per cent lower than the current rental market. For this investment outlay, a tax offset will be available to institutional investors of a $6,000 rebate, together with a state government payment of $2,000 cash or in kind, making a total tax off-set incentive of $8,000. This will apparently be available as an $8,000 cash payment to not-for--profit organisations. I would ask: will local government be considered as ‘not for profit’?

This $620 million scheme aims to provide incentives over four years for the development of 50,000 new, affordable rental accommodation units to rent to low-income earners at 20 per cent below market rates. Although the financial prospectus was drafted with the assistance of social workers, it does not address the significant undersupply of new homes across Australia, which is the dominant influence on housing prices and rental affordability. I believe there are design flaws with this system because it should have been designed to meet the demand. For what is supposed to be national legislation, the bill again is very eastern-states centric.

In the next three years it is predicted that there will be an undersupply of housing of over 200,000 homes across the country. The incentive to build 50,000 homes over four years will not alone relieve the pressure on housing affordability in this country. How can one compare rental demand shortages in Port Hedland and Karratha in northern Western Australia with the public housing shortage in Manjimup or indeed Walpole, the southern most town in my electorate of Forrest, or compare shortages and prices in Sydney with a place like Harvey in my electorate? And how can these areas have the same incentive payment when one compares the price differential of housing construction in New South Wales with the costs of construction in Tasmania?

The demand in metropolitan and outer metropolitan areas compared to regional areas across Australia therefore needs a sliding scale to take into account the variations in construction costs in all areas. The incentives are below levels which would attract investors. Any new asset class would need to yield a minimum of five per cent and would need to be nine per cent to be competitive. I am advised that other estimates put this as high as 15 per cent. The assumed passing yield under these bills for the National Rental Affordability Scheme is just 4½ per cent. This would not attract institutional investors.

The $8,000 tax offset or cash rebate as a fixed dollar amount is not sufficient for investors in high-cost areas. Therefore I believe the value of the incentives should be more closely aligned to the value of projects and forecast rents. There should be a sliding scale available for high-cost, in-demand areas in metropolitan and outer metro areas on the one hand, as well as a provision for an incentive for construction of rental accommodation in regional areas where the additional costs of transport and construction of housing can be quite prohibitive.

I agree with my coalition colleagues that state and territory governments should match the tax rebate amount of $6,000 or indeed whatever sliding scale may be finally implemented to improve the value of the incentive. After all, state and territory governments will be the beneficiaries of windfalls in stamp duty and GST revenue from these new rental accommodation projects. From a commercial perspective, the current incentive structures will only see viable projects emerge from the urban fringe and smaller cities, instead of sustained, widespread growth in all areas, including my electorate of Forrest in regional Western Australia.

Investors will have to borrow to build and structure their borrowings over, potentially, a 10-year period. Therefore they will not be attracted to the more expensive construction areas of regional Western Australia, like some of those in my electorate. There is also no provision for the 100 accommodation dwellings to be split and built over different areas. This could provide added incentive for an investor to provide low-cost rental accommodation over several regional areas.

The penalties that will be imposed on developers and investors under this proposed legislation if properties are sold within a ten-year period is also a disincentive to attract large-scale institutional investors. As the current rental market differs not only from state to state but also by location, I also have to ask: who will decide what the current market rental value in any one area is? Just as there is a variance in the national rental market, so should there be a sliding scale within this scheme.

But we should also maintain access to capital for homebuyers, and I welcome the government announcement to increase the First Home Owner Grant to $21,000 for new housing. However, we have yet to see the detail confirmed whether the $21,000 will be available for both first home buyers who are building their own home as well as first home buyers who will be purchasing their home from a spec builder. I also contend that tenant eligibility criteria should provide a pathway to homeownership; otherwise, renters under this scheme will remain on welfare and rental assistance for longer than is perhaps necessary. Also the income threshold should be raised for those trying to save to get into private housing. This scheme should not just be a proxy state housing scheme offering to bail out the majority of state Labor governments. This scheme should provide renters with a pathway to homeownership.

Many community groups who look to house people with special needs may well be attracted to such a scheme on face value. It indicates that they could develop housing for disabled people or even housing for the aged. But this activity is apparently precluded from this scheme. I note that housing projects that have already commenced construction will be eligible to be included in this scheme. Therefore this scheme will fund projects already in the pipeline, which means that fewer new totally affordable houses and rental stock will be added to the forward projections. Essentially, these bills may relieve the pressure on state governments as a result of their undersupply of public housing.

Another flaw with this scheme is that it does not assist state governments in providing an increase in the supply of affordable housing for their key workers, such as health and education workers, or provide an incentive for these workers to take up employment positions in regional communities. The proposed eligible salary levels are below those of our essential key workers and here, again, this most deserving group of skilled workers will be excluded from eligibility under these bills.

I support my colleague’s proposed amendment to this bill. The Age newspaper on 15 March reported recent data from the Real Estate Institute of Australia showing the average family could no longer afford the average home mortgage. Close to half the average family’s post-tax income, or 37.4 per cent of gross medium family income—and the affordability figure is regarded as 30 per cent—is now required to pay the mortgage. This is the worst result in the 22 years since the survey began.

In fact I was recently told by a local office of the WA Department of Housing and Works that supply public housing in Western Australia that it was acceptable for applicants to pay up to 60 per cent of their Centrelink pension in the private rental market. This is simply unacceptable. The cost of rental accommodation in Australian cities and several regional centres is very high, such as the coastal sea-change/life-change areas in my electorate in Busselton, Dunsborough, Yallingup and Margaret River. The main reason for this is an undersupply of rental accommodation that has been caused by declining building approvals and dwelling starts and, in WA, the failure of the state Labor government to release land. ABS figures have confirmed that there is a trend to fewer residential dwellings being commenced.

Rising interest rates have also seen fewer investors enter the housing market, which has further reduced the supply of rental accommodation available. The coalition certainly supports efforts to increase the supply of dwellings for both homeownership and rental accommodation available. However, the best way to ensure that housing becomes and remains affordable is creating a strong economy, with more jobs—and not more unemployment as this government forecasts—and increasing real incomes, as well as continued investment in the housing sector and adequate releases of land. One thing for sure is that rents will continue to increase if government gets this economy wrong.

According to WA Business News on 28 August 2008, a survey found demand for WA rental properties was among the highest nationally, with 37 per cent of property managers stating there was a shortfall of more than 10 per cent of total stock. WA had the highest proportion of managers reporting rent increases during the past six months, with one-fifth of those surveyed raising rents by more than 21 per cent. Most respondents said rents were likely to increase by up to 10 per cent over the next six months, while 23 per cent indicated rents were likely to remain flat. Half of those surveyed in WA took less than seven days to lease a vacant property, while 45 per cent took more than one week—slightly higher than the national average.

Local Bunbury real estate company LJ Hooker advised that rental demand is currently a lot higher than it was five years ago. The last two Christmas periods had high demands, but Christmas three years ago there were zero rentals available, and this year is looking to be the same. A few years ago, percentage rate returns were 10 per cent of house values. A house valued at $200,000 would attract a rental of $200 per week. But the price of that $200,000 rental house has now reached $300, and rentals of $250 to $300 per week are very hard to find. Potential renters present themselves every day, picking up the booklet of rentals available, but rentals usually only last a week before they are snapped up.

Likewise, another local Bunbury agent, Raine & Horne, advised of a large influx of workers to the area, such as engineers and tradespeople, who have been attracted to the area due to the large expansion projects of various mining companies, which have seen the rental market spiral. These workers are willing to pay premium rentals for properties in and around the CBD. These prices are much higher than the locals can afford or are willing to pay. These people are coming from all over the world for these mining expansion jobs and are paying prices above Raine & Horne’s listed prices for fully furnished CBD accommodation.

CBD rentals have risen over $110 per week over the last eight months. However, there are still rental properties available in the outer CBD suburbs of South Bunbury, Usher, Australind et cetera, which are priced very competitively. In contrast, these property rental prices have only increased $30 to $50 over the same period of eight months. The reason for this is that people purchasing investment properties are paying more. When interest rates were higher, the repayments on properties were higher, which required a greater rental yield. For this reason, with falling interest rates and declining rental demand, there should be a plateau or decrease over the next few years.

Despite this, the cost of housing is still increasing as a proportion of average yearly earnings. Wages have actually grown less than have rental and housing prices, which have seen more of the family’s income going into housing. Reserve Bank figures for July 2008 indicated that Bunbury suffered the highest percentage of missed mortgage payments in the state and was the only region in WA to have home loan arrear rates at 0.7 per cent—greater than the national average of 0.55 per cent. Three months ago, Bunbury was ranked 20th in the state for missed mortgage payments.

I agree with my coalition colleague the member for Cook that amendments are required to make the scheme more flexible and more attractive to private sector investment. At the present time there has been little take-up from private institutional investors such as superannuation funds, because the rates of return offer little incentive to enter the scheme. It would be more attractive to the not-for-profit organisations that look to provide community housing for low-income earners or special needs accommodation.

Budget estimates indicated that the vast majority of incentives would be paid out in tax offsets to private sector investors. However, if more not-for-profit organisations take up the scheme, the $6,000 incentive will have to be paid out in cash to charitable sectors. Estimates may then have to be revised if more funding is required, as the majority of incentives are likely to be provided in direct grants to the not-for-profit sector rather than as tax offsets, due to the expected poor take-up by private sector investors.

Limited land supply due to restrictive land-release policies of state and local government planning is one of the main reasons for rising housing costs. State planning policies, combined with government taxes, fees, excessive infrastructure levies, charges and compliance costs, not only have added to the cost of new housing—they now represent a quarter to a third of the cost of a new house-and-land package—but have also contributed to the strangled supply of land. This must be the biggest issue impacting on land supply, housing affordability and rentals across the country—essentially it is how land is being supplied to the market. If the Labor government is serious in wanting to relieve the housing affordability crisis in Australia, it should be engaging with local government to assist with the provision of basic infrastructure and services to unlock land supply right across the nation.

This scheme, over the short and medium term, must be accompanied by major long-term reforms that address the key underlying causes to house price inflation. The previous state Labor government in Western Australia was too slow in releasing land for housing supply, and that ultimately drove up house prices and rents. I welcome the recently established new Liberal-National state government alliance in Western Australia, which recognises the need to provide the necessary infrastructure and to release land in a timely manner that will result in more housing units in cost-effective areas.

It is the state governments that will benefit from this scheme by way of stamp duties and GST revenue, derived from projects that will go ahead as a result of the scheme. I believe, therefore, that it is appropriate that the state governments should match the Commonwealth’s contribution to the scheme and that this should be as a cash payment rather than as in-kind support. However, it would be more beneficial to provide a sliding scale incentive to better reflect differences in each of the housing markets. This would better affect the investment in housing projects in certain areas, be they metropolitan or regional. There is a lot of uncertainty about this scheme; therefore, the take-up is also uncertain.

The government’s National Rental Affordability Scheme, coupled with its proposal for the First Home Saver Accounts program, is a seriously inadequate response to the housing affordability crisis, given that money deposited in these accounts cannot be accessed for five years from commencement. Agreements have not been negotiated with financial organisations that may offer these accounts. Administration costs have not been calculated, and the timeline for their introduction has blown out by three months. In fact, to my knowledge, no financial institution has yet put up its hand to say it will offer the accounts or what administrative charges will be charged on such accounts.

Construction costs in Western Australia appear to be higher than in other states or in the territories. I understand that the cost of constructing an aged care unit in the eastern states is approximately $180 per square metre, whereas the cost in WA is apparently $239.

The waiting list for public housing has blown out to many years in WA under the state Labor government. For example, staff at the Department of Housing and Works office in Bunbury, which covers the south-west areas of Yarloop, Bunbury, Eaton, Australind, Dalyellup, Collie, Donnybrook, Harvey, Brunswick, Capel and Boyanup, are currently attending to applications for one-bedroom public housing that date back to 2004—that is, they are only attending to those people who applied four years ago. If you applied for a two-bedroom house, lucky you if you applied in 2002, because that is the date for which they are now processing applications for two-bedroom houses. It would be better if you had applied for a three-bedroom house, because they are now processing applicants who applied only three years ago, in 2005. Similar and indeed longer waiting periods are being experienced all over the south-west in areas such as Busselton, Margaret River, Nannup, Bridgetown, Manjimup and Greenbushes.

In my electorate of Forrest, there are over 6,200 people receiving rental assistance from Centrelink. According to the West Australian on Wednesday, 24 September 2008, the waiting list for state houses in Western Australia blew out to almost 18,000 West Australians who were in the queue for public housing at the end of August 2008. The number of applications on the list had surged by almost 40 per cent in less than three years. Quite simply, there has not been enough Labor state government investment in public housing stock and infrastructure, and the onus has been put on residential developers in the south-west to provide the one-in-eight public houses in any new estate, such as Dalyellup in my electorate. As Shane Nichols from the Australian Financial Review reported on Wednesday, 3 September, price increases on blocks of land have escalated because developers now have to pay for the infrastructure that goes with housing estates.

The full cost of all services is passed on at the start from the developer to the home buyer, a factor that is driving up costs for developers and home buyers alike. Add to this the release of land, exacerbated by the delays in obtaining extraction licences for fill materials for building pads. Building costs have escalated. Take steel, for example: the price of steel has risen by 30 per cent in the last six months. Add to this the price of fuel for transport costs to the site. They all add to time delay and rising costs.

I believe the amendment proposed by the coalition should be supported to improve the proposed legislation under these bills. I support the amendment moved by the member for Cook.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

by leave—When I was speaking last time on the National Rental Affordability Scheme Bill 2008 and associated legislation, I was talking about the current rental market in Tasmania in relation to average income. I mentioned that the median weekly family income in Tasmania was $1,032, compared with $1,171 in Australia generally. Unfortunately, the figures are lower in my electorate of Braddon, where the socioeconomic status is lower than in any other major Tasmanian centre—for example, Launceston, in the north, and Hobart, in the south. The average rental price for a three-bedroom house on the north-west coast is $200 or above, which, given the figures that I have just cited and have cited previously, is about 50 per cent of an average individual’s weekly income for many people.

On the north-west coast of Tasmania there are currently 5,583 renting households. Of these, 2,035—that is 36.4 per cent—are currently experiencing rental stress, struggling to afford to pay their weekly rental costs. We know that the main factor currently driving up rental prices is a shortage of available properties, attested to by nearly every member who has spoken in this place on this important legislation. In fact, vacancy rates are at or below two per cent in all Australian capital cities. With this in mind, I am so excited about this new Rental Affordability Scheme. We need to build and make available more properties in order to make renting and indeed home purchasing more affordable again. I acknowledge that we are not going to solve the problem overnight, but we are definitely moving in the right direction, and in this I would like to congratulate the minister responsible for this legislation, the Minister for Housing, Tanya Plibersek.

This scheme alone will not fix housing affordability in Australia, but it is a component of the government’s $2.2 billion housing affordability package, which also includes our $512 million Housing Affordability Fund and the First Home Saver Account. The Housing Affordability Fund will help bring down the cost of newly built homes for many Australians, along with our recently announced increases in the home owner grant scheme, while our First Home Saver Accounts program will help young Australians in particular save for their first home.

I want to spend a bit of time talking about the first home saver accounts, because I believe they are a key in solving our country’s current housing and rental crisis by redirecting our current focus from short-term spending to medium- and long-term saving. The first home saver accounts will provide a simple, tax effective way for Australians to save for their first home to buy and then live in, through a combination of low taxes and government contributions. In the way the account is set up, the government will contribute 17 per cent on the first $5,000 that an individual contributes each year. So when we break that down in real terms, for the first $5,000 a person contributes to the account, the government will chip in $850. We recognise that $5,000 is quite an amount of money to have to save, but we are trying to encourage people to get serious about their savings if they want to own their own home and be part of what has been the traditional Aussie dream. Also, $5,000 is not the maximum contribution that can be made to an account each year. There is, in fact, no limit. For the record, account holders contribute from their after-tax salary and earnings and are then taxed at 15 per cent, which is equivalent to superannuation. All government contributions will be tax free. The accounts will be open for all those aged 18 to 65 and are capped at $75,000, which in turn is indexed. Young people, for example working part-time, are able to start off by putting as little as $20 a week away into their first home saver account—an amount that they may barely notice, at least for some. They can then increase these contributions when they gain full-time employment or start earning a bit more.

When we talk about first home saver accounts, it is clear that they are exactly that—aimed at saving for a first home. The accounts are locked-in for a minimum of four years, with a minimum $1,000 required to be contributed in each of these years in order to receive the full government incentive. So it is a savings plan for now and in the future, and it is taxed at a lower rate than would otherwise be for such income. This measure I believe is a very responsible policy by our government because we want to turn around the current trend of short-term spending and really get our next generation focused on long-term saving. And the bigger the deposit our kids can save, then the lower their mortgage repayments are going to be in the future.

The first home saver accounts are individual accounts, so cannot be shared. However, if two individuals in a relationship open individual accounts, they can then combine them once the time to purchase a home presents itself. Another advantage is that, if a couple were to spilt up, there is no issue in dividing up account funds. So this is meant to be an incentive, an encouragement, not a disincentive.

In the case where an account holder marries or moves in with their de facto, who already owns a house in which they live, the person is able to either contribute the funds from their account to this pre-existing mortgage or, alternatively, move the full amount of this account into their superannuation. I reiterate that alternatively they can move the full amount of their account into their superannuation. None of the government contributions or interest earned is lost if these account funds are moved to superannuation. This is really an inclusive incentive for people to save.

The account provisions are also aimed at purchasing a first home in which to live, so people who may previously have purchased an investment property are still eligible to open a first home saver account. However, penalties will apply if a person withdraws these funds and then does not use them to purchase a home. Again, this is a perfectly logical and responsible policy in my mind because these accounts are solely for the purpose of helping Australians to purchase their first home by encouraging medium- to long-term savings.

These accounts will also operate in addition to the first home owners grant. This grant has been in operation in Tasmania since 2000 and was a one-off grant of up to $7,000, depending on eligibility. That has now, again depending on eligibility, risen to $14,000. Having a first home saver account will not affect a person’s eligibility to receive the first home owners grant—again, another incentive.

The Treasury estimates that about $6.5 billion will be held in first home saver accounts after four years. Currently in Australia the purchase cost of the average home is 7.5 times a person’s average wage. This has risen from about four times the average wage a decade ago. Rising interest rates have also made repayments more expensive. In my electorate of Braddon, the average house price has risen from $50,000 to $80,000 a decade ago—that may not seem a lot—to more than $250,000 these days, which, compared to many other places in Australia, must seem like a dream, but everything is relative. This makes it very difficult for an average-income earner, say in their mid 20s, to pay rent and also to save for a deposit on their own home. Because of these current high rental costs and high mortgage costs, I think many young people in my electorate have fallen into the short- term spending mindset. They simple live week to week to get the bills paid, pay the rent and feed and clothe themselves and their children, if they have any, and very little is left over.

I believe this legislation and the first home saver account will turn this mindset around—or at least attempt to—because young people will be encouraged to start saving from when they turn 18. So when they first start their apprenticeship or in their first year out of uni, or even when they are just working casually or part-time, they can start putting just a small amount away each week which will then accrue interest and attract a government contribution each year. They cannot touch this money while they save, so the temptation to use it to buy that new car or take a holiday is eliminated. This is the short-term spending culture we want to change. There is nothing wrong with spending but you need to be able to afford what you spend your money on and hopefully there is an incentive to save into the future.

In addition to building up these deposits, the accounts will also encourage a habit of saving which hopefully will last a lifetime. So if they cannot touch it, then without really even thinking about it, once they are ready to make a deposit on their first home, say, eight or 10 years later—and I know that seems a long time when you are young and it is a long time to hold your breath—

Petro Georgiou (Kooyong, Liberal Party) Share this | Link to this | Hansard source

It’s a long time when you’re old too.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

It is indeed. They will have a substantial little kitty to rely on. I think that is where many youngsters in my electorate have been caught out. They move out of home and into the rental market in their 20s. They are paying these big rents, or relatively big rents, while also paying more for their petrol and groceries, so consequently they are not making many or any savings. Then they get to their late 20s and suddenly realise they cannot afford to purchase their own home. I believe the first home saver account will help turn this around.

The second major innovation of the first home saver account is that family members are able to contribute as well. This is a key feature of the accounts, as all parents and grandparents would like to see their children realise the great Aussie dream to buy their own home. So if you are now a walking ATM for your children you will be able to continue to be a walking ATM and contribute to their savings accounts. So if a young person’s parents or grandparents were to contribute, say, $100 as an 18th or 21st birthday present, the government will also give them $17, which is not a bad present from Uncle Kevin and the government. These accounts will initiate a major mindset shift back into long-term saving which will then flow onto future generations. If we can get our younger generation to get saving right now and subsequently pay off a mortgage during their lifetime then this financial security will be passed onto their children and then their children’s children after that.

Finally, both the National Rental Affordability Scheme and the first home saver accounts—in addition to the first home owner grant, which we have recently increased—are fantastic, practical initiatives of the Rudd government. We are not just talking about our country’s current housing crisis; we are getting in there and doing something about it. I commend this legislation to the House. And for the record I thank Deputy Speaker Vale before you, Mr Deputy Speaker Georganas, for helping me out earlier today when I was supposed to be in the chair and opening the Main Committee.

Judi Moylan (Pearce, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008. I think that I would like to start with a quote from Julian Disney from the University of New South Wales because for many years he has been a fairly lonely voice, may I say, calling for something to be done about the housing crisis in Australia. In a paper that he put out commenting on this scheme he said:

Lack of affordable housing strikes at the heart of our lives, our communities, and Australia’s future prosperity. It impoverishes people, erodes families, destroys jobs, weakens the economy, and damages the environment.

He went on to say:

Problems of unaffordable housing have worsened alarmingly during the last 10–15 years—

and I think I have been listening to him talking about this for about that length of time. He has been supported by other organisations like Shelter and ACOSS. Many other organisations have also been heard, but they have not been really listened to. Professor Disney went on to say that these problems have been known about over that period and he continues:

average house prices relative to household income have almost doubled

average monthly payments on new loans have risen by more than 50 per cent

the proportion of first homebuyers has fallen by about 20 per cent

the proportion of low-rent homes has fallen by at least 15 per cent

opportunities to rent public housing have fallen by at least 30 per cent.

These are really very disturbing figures.

The government purports that the design of the National Rental Affordability Scheme will encourage large-scale investment in new affordable housing stock by the provision of tax offsets and direct cash incentives for the development of new housing stock or new dwelling stock providing it is let to eligible tenants and at a benchmark rental over the 10-year life of the scheme.

My concern is that, at the time of preparing this speech, the income test applying to the scheme is not specified, the market rate of rent remains undefined—that is, the benchmarked rate—and the legislation is silent on who the eligible investors will be, apart from the specified institutional investors. These are the key elements that go to the heart of this legislation and the possibility of it providing the 50,000 affordable rental dwellings that it promises to deliver. Fifty thousand is the stated number of dwellings that the scheme should deliver, all things being equal. I think that this is an optimistic view—and I think others share that view—if the scheme is fully subscribed to. The setting of the market rate of rent will form the basis for the rental being charged by developers opting in to the scheme. To qualify, rentals must be set at 20 per cent under market value. This alone could determine the level of interest in investing in the scheme.

We had a Senate inquiry into housing affordability, which looked at this scheme. There were some very good contributions to the Senate inquiry. One of the people who had a bit to say was Ms Kakas from the Property Council of Australia. I hope I have pronounced the surname correctly; it sounds like it might be Greek. I might need the help of my colleague in the chamber the member for Kooyong. Ms Kakas made a good contribution—very constructive. She said:

... we have the opportunity, if the National Rental Affordability Scheme is properly designed, to bring some maturity and some changes into the marketplace to bring superannuation, developers, trusts and new ways of bringing products to market and to keep investors in place.

But she went on to say:

I think not having the detail certainly adds a level of constraint and speculation which keeps our development people as a whole putting their toe over the sidelines, saying, ‘We’d like to participate and we think this has real potential but we really need to see how it is going to work on the ground and whether or not there is some feasibility and flexibility there to allow for innovation to occur.’

I think these are real concerns. I do not want to be a wet blanket. I raised the matter of the housing crisis in this place immediately following the 2004 election, so I have long felt that more needs to be done. I applaud the Minister for Housing for taking this initiative but I think that it needs much more detail if we are going to be able to fully subscribe to it and even touch the side of what has become an immense problem in this country.

Without knowing the income test that is to apply to this scheme, we have no idea whether it will cover many of the service sector people working in regions, in particular where housing is expensive due to rapidly expanding workforces. The country town of Boddington, in the electorate of Pearce, is one such case. The goldmine has reopened, and the resulting population explosion has greatly increased property values and rentals, with severe shortages driving up costs. Indeed, the local government has spoken to me a number of times about this. They wanted to open up new land but the state Labor government—at that time—had done nothing to fund infrastructure services to the town. It was very difficult to develop land without the basic services of power and water supply and sewerage. The hands of local government were very much tied in that case—as I have noted is the case in many parts of my electorate, in the outlying country towns within an hour or an hour and a half of the city.

Despite the lack of critical detail as we debate the merit of the passage of this legislation through this House, measures which hold the promise of increasing housing stock for the rental market, it is a very welcome start. It is important, though, for us to understand that the serious state of housing availability and affordability in many cities and towns in Australia has come about largely due to the serious dereliction of duty of state and territory administrations under Labor governments primarily.

It has been reported that there is a shortfall of some 30,000 houses in the public housing sector alone, and in most areas it has been difficult to rent housing in the private sector even if you can afford rents of $500 or $600 a week. Some people in big cities have had to agree—and this is very recent—to pay six months rent upfront plus a bond to agents just to get to the front of a long list of applicants, and sometimes there are 30 or so applicants for one dwelling. This has left many families and individuals living in temporary accommodation, hiring caravans, living in cars or on the streets or, as I said, moving from one household to another. It is a very unsatisfactory situation, especially for families with children. Many people are experiencing a high level of rental affordability stress.

It is little wonder that we have reportedly over 100,000 homeless people in Australia. The shortage of both private and public housing is having a serious impact across the community, including on young single students and young families. But the situation is particularly dire for those on low and fixed incomes, such as pensioners—disability pensioners in particular—veterans and those who have little opportunity to increase their income stream. Those who rely on private rentals, which are scarce, expensive and continue to increase, are under particular stress. There are many reasons for the housing shortage and the high prices, which are out of the reach of many people. They can be resolved with proper management and with political will.

I want to acknowledge the constructive work done by the Real Estate Institute of Australia in outlining some of the speed humps slowing development and I acknowledge REIA’s endeavours to make recommendations on the way forward. Again, they have been a bit of a lonely voice in the wilderness. I think they have been coming to see me in this place for at least 10 years—that I can recall—over problems with housing shortages. They, along with many others, valiantly worked for several years to highlight the growing housing crisis. Poor planning has resulted in many Australians forgoing the dream of owning their own home or finding affordable, reliable rental accommodation.

The coalition government supported greater land supply and was joined by the Residential Development Council in calling for the adjustment of public policy settings. The deliberate restrictions on the release of land for new housing by state governments have been one of the key drivers of spiralling home costs in recent years. In 2006, RDC Executive Director Ross Elliott identified three things driving the decline in housing affordability. Firstly, deliberate restrictions on the release of land for urban growth have forced up raw land prices faster now than in almost any period in living history. Secondly, not only is the land too expensive but new developments are now heavily taxed to the point where these taxes, charges and levies are adding up to $200,000 in costs for a new house and land. Mr Elliott said the third problem was a dysfunctional system of development assessment, which was adding unnecessarily to development costs, adding to needless delays and inflating the price of developed stock.

Try getting your applications through some local government authorities—and this is not what Mr Elliott said but is my experience and my understanding. Many local governments are underfunded and understaffed. I know for a fact that it can take 12 weeks to get an acknowledgement that a letter of inquiry has been received by local government, and then no answers are forthcoming on the development questions. In my view there needs to be a federal, state and local government strategy to do something about supply, to remove unnecessary roadblocks and delays in the development approval process and to work to bring down government taxes and charges on real estate transactions for home owners and rental accommodation developers.

As I said before, I spoke in this House in 2004 about the high cost of government taxes and charges on each real estate transaction, highlighting the fact that the increase in the stamp duty revenue of the states since 1998 has been 120 per cent, with Sydney a whopping 171 per cent and Western Australia 110 per cent. The Productivity Commission found that:

… for a home buyer required to provide 10% of the purchase price for a deposit—

this is for an average priced property—

a stamp duty of 5% increases the deposit gap by 50%.

Meeting this extra upfront cost might require first home buyers to delay their entry to the market …

The Urban Development Institute of Australia in 2006 found that the ‘increases in government fees and charges as well as the add-on cost to development land amounted to 21 per cent to 34.8 per cent of the cost of homeownership’. These are some of the problems that have made it much harder for those on low incomes to manage to pay increasing rentals in the private sector and to find housing in the public sector.

National figures from the Australian government housing data set in June 2006 showed that more than one-third of Commonwealth rent assistance recipients paid more than 30 per cent of their income on rent, after CRA was factored in. This situation has been exacerbated due to little progress by the state governments in maintaining adequate stocks of public rental properties, with unacceptably long waiting lists for public housing. For example, there were reportedly 16,000 families on Homeswest waiting lists in May this year in Western Australia—16,000 waiting for public housing. And this was at a time when the West Australian government, a Labor government, was selling off prime public housing sites, leaving properties derelict and not spending adequate amounts of money on renovating existing stock and certainly not putting very much money into the development of new stock.

Sadly, this measure, which seeks to attract private investment, is not actually going to provide for this particular section of the market. These are people who sometimes have chronic problems in meeting their rental payments and who have other social difficulties that would not make this kind of housing an attractive proposition to very many in the private sector, I postulate. We still have an obligation to take care of this group. And I am very concerned—deeply concerned—about the lack of affordable and suitable housing for people who have a disability, particularly those with a mental disability. In the past people with certain kinds of disability were institutionalised but they are now put out into the community and often these are the people who most struggle to find appropriate and affordable housing. Often they form the bulk of the people who today live on the streets. In a wealthy country like Australia, despite the financial woes of the world, it is totally unacceptable that we neglect so badly this sector of our population. We ought to be ashamed at what is happening to this low-income group in our community. It is just a disgrace. So there are 16,000 people on Homeswest waiting lists in Western Australia and I would expect that the figures are similar in other states.

Although it is pleasing to see that many key stakeholders, such as the Master Builders Association and the Housing Industry Association, to name two, were considered in the development of this legislation and while the $622.6 million is a welcome injection of funds into the rental housing sector to address the significant undersupply of new dwellings, it is, as I said, unlikely to be able to fill the gap. Somebody forecast that we need an increase of more than 200,000 new dwellings by 2009-10. So this is like a drop in the ocean. As I said, it is a welcome drop in the ocean but it is a drop in the ocean. I know that the states have been a party to this agreement and that they are making a contribution, but it is nowhere near the contribution that they should be making given the dereliction of duty that we have seen, especially over the past decade. I think much more could be expected of state governments in this respect.

There are some definite positives but there are some problems with this. I know that our shadow minister has put forward an amendment to the legislation and, in the interests of a bipartisan approach to what is a very serious problem in this country, that amendment ought to be considered and there ought to be greater clarification of some of the points that are causing concern in those investor groups that might help us to solve the housing rental availability and affordability problems in this country.

One of the other problems that I see with this legislation, I note in the little time I have left, is that, if a development is designed to convert existing residential stock in an established urban area to affordable housing stock based on a new design and layout that caters for specific disability groups or the ageing, that project should be worthy of consideration; however, I think we will find that such projects are excluded under this scheme. That is disappointing because, as I said, these people are amongst some of the neediest within our community with regard to public housing.

There are a number of other issues, probably too numerous to go through now in the time that I have available. But one other point is that this scheme does apply to existing housing stock where it meets the criteria, and it does apply to renovations. Again, that will prevent us from providing those 50,000 new dwelling units that we need just to begin to touch the sides of what is a huge gap in affordable and appropriate rental accommodation in this country. As I said, our shadow minister has identified some of these problems and put forward an amendment and, while we support this legislation, it would be good to see that amendment accepted.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

Just before I give the call to the member for Shortland, can I say to the member for Pearce that the pronunciation of the surname Kakas was perfect, as I am sure that the member for Kooyong, who was here earlier, would agree.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I greatly respect the member for Pearce and I find that I agree with her on a number of things, but I have to take issue on part of her contribution because an absolutely unacceptable shortage of housing exists throughout Australia, and that was allowed to bloom under the previous government. With regard to public housing, I was a state member of parliament when the Howard government came to power and one of the first acts of the Howard government was to reduce the money that went to the states. That had a flow-on effect in the amount of public housing that was available in each state. Overnight, the waiting lists for public housing doubled. Whilst I acknowledge that we do need more public housing in our states, I have to say very respectfully that that public housing shortfall was not a problem that you could direct and say was a state problem; it was a problem that did, to a large extent, come from the then federal government. I found it very pleasing that the Rudd government made it a priority to have a Minister for Housing, something that the previous government did not do. The simple fact that the Rudd government has a high-profile minister as the Minister for Housing shows that we are committed to addressing the crisis in housing in this country.

Be it affordable rents, be it home ownership, be it the fact that we need to help first home buyers to purchase a home, be it any area of housing, the Rudd government recognises the importance of housing and what it means when there are not enough houses available for the citizens of Australia. That can be seen by the fact that one of the first acts of the Rudd government was to look at homelessness, which demonstrated that one of the major causes of homelessness is the fact that there are not enough houses available.

This is one tier of the Rudd government’s approach to affordable housing. Initially, there was a three-pronged approach which was the Housing Affordability Fund, the establishment of the first home saver account and the National Rental Affordability Scheme Bill 2008, which we are debating in the House today. Another great boost to first home buyers is the increase in the first home owners grant announced in the package last week. First home owners will now be able to get a grant of $14,000, or $21,000 if they are purchasing a new home. This will also encourage our housing industry to pick up in this time of economic insecurity.

The National Rental Affordability Scheme is designed to encourage large scale investment in affordable housing for people who are struggling to find rental accommodation. The NRAS offers tax and cash incentives to providers of new dwellings on the condition that they are rented to low- and moderate-income households at 20 per cent below market rates. The NRAS is established in this bill. This bill amends the Income Tax Assessment Act 1997 to enable entities participating in the NRAS to claim a refundable tax offset in their annual tax return or through lodgment of an application by not-for-profit entities who would not ordinarily lodge a tax return. In addition, the bill amends the ITAA 1997 to ensure that state and territory contributions to entities participating in the NRAS, whether in cash or in kind, are nonassessable and exempt for taxation purposes and to ensure that there are no capital gains tax consequences from the receipt of the incentives under the scheme. This is just one demonstration of the Rudd government’s commitment to solving the shortage of rental accommodation in Australia.

The NRAS commenced on 1 July 2008. These amendments apply to income tax assessments for the 2008-09 income year and later years. The incentives comprise Commonwealth contributions in the form of a refundable tax offset or payment to the value of $6,000 per dwelling per year and a state or territory contribution in the form of direct financial assistance of an in-kind contribution to the value of at least $2,000 per dwelling per year. The incentive will be provided for a period of 10 years to complying participants and will be indexed in line with the rental component of the consumer price index.

The Rudd government did not think of this in making a spur-of-the-moment decision on an approach to looking at addressing the shortage of housing and affordable rental accommodation. Rather, this policy was developed in consultation with industry, those people who provide housing, and with those people who actually need to access affordable housing. What that says to me is that the Rudd government is engaging, consulting and then developing policies that will address the needs of the people of Australia. What enables the government to do this is the fact that it is consulting with all groups in the community.

The National Rental Affordability Scheme Bill 2008 will provide new principal legislation relating to the Australian government’s new National Rental Affordability Scheme. The cost of this scheme’s package is estimated to be $622.6 million over four years. The scheme will have a positive impact on low to moderate income families’ ability to rent a dwelling that is part of the National Rental Affordability Scheme at a rental rate that is 20 per cent below the market rate. It will have a very positive effect on rural and regional areas where incentives to support and build housing are not as strong as those in other areas.

I need to share with the House one story in particular that shows just how bad this rental accommodation crisis is. As a federal member of parliament, I do not have the same amount of contact as a state member would have with constituents who are looking for housing or rental accommodation. But I have to tell the House that over the last three to four years there has been an ever-increasing number of constituents coming to my office seeking assistance to find housing. An elderly lady in her 80s living within the electorate had a husband who was in the early stages of developing dementia. He threw her out of the house and locked her out. We contacted the department of housing but, because she was on the lease of her current house, we were unable to secure emergency accommodation for her.

What this elderly lady had to do was move from one house to another house and then to another house, each night sleeping on the sofa of a different relative or friend. In the end it became too much for her. Here was a woman who was still facing actual physical danger but she returned to the situation that she had escaped from, simply because she had no other options. I must correct the record here. She and her husband had purchased their house from the department of housing so she was an owner of that house. Because she was an owner of that house, she was unable to get rental accommodation through the department of housing. She felt uncomfortable going to a refuge. In the end she was forced to return home. I believe that is a very sad story, one that shows the inadequacy of the current system.

In Lake Macquarie the availability of rental accommodation is less than two per cent, as has already been stated by the member for Charlton—and three per cent is what is thought to be a tight market. If you are a young family looking for accommodation or if you are a single person that has no rental record, your ability to find a house is next to none.

I have had a family of six come to my office saying that they were unable to find accommodation and they were forced to pitch a tent and live in it for some three to six months. I could tell you story after story after story about the way this housing shortage has impacted on the residents of the Shortland electorate. The Shortland electorate, I might add, has a very high level of homeownership and a very elderly population but still, even with that high level of home ownership, there is this incredible shortage of rental accommodation for those people that need it. And, if you move to the Central Coast part of the Shortland electorate, the shortage is even greater, exacerbating the difficulty of finding accommodation in that area.

We had the Howard government sitting on their hands for 12 long years. We had the Howard government ripping money out of funds to the states for housing. We had the Howard government not even bothering to have a housing minister. Because of their inaction, because of the simple fact that they were not prepared to face up to their responsibilities and ensure all Australians had the option of having decent accommodation, this enormous crisis in housing developed in Australia.

This bill will provide new principal legislation relating to the Australian government’s National Rental Affordability Scheme. Its object, of course, is to increase the supply of affordable rental dwellings, something that the previous government totally ignored. At the same time it will look at reducing the cost for low- and moderate-income households. The rental accommodation that is available in the Shortland electorate—and in other electorates it is even worse—is well beyond people’s ability to pay. The scheme will encourage large-scale investment in affordable rental housing by offering an incentive to providers of new dwellings on the condition that they are rented to people who are finding it hard to obtain rental accommodation at the moment—that is, people on low and moderate incomes, people who are really struggling. This rental accommodation will be provided at 20 per cent below market rates. The incentive for providers will be in the form of a tax offset over a 10-year period. The bill also addresses a number of scenarios that may arise under the scheme.

The National Rental Affordability Scheme is part of the government’s $2.2 billion affordable housing package which will increase the supply of affordable rental homes, help people save for their first home, lower housing infrastructure costs and build new homes for the homeless. If you remember, at the commencement of my contribution to this debate, I emphasised the importance that the Rudd government has placed on solving the problem of homelessness.

The scheme delivers on one of the government’s 2007 election commitments. The Council of Australian Governments agreed to implement the scheme in March 2008. The National Rental Affordability Scheme will create up to 50,000 new rental properties across Australia at a cost of $623 million in the first four years. The scheme provides incentives to participants to build new dwellings for renting to low- and moderate-income households, as I have already said. The incentive is made up of contributions from both the state and the Commonwealth, and it also has the support of the housing industry.

This is good legislation. The scheme will be reviewed in its early years of implementation to test whether it is adequately focused on those who would otherwise be in rental stress, people like the elderly lady or the family of six who were living in a tent that I have told the House about in this contribution. The review will test whether there is scope for simplification or reduction in the administrative burden and whether there are evolving issues of noncompliance that need to be addressed. The review may indicate a need for improvements to the scheme.

We have before us today a scheme that has been developed in consultation with all sectors of the housing industry. We have before us today legislation that has been developed to address a specific problem, and that is the shortage of affordable rental accommodation in Australia. We have before us today legislation that the government will continually review to see that it is actually meeting its objective of ensuring that there is affordable housing for all those people on low and moderate incomes, those people who are currently finding it very difficult to survive because of the proportion of their income they need to pay for rent, and those people who just cannot find accommodation and are either forced to live in unsuitable accommodation or live with friends or relatives, or find themselves homeless. This is good legislation that should be supported by all members of the House.

Barry Haase (Kalgoorlie, Liberal Party, Shadow Parliamentary Secretary for Roads and Transport) Share this | Link to this | Hansard source

It troubles me somewhat to speak this evening on the National Rental Affordability Scheme Bill 2008 and related legislation and to be forced to disagree with the honourable member for Shortland.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

When have you ever agreed with me?

Barry Haase (Kalgoorlie, Liberal Party, Shadow Parliamentary Secretary for Roads and Transport) Share this | Link to this | Hansard source

There is a point in that, of course.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Try to ignore each other.

Barry Haase (Kalgoorlie, Liberal Party, Shadow Parliamentary Secretary for Roads and Transport) Share this | Link to this | Hansard source

We are told that this legislation establishes a scheme designed to encourage large-scale investment in affordable housing. It does this through tax and cash incentives to providers of new dwellings on the condition that they are rented to low- and moderate-income families at 20 per cent below market rates. The Rudd government has talked long and hard about the housing supply and the affordability crisis. Indeed, in doing that it talked up the expectations of low- and moderate-income families who look forward with bated breath to a solution. However, we have not found one.

I have probably one of the greatest crises of accommodation of all time across the Pilbara region of my electorate. I know full well the problems. Recently I had a staff member in South Hedland move on from a $51,000-plus a year job. I am unable to replace that person because the person who replaces her needs to go to town and find accommodation that they can actually afford. What is available is going to cost somewhere between $850 and $2,500 a week. Do the math. It does not work.

Before the last election and ever since, everybody has been looking forward to this great day when we find a solution to housing affordability. This certainly is not it. Why would somebody contemplating building a house in the Pilbara forgo at least $20,000 a year rental so as to get $8,000 a year from combined governments? It does not add up.

There has been some interesting stuff talked about. I will quote Kevin Rudd’s Black Book of Broken Promises:

Kevin Rudd’s efforts in the area of housing affordability are doomed to fail, because he does not seem to understand that the problem in Australia lies on the supply, not the demand side. In other words, there are a lot more interested buyers than available houses and land, causing the prices to go up. This is the elementary economics of supply and demand, which the “economic conservative” Kevin Rudd fails to grasp—

sorry, Mr Deputy Speaker, I am referring to our Prime Minister—

instead preferring to paper over cracks and appear to be doing something, alas, without actually achieving tangible results.

For example, the Rudd government’s First Home Saver Accounts (FHSA) will not make entry level housing more affordable for first home buyers, quite the contrary, they are unlikely to increase house prices by giving buyers more money to spend, whilst doing nothing to increase the supply of housing.

Labor’s recently re-launched $512 million Housing Affordability Fund (HAF) cannot possibly cut $20 000 from the cost of a home, as claimed by Kevin Rudd—

our Prime Minister—

Instead, it is nothing more than a slush fund designed to bail out failed state governments.

Before you rise up in alarm, eligible organisations under the program are state and local governments and, according to the Rudd government’s guidelines, typical projects would include the installation of sewerage, roads and parks as well as funding that reduces holding costs imposed on developers by government planning systems. Isn’t that propping up state governments? It is a clear instance of picking up the tab for the responsibilities of other levels of government whilst doing nothing about the other major contributors to problems with housing affordability—the outrageous levels of taxes, fees and charges claimed by the state government. They are using housing as a convenient cash cow.

I do not know whether the government really understands the full national scope of these housing issues. I say that because I think this is intended to be a positive solution, and it possibly is if you work and live in a metropolitan area. But I am afraid that, like the former state Labor government in WA, this federal government has no idea of what is happening out in regional Australia—and I include Tasmania in that; it is part of Australia. The electorate of Kalgoorlie is a far cry from the comfortable metropolitan electorates where the Prime Minister, Deputy Prime Minister and Minister for Housing live.

Years ago, if Australians talked about high rents, they may have with bated breath told each other stories of the unbelievable rental prices they heard of in Sydney, maybe even of the prices in some of the suburbs in the housing minister’s electorate. That was before the mining boom. Now we hear stories about the unbelievable rental prices in mining towns and the seemingly ridiculous prices people will pay and the lengths they will go to just to secure a caravan site, a shipping container or a shed to live in. If you are lucky you will get a two-storey shipping container, and that is high living!

Some of the stories that have been reported in newspapers and on current affairs shows on TV are not funny. They are very tragic in fact because these are real people trying to make their way in real jobs in my electorate in the Pilbara. It is a sad reflection of the state of the regional commercial housing market. Mining is a key industry in the Kalgoorlie electorate and it is not just my electorate but Western Australia at large and, indeed, nationally. The economy’s big benefit from the boom, of course, has been national. Everyone is getting a slice of the Pilbara cake but they do not suffer the pain would-be residents are suffering.

There is a predictable effect when an industry that generally operates in remote areas increases exponentially almost overnight. The Pilbara has made its name in iron ore and, as iron ore boomed, the industry cried out for more workers and affordable accommodation in the Pilbara became harder and harder to find. It is especially true for permanent affordable accommodation. As I alluded to earlier, a modest three-bedroom, one-bathroom house can set you back $1,500 a week in rent and a brand new four-bedroom, one-bathroom house will set you back more than $2,500 a week—that is, if you are lucky enough to get a rental. There is such a high demand that landlords can choose from the many applicants for each house, and I know that when a tenant moves on, often because of the absolutely unsustainable rental prices, the landlord has the opportunity to increase the rent. In the early days—and I am talking as close as two years ago—rents were doubling from one tenant to the next. There is a very scary world out there if you have not been to the Pilbara and you lob in there expecting to find accommodation.

I am sure that you can pay these high prices in upmarket suburbs in the housing minister’s electorate but you have the choice to pay a lot less if you want to, and if you do have a couple of grand a week you would get a very swish house with a very nice view of Sydney Harbour for your dollars.

In the Pilbara you have to be on very substantial wages to pay that kind of money. It is common knowledge that our miners work hard in tough conditions and get paid well for it, but what about the rest of the community which supports those mine workers—government workers, nurses, teachers et cetera? The whole GEHA housing system in Western Australian regional centres has virtually collapsed because the Labor government, over the last eight years, has not put money into it. Local government employees and small councils simply have to acquire land and build houses to try to accommodate their workers. Small service organisations cannot get staff simply because they cannot accommodate those staff. So the level of service for all industries in my Pilbara towns deteriorates.

Why would any investor thinking of building homes in my electorate join the National Rental Affordability Scheme? As I said before, they have to forgo 20 per cent of the market rate, and with the levels of rent in the Pilbara, and in the Kimberley, that would start from about $20,000 a year and they would get back a paltry $8,000. It simply does not work. One of the major reasons in the early days that housing affordability slumped in the Pilbara area was LandCorp. I am sorry to say that LandCorp’s modus operandi was altered some years ago. Their initial responsibility was to provide a steady stream of land for building and a continuum of affordable housing. Some years ago they were asked to make sure that they contributed to the bottom line of government income. Profit became the incentive. Since those days they have dropped the ball when it comes to providing affordable housing. They have simply trickled land onto the market, ensuring that, as land becomes available, it will be fought over to the extent that maximum prices will be paid. That is certainly not the work of an organisation charged with the responsibility of providing affordable housing.

So much has been said about native title and how, in my vast Pilbara areas, land is not available because of the uncertainty of covering future costs when native title is finally sorted. So what LandCorp have been doing is spoiling what ought to be a positive economic loop. They have been trickling down land so as to push the price up, so as to make more money for LandCorp, so as to pay more money into the coffers of the previous Western Australian Labor government.

I have been in parliament for 10 years now, speaking volumes about the failings of LandCorp. I am pleased to say that there is now a glimmer of hope for changes. With a newly elected Liberal government in Western Australia, LandCorp just may be given a shake-up or at least brought to heel. I wrote to the former state Labor government practically begging them to do something about greedy LandCorp, but they remained a problem for housing of an affordable nature in my electorate. It does not matter how good the incentive is for investors to create housing when LandCorp will not release the land for them to buy and build on. There is just no way that prices will be affordable. Of course, the cycle is vicious. There is no land to build on except what has trickled down, so the price goes up. Then, when you secure the land on which to build a home, you pay exorbitant prices to builders because they have to factor in exorbitantly high prices for accommodation for their crew whilst they build the home. But the delays are extortive, often because builders cannot get accommodation of any nature. It happens to contractors time and time again. A good mate of mine, Doug Gould, finished up having to buy a hotel in Port Hedland so that he could accommodate his 28 truck drivers, so that he could fill the requirements of the contract, while working with one of the large companies in Port Hedland.

It is a situation that is certainly not going to go away as a result of any part of this proposed legislation. The situation in the Pilbara was so bad that it loomed large on the agenda of the Senate inquiry into housing affordability that took place last year. I draw your attention to the submissions to that Senate inquiry. They highlight the issues about which I have been speaking. In particular, the Chamber of Commerce and Industry Western Australia’s submission points out some very alarming factors about land release in Western Australia.

Broome’s population, for instance, is estimated to have grown by 3.4 per cent, or 2,400 permanent residents, between 2001 and 2007. There is also a significant demand for seasonal accommodation as a result of the boom in tourism in Broome. Despite this, the lots of land released onto the market did not increase over the same period, with a record low in 2004-05 of just 50 blocks released by LandCorp. During this time the median house price in Broome rose from $225,000 to $610,000. That is not bad for a very, very short period of time if you are an investor. If you are trying as a normal employee in the Broome area to find a house that is affordable and you are being forced to consider an increase from $225,000 to $610,000, you are not going to be very happy about it.

These are the same people I was talking about earlier whose eyes lit up at the mention of improving housing affordability from the then candidate to become Prime Minister of this country, Kevin Rudd. He was going to change the world when it came to simple employees, these working families he speaks so much about these days, and they were very impressed. In fact, I am sure it is why he did so well at the last election. There were so many people out in the electorate who thought he would honour his commitment and his promises. He did not, of course.

I cannot emphasise enough the severe impacts that house and land shortages are having in areas like the Pilbara and the Kimberley. Housing is a basic human need. People who want to move to the region to find work cannot afford the housing. We developed a pilot case to bring prospective employees from areas of high unemployment to the goldfields, the Pilbara and Kununurra, where people are screaming out for employees. With our principle of mutual obligation it seemed perfectly logical to ask individuals in high-unemployment areas to move to these areas where employers are screaming out for somebody with two arms, two legs and a head. It did not work, because there was simply no affordable accommodation in those areas for the unemployed people to move to. Much more needs to be done.

In many cases even if people can afford accommodation, they still cannot get housing because the demand is so high and the supply is so limited. Companies and organisations cannot get the workers they need because they cannot provide the accommodation either. Even though many offer generous housing subsidies, the houses simply are not available. This leads to a loss of services in areas where wages are not as high as in the mining industry. It all impacts on the quality of life for people in those communities, with few or no shops, restaurants, childcare facilities, medical and dental services and more. The lack of affordable housing is directly contributing to a deterioration in lifestyle in these centres.

We have had so many broken promises, so many failed statements of passion that have been realised in the months since the election of this government. There was the broken broadband promise, the broken border protection promise and the broken budget accountability promise. We have had the creation of ‘child care watch’ and we have had the creation of Fuelwatch. I believe it was mooted recently that we were going to have ‘watch watch’; ‘Defence watch’ we have now, too. I am appalled that, having promised so much to so many working Australians prior to last November’s election, now the goods are supposedly to be delivered our Prime Minister and his team are found to be so wanting. It is a disappointment to me but, my goodness, I have a roof over my head and I have a quid in my wallet. That is not the case for so many Australians, and they are severely disappointed. I believe it is a situation that will not be righted until such time as we have another federal election to set the record straight for the delivery of good governance and real services for the people of Australia.

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

I speak today in support of the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008. There is a shortage of affordable housing in Australia and many families are struggling to find and keep a roof over their heads. This problem is not confined to less well-off areas or regions; it is spread across our nation. There may be different causes for the shortage, but the effect is the same. Many people are moving house or cutting back on essentials to keep a roof over their head. They are renting in a private rental market where rent rises are outstripping wages growth and inflation.

The data in the 2006 census reveals that 28.1 per cent of Australian household dwellings are rented. That is more than two million houses, flats, units, townhouses and the like. In my electorate of Deakin this figure sits at 10,367 dwellings. This comes in below the national average as a percentage, with 22.3 per cent of dwellings in this category. Of this amount, though, there are only 1,062 state housing authority dwellings in Deakin recorded in the census figures. The rental stress figure in Deakin has been measured at 32.6 per cent. For those who are not aware of how it is measured, it is a situation where the renter is paying more than 30 per cent of their income in housing costs every week or month as the case may be. In Victoria, the state average of renters experiencing rental stress is 35.6 per cent. The proportion of people spending more than 30 per cent of their disposable income on housing increased from 19 per cent to 23 per cent in the 10 years from 1995-96, according to the 2008 AMP.NATSEM income and wealth report. There are 1,037,652 households in Australia that are under housing stress when rental and mortgage stress are combined. Approximately 700,000 of these households are renters. Australia wide, renters tend to be younger than those in owner occupied households.

Rates of renting are higher among those people without partners. And lower income is associated with higher rates of renting, except for households with people over 65. So, as income rises, the likelihood of renting decreases and, of course, the likelihood of owning your own home increases. Many working families are stuck in the private rental market without a way to move into home purchase, and it is even worse for low-income earners. The AMP.NATSEM report of 18 March this year shows that the price of a typical house in 2005-06 was about 27 times the annual disposable income of the poorest renters. In 1995-96 the median house price was only 16 times the disposable income of the poorest renters. This same report found that, of all English-speaking, industrialised countries, Australia had one of the least affordable housing markets, with nearly 90 per cent of the areas considered severely unaffordable. In the period from 1995-96 to 2005-06 there was little change in the proportions of householders who were renters for most age groups, except for those in the 35-44 year age group. For this group the proportion who were renting increased form 27 per cent in 1995 to 32 per cent in 2005-06.

Many people who want to own their own homes cannot because they are priced out of the market due to the rising cost of housing. And it is the entry price of the market for homes in the eastern suburbs of Melbourne that is the first step in the problem in my electorate of Deakin. A check of these figures shows the scale of the barrier when it comes to buying property in the electorate of Deakin. For instance, in Blackburn the median house price in June 2008 was $646,000. That was up from $561,000 in June 2007. A little bit further out, in Mitcham, the median house price in June 2008 was $468,000, up from $440,000 in June 2007. Out in my area of the electorate, in Heathmont, the median house price in June 2008 was $450,000, up from $380,000 in June 2007. At the eastern end of the electorate of Deakin, in Croydon, the median house price in June 2008 was $360,000, up from $343,000 in June 2007. These are not inner city suburbs. These are areas up to 30 kilometres outside the Melbourne CBD.

The alternative to buying is to rent, but the knock-on effect is that people on lower incomes can be pushed out of the market as those with higher incomes soak up rental vacancies. This pushes up the entry point for rental accommodation, especially for larger accommodation such as three bedroom houses which are suitable for families with children. A check with local real estate agents last week revealed the following range for average rental prices of a three bedroom house in Deakin: in Blackburn it was between $300 and $400 a week; in Mitcham between $330 and $350 a week; in Heathmont over $300 a week; and in Croydon between $350 and $380 a week. Further to that, the agent contacted in Heathmont said they only had a total of four rental vacancies on their books anyway.

Affordable housing was the top of the agenda when the Minister for Housing, Tanya Plibersek, addressed a local social and affordable housing summit hosted by the City of Whitehorse, the member for Chisholm and me earlier this month, on Tuesday 7 October. This forum included over 60 local community members and stakeholders. Included were representatives from housing community groups like Melbourne Affordable Housing, disability groups, developers, Victorian state government representatives, social service providers like Family Access Network, welfare groups such as Wesley Central Mission and church groups. The forum heard about federal, state and local governments’ plans for tackling the crisis in affordability in the eastern suburbs of Melbourne.

The state government representatives highlighted the statistics that reinforced that vacancies are at an all time low and that the public and community housing sector is overloaded with demand for accommodation. Mr John Trimmer and Mr Rob McGauran from Melbourne Affordable Housing both gave presentations about how their not-for-profit organisation acts as developers, owners and managers of affordable rental housing for people in need. Melbourne Affordable Housing was formed in 2001 and has 300 properties tenanted with a forecast of an additional 200 properties over the next 18 to 24 months. The properties they have developed are small in number with a couple of examples being their Lion Garden development in Melbourne where they have partnered with the Collins Street Baptist Church, and the Melbourne City Mission to develop nine one bedroom units. They have also delivered a 52 unit apartment complex in Preston developed in partnership with Buildcorp.

Both John Trimmer and Rob McGauran highlighted the particular problem that housing is unaffordable in areas with opportunities for employment, learning, services and low-cost living. Hence, in inner city areas and those suburban areas with good public transport, the availability of affordable rental accommodation is below two per cent. The local press in my electorate of Deakin have reported a rental vacancy figure as low as one per cent, which makes it almost impossible to find a home to rent once time for turnover of tenants is taken into account.

Melbourne Affordable Housing is an organisation that takes a community development approach and seeks to build diverse and sustainable communities through the provision of appropriate and affordable social housing. This includes redeveloping vacant car park sites so that the car parking is still there but, for instance, the units may be built above so that there is no loss of public amenity. Melbourne Affordable Housing uses a joint venture model and forms partnerships with churches, local government and community groups.

The forum heard that public housing in both the Whitehorse and Maroondah local government areas is stretched to the limit. As the Senate Select Committee on Housing Affordability in Australia recorded in their report of June 2008, the number of public housing dwellings nationally declined from 372,134 in 1996 to 341,378 in 2006. During this time, Australia’s population increased by around 13 per cent, therefore producing an even larger decline in real terms.

The steady decline in public housing stock over the last 10 years has led to an increase in waiting lists which flows over into the private rental market, affecting vacancy rates and rental prices. The 2008 Productivity Commission report on government services found that, in 2006-07, the Australian state and territory governments provided $1.3 billion for housing assistance under the Commonwealth-State Housing Agreement. The bulk of this funding was for public and community housing, but this was a reduction in funding in real terms of 16.7 per cent between 1997-98 and 2006-07. That is a reduction in real terms of nearly $300 million per year.

The National Rental Affordability Scheme will increase the supply of affordable housing and reduce rental costs for many low- and moderate-income families. As housing affordability problems are fundamentally driven by a lack of housing supply, there are incentives to increase the supply of privately constructed rental dwellings. This scheme encourages large-scale investment in affordable rental housing by offering an incentive to providers of new housing on the condition that dwellings are rented to low- and moderate-income households at 20 per cent below market rates. These incentives comprise a Commonwealth contribution of $6,000 per dwelling per year, but they also include a state or territory contribution of $2,000 per dwelling per year, either as a direct financial support or an in-kind contribution such as reduced stamp duty, infrastructure charges or fast-tracked development approvals.

Incentive can be in the form of a refundable tax offset or a payment for 10 years, which will be indexed to the rental component of the CPI. All up, $622.7 million over four years is to be allocated to create up to 50,000 new rental properties across Australia. And if the market demand for the scheme remains strong, the Rudd government will make a further 50,000 incentives available from July 2012. This would help build another 50,000 affordable rental dwellings on top of the funding for 50,000 rental dwellings delivered in this bill.

This scheme is a key part of the government’s $2.2 billion affordable housing package. More than 1.5 million households will be eligible for tenancies under the scheme, including key workers such as entry-level police officers, teachers, carers, apprentices, cleaners, hospitality staff and childcare workers, to name just a few. The National Rental Affordability Scheme will be of great assistance to low- and moderate-income renters in Deakin and Australia as a whole. I commend the bills to the House.

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

I rise in the House in support of the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008. These bills provide the legislative basis to implement the Australian government’s National Rental Affordability Scheme. NRAS is a key component of the Rudd government’s $2.2 billion affordable housing package, which will boost rental stocks, help people save for their first home and lower housing infrastructure costs. There is acute housing stress being felt at this time by many people across Australia.

The National Rental Affordability scheme is a $623 million investment in the provision of 50,000 new and affordable rental properties within four years to address this need. The objective of the scheme is to encourage large-scale investment in affordable rental housing through incentives to providers of new dwellings. The homes must be rented to low- and moderate-income households at 20 per cent below market rates. The incentives include both a Commonwealth contribution of $6,000 per dwelling per year and a state or territory contribution in the form of direct financial support or in-kind contribution to the value of $2,000 per dwelling per year. The Commonwealth contribution can be in the form of a refundable tax offset or direct payment. The incentive will be provided each year, for 10 years, to those people who satisfy the criteria. It will be indexed in accordance with the rental component of the Consumer Price Index.

The associated National Rental Affordability Scheme (Consequential Amendments) Bill 2008 will make amendments to the Income Tax Assessment Act 1997. This will provide for the refundable tax offset and ensure that state and territory contributions to entities participating in the scheme are non-assessable and non-exempt income for taxation purposes. For partnerships envisioned under this scheme to work, there must be surety and clarity regarding the tax implications of the legislation. This bill ensures that there are no capital gains tax consequences from the receipt of incentives under the scheme.

The structure of the bill allows certain details of the scheme to be administered by regulation. This gives the government the scope and flexibility to address any issues that may arise for potential partnerships between investors and the not-for-profit sector. That is why there will be a review of the scheme in its early years of implementation. This will ensure that the scheme is having its intended impact. The review will also assess the possibility of lightening the administrative burden of the proposals and make recommendations on possible improvements.

The government is open to the possibilities that come from creative partnerships between investors and the not-for-profit sector. We are more than willing to work with potential partners to iron out details to make this policy a world-class innovation in the provision of affordable housing. Already in my electorate, community housing providers have begun talks with developers specialising in environmental housing. The opportunities for affordable environmentally friendly housing to flourish under the National Rental Affordability Scheme cannot be understated. These creative partnerships are crucial to the success of the scheme, and the government looks forward with confidence to the affordable housing outcomes that will arise from the goodwill and creative enterprise already in motion as a result of this Labor government policy.

These bills address fundamental problems in the supply of affordable rental accommodation, which are being felt Australia wide. In my electorate of Robertson, those who have not yet bought their own home are experiencing unprecedented pressure as rental prices skyrocket in a period of low supply. With median house prices in New South Wales now reaching $385,000—even on the Central Coast the median house price is $364,000—the 10 per cent deposit required is often far beyond the reach of many people, particularly young people, families and pensioners. Their only option in these circumstances is to rent.

On the Central Coast, rental vacancy rates are at 1.1 per cent, and below that from time to time. In Robertson the proportion of renters under stress—that is, those paying more than 30 per cent of their net income on rent—is a staggering 44.5 per cent. That is more than 4,000 households in my electorate experiencing rental stress. Nearly 30 per cent of mortgage holders are likewise under financial stress. In some cases this unfortunately leads to repossessions, forcing more families to rent in a market of diminished supply. The effect of this on pensioners, seniors, families and young people trying to make ends meet is devastating. More and more income is being used just to put a roof over their heads.

This situation is emblematic of a crisis that has been building within the housing sector over the past decade. The average price of housing has exceeded income by an average seven times the average annual wage and represents a far greater proportion of income than is acceptable and feasible for many potential homebuyers. Australia needs practical solutions to this problem, and the Rudd government is delivering this very practical solution. It has the additional benefit of providing a stimulus to the housing industry and will add to economic activity.

If we fail to address the housing needs of young people and young families, we are at risk of developing a generational divide, where those who already own homes grow more affluent on capital gains while future generations are locked out of the market for good. A lack of affordable rental properties is only adding to this pressure, making it even less likely that people will be in a position to save a deposit for their own home.

I noted with optimism the announcement last week to triple the First Home Owner Grant to $21,000 for people buying a newly constructed home. This will certainly provide a substantial support to young people on the Central Coast seeking to enter the homebuyers market for the first time. This measure will also complement the impact that the National Rental Affordability Scheme will have on the supply of housing.

Young people are effectively locked out of the market unless they are assisted by a parent or relative who is in a financial position to act as a guarantor for a loan or provide financial support in paying the mortgage. The flow-on effect of this is to entrench disadvantage in homeownership, despite any gains that may have been made in the areas of school retention and higher education. For example, a young professional who has had the benefit of a higher education may be better off in their career options than, say, their parents but would still find it difficult or impossible to break into the homeownership market on a single income.

Another crisis coalescing in the housing sector is the effect of rising land values on residential home parks. Residential home parks often become the last-ditch option for seniors or pensioners to own their own home. The catch is, of course, that they do not own the land upon which their home resides, only the structure of their home, paying strata fees—in effect, rent—to the park owner. As land values increase, residential park owners seek to realise their capital gains and develop these parcels of land. The flow-on effect is that the last bastions of affordable housing evaporate as the land is developed into housing that costs far more than the previous tenants could possibly afford. A very large proportion of residential home park tenants are elderly, many of them pensioners, both age and disability pensioners. Worse still, as values rise in any given area, the problem becomes compounded as multiple park owners seek to realise these capital gains at the same time, leaving people who have lived in a particular area maybe all their lives or for a very long period with nowhere viable to shift locally that they can afford.

Imagine, then, a pensioner who has lived in a particular area their entire life. This pensioner may have overlapping medical conditions, as many do, being managed by their local GP. They know their local GP well; this is the same GP who has treated them for years and understands their condition—so do the home care service providers who visit this pensioner from time to time. This senior Australian, possibly a pensioner with limited resources, is then made to relocate as a result of a residential home park closure. The home park down the road may have closed months ago, and the state department of housing premises are already occupied. In fact, on the Central Coast, in my electorate, there is a 10-year waiting period for state housing. There are no local options to relocate to. The only option then is to be moved out of the area—moved away from family, friends and community, away from services and local networks that they are accustomed to.

This is as a result of the housing shortage that was allowed to occur by the previous government due to their drastic failure to commit resources to housing. Relocating a pensioner or senior Australian under such circumstances has the potential to cause tangible and detrimental health effects. This is a real and present danger for many pensioners exposed to this housing crisis as a result of the lack of foresight by the previous government. They simply failed to respond to this obvious emerging housing crisis.

The situation I presented to you is not merely hypothetical, as we can see. I note with concern the difficulties faced by the 80-plus residents of Karalta Court Residential Home Park in Erina, again in my electorate. The park residents are seeking a way to relocate their homes and to continue to live together as a community in an area that they can afford. The residents own their homes, or the structures, and are currently seeking partnership models by which to relocate and re-establish their small community within reach of the essential services required by the park’s residents. Many of them are elderly and must be within reasonable reach of medical services. The residents, as I said, own the structures but not the land. They are therefore not strictly seeking to build new affordable rental properties within the scale of this proposal before us in the legislation. They are, however, seeking land for affordable housing that they already have—the buildings themselves. While applauding the present legislation, I encourage the government to look further at this issue of residential home parks and to bear in mind that this area needs further work.

These are just some of the scenarios presented to me in my electorate of Robertson. I am immensely proud of the steps we are taking as a government to address the supply of affordable housing for all Australians. I particularly thank the minister, Tanya Plibersek, for her commitment and hard work in implementing the raft of housing policies which is designed to restore balance to the housing sector and to boost affordability. Affordable housing is the foundation stone of a just and equitable society, and it is an objective that this government is pursuing with great passion. I commend these bills to the House.

Sharryn Jackson (Hasluck, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to rise and support these two pieces of legislation, the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008, that establish the National Rental Affordability Scheme. The objective of the scheme is to encourage large-scale investment in housing by offering an incentive to participants in the scheme to increase the supply of affordable rental dwellings and to reduce rental costs for low- and moderate-income households. It is a key part of the Rudd government’s $2.2 billion affordable housing package, and the NRAS will increase the supply of affordable rental homes, help people save for their first home, lower housing costs and build new homes for the homeless.

There is quite substantial reasoning behind the legislation that is before the House. It is about the fact that an increasing number of Australians are experiencing housing stress. There is an absolute imperative, a great need, to stimulate the supply of lower rent homes. As many know, it is tougher than ever before for low- and moderate-income earners to find affordable rental housing for themselves and their families. Vacancy rates across Australia, including in the electorate of Hasluck, are at critically low levels, and rents are increasing faster than other everyday living costs. More and more families are spending more than 30 per cent of their limited income on rent. That is generally the level at which commentators assess that a household is facing mortgage or rental stress. Once upon a time, many Australians rented as a stepping stone to the purchase of their own home; now many are finding it harder to save the deposit.

I welcome the introduction to parliament of these bills to establish the scheme. This new program, which delivers one of Labor’s 2007 election commitments, is a $623 million investment that will create 50,000 affordable rental properties for low- and moderate-income earners in its first four years. Increasing the supply of affordable rental housing is a priority for the Rudd Labor government. Across Australia, nearly 700,000 low- and moderate-income families are now spending more than 30 per cent of their limited incomes just to pay the rent. In Hasluck, based on 2006 census data, 2,406 households, or 36.2 per cent of households renting, are experiencing rental stress. These people are being forced to move house, to live with other families or relatives, to live in cramped conditions or to cut back on essentials just to keep a roof over their heads. I think in Western Australia we have seen even greater housing and rental pressure than in other states. That is why increasing the supply of affordable rental homes is a major priority for this government.

The scheme essentially offers incentives to providers of new dwellings on the condition that they are rented to low- and moderate-income households at 20 per cent below market rates. That incentive comprises a Commonwealth contribution of a refundable tax offset or payment to the value of $6,000 per dwelling per year and a state or territory contribution of direct financial support or in-kind contribution to the value of $2,000 per dwelling per year. I would hope that the West Australian state government continues to honour its commitments to meet that in-kind or direct financial support contribution. The incentive will be provided each year for 10 years to complying participants and will be indexed in line with the rental component of the consumer price index. It is important to say that this scheme provides a new opportunity for all levels of government, federal, state and local, to work together with business and not-for-profit organisations to meet that objective of increasing the supply of affordable rental dwellings. I believe it will also facilitate new and creative partnerships between traditional institutional investors, perhaps hopefully even superannuation funds as well as developers and community housing providers.

We know from the terms of the legislation that it is to be reviewed in its early years of operation to test whether there cannot be further modifications made to reduce the administrative burden to ensure that it is meeting whatever the evolving issues are in this area and also to ensure that it is addressing issues of noncompliance. Most of the administrative details of operation will be covered in regulations to provide flexibility to address changing circumstances, as I have indicated.

Importantly, there are some mandatory assessment criteria. They include five criteria in section 7 of the legislation: a demonstrated need for the proposal; the delivery of accessibility and sustainability outcomes; the participant has demonstrated capacity and experience to deliver the proposal; the proposal is financially viable; and the priority areas of interest are addressed in the proposal. I note that applications for round 1 have already been called for and the priority areas for round 1 as set out in the explanatory memorandum: are directed towards rental dwellings that will become available for rent in this financial year, 2008-09; large-scale projects, over 100 dwellings; to be consistent with state, territory and local government affordable housing priorities; and to include dwellings for tenants with special needs, in particular people with disabilities, older Australians and Indigenous Australians. Of course, overriding this is the aim to maximise long-term affordable housing outcomes for tenants.

As I said earlier, this scheme is a part of a $2.2 billion affordable housing package. The package includes a number of measures designed to increase the supply of affordable housing, to help people save for their first home and to lower housing costs and build new homes for the homeless. I want to take this opportunity—perhaps straying a bit from the bill—to say that I am pleased that the First Home Saver Accounts legislation is well and truly on its way to being in place because I know that many first home buyers are finding it tougher than ever to buy a house. The average first home mortgage has more than doubled in the last eight years, from some $123,000 in December 2000 to 246,500 in July 2008.

Fewer low- and moderate-income earners are able to buy a first home. Only 17.6 per cent of first home buyers came from the bottom 40 per cent of earners in 2005-06, compared to over 20 per cent from this group a decade ago. Households in the bottom 20 per cent of earners that are lucky enough to buy a first home then use up 66 per cent of their income to pay for the privilege. This is why the Rudd government is investing $1.2 billion in new first home saver accounts to help aspiring first home buyers save a deposit for a home.

In addition, contributions to first home saver accounts will not be subject to tax when contributed to an account, and interest on the accounts will be taxed at 15 per cent rather than at the account holder’s marginal rate. This mirrors the tax treatment provided to superannuation, ensuring that young Australians get support to buy a first home similar to the help older Australians get to save for retirement. We hope that by 2012 there will be more than $6.5 billion saved in these new accounts. That is just one measure.

Another measure is the Housing Affordability Fund. The federal government is putting half a billion on the table to invest in infrastructure that currently adds tens of thousands of dollars to the cost of houses. The money will also provide an incentive to local governments to cut red tape, in particular, to reduce planning and development delays that can add significantly to the cost of new homes. Local governments, in conjunction with the private sector, will come forward with proposals applying for the Commonwealth grants. These will be assessed on a competitive basis—on how much they can reduce the cost of housing and pass on savings to homebuyers. It is a partnership between federal, state and local government to create more affordable housing. The fund provides local governments, as well as state and territory governments, with the financial incentive to reform and streamline planning processes and reduce costs to develop land. Only governments that are prepared to undertake reform will receive grants under the fund. The federal government is interested in solving problems and improving housing affordability, not playing the ‘blame game’. Importantly, another part of the Rudd government’s program, A Place to Call Home, will deliver some 600 new dwellings for homeless people.

I have taken some time to go over items in the housing affordability package put forward by the government largely because I spent some time this afternoon listening to speeches made by members opposite and some days ago I listened to the member for Cook as he addressed the legislation and proposed an amendment. I oppose the amendment proposed by the member for Cook. I take up a number of issues with him and with members opposite concerning their response to this legislation and to the scheme.

In his proposed amendment, the member for Cook goes to a number of specific criteria which he would seek to have applied to the National Rental Affordability Scheme. I would argue that most of what he seeks to do is at best unnecessary but perhaps also in some places unclear. For example, I have talked about how the legislation contains sufficient flexibility to allow adjustments to the scheme to ensure that it addresses evolving issues. Many of those evolving issues—the way in which the scheme operates, compliance issues—give the government flexibility to deal with issues as they practically unfold on the ground.

A number of members opposite have talked at length about questions involving sustainability. Indeed, the amendment proposed by the honourable member for Cook seeks to specifically apply certain federal government subsidies to the rental dwellings included under the proposal, subsidies such as the federal government’s solar panel rebate and solar hot water rebate. I take members to the five mandatory criteria currently contained within the legislation against which proposals will be assessed. One of those criteria includes the issues of sustainability and accessibility, and I draw that to the attention of members. Members who have some passing knowledge of planning issues in their own state will be aware that many state and local governments supply quite detailed planning requirements with respect to, particularly, sustainability issues but also, in some jurisdictions, accessibility issues for people with a disability.

If you are going to have a partnership with local and state and territory governments, it is important that you indicate that it is a significant, important criterion in funding priorities that accessibility and sustainability are addressed. It would be absurd to limit that solely to current federal government rebates, as opposed to including the broad range of sustainability measures, often innovative measures, that are being taken in our states by state and local governments.

It seems to me that the flavour of many opposition speeches in response to the legislation has been that of the good old blame game. I think the opposition fail to recognise that one of the clear objectives of the legislation is to try to create partnerships with state, territory and local governments, as opposed to setting state governments against the federal government, setting state governments against local governments and setting local governments against the federal government. We want to share the priority and the goal of increasing the supply of affordable rental housing stock throughout the country, throughout our local areas.

I cannot let the comments of the member for Pearce go regarding responsibility for the reduction in the levels of public housing stock in Western Australia, which she laid at the feet of the former state Labor government. I think it is important for the purposes of the record to clarify for her sake that the public housing stock in Western Australia began to be reduced in 1996 by the then state Liberal government, with a number of schemes that were directly related to trying to move people from public housing, or Homeswest, accommodation into other forms of accommodation—in some cases, with people purchasing their own homes. For example, between 30 June 1996 and 30 March 1999 we saw a reduction of almost 2,000 public housing dwellings in Western Australia.

Given my comments about wanting to work in partnership, it is a sad thing to have to say that, with the election of the new Liberal state government in Western Australia, they are at it again. I was incredibly concerned to see media releases from the now Minister for Housing and Works, the Hon. Troy Buswell, who is probably famous in this place and many other places in Australia for aspects of his behaviour and not necessarily for his expertise in the housing area. He has decided to order a review of public housing stock in ‘high-end suburbs of Perth’ with a view to eventually reinvesting the value of some properties to greater effect elsewhere. In other words, he is looking at moving public housing stock out of Perth’s more affluent suburbs and into other areas in Western Australia. That would be a great shame and does not seem to me to add anything either to the debate or to the quality of housing made available for low- and middle-income earners. I urge the minister to review his decision—and I urge my colleagues from Western Australia to ask the minister to review his decision—and to look at a far more sensible investment in public housing stock than moving it from his mates’ leafy suburbs to other suburbs within the metropolitan area. I find the hypocrisy from the opposition in respect of this debate extraordinary, given that they are the party that was in federal government for over a decade and gave absolutely no priority to housing.

Now what we have before us is a comprehensive package of measures, and this National Rental Affordability Scheme is what we are dealing with this afternoon in the legislation before the House. They are commendable measures. I would say again that the National Rental Affordability Scheme provides incentives to participants to build new dwellings for renting to low- and moderate-income households at rates 20 per cent below market rates. It is hoped that more than 1.5 million households around Australia will be eligible to rent these dwellings at a 20 per cent discount to the market rate. That is a marvellous thing, as is the rest of the housing affordability package that is being put forward by the Rudd Labor government. I simply wish to record my appreciation and congratulate the Minister for Housing, the Hon. Tanya Plibersek, for this wonderful raft of legislation. I commend the bills to the House.

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

It is with great pleasure that I rise tonight to talk about the National Rental Affordability Scheme Bill 2008 and related legislation. It is certainly welcome legislation. On many occasions I have spoken in this House—in this very chamber, in fact—about the concerns that I have in my own electorate of Forde, but what I would like to do tonight is talk a little bit about the rental scheme bill, some of the extreme situations that exist in the electorate of Forde and why a piece of legislation like this is so important. It fits a raft of programs and plans that the Rudd government has put together. I should say at the outset that, like my colleague who has just spoken, it does concern me that the opposition have a particular view on this legislation. We understand the opposition are there to oppose our legislation, but I think it is probably obvious from the lack of speakers on their side that they feel that this legislation is very important. I am happy for them to support it where they can.

In this issue of housing affordability, whether we are buying or renting in this case, we need to put forward incentives to spur on the rental housing market. We looked at different schemes of different governments when we were forming our plan and our election commitment to take this particular piece of legislation forward. We looked at ways of reducing the concern of and the stress on people who are trying to rent.

While I will quite often argue the benefits of commercialisation, I will certainly also argue the benefits of social infrastructure and the provision by governments of certain services. It is very interesting to see the concern for markets and ultimately market forces in the global economic situation we now have. Markets do fail. There is a need for intervention by governments at different levels at different times, and I should say that in this country we should not be at all concerned that governments have to step up to the plate and get involved to ensure that people who are affected by something as important as housing get the support of government. This is a time when you can see the need for governments to provide some basic services, whether it is in social ownership or in so many different ways.

The fact is that public housing is of utmost importance. If we expect the market to provide something as essential as a roof over a person’s head, we can see when this fails that it is not a case of having time—that markets will correct themselves, cycles will move on and people will be able to afford or get access to housing. When people do not have a house, do not have a roof over their head, it creates so many other social problems. I think this is what is missing when the opposition argue points of this bill. This is not an academic argument. It is not about what we can or should or could not do or where we might make comparisons.

I was intrigued by the emotive speech of the member for Kalgoorlie. He was saying that nowhere else in the country are there problems like those in his electorate. His electorate is different. All of our electorates are different. We have hot spots and we have areas that have different concerns. A mining boom creates certain problems—in fact, larger problems—but there is a benefit in a mining boom. There is a large amount of money flowing into that particular economy. In regions like mine, the effect on people is very much about other demands and market forces that mean that people who were previously able to access affordable housing have now found themselves out on a limb and with no solutions.

The fear for me and certainly my electorate is that even some of the very affordable housing is disappearing. While we might prefer not to have people living in mobile home parks, they have provided a certain level of housing and even emergency housing. But the growth in the demand for land has meant that we are now getting to the point where even these options are fast disappearing, certainly from the electorate of Forde. We have had a major mobile home park close down, so even people who are in transitional accommodation phases are let down by that.

I will go back to the bill and talk about what it is going to provide, and apply that to how it will help the seat of Forde. As I said, the National Affordability Rental Scheme is an integral part of the government’s $2.2 billion affordable housing package, with the aim, of course, of increasing the supply of affordable rental homes. The object of the bill is to encourage large-scale investment in housing—and I note that it is investment; this is about government being involved at a level that will stimulate the sector—by offering an incentive to participants in the National Rental Affordability Scheme so as to increase the supply of affordable rental dwellings and reduce rental costs for low- and moderate-income households. The scheme offers incentives to providers of new dwellings on the condition that they are rented to low- and moderate-income households at 20 per cent below market rates.

We have heard other speakers talk about this, but it is important to reiterate that the National Rental Affordability Scheme will provide up to 50,000 new rental properties across Australia at a cost of $623 million in the first four years. As has been stated, if market demand remains strong, another 50,000 rental properties will be made available over five years from July 2012.

I mentioned the 50,000 properties and the initiative by this government to provide incentives for investment. This was not possible under previous government schemes. We had a number of schemes that were worthwhile causes or worthwhile for a period of time in our history, such as rental assistance and the First Home Owner Grant. But if you do not have an overall plan for or an understanding of what rental affordability and availability, particularly high rents, will do to a community then the whole thing falls flat. I mentioned market forces before; the previous rental assistance schemes basically brought on market failure. There was nothing to prop up the fall from that position. So the government providing an incentive for investors to get into a particular type of market is very important.

As has been mentioned, the incentive of $6,000 per dwelling per year and then the contribution from states and territories of that other $2,000 either in dollars or in kind will certainly go a long way toward encouraging developers and other investors to enter into that market. The incentive will be provided each year for 10 years to complying participants and will be indexed in line with the rental component of the consumer price index.

We are in the middle of a housing crisis. We understand that. We know that. Members from the other side of the chamber had a go when they were in government. They put a number of incentives in place, but 12 years later they do not work. We have an extreme shortage of rental housing, and generally getting the market primed is what this legislation is about to do.

Nowhere is the rental housing shortage more evident than in my electorate of Forde, and I gave you some examples of the changes that have occurred. To give you some on-the-ground examples, in September 2006 the median rent for a three-bedroom house in the Beenleigh, Eagleby and Mount Warren Park area was $245 per week. The most recent data from the Residential Tenancies Authority in Queensland, for September this year, put the median rent at over $300 per week—and that is the median rent, so obviously there are different extremes of that.

I should mention Eagleby. For those who know the region of Forde, Eagleby has always been seen as an area with low-cost accommodation—certainly for rental but also for purchase. Because the demand for housing has been so high and because investors have been able to get a guaranteed return on their investment, homes in Eagleby that were $150,000 to buy only a few years ago are now $400,000. This is pushing people directly out of the market in terms of being able to purchase a home, but people who want to rent in that particular area are certainly out of the market as well. In Beaudesert, which is very much a small regional town, the median rent in September 2006 was $270 for a three-bedroom house; now, in September 2008, it is over $320 a week.

My electorate takes in the Gold Coast hinterland, so I have three local authorities. I take in the new Scenic Rim Regional Council, which is very much a rural area, of which Beaudesert is a township, and the areas of Tamborine Mountain and also the northern Gold Coast, from Beenleigh to Yatala. The rate of people moving into even those areas of Queensland is a net figure of over 1,500 a week. Whether economic conditions and changes mean that that may slow down, the reality is that that is the demand that we have on our region at the moment. Without any direct support immediately to get more rental housing in place, I can only see our conditions becoming more extreme. Essentially, that is why people are moving out of some of the higher density areas into regional towns within the electorate. But of course we then have another problem in my electorate of Forde of poor road infrastructure and transport infrastructure. So we have a range of other social problems that come out of this.

To give you an understanding of that, on the northern end of the Gold Coast rents have risen in two years from $335 a week to over $400. As I said, that demand and that condition continue. If you look at the overall state of Queensland, the vacancy rates sit somewhere between 1.4 and 3.7 per cent. The member for Kalgoorlie pointed out that he has some extreme circumstances; the state of Queensland is no different. The mining areas of Queensland fall into that same category. My electorate, as I said, has vacancy rates as low as 1.4 per cent, which causes a huge amount of pressure. My concern is that, without schemes like this, people moving further out to get affordable or just available housing is going to have major potential for a lot of social discomfort.

It should be pointed out that the city of Brisbane has undergone a lot of regional planning in the last five to 10 years and so there has been an accommodation made for more high-density accommodation, including rental accommodation. So, to a large degree, the metropolitan areas are not as stressed as areas like the electorate of Forde. As I said, people are being pushed out into areas that are unserviced. Again, a major overall part of our Building Australia approach is putting money into infrastructure and being able to provide more and more infrastructure. If we bring all those conditions together—more investment in rental properties, more investment through the first home owners scheme, which I will talk about more in a minute, and other incentives we have put in place—and if we can build more infrastructure and have more physical and transport infrastructure put in place, it is going to service people very well.

One of the things that have concerned me to an increasing degree is not only the availability of rental property but simply the ability of local authorities to allow planning to proceed at a rate that would allow this sort of construction to take place. There are incentives to invest and build more rental accommodation. There will no doubt be a fair amount of higher density accommodation built through that process, and councils can respond reasonably quickly. But the problem is that the demand in areas like mine means that councils just cannot keep up with approvals. The extra resourcing that will be required by these local authorities will mean that we are probably going to need to consider how we make these changes and get this new accommodation put in place.

Looking at some other initiatives of this government, we have been bringing local governments together to talk about infrastructure and how that infrastructure will work and the priorities. We can package that together and certainly have an understanding that certain infrastructure will go further in allowing us to build more rental accommodation quicker and also go further for those people who may decide to build new homes. The wonderful thing is that, yes, you can buy homes to some degree at a reasonable rate and you can have them built at a fairly quick rate, but available land is the major pressure certainly in the electorate of Forde. I have spoken in this House, even in my maiden speech, about the amount of available open space and new areas. However, planning is way behind. We will not have the ability to undertake any massive rollout of built environment for a number of years. That concerns me but, again, I believe that, through the initiatives of the Rudd government, working closer with local governments will resolve many of these issues.

State governments have a role to play and have been responsible for this. If you look at rental properties and public housing in Queensland, you will see that, because of the lack of funding coming out of the federal government for many years, the Queensland government has had to make some hard decisions about how it prioritises housing. Of course, that is happening in metropolitan areas. Areas like mine have been left to work out their own solutions. Having this sort of legislation and these sorts of incentives will make it much better for regions like mine.

A range of initiatives were released last week by this government to help prime the economy and ensure that we have continuing growth. The housing incentives, such as the tripling of the first home owners grant to $21,000, will certainly go a long way. To ensure that local authorities can understand the priorities we as a government have to solve ultimately our housing shortage problems they need to work more closely with us.

I spoke last time in this House about the lack of road and transport infrastructure. Those in the chamber that evening heard me talk about Duck Creek Road, which raised a lot of eyebrows—some people know where Duck Creek Road is and others do not. It is an interesting part of the electorate that services O’Reilly’s guesthouse. People from South-East Queensland know the history of the O’Reilly family and the famous Stinson wreck. Duck Creek Road is only one piece of infrastructure—and I spoke about that at length—and getting road infrastructure with transport infrastructure with good housing infrastructure and services is very much what we have to do to complete the picture. I believe this government has put together a whole range of initiatives that package up the solutions for our future and our future growth.

I could talk for a long time about the problems in the electorate of Forde. I believe that problems can be solved. Legislation like this goes a long way for me as a federal member to say that I, as the representative of my constituents, am doing the job and this government is doing the job. This is going to provide enormous relief for families who are really hurting. I am sure the member for Throsby’s constituents have similar issues to deal with. For members on both sides of this House, working towards solutions for our communities is our No. 1 priority. I commend this legislation to the House.

Jennie George (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to follow my colleague the member for Forde on the National Rental Affordability Scheme Bill 2008 and associated legislation. He rightly pointed out that every electorate has its own housing and rental affordability issues. That is certainly the case in Throsby, as it is in the electorate of Forde and in the Illawarra region generally. When I last looked at the 2006 census data, I found then that nearly 11,000 households in the Illawarra were suffering mortgage stress. That data is a bit out of date now with the consecutive interest rate rises that came after the census data was collected, but interestingly enough in that five-year period between the 2001 census and the 2006 census there was in my region a 100 per cent increase in the number of households suffering mortgage stress.

Data has also shown that over 40 per cent of households in private rental arrangements in my electorate of Throsby are in rental stress, paying more than 30 per cent of their income on rent. As we know, the queues for public housing keep getting longer. That is no surprise, because of the impact of the huge cuts—around $3 billion in real terms—that are the legacy of the Howard government. On top of that, an estimated 1,500 people in my region face homelessness on any given night. It is no wonder that housing and rental affordability issues fared largely as priority issues in the lead-up to the federal election. There was no doubt in my mind that the proactive response of the Rudd Labor government was very important in connecting with the real-life experiences of a lot of people I represent in my electorate.

Of course, we have seen in the electorate of Throsby a lot of young couples being driven out of the housing rental market in Sydney and coming to establish their lives in a lovely part of the world, in the Illawarra. But we are also finding that the cost of the average home is now seven times the average wage when, not so long ago, it was about four times the average wage. So it is no wonder that many young people in my electorate are giving up on the idea of ever owning their own home. In that regard, the recent announcements made by the minister about the first home saver accounts were very welcome. Tonight, this specific bill that addresses the National Rental Affordability Scheme does provide some light at the end of the tunnel for all those people who found the going really tough.

The Rudd Labor government has always maintained that there are no silver bullets to cure the affordability issue, but we are committed to a comprehensive, affordable housing agenda. In that regard, I particularly welcome the Minister for Housing’s proactive approach in pursuing a range of innovative strategies to try to deal with the legacy left by an uncaring government for whom the issue of housing affordability did not even register on their list of concerns. As I said earlier, there is not a silver bullet and we cannot resolve the problems overnight, but we have backed our commitments with a significant outlay in the order of $2.2 billion to address a range of supply- and demand-side issues. Among those, of course, are the first home saver accounts that I referred to; the National Rental Affordability Scheme, which is encompassed in the bill before us tonight; a commitment to an audit of surplus Commonwealth land; the Housing Affordability Fund, which I hope, in my area, will help to drive down the price of new homes; the National Housing Supply Research Council, which will publish an annual report analysing the adequacy of construction and land supply; and, very importantly—and I will touch on this later—a commitment to build new homes for homeless Australians through the program called A Place to Call Home.

In the debate tonight we are looking at one specific policy proposal among a raft of innovative solutions to the affordability issue, and that is the National Rental Affordability Scheme. We know from the most recent data that, of the 1.1 million Australian household in housing stress, almost 700 of these household are in fact renters. They are renting in a private rental market where rent rises are outstripping, by far, wages growth and the cost of living index as measured in our inflation rate. Interestingly enough, the most recent data that I could find for the Illawarra, in a survey undertaken by our local research organisation called IRIS, showed that, in the quarter ending June 2008, rental markets in the Illawarra remained tight with demand continuing to outstrip supply. The report indicated:

At the start of the year it was the southern parts of the Illawarra that were seeing record increases in median rents, now the northern suburbs have followed suit. In the 12 months to June the median rent for a house in the Bulli to Woonona area jumped 17 per cent, from $310 to $365.

The region’s median rental price increased by 9 per cent to $300 during the year to June.

So in my electorate, in the region that I represent, the pressures on households with rental increases way ahead of the kind of wage increases people are receiving are really causing enormous stress for a lot of people. Of course, the more that people are asked to pay in rent, the harder it is for them to save for their deposit for their first home, so the Australian dream for lots of young couples is becoming less of a realistic proposition than it was in my generation.

The legislation before us tonight proposes that we provide a major supply-side initiative to make rental properties more affordable by encouraging large-scale investment in rental housing aimed at low- and moderate-income earners. As others have said, the scheme will offer institutional investors and other eligible bodies annual rental incentives every year for 10 years. These will be made up of a Commonwealth contribution of $6,000 per dwelling per year and a state contribution, which will be either direct financial support or an in-kind contribution to the tune of $2,000. As we know, these incentives will be available to providers only on the condition that dwellings are rented to low- and moderate-income households at 20 per cent below the market rate. We are aiming to create up to 50,000 new rental properties across Australia at a cost of $623 million in the first four years. This scheme provides, for the first time, a great opportunity for all levels of government, the business sector, and the not-for-profit organisations and the community sector in general to work together to increase the supply of rental housing for low- and middle-income earners.

Recently, I wrote to the Minister for Families, Housing, Community Services and Indigenous Affairs on matters brought to my attention by the Illawarra Legal Centre. The issues they raised with me related to the upcoming national affordable housing agreement. Specifically, they asked that I pursue with the minister Commonwealth funding for social housing, to ensure its sustainability and growth, and the supply of community housing owned and managed by non-profit organisations. They were keen to ensure that the not-for-profit sector would be included in the new National Rental Affordability Scheme.

In her response, the minister indicated that the new housing agreement would encompass housing assistance provided at all levels of government, including all programs funded through the Commonwealth-State Housing Agreement and the SAAP, as well as other measures aimed at making housing more affordable, including the scheme encompassed by this bill. Very importantly for the not-for-profit sector, the minister stated:

The Government recognises the important role of public and community housing. Public and community housing provides safe, secure and affordable housing for low income and disadvantaged Australians. Reform in social housing should improve the social and economic opportunities of tenants and provide for the long term sustainability of the social housing sector. I can assure you—

that is, the Illawarra Legal Centre—

that these issues are being discussed as part of the negotiation of the NAHA. The NAHA will include performance measures applying to the delivery of high quality and sustainable public and community housing.

The Government is supportive of an expanded role for not for profit community housing providers. The Government expects that the National Rental Affordability Scheme—

which is encompassed by the bill before us tonight—

will assist the community housing sector to grow, both as tenancy managers and owners of new stock. Under the National Rental Affordability Scheme Capacity Building Strategy, assistance will be available for not for profit affordable housing providers to help develop their capacity through grants and projects that target identified needs within the sector. The Government has committed $1.5 million over two years to assist affordable housing providers become involved in the National Rental Affordability Scheme.

The Government supports opportunities for not for profit housing providers to grow in addition to the National Rental Affordability Scheme. As these opportunities arise, the Government intends to work closely with not for profit housing providers.

She concludes:

The Government is committed to tackling the problem of housing affordability in Australia, particularly for low income earners who are most vulnerable in the current housing market. These issues are central to the new NAHA.

I quote her reply at length because I think it is probably not well known out there in the community that special initiatives and particular strategies will be encompassed by the National Rental Affordability Scheme to ensure that the not-for-profit sector can be involved in the provision of further housing.

As others have commented, the legislation provides that the details in the making of this new scheme will be by way of regulation. In this manner, the government will have the necessary flexibility to address changing circumstances, including a process for determining market rent, tenant eligibility criteria and reporting requirements for the scheme. As we know, the legislation provides that the secretary can issue a certificate in relation to a refundable tax offset or make payment directly if it is an endorsed charitable institution that is involved in the provision of affordable housing.

I want to say a few things about homelessness. Although it is not an issue directly taken up in the scope of the legislation before us tonight, it is one area among many which are being addressed by strategies, innovative ideas and commitments made by the Minister for Housing and the Prime Minister. In that regard, I do want to put on record my thanks to the Minister for Housing for coming to the Illawarra to address a roundtable discussion that we held with all the major service providers who provide services to homeless people in my electorate and in the member for Cunningham’s electorate. As I said in my introductory remarks, we know that more than 100,000 men, women and children are homeless on any one night in Australia. On the last count I saw, around 1,530 people in the Illawarra face homelessness on any given night. So it is a major issue locally. I want to commend the housing minister and the Prime Minister for their genuine commitment and desire to address this blight that exists in our country.

We have made a beginning with the downpayment of $150 million through the A Place to Call Home initiative, and I understand this will provide supported accommodation facilities based on the Common Ground housing model. According to recent press releases from the minister, she has launched such a program in Tasmania, and plans are underway in Victoria, South Australia and New South Wales—my own state. This is the first time a federal government has displayed a commitment to dealing with homelessness, and full marks to them for taking on this major challenge.

In that regard, I want to acknowledge the wonderful work of local organisations including Southern Youth and Family Services, the two women’s refuges, the men’s refuge at Coniston, the Women’s Housing Trust, Darcy House at Port Kembla and others who have been involved in ongoing discussions and have made submissions in response to the minister’s green paper on homelessness. Again, I think it has taken the election of the Rudd Labor government to deal with the issues of housing and rental affordability and with the legacy of homelessness in our affluent society in a compassionate and concerted way. I want to commend the government for its bold initiatives and innovative solutions. There are no silver bullets but I think we are seeing a government that is genuinely committed to addressing a major social problem.

Maxine McKew (Bennelong, Australian Labor Party, Parliamentary Secretary for Early Childhood Education and Child Care) Share this | Link to this | Hansard source

There has never been a more important time for governments to be proactive in providing for the very basics of human existence. No area is more critical than the ability of a society to provide adequate, affordable housing for its citizens. As Professor Julian Disney, the Director of the Social Justice Project from the University of New South Wales has been pointing out for many years, a lack of affordable housing strikes at the heart of our lives, our communities and Australia’s future prosperity. He says that it erodes families, destroys jobs, weakens the economy and damages the environment. On the other hand, a sound housing strategy, driven by governments, is what has been sadly lacking in recent years and we are now paying the price.

The Rudd government, as we have heard, is changing that and we now have a comprehensive approach to housing in this country. The government’s policies support people in a range of circumstances—people who are buying their first home, people who are renting and people who are homeless—and the National Rental Affordability Scheme Bill 2008 and associated bill address the needs of the families who rent their homes.

In many of our metropolitan cities, and especially in Sydney, we have seen newspaper reports suggesting that the rental squeeze is such that stressed-out applicants are turning on real estate agents and abusing them for lack of availability of rental stock at an affordable price. While I feel for real estate agents, the frustration of those desperate to find a home is understandable. The research on rental vacancy rates explains why prospective tenants in Sydney are so frustrated. In the 12 months to March 2008, the Australian Bureau of Statistics reported that Sydney had an average rental vacancy rate of only 1.2 per cent. This is significantly lower than the rate of three per cent, which is the generally accepted benchmark indicating fully-utilised rental supply. But we should not be in this position. The fact is that for many years the former government was a bystander, a passive player, with no housing strategy and certainly no minister sitting around the cabinet table with principal responsibility for promoting the interests of affordable housing and sound urban development.

The Rudd government has changed that. Certainly, as a new member I feel it is one of our great strengths so that, as a new representative, I can now talk to my local government authorities, for instance, as I have done in my local community with both Ryde and Hornsby councillors, about the fresh opportunities there are for partnership that the federal government is making available through a range of ambitious housing initiatives. It is why I am an enthusiast for this particular bill, the National Rental Affordability Scheme, which is a key component of the government’s overall $2.2 billion package.

Included in this package is the $623 million National Rental Affordability Scheme, with other key measures including a $1.2 billion investment in new first home saver accounts to help aspiring first home buyers save a bigger deposit through low tax savings accounts. There is also a $512 million Housing Affordability Fund. This will lower the cost of building new homes by tackling the critical supply side issues of the length of time taken to bring new houses to sale and the impact of infrastructure charges. As the minister said when she introduced this legislation last month, all up, our combined measures will increase the supply of affordable rental homes and help people to save for and purchase their first home. It will lower infrastructure costs and build new homes for homeless Australians.

Further to these measures, last week the government announced an additional $1.5 billion investment in the first home owners grant. This means that Australians buying an existing home between 14 October this year and 30 June next year will have their first home owners grant doubled from $7,000 to $14,000. Those purchasing or building brand new homes will see their grant trebled from $7,000 to $21,000.

I think Australians can see even more clearly now—and I know this is certainly true in my own electorate of Bennelong—that at a time of unprecedented global economic turmoil it has never been more important for governments to be key drivers of basic services, and of course housing is an absolutely essential service. I am proud to be a member of a party that was farsighted enough to be considering substantial supply-side housing initiatives long before the present crisis. I was a participant in the National Housing Summit convened by Kevin Rudd during last year’s election campaign. It attracted all the leading players—the peak industry groups, major developers, local government officials and public policy intellectuals such as the aforementioned Julian Disney. The dilemma that was universally expressed was this: how is it that, with so much bounty, we have comprehensively failed to provide a better supply of quality affordable housing for Australian families? It really is a major indictment of the previous government that on this, as on so many other areas of social policy, so many senior ministers remained cavalier about housing and the needs of families right through the years of maximum prosperity. Those struggling to put a roof over their head or pay an ever larger slice of their income on weekly rental payments will not thank them.

But the Rudd government, as I say, is acting. It is acting swiftly and decisively with practical, fresh solutions to today’s housing problems. With this legislation the government is delivering on one of its key election commitments—that is, to increase the supply of affordable rental housing for Australians and their families. This is not before time. I am sorry to say there are an estimated 700,000 householders in the rental market experiencing rental stress. Rental stress is defined where those on low or moderate incomes are incurring housing costs above 30 per cent of their overall income. This group makes up a significant component of the estimated 1.1 million Australian households in some form of housing stress. Again, in my own area of Bennelong the proportion of people suffering significant rental stress is estimated to be around 38 per cent. That represents over 4,000 individual households.

Many of Australia’s renting households are our low and moderate income earners. The Australian Bureau of Statistics reports that in 2005-06 around 30 per cent of households in the middle-income quintile were in rental accommodation and around half of the households in the lowest quintile of household incomes were in rental accommodation. The only option for many families with young children is to live long distances from work opportunities and, in many cases, from community services. This adds of course to social stress, family stress and can lead to increased dependency on welfare. The problem is particularly acute for those who are already marginalised. Many low-income and Indigenous Australians find themselves actively discriminated against when it comes to access to rental accommodation.

As well the rental situation is now so dire that the problem is travelling up the income scale. What we are now having to cope with is the struggling middle. Those starting out in the workforce, childcare workers, retail workers, entry level teachers—many of our essential workers—find it increasingly difficult to afford a decent dwelling in reasonable approximation to where they work. This is unsustainable and it is why the Rudd government is acting.

The National Rental Affordability Scheme will help to build up to 50,000 new rental homes across Australia. It represents an investment of $623 million over the next four years. If market demands remain strong, there is room for a further 50,000 rental dwellings over five years from July 2012. Up to 1½ million households will be eligible to be tenants under the scheme and this is how it works. With incentives to be indexed to the rental component of the CPI the National Rental Affordability Scheme will offer institutional investors and other eligible entities annual incentives every year for 10 years provided conditions continue to be met.

As the Minister for Housing has said this is a new way of doing business in Australia and it will create a new asset class for institutional investors in affordable residential housing. The two main elements are an annual Commonwealth government incentive to the value of $6,000 for each dwelling each year in the form of a refundable tax offset and, as well, an annual state or territory government incentive to the value of $2,000 for each dwelling each year, which will be provided through cash payments or in kind financial support. The incentives are for developers, builders and the community housing sector which will help manage tenancies. Central to the scheme is the provision of this $8,000 combined incentive and that will be available for every new home that is built and rented out at 20 per cent below the market rent for a particular area.

This is long overdue, as I say, and it is a welcome initiative that will help meet the needs of many who now struggle with high rents. Of course, it is not the only answer but it is the start of a different kind of approach, one that recognises that no one party can solve this problem, an approach that recognises, I think, that creative collaboration is the only way to help more of our citizens with a need as basic as affordable housing.

To conclude, at a time when I think we need to do everything we can to maintain growth in the economy, this is a scheme that is about as timely as it gets. It will bring substantial growth to the community housing sector and it will support those Australians who carry out the invaluable work on which a healthy community depends—our teachers, our childcare educators, our police officers and our retail workers. It will help them by reducing the costs of renting in the private market. It is time all of these people had the housing break they deserve and this bill certainly helps to deliver on that promise.

Richard Marles (Corio, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008, a bill which introduces the National Rental Affordability Scheme. It does that by amending the Income Tax Assessment Act 1997. This is another commitment that was made by Labor in the lead-up to the election which is now being fulfilled by Labor in government. This legislation is part of the government’s response to the national housing affordability crisis and the national affordable housing shortage. That is a response which involves a $2.2 billion commitment in housing measures that were announced in this year’s budget. They include $1.2 billion for first home buyer savings accounts and $512 million for the Housing Affordability Fund. It involves the green paper consultative process around homelessness, with a white paper in relation to homelessness due later this year.

Housing is fundamental to the principles of social cohesion and individual wellbeing. The great Australian dream of home ownership has become a distant memory over the past decade and in some cases an impossible objective to achieve. The Rudd government is committed to assisting Australians to reach that goal of making housing an affordable objective irrespective of whether or not Australians choose to rent or buy, and this bill forms part of the government’s response in relation to that.

Accessibility to homeownership has long been one of the defining attributes of egalitarian Australia. As early as 1911 almost half—49 per cent—of Australian households owned or were purchasing their own home. Despite the Great Depression and two world wars, that level was maintained right through until 1947 when 53 per cent of Australian households owned or were purchasing their own home. That figure peaked in 1966 at 71.4 per cent and has since then been hovering in the high 60 per cents. By international standards that represents a significantly high level of homeownership. Countries such as Austria, France and Holland all have homeownership in the mid to low 50 per cent range. Germany, for example, has a level of homeownership which hovers just above 40 per cent. But, in Australia, at the same time that homeownership levels have remained high, housing affordability has been in decline.

When the Housing Industry Association first commenced its affordability index in 1984, the rate was at 203.9. That represented a comparatively affordable level of housing. It represented a median house price back then of $61,000 a year, monthly repayments of $496 and a repayment to income percentage of 14.7 per cent. By December of 2001 that index and those figures remained comparable. The index was at 205.2. The median house price had jumped to $210,100 but the monthly repayments were at $1,049, which meant that the repayment to income percentage was almost the same at 14.6 per cent. But it is at that point that we have seen a dramatic fall in housing affordability. Since 2001 this index has been in freefall. By March of 2008 the affordability index was down to 103.1. It was at the lowest level in its recorded history. The median house price was at $425,600, a figure which had more than doubled in six years. Monthly repayments had climbed to $2,799, representing a 166 per cent increase on the 2001 figure and the repayment to income percentage was at 29.1 per cent—more than double the 2001 figure.

To put that in some form of context, mortgage stress has often been defined as 30 per cent of a household’s income being spent on household costs. So what this was saying was that in March of 2008 the average percentage was hovering just below a level which is described as mortgage stress. As a result, homeownership went from being the dream of every working Australian to becoming a nightmare in many cases.

At the time of the last election in 2007 over a million households in Australia were under mortgage stress, and 75 per cent of those households earned less than average weekly earnings—hardly a surprise. The main victims of mortgage stress, again, were those under the age of 35, people who had bought their first home in the years between 2000 and 2004. All of that then begs the question as to what the former Howard government did in the period between 2001 and 2007 when we saw such a dramatic reduction in housing affordability, such a dramatic increase in the cost of housing. Despite repeated warnings from the industry, that government found the nearest sandpit and plunged its head into it. Despite repeated calls from organisations such as the Urban Development Institute of Australia, the Housing Industry Association, the Tenants Union and none other than the Reserve Bank of Australia, the Howard government did almost nothing.

The figures and arguments from those organisations were indisputable. The Urban Development Institute of Australia in 2007 released a report showing that only 39 per cent of Australians could afford to buy a house in their local area, compared to a figure of 96 per cent in 2001. In 2005, the Tenants Union called on the federal government ‘to commit to a housing plan that includes providing genuine housing affordability’. But still we saw no action on the part of the Howard government. The Housing Industry Association repeatedly warned of the chronic shortage of new housing stock and how that linked to other housing issues. That led Mr Harley Dale, the chief economist of the HIA, to say in 2007, in reference to the housing shortage:

The situation for new home building will in turn sustain the current problems of struggling first home aspirants and tightening rental markets.

Despite all of that, the Howard government did nothing. It ignored repeated requests and pleadings on the part of the industry. It disregarded data from the Housing Industry Association and the Reserve Bank of Australia and it was deaf to the cries of the Australian public who are feeling the housing pinch.

In my electorate of Corio, which covers a large part of Geelong, we see a situation which is probably similar to situations all around Australia. The median household income in Geelong, according to the 2006 census figure, was $840 a week, compared to a national average of $1,027 a week. The median house price was $257,500. If you assume the mortgage repayments on a loan constituting 85 per cent, say, of the purchase price at a current market rate of around 8½ per cent over a 25-year standard variable loan, that amounted to $406.50 per week in mortgage repayments. Based on those figures, you can see that the average household expenditure in my electorate on mortgages was approaching almost 50 per cent of weekly income.

The single most significant reason why we saw the lack of housing affordability go up was the 10 interest rate rises in a row which occurred under the Howard government. Thankfully, the people of Geelong and the people of Australia are beginning to receive some respite with the most recent round of interest rate cuts. The Rudd government came to power acknowledging that there was much work to be done in the area of housing, a problem which has grown over the course of the decade. This problem will take a lot more than the 11 months the Rudd government has had in office to fix. There is clearly no silver bullet in relation to this problem. Having said that, I also note that the Rudd government has come into office with clear policies, as seen in this legislation. That stands in stark contrast to what we have seen from the other side of the House—a coalition which offered very few policies, if any, in government. They offered nothing tangible in relation to this issue at the last election and we have seen absolutely nothing come from the Liberal Party while in opposition.

A recent visit to the Liberal Party website to see what the shadow housing minister, the member for Cook, has done in his first few weeks in the job reveals that he has done not much at all. I suppose at least we have to commend the opposition on having a representative responsible for housing. He has issued three press releases since coming into the job. On 30 September he identified that there was ‘a gap between supply and demand for housing right across the country’, an insightful observation, but one that has come about five years too late. But having made that observation, there are no clear policy solutions offered to deal with that observation. Again, on 2 October, the same issue was identified and again no policy solutions were put forward. On 8 October, there was another press release identifying the same issue and the only policy response we saw at that point was, ‘Our approach will be driven by practical economic policies that address the supply challenges in the market.’ That is hardly an edifying comment about the direction in which the opposition would go in terms of this issue.

The Australian people waited over a decade for the coalition to formulate a housing policy and it appears from what we have now seen that we are still waiting to see a housing policy from the other side. It begs the very obvious question: why would they bother to have a shadow housing minister if they are not actually going to produce any housing policies? As I said, by contrast with that, the Rudd government has had a very clear position in relation to this.

A division having been called in the House of Representatives—

The Rudd government have been listening to the warnings of the industry and it has been hearing their calls. We listened to ideas and suggestions that came from the participants of the National Summit on Housing Affordability last year. From that a discussion paper was produced on the Australian housing market which was titled New directions for affordable housing. That of course included a discussion of, amongst other things, the issue of the shortage of supply in housing—and it would do well for the new shadow minister for housing to perhaps read that document and to learn something about these issues. We took these policies to the Australian people at the last election and since coming to office the Rudd government has been working to implement them.

We have for the first time a Minister for Housing. We introduced and committed funding to real policy responses such as the First Home Saver Accounts, the national Homelessness Information Clearinghouse, the Housing Affordability Fund, the National Housing Supply Council and the electronic development assessment to speed up the planning approval process, and of course as late as last week we had the doubling of the first home buyers grant, a tripling for buying a new dwelling. And we have the National Rental Affordability Scheme, which is the basis of this legislation.

The object of this scheme is to create affordable rental housing and reduce rental costs. Its implementation is forecast to create 50,000 new rental properties at a cost of $623 million in its first four years, and it does so by encouraging investment in new dwellings which, following a government incentive to the owner, can then be offered for rent at 20 per cent below the market rate. This will provide an option of affordable housing for low- and moderate-income households. The government incentive to the owners comprises a Commonwealth contribution of $6,000 per dwelling per year and then a $2,000 in-kind contribution from state and territory governments per dwelling per year. These contributions can be taken as a tax offset or as a payment and the incentives will be provided for a period of 10 years. The incentives will be indexed against the CPI so that they keep pace with inflation.

This scheme has been developed in consultation with the Council of Australian Governments, which agreed to its implementation in March of this year. It will be reviewed in its early stages to ensure its effectiveness and scope. It is envisaged that if demand for the scheme is high then another 50,000 properties will be offered from July of 2012.

In conclusion, this legislation is part of a suite of measures that constitutes the government’s response to the issues currently facing the Australian housing market. We have acknowledged not only the existence of the problem but also its gravity and complexity. The people of Geelong and the people of Australia are feeling the pinch. We have not got into this position overnight; it has taken the better part of a decade of neglect and it is going to take some time and some work to fix. But this government has a plan to do that and that plan is being implemented. It stands in stark contrast to those opposite who do nothing but continue to offer empty rhetoric and platitudes to the Australian people. They seem utterly disinterested in the plight of ordinary Australians when it comes to affordable housing. Housing, as I said, is fundamental to social cohesion and indeed the Australian way of life. The Rudd government acknowledges this, even if those opposite do not, and this legislation will assist Australians by providing more affordable rental housing and in that sense provide more affordable housing options to all Australians. I commend the bills to the House.

Chris Trevor (Flynn, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the government’s National Rental Affordability Scheme Bill 2008 and the related National Rental Affordability Scheme (Consequential Amendments) Bill 2008. It is with great pride that I comment on these two bills. I am proud that my government is committed to tackling the issue of rental affordability and is acting swiftly, comprehensively and creatively to address this issue at its very core. As we are all aware, it is now harder than ever before in the history of Australia for people to find affordable rental accommodation. Nowhere is this pain felt more widely and more deeply than by those on low and even moderate incomes and their families. There are plenty of these people in my electorate of Flynn. It is these people on low and moderate incomes that are at the front of my mind today as I rise to speak on this very real, very painful and very relevant issue.

Across Australia, rental vacancy rates are at an all-time low. In my electorate of Flynn, in my home town of Gladstone, I am informed that rental vacancy figures have dropped to 1.5 per cent for the largest rental agency in town, and median rents for a three-bedroom house in Emerald, also in my electorate, have increased from $350 per week in 2006 to $380 per week in 2008. Of course, with low rental vacancies across my electorate and throughout Australia generally, there is increasing pressure on rental prices. There is only one way that rents have gone, and that is upwards. This is a very real issue that impacts on everyday life for my constituents who rent homes, as their rent has increased faster than any other everyday living expense. While rents increase to levels never seen before, my constituents in Flynn are forced to cut back on essentials, move house more frequently or live in cramped conditions just to keep a roof over their heads.

I am pleased to speak on these bills. They are particularly relevant to my electorate of Flynn. I am proud that my government is acting now on this problem that for too long has gone unanswered. The opposition’s approach to rental affordability when in government can be summed up in three ways, with respect, and they are neglect, more neglect and shameful neglect. Rather than sit and watch this problem worsen, we will act to give vulnerable Australian people access to affordable housing, to give them a home but, more importantly, to give them back a heart and their hope for the future.

The National Rental Affordability Scheme is aimed at encouraging investment in an area that has previously been underutilised. The scheme will present new opportunities for investors and a new asset class of investment in residential property. The scheme will also present opportunities for new and creative partnerships between institutional investors, developers, community groups and not-for-profit organisations, as well as all levels of government, to work together and provide a sustainable solution to providing affordable housing in Australia. I believe in my own heart that we can make a difference. I am more than happy to commend the bills to the House.

Debate (on motion by Ms Grierson) adjourned.