Wednesday, 24 October 2018
National Housing Finance and Investment Corporation Amendment Bill 2018; Second Reading
I rise to speak on the National Housing Finance and Investment Corporation Amendment Bill 2018, and I can indicate to the chamber that Labor will be supporting this bill. The original National Housing Finance and Investment Corporation Bill passed parliament on 28 June 2018, with Labor's support. At that time, no opportunity remained for the House to consider any amendments to the bill put forward by the Senate given that the National Housing Finance and Investment Corporation was slated to be established on 1 July 2018. Labor didn't want to delay the establishment of the body and the board being put in place, so we reached agreement with the government to withdraw our amendments and allow for the bill's expedited package. But that was contingent on the government providing a written undertaking to introduce and support a new bill in the spring sittings containing the amendments we'd intended to put forward in the Senate, and this bill honours that commitment.
Labor were pleased to see the National Housing Finance and Investment Corporation established and begin preparatory work in the lead-up to its first bond issuance, expected next year. This, of course, represents the realisation of Labor policy. It's important to note that, while the coalition government flagged its intention to establish the National Housing Finance and Investment Corporation in the 2017-18 budget, that was a month after Labor's plan for housing affordability and jobs in April 2017. That plan built on our existing policies to reform negative gearing and capital gains tax and contained Labor's commitment to establish a bond aggregator to drive increased investments in affordable housing.
Labor's commitment to establish an aggregator recognised that, while the community housing sector in Australia has grown significantly in recent years, it still remains relatively small. We have a chronic shortfall of affordable rental and social housing, and that means that sector has to achieve greater scale and sophistication. Among the constraints have been restrictive loan tenor from lending institutions, the high cost of financing and organisational fragmentation. Labor, having established the benefit bond aggregators have delivered in comparable countries, such as Britain, determined that a body of this nature in Australia would help community housing providers access cheaper finance, secure longer loan terms and help the sector build up institutional capacity and scale. This was again another case of Labor leading the policy debate on a critical debate for Australia and the government playing catch-up.
The bill we're currently debating contains three amendments, including Labor's two sensible amendments agreed to by the government. Our amendments include a requirement that at least one director on the board of the National Housing Finance and Investment Corporation have relevant skills and experience in affordable housing gained in the community. This was proposed by numerous community housing providers during the Senate inquiry. For example, St George Community Housing Ltd stated:
… we would suggest that it benefits the objective of the NHFIC to have a Director or Directors with experience and expertise related directly to social and affordable housing and the economics and social benefits of related projects …
that is, in the housing provider sector.
A further amendment will bring forward the review of the operation of this act to as soon as possible after a period of two years beginning when this act commences. Such a review will allow for key issues surrounding the loan cap, funding for capacity building and the use of the National Housing Infrastructure Facility to be canvassed.
The third remaining amendment contained in schedule 1 establishes a $1 billion special account for the purposes of the Affordable Housing Bond Aggregator. This amendment will allow the National Housing Finance and Investment Corporation to draw down on a $1 billion line of credit to support the Affordable Housing Bond Aggregator. The existing $150 million appointed to the bond aggregator will be credited to the special account. Regrettably, while Labor sees considerable benefit in a bond aggregator, the government is stubbornly refusing to address the related but fundamental issue that'll hold back community housing providers from using the aggregator to deliver affordable rental housing at scale, and that is that they have neglected to address the yield gap. Policies to address the yield gap are necessary to complement the work of a bond aggregator and they're a key feature of successful schemes overseas. This isn't just Labor's view; it's also a view widely shared among community housing providers and other key stakeholders.
Launch Housing, in its inaugural Australian homelessness monitor report, welcomed the establishment of a National Housing Finance and Investment Corporation but made clear that, as a stand-alone initiative without additional support, 'it will not provide a sufficient subsidy to increase the level of social housing'. The community Housing Industry Association, in their submission to the Senate inquiry, stated:
CHIA agrees that while the bond aggregator will reduce the cost of financing social and affordable housing, it will not be sufficient to address the funding gap between the operating costs and the rental income. This is because, by design, community housing providers ... charge rents below market rates to make housing more affordable for tenants.
The Australian Housing and Urban Research Institute was similarly forthright on the government's submission. It said:
AHURI research has argued that there is a need to address a funding gap in the context of new finance:
Whether involving new finance or the redirection of existing housing subsidies, government financial support is essential to complement private financing of additional affordable housing supply. Inadequate government co-funding is the primary capacity constraint that providers currently face in their efforts to expand affordable housing ...
In taking no action on this issue, the Liberals have ignored calls from the Senate Standing Committee on Economics, their own Affordable Housing Working Group, and key experts and stakeholders to urgently address the yield gap. Labor have been consistent in our calls for the government to develop, as a matter of urgency, a policy framework that bridges the yield gap to address housing affordability and get better outcomes for Australians.
If you want to increase housing supply, improve productivity and help assist the disadvantaged, then the government must address the yield gap. It's abundantly clear that the coalition has no intention of doing so. Only a Labor government will tackle the housing affordability crisis. The fact is that our home ownership rate is now as low as it's been in six decades. Only a Labor government will increase the home ownership rate and put the great Australian dream within reach of low- and middle-income Australian families. Labor have announced a comprehensive series of policies to this end. Labor will have more to say on this issue in the lead-up to the next election. I commend the bill to the House.
As the member for Goldstein, it's a great pleasure to be able to rise to support this bill. I have to begin by referring to the speech by the member for Fenner. I've got to say that, in the context of his speech about this bill, it now seems that the phrase 'under a Labor government' rolls off his tongue so easily and with such predictability and hubris that sometimes you wonder whether he has jumped ahead of himself and the Australian people. In the end, every time he gets up and speaks in this place, it is with absolute confidence and conviction that he believes that he is just the factional apparatchik-in-waiting to take a ministry in a Shorten government. Of course, he is more than entitled to do so, if he wishes, but he has to actually recognise that this parliament is not over yet and we are not done yet. But it is a welcome thing to see him get up and speak on this bill, as it is to see the Labor Party moving it. At this point, they're not moving, as far as I can read on the board, with some sort of superfluous and pointless amendment to justify the extension of this debate and to justify dragging people down simply to vote on the purpose of a failed amendment. They're actually going to let this one go through, which suggests that they do think the bill's workable. The bill actually is the foundation of good policy. It's a bill that people need to make sure that we can provide the housing finance environment necessary for Australians who need the assistance and the backing of government.
No-one should really be surprised, because this government, at its heart, has the interests of Australians. The Prime Minister said this the day he was sworn into office by the Governor-General and took upon himself a flag to put on his breast—there was an image of the flag—to say that he was on the side of the Australian people.
I know some people on the other side may mock this proposition but, when it comes down to it, they know the truth. They know the truth that this legislation, our legislation, and the full program of this government, is to deliver for the Australian people.
Housing is one of those issues that, when it comes down to it, is foundational for our sense of security within society. I often talk about people who wake up, get out of bed, go brush their teeth, dress themselves, go off to work and be able to invest in their own future off the back of their labour and investment in themselves and their families as the foundation for community and our great nation. But housing is a critical part of that. If you ever want to see people's lives disrupted and people's lives undermined, it's where they don't have a place that they call home. Home is not just the place where people store their sometimes limited possessions; a home is more than just a place. A home is somewhere where families come together, where people share time with their loved ones—sometimes private time—and with friends. It is their island in a world unpredictable. It is also critical for the foundation of every other part of success. It's like the foundation stone of building a life. So having a home is critical. We all know that, and I hope even the opposition would acknowledge the critical role of housing.
There's no greater security that can be achieved in life than the capacity to be able to go on and own your own home, to be the custodian of a property, and to be able to have the ultimate sense of security. But we know full well that not everyone is in the situation. There are millions of Australians who are on their way in life, having gone to school, maybe gone to tertiary education or maybe gone straight into the workforce, and they graduate from living at home—and, tragically, sometimes people can't even fulfil that—to then go on and rent and, ultimately, are in the position, if they're able to save, to get that ownership and foundation within society. But there are also many people who struggle even to achieve that—and, frankly, often, it's due to factors outside their control.
We as a nation—particularly one as wealthy as ours—cannot turn a blind eye to the plight and suffering of those people and say that we don't have their back; that we don't care about their need for security. But it can't always just be overcome with more labour or more work, particularly with the challenges we face in housing affordability on the private market at the moment. This government, working with the states and territories on this issue—which is a critical part of it, as we of course are oft a distant capital, and the states work directly with people delivering services—is keen to make sure that every Australian has not just a sense of security but also the foundation for a successful life, particularly those who are most vulnerable and have the least capacity to correct their situation—often young women who have had children and may no longer have a supportive spouse and really need the support of this place and the support of their fellow citizens. The National Housing Finance and Investment Corporation is part of that important framework, in operating a $1 billion fund under the National Housing Infrastructure Facility. It's a critical part of the overall national approach to addressing the challenges we face in making sure that everybody can have their own home—and we know how critical that is.
If we look around the country today—and there's plenty of data out there—we see a worrying trend. We see a decline in the rate of private home ownership across almost every single age group in the country. In fact, it's only in the top economic quintile of people over the age of 65 that we see an increase. Every other age group is seeing some form of decline. It's more modest in the 65-plus category, a little greater in the 55-plus category, a little greater again in the 45-plus category, but when you get down to home ownership rates amongst people under the age of 35 and 25, I make no apology: I'm concerned about it, seriously concerned about it.
Home ownership is not just about a place where people live; it is an investment in the status quo. If you want preservation of a liberal democracy, as I do, a society built on ownership and opportunity, home ownership is critical. Once people make an investment in the status quo, they have an interest in preserving it. If you're a true conservative—and I need to make that point—then you understand the critical role of housing and how it should be at the fore of the minds of everybody in this place if we want to preserve the best of the past and take it forward for the future.
I saw this directly in my former role, when I was human rights commissioner, particularly working with Indigenous communities. Of course, yes, you had people who were displaced from their custom, their culture and their land. What came with that was a legacy of displacement and disruption of a continuation of thousands of years of culture and tradition. But, when you removed that connection, you also severed that sense of security that Aboriginal and Torres Strait Islanders hold. It is not the same as our modern title of land that we have, where people buy their own home. Yes, it can be on the basis of collective ownership. But the principle that sits behind it and the security that people derive from a place they call home, no matter the culture, can never be underestimated. This is what the Chinese Communist Party never understood when they sought to deal with issues around property rights—that people would stand there and fight, even against the tyranny and the oppression of the state that wanted to displace them and move them for some sort of collective ambition.
Private property ownership and ownership generally and having a place called home is foundational for any society that wants to seek to preserve itself. And part of the enduring challenge that we have in this place, when you look at all the well-intentioned but failed policies designed to support Aboriginal and Torres Strait Islander people, is that we are constantly trying to repair the damage that we have done, to rebuild the connection to that sense, that cultural understanding, of a place called home. And it's no different in practice for so many people who lose their home in our modern society as well. But, if we're going to address the challenges around making sure people in whatever economic stage in life have access to housing that meets their needs, we must be realists. People cannot simply turn to the state to provide all of the supported welfare benefits that they wish or may seek. That suffocates not only the spirit of entrepreneurialism but also the sacrifice that's necessary to have a society that sustains itself. People should be encouraged to stand on their own two feet and to be able to take care of themselves not out of a selfish ambition but so they're in the best position to take care of themselves so they're not a burden on others and so that they can help others stand up too. But a critical part of that is also because then they leave open the space that others need to get support and assistance for other types of social support.
When people come to me and speak to me about the challenges around social housing—and I'm not seeking to play it down; it is a serious issue—there are challenges we need to face to provide the financial instruments, the bond structures, for governments, for the private sector, for community organisations and for civil society organisations to finance the development of new housing for people. But the greatest thing we can do to lessen the burden on the social-housing system is to have a private system that works, because the more people who can take care of themselves, the less people will turn to the social-housing system and say, 'We need assistance and support.' Free up the places that those less fortunate than ourselves depend upon. That should be our ambition in our housing policy: to make the private system work and to support those who can't.
That's part of what this bill is trying to address as part of a national strategy—again, working with the states and the territories because they are ultimately the service providers. Our $1 billion National Housing Infrastructure Facility and its Affordable Housing Bond Aggregator can do enormous good in helping to change the landscape for more available housing, but that is only one part of that story. We need states to step up and meet the expectations of them, their obligations, and those are to be able to shift the regulations and the controls so that there is more housing available for different stages of life, in locations where people need to live, and to stop suffocating new development.
That's one of the things I have great concerns about in our opponents' policy come the next election. We saw modelling data out today, looking at the consequences of changing rules around taxing losses, which is what the Labor Party are proposing, should they win the next election, if people invest in housing. Most people talk about it as negative gearing. It's not; it's putting a tax on losses. It is possibly the most ridiculous policy proposal you could ever invent—to tax a loss. And what did the modelling show for the forward projections in terms of housing development? The introduction of this tax on losses will lead to 42,000 fewer homes developed in Australia, 42,000 families who will be denied the opportunity to secure their own home, 42,000 Australian families who will be pushed into the pool of those dependent on existing housing, so 42,000 families who will add to the burden on the social-housing stock—and why? Because our political opponents don't actually have answers to these pressing problems. Instead, they are going to tax losses and undermine confidence in housing development, rather than focusing on the sorts of policies that are in this legislation so that we can deliver the housing stock Australians desperately need.
I rise today to support the National Housing Finance and Investment Corporation Amendment Bill 2018. I know that the federal government is working with states and territories in this space and that states mainly are the providers of social housing, as we know, but this is a $1 billion facility. The National Housing Finance and Investment Corporation, NHFIC, was established on 1 July 2018 as an independent corporate Commonwealth entity. NHFIC works in conjunction with the bond aggregator to provide cost-effective and longer term finance for community housing providers. NHFIC was formed primarily to increase the availability of rental and mixed development affordable housing stock available in the market through community housing providers.
There are four main amendments to the NHFIC Act, which commenced earlier this year. The current act provides that the board of NHFIC must collectively have an appropriate balance of qualifications, skills and experience in a relevant field, those being banking and finance, law, housing, infrastructure planning and financing, local government and public policy. The amendment includes a new requirement that at least one board member must have appropriate qualifications, skills or experience in social or affordable housing. This amendment is critically important, as it acknowledges that specialist knowledge is required to successfully operate in a field that is outside the usual experience of bankers, lawyers and property developers. The skill set required is significantly different, and demands are greater for people who run not-for-profit community housing providers, those with tenants who are financially disadvantaged and may also have special needs.
The easy answer from property developers, at times, is to build affordable housing on low-cost land on the fringes of urban areas, which can be far from jobs, schools, medical facilities, public transport and shops, and this therefore compounds the problems faced by financially vulnerable people, who need this housing. Board members with social and affordable housing experience know that increasing the distance from services creates problems of intergenerational unemployment and poor health and education outcomes. Our focus should be on infield development—that's what should be their aim—the creation of affordable housing in middle-ring suburbs. This will help to provide the most vulnerable members of our community with improved access to jobs and services, with the hope that, over time, they or their children may be lifted out of the poverty trap. We also need affordable housing of this type in rural and regional areas, which have people with similar needs.
The bill provides for the statutory review of the operation of the NHFIC Act to occur after a period of two years, rather than three. The bill also provides that NHFIC may now redraw amounts repaid by community housing providers to the Commonwealth government. The bill does this by bringing forward planned annual appropriations, and by the creation of a special account for the purpose of the Affordable Housing Bond Aggregator. The amendments therefore, in practical terms, provide for the $1 billion to be reused and reused, and avoids the lapsing of any undrawn funds three years after the appropriation.
The provision of government funding for affordable housing through community housing providers is not new, of course. Previously, state governments provided financial assistance and land releases to facilitate affordable housing. Victoria has a long history of providing affordable rental accommodation through community housing providers. Successful examples of those operating in the field for decades include Common Equity Housing Limited and SouthEeast Housing Cooperative. New South Wales has a more diverse history, with both owner-occupied and rental affordable housing having been provided by a range of different organisations, using a variety of different means. Starr-Bowketts and terminating building societies provided members with low-cost housing finance based on a regular ballot system. Housing cooperatives historically borrowed state funds, supported by bond issues, to provide low-cost finance for the first home buyer members. These housing co-ops also previously ran ballots for first home buyer members for the release of state owned land at affordable prices.
The funds available through NHFIC will be provided for affordable rental housing and mixed developments. However, there's also a capacity for community housing providers to enter into arrangements to support affordable mixed owner-occupier and rental housing—the combination. As members would be aware, the price of owner-occupied housing in the market is gradually decreasing. However, as The Australian Financial Review online explained in its article of 5 September:
The proportion of household income taken to meet mortgage repayments widened nationally to 32.2 per cent in the second quarter from 31.5 per cent a year earlier as the average loan burden to first home buyers - whose numbers increased in most states - rose from a year earlier.
NSW remained the worst state for housing affordability in the June quarter, with the proportion of household income needed to meet mortgage payments rising to 38.1 per cent from 36.5 per cent in March and 38 per cent a year earlier.
In Victoria, the figure rose to 34.3 per cent from 33.4 per cent a year earlier.
So what are our options? There are many models that attempt to address the problem of affordability for owner occupiers. Low interest rates and stamp duty concessions for first home buyers can sometimes fuel higher prices. Rising interest rates increase mortgage stress and foreclosures. And so the question is, how is it possible to reduce the construction cost of affordable housing without reducing the value of existing housing? I'm aware that a number of community housing providers are working together with groups of potential owner-occupiers to project-manage and build their own affordable strata-title or community-title projects.
Community title is best described as horizontal strata title. The completed apartments or dwellings are available at cost to the owner-occupiers who committed their funds, time and skills to the project and to the community housing provider, who acquires a number of apartments or dwellings for affordable rental purposes. The funds may potentially be borrowed through the NHFIC. At the completion of the project, the NHFIC could be repaid or, alternatively, the funds could be re-used by the community housing provider to finance the next mixed-development project. There could be a continuous build. What we need is more affordable housing.
Discussions are currently happening with banks to gauge their interest in working with the community housing providers to support these types of proposals. This proposed mixed-development model focuses on affordable owner-occupier housing for people like police, teachers, healthcare and social welfare workers, low- to medium-income first home buyers and low- to medium-income people over the age of 55 who have previously owned a home but are no longer owner-occupiers due to life experiences, such as divorce, illness, unemployment or the death of a partner. Whilst the number of older women who are no longer homeowners is of particular concern, older men are also included in this category.
The aim is to provide owner-occupier housing for people who are currently priced out of the market and exclude people who have the income to purchase housing at market prices. The aim is not to reduce the price of existing housing but to provide a limited amount of housing for people who are on the margins of the market who would not otherwise be able to afford to own their own home. This really is a good opportunity for those who meet the criteria. It will require time and work over a two- to three-year period. The mixed-development proposal is just one of the options out there. I look forward to seeing more of that as the NHFIC moves on.
I want to briefly talk about the effects on housing of Labor's negative-gearing policy. We saw today that this could lead to a fall in new housing construction of up to 42,000 dwellings and 32,000 fewer jobs over five years. Australian Bureau of Statistics figures released in August this year show a nine per cent fall in new dwelling approvals over the previous 12 months, so we know that Labor's policy will not actually boost the supply of housing or jobs in the construction sector at all. They forecast 8,000 fewer houses and 34,000 fewer apartments in the first five years.
We know that Labor is proposing to further reduce the attractiveness of investing in rental accommodation by abolishing negative gearing, as we heard. I don't know whether Labor quite understands that this will actually increase the number of investors leaving the housing market, thereby reducing the price of existing housing and decreasing the amount of housing stock available for rental. Changes to negative gearing and the reduction of interest-only loans will mean that investors will pull out of the rental housing market, further reducing the stock of rental housing and driving up rents.
Perhaps Labor should speak to Paul Keating about the 1985 Labor experiment with negative gearing. The Hawke Labor government changed negative-gearing laws in July 1985, only to reinstate negative-gearing laws shortly prior to the 1987 financial crash. What happened? As investors sold out of the market the availability of rental accommodation in Sydney and Perth plummeted, vacancy rates dropped to approximately one per cent and the price of rental accommodation in those cities surged.
Australians in rental accommodation are vulnerable if their landlords sell their houses or apartments due to the increased principal-and-interest mortgage payments or the loss of negative gearing. We know that in most states there are restrictions on the amount that rent can increase year on year, but there's no price protection when the renter moves from one home to another. The increase in rental stock being dumped into the housing market at a time of falling house prices would destabilise the housing market even further. If the value of the house drops below the value of the mortgage, past experience and prudent lending practices indicate that the banks would foreclose on the property and potentially bankrupt the former homeowner, who cannot pay the shortfall.
I want to finish by speaking on how important home security is. For a lot of the migrants who came to this country, the one thing that was an absolute priority was to own a home. They would go without in many other parts of their life, because they came from a country where they perhaps had lived in a landlord's property and never ever had the opportunity, as some of the Italians found, to actually own a home. When they came to Australia and they saw this wonderful land of opportunity, where they could get a job, be paid well for that job, save their money and use it, so often their priority was to put a roof over their family's head. That was an absolute driver. They saved and they saved, and they took abiding pride in being able to put a roof over their family's head and pay that house off simply by working hard. They were committed to the laws of this country and the opportunities that this country gave. So many of them were grateful to this country for the opportunity it gave them. But one of the most important parts of their security, and their security in older age, was having a roof over their head and having that home paid off. The NHFIC bill gives a further opportunity to Australians to do exactly that—to own their own home, to have access to affordable housing.
I met some young people recently when I was speaking at the Cape Naturaliste College graduation ceremony. It was interesting to hear those young people talking about how they aspired to having a smaller home than their parents had because they were determined to get into a position to own that home earlier. They wanted to have a range of opportunities along the way but they saw home ownership as a critical part of their security. When we get to later years, Mr Deputy Speaker, an important thing for all of us is to own the roof over our head. We're then in a position to manage whatever health or other personal challenges come before us. It's a key part of our security. I'm very pleased that the government is making further moves towards that through the National Housing Finance and Investment Corporation. (Time expired)
I'm pleased to rise this evening to speak on the National Housing Finance and Investment Corporation Amendment Bill 2018. When not just we on this side of the House—not just Liberals, not just Nationals—but all Australians want some guidance on where we should be on a particular issue, there is no better place to go back to than what is known as the 'forgotten people' speech by Sir Robert Menzies. What did Menzies say about the importance of housing in that speech? He talked about homes material, homes human and homes spiritual. He said:
I do not believe that the real life of this nation is to be found either in great luxury hotels and the petty gossip of so-called fashionable suburbs, or in the officialdom of organized masses. It is to be found in the homes of people who are nameless and unadvertised, and who, whatever their individual religious conviction or dogma, see in their children their greatest contribution to the immortality of their race. The home is the foundation of sanity and sobriety; it is the indispensable condition of continuity; its health determines the health of society as a whole.
I have mentioned homes material, homes human, and homes spiritual. Let me take them in their order.
And Menzies went on to talk about 'homes material'. He said:
The material home represents the concrete expression of the habits of frugality and saving "for a home of our own". Your advanced socialist may rage against private property even while he acquires it; but one of the best instincts in us is that which induces us to have one little piece of earth with a house and a garden which is ours: to which we can withdraw, in which we can be among our friends, into which no stranger may come against our will.
If you consider it, you will see that if, as in the old saying, "the Englishman's home is his castle", it is this very fact that leads on to the conclusion that he who seeks to violate that law by violating the soil of England must be repelled and defeated.
Menzies was exactly right. And, from his generation, we saw the greatest increase in home ownership our nation had seen. Yet, over the last decade, unfortunately, politicians in this place and in our state chambers and in our local governments have let our nation down. They have put artificial restrictions on the number of houses available with restricted zoning laws, and we haven't had enough homes being built in this nation compared to our increase in population, and that has pushed the price of houses up to where many in our nation—many young people—have simply said, 'Bugger it.' They've said, 'It's simply too hard to save for a home.'
We have to correct this. We have to take every step available to us to correct this. We have to give opportunities to young Australians to own their own homes. That should be one of the central priorities of this parliament, this government and this chamber.
The way to do that is quite simple. We have to go back to the good old-fashioned laws of supply and demand. If we're going to have a migration rate of 100,000, 150,000, 200,000—or even 300,000, which we saw during the Rudd-Gillard-Rudd years—we've got to make sure that we are building housing stock for the numbers of people who settle in Australia. And we are doing right to try and decentralise some of our migration intake. Yes, I know it's hard, and yes, we have to have jobs out in our country and regional areas. But that's what we must aim for. We have a broad and wide land mass in Australia, and yet we have everyone wanting to congregate in Sydney, Melbourne or Brisbane, or even over in Perth, in high-rise apartments. We are building apartments and putting people in them, lined up like battery hens. It is detrimental to our nation's welfare. It is detrimental to the kids who do not have the opportunity, and the privilege, to run and play in their own backyard.
On this side of the House, we understand those problems and we are sensibly working through them. What do we see on the other side of the chamber? We see typical Labor policy—short-term solutions without looking at the unintended consequences of their policy, and a failure to learn from the mistakes of history. And here we go again. Labor's policy on housing is to have an attack on negative gearing because it sounds evil.
Let's be very clear about what Labor's attack on negative gearing is. Firstly, they try and make out that negative gearing is some dodgy tax deal that people are engaged in. It is a simple principle: if you are investing in an asset to try and create wealth, income and cash flow, your interest expenses are expenses that you can claim as tax deductions. That principle doesn't just apply to housing. It applies to shares, it applies to commercial property, it applies to machinery—it applies to every type of investment class that exists.
But the Labor Party want to deny schoolteachers and firemen and plumbers and small business people and middle-class Australians that opportunity. If you're from the big end of town and you've got your affairs structured through companies, you can of course still negatively gear property under Labor's policy. But, if you are a wage and salary earner, the Labor Party wants to take that opportunity away from you.
What are the effects of this policy? We've seen today modelling from the Master Builders Association. What would the effect of Labor's policy be? It would be 'a fall in new housing construction of up to 42,000 dwellings over five years', with 8,000 fewer houses and 34,000 fewer apartments. That is the consequence of Labor's ill thought out policy. What about the effect of Labor's policy on employment in the housing construction sector? The modelling says there would be 32,000 fewer jobs. That's plumbers, electricians, landscape gardeners, tradesmen, plasterers and bricklayers that rely on housing construction for their income—32,000 fewer jobs in that sector under Labor's policy. It would mean a $1.4 billion contraction in building activity in the first year alone, or a six per cent decline, in my home state of New South Wales.
That is the policy that Labor want to inflict on our housing market. This is happening at a time when the construction cycle is already in a decline. You couldn't pick a worse time to implement this policy. Like the majority of the Labor Party's policies, as we see, it hurts the very people that they think they are helping. We've seen this happen before, back in the 1980s. Labor thought this was a great idea and it could be very popular: 'Let's go after negative gearing.' What does history tell us? We know that, in Sydney, rents went through the roof. People who are renting, trying to save and put some money aside for a deposit, are going to be hit by Labor's policy. They're going to have higher rents to pay.
With that historical evidence, with what we are seeing in the housing cycle today, and with report after report that puts out how misguided, dangerous and counterproductive Labor's policy is, you would expect that they would say, 'Okay, we've got it wrong; we're going to fall back.' But, no, they're knuckling down. They're knuckling down on a policy that will actually harm the housing market, lead to fewer houses and push rents up. If they were ever able to implement this policy, the only questions would be, 'How much damage has been done? How many jobs have been lost? How much have rents gone up?' until they did what they did back in the 1980s. They realised they got it wrong, they realised the harm they were doing, and they reversed that policy. Let's hope they never get that opportunity.
Getting back to the specifics of this bill, it amends the National Housing Finance and Investment Corporation Act 2018. The government recently established the National Housing Finance and Investment Corporation, a new corporate Commonwealth entity dedicated to improving housing outcomes for Australians. It was established on 30 June this year, upon the commencement of the National Housing Finance and Investment Corporation Act 2013. The corporation operates the $1 billion National Housing Infrastructure Facility and an affordable housing bond aggregator. This will provide local governments, registered community housing providers and other eligible applicants with finance for infrastructure that will unlock the supply of new housing. That's what we need to do. We don't need mad policies or counterproductive policies that attack negative gearing for teachers, for firefighters and for the middle class. We need policies that unlock the supply of new housing. That is exactly what this policy is aimed at.
The bill implements the amendments to the act regarding the composition of the board and the time frame for review of the operation of the act. The bill also amends the act to make provisions for the establishment of a special account for the bond aggregator function. The amendments concerning the composition of the board of the corporation and the time frame for review of the operation of the act are minor in their effect and a full commitment that the government gave to the opposition during debate in the Senate on the bill back in June 2018.
The bill will create a special account for the purposes of the $1 billion line of credit, appropriated to the Department of the Treasury, for the function of the commission. Upon the commencement of the bill, the $150 million already appropriated to the Commonwealth for that purpose is to be credited to the special account. The bill also appropriates the remaining $850 million of the $1 billion line of credit, which is to be credited to the special account over four years from the commencement of the bill. The bill will provide a schedule of crediting for the remaining $850 million. This is just a further example of what this House is doing and this government is doing to make sure that we can give as many Australians as possible the opportunity to own their own home.
I'd like to conclude—these comments are my own, not those of the government—by saying that I believe we need to look at giving young people the opportunity to use part of their superannuation savings as a deposit for their own first home. Anyone who goes into retirement without owning their own home will struggle. Instead, you could put aside your superannuation and, when you've hit the age of 65, you could take that superannuation money and then buy a house. Why not allow people to make the investment decision for themselves? They should be able to decide, with their money that they have earned, if they want to invest that in their housing for their retirement. That is good, but it needs to be done while increasing the supply of housing. That is what this bill is aimed at. I commend this bill to the House.
I rise to speak on the National Housing Finance and Investment Corporation Amendment Bill 2018. It is a very important piece of legislation that addresses a very pressing need in Australia—that is, to facilitate better and cheaper funds for community housing providers. Just to put things in perspective—many of you already realise this, but I'll just repeat it for the benefit of the House—states have traditionally provided public housing, but there is a sector in that space called community housing. On a commercial basis, but with any profits rolled back into the community housing provider's coffers, community housing is used to grow more affordable housing.
The Commonwealth is already suppling—this is approximate, because I don't have the exact figures—about $4.4 billion over the forward estimates in Commonwealth rent assistance. Recently, some states, including New South Wales, have rolled some of their stock over into the community housing market so that it facilitates better management, an expansion of stock and an expansion of other houses and apartments. It also means that the tenants in the community housing are now eligible to claim Commonwealth rent assistance. That in itself makes many unaffordable rentals affordable, and the Commonwealth really does stump up an enormous amount of funds to support affordable housing.
We've also released, in the announcements made in the last 18 months or so, serious amounts of Commonwealth land in both Melbourne and Sydney for housing projects, and we've stumped up hundreds of millions of dollars for the remote housing agreement again.
This bill addresses the National Housing Finance and Investment Corporation and some necessary amendments to the act that created it earlier this year. The National Housing Finance and Investment Corporation is a new entity, a Commonwealth entity, which has as its core function to be a source of funds for the community housing providers. It also establishes a bond aggregator, the Affordable Housing Bond Aggregator, so that it can cluster as a single borrower of funds through bonds for the community housing providers and get many basis points benefit for the community housing providers by the fact that they are borrowing funds in bulk.
There is a $1 billion facility that's already set aside. The NHIF, or the National Housing Infrastructure Facility, has been capitalised with $150 million.
What the amendments in the bill do is implement the recommendations that a Senate committee of review made. I'll just go through some of those. The bill establishes the criteria for the board appointment process, the skills that they require, and it also requires that the facility never has funds greater than $1 billion. It should be debited by the amount of the excess, and that excess amount is returned to consolidated revenue. It's a facilitator of cheaper funds. It may give the minister the regulatory power to direct that a specific amount be debited from the special account and returned to consolidated revenue. Obviously the minister would have to consult with the board.
These amendments also bring forward the planned appropriations that were outlined. I'll just go through those figures again. At the commencement of the bill, $105 million is credited, followed by $310 million on 1 July 2019, $270 million credited on 1 July 2020 and a further $165 million credited on 1 July 2021.
These amendments outline the skills and the qualifications required for the board members, and there should be an appropriate balance of qualifications. Like any board, you've got to have multiple skills for proper governance, but skills and experience relevant to that board's actions—that is, they have a legal or banking and finance background; experience in the housing sector; experience with infrastructure planning and delivery, local government or public policy; and obviously experience of how the community housing providers work.
The bill provides also for a statutory review of the operations of the National Housing Finance and Investment Corporation after a period of two years—very wise words, because it hasn't operated before. We've got to see how it's going and whether it's operating as it was purposed.
At the root of all this is the issue of affordable housing. Anyone who has lived in one of the major cities or has got family in the major cities realises that rents are sky high, particularly in Sydney and Melbourne, and to a lesser extent in Brisbane, Perth, Adelaide, Hobart—you name it. Wherever you are, capital cities in Australia have high rents at the moment. That is why the Commonwealth provides Commonwealth rent assistance. It's not only for community housing; it's also for people in the private rental market.
I would bring the attention of the House to the fact that decentralisation would be a great solution for the housing affordability crisis. We have many regional towns and cities that have room to move. They have the infrastructure, the water supply, the schools, the health facilities and industry. That's why the National Party is so committed to the principle of decentralisation. We have the Regional Growth Fund, which will allow successful applicants to grow their industries or their initiatives and provide infrastructure that will allow the economies in the regions to grow. Aside from Australia, other countries, such as Europe or America, have very decentralised populations. In Germany, for instance, there are only a couple of cities that have more than 600,000 people in them. But, in Australia, we've got Melbourne and Sydney vying to be 'super cities'. It's not logical that we put all our infrastructure and the majority of our population in two major centres when we have so many other areas that have all the recipes for much greater growth.
You need a catalyst, and that's why the policy of decentralisation is so important. If there are government bodies or statutory authorities that are more suited to a regional location, why shouldn't they be there? If you're administering the Murray-Darling Basin, being centred in the middle of Canberra is a long way from the Murray-Darling Basin. Admittedly, the Molonglo River goes into the Murrumbidgee, which then goes into the Murray, so it is part of the basin. It's the same with having fisheries near the fishing industry and so on and so forth. Relocating the APVMA to Armidale, next to the University of New England, where many of the APVMA workforce was educated—where we have airports, internet, brand-new buildings, a university culture and where a lot of the agricultural bodies have their head offices—is a natural fit. I can see they've already been swamped with applications to go and work there. So I think it's going to be a great benefit, and you'll see the New England area get another boost. When the New South Wales Department of Agriculture moved to Orange, there was kicking and screaming all around. But, if you now told workers and employees of the New South Wales agriculture department that they were moving from Orange, I think you would see a mass revolt.
Decentralisation really works for affordable housing, but the trick is to get industry, rather than just government authorities, to move to regional centres. We need to have facilities in place so that industry will move and operate in the regional cities. That's why connectivity is so important. That's why we put so much money into built infrastructure like the Pacific Highway, linking the eastern seaboard—all the cities of Coffs Harbour, Port Macquarie, Taree and down to Newcastle. Virtually, when it's finished, you will be able to put cruise control on at the exit of Sydney and you won't hit a traffic light till you get to the Gold Coast. It's a great piece of work. Also important is the expansion of connectivity in a digital sense. Through the international satellite system, the NBN now has two new satellites, delivering a much better service for regional Australia. So businesses can operate wherever they want to set up, where they are near their product. All these things, cumulatively, make regional development possible.
That's the other thing: for regional centres to grow, like any civilisation, they rely on water. That's one of the first things when you're planning a city or a town—you have to have a reliable water supply. And that's why we're so committed to expanding the dams around the nation: because you won't get sustained population growth and you won't have sustained agriculture unless we have stored water. Everyone's familiar with the Snowy Hydro scheme, but that feeds into the Murrumbidgee Irrigation Area as well. The expansion of dams in Queensland will allow vast swathes of irrigated agriculture, which will then allow population growth—around the nation and around the world—but it also puts a floor of primary production into regions. All those things will facilitate regional development—water supply, infrastructure, and digital connectivity, as well as physical connectivity with highways. That's why we're rolling out the Roads of Strategic Importance initiative. That's why we are putting money into the Bruce Highway and, as I said, the Pacific Highway upgrades, and upgrades in Victoria and South Australia, and all around the nation—all those things will facilitate growth in the regions.
This bill is a response to the Senate committee recommendations that will improve the governance and the regulation of this new facility, the National Housing Finance and Investment Corporation, and the bond aggregator. These are both great initiatives. The community housing providers supply an awful lot of housing in a very cost-effective manner—much more than private developers. I'm not saying that they're inefficient, but the price and the affordability of the product is much better. To help them grow, if we can get them a source of cheap, long-term funds, all the better. That allows them to deliver a much larger product and many more houses. What I am very concerned about, as the member just spoke about, is the threat to the property development in this country—that is, the removal of negative gearing and changing the capital gains discount. That will seriously depress building activity. The Master Builders Association in their report outlined the figures. It's genuine modelling—they're hardly a political body; they are just worried about the negative consequences for affordable housing. We saw it happen decades ago. I'm old enough to remember when negative gearing was removed. Rents in Sydney skyrocketed. The same thing will happen again, if this was to come to fruition. That's why we on this side of the House understand these things— (Time expired)
It is fitting that this particular bill, the National Housing Finance and Investment Corporation Amendment Bill 2018, is being presented to the House today when it was released by a very senior group, a very serious group, of experts today—
Mr Gosling interjecting—
Deputy Speaker, I would point out that the member is not in his seat.
I think it is fitting that we should be debating this bill about affordable housing today, when a group of experts have had the time to analyse the Labor Party's ill-conceived thought bubble, almost—where the Labor Party felt that they could have a situation where they could end negative gearing and simultaneously drive rents up, drive prices down, and make sure that no-one can get into the housing market because no-one will be investing in it.
The National Housing Finance and Investment Corporation, the new corporate Commonwealth entity dedicated to improving housing outcomes for Australians, was established on 30 June 2018 upon the commencement of the National Housing Finance and Investment Corporation Act. NHFIC operates a billion-dollar National Housing Infrastructure Facility and the Affordable Housing Bond Aggregator. The finance corporation will provide local governments, registered community housing providers and other eligible applicants with finance for infrastructure that will unlock new housing supply. The AHBA aims to provide cheaper and longer term finance for registered community housing providers. The National Housing Finance and Investment Corporation Amendment Bill implements amendments to the NHFIC Act regarding the composition of the board of the NHFIC and the time frame for review of the operation of the NHFIC. The bill also amends the NHFIC Act to make provision for the establishment of a special account for the bond aggregator function for the NHFIC.
These things are important. The Labor Party like to sneer at people who want to have affordable housing. The Labor Party like to sneer at people who don't have quinoa and goat cheese salads on a Saturday morning and who don't get their almond milk activated. The fact of the matter is that, throughout Australia, in my own communities, there are people who are struggling to afford to live in a home of their own.
The Burdekin Association in my electorate of Mackellar does an extraordinary job of providing affordable housing for people who are elderly and have nowhere else to go. They have done so for almost 60 years. They provide a service that is truly extraordinary across my community and many other communities. This amendment, this corporation and this bond aggregation will make it possible for them to provide yet more services and more housing stock to people who are seeking to afford to buy their own home.
Then we have the situation raised by ANT Constructions. This is a construction firm that was handed down from father to son. The ANT Constructions CEO has made the point on many occasions that governments have made the problem worse, that every time we have sought to make housing more affordable we've made it less affordable and that every time we have tried to increase supply we have reduced supply. That's why this government is getting out of the role of telling builders like ANT Constructions and Ant Gleeson how to build a home. He knows more about building houses than I and everyone else in this place will ever know. But, somehow, the Labor Party think that they know how to tell people like that how to run their own businesses, and it's not good enough. The truth is that the people they've hurt are the most vulnerable, the people who don't have goat cheese on their salad and who sometimes get almond milk that isn't activated already.
The Labor Party represent the inner-city latte group, most of whom are professors and lecturers at university. They don't know about the real people, like in my electorate of Mackellar.
Mr Champion interjecting—
I see the members opposite interjecting and getting upset. They should try coming to my electorate, and I don't I mean just flying over it. I mean getting out of their aircraft and coming down and seeing the struggle on the streets of my electorate to sometimes afford those simple pleasures of life, like being able to put a roof over your head.
The fact is: every time you look at how housing got so unaffordable in Australia, at the centre of it, at the end of the path, is the Labor Party. In my state, New South Wales, you only have to say two words to know how bad it's going to get under them: Bob Carr. He is the bloke who had two choices: he could run a government or he could blame immigrants. Of course, being in the Labor Party, he blamed immigrants. He said: Sydney is full; go away. And at the same time, in Canberra, there was his good mate Kevin Rudd. I've been going through the index of the three-kilo biography, volume 2. It's almost as good as Clive's. In fact, you'd think they were in a race to see who could produce the heaviest autobiography.
Mr Champion interjecting—
It's a shame that the member opposite wants to be heard but no-one can understand him when they hear him. I had a look down the index and I couldn't find a bad word from former Prime Minister Rudd about the former state Premier, Bob Carr. And why would there be? At the same time Bob Carr was telling everyone to go away, because he couldn't be bothered building infrastructure—the New South Wales Labor Party made 33 infrastructure announcements and cancelled 35 of them—
I don't understand what the Labor Party doesn't understand, why they don't think this is relevant. This bill is about making housing affordable. They somehow think that when a member of the Liberal Party stands up—a member who actually cares about people who don't, when they order their salad, insist on different types of leaves from all parts of the world or else are shunned by their peers—and talks about affordable housing they're not talking to this bill. It says everything about them. No wonder the shadow Treasurer is a person whose education comes from Yanis Varoufakis, the Greek finance minister, who almost—almost; he didn't quite get there—bankrupted an entire continent. He learnt everything he knows from Yanis Varoufakis, and he's putting in into practice by introducing changes to negative gearing and capital gains tax—
As I was saying, the fact is that this bill does a lot of good for people who are looking to be able to afford to live in a home of their own or, if not their own, one provided by a community group. It is critical that this amendment bill be passed by this House so that we can get the expertise we require onto the board of the corporation and actually start to get the bond aggregator working. Bond aggregation is nothing new. It's almost like a form of social capital. It allows people to invest in affordable housing stock—people who live in my electorate and electorates like those of the member for North Sydney and the member for Lyne, members on this side of the House who happen to care about the people who really need affordable housing. I commend this bill to the House.
In summing up, firstly I would like to thank those members who have contributed to this debate, most noteworthy being the member for Mackellar, who spoke just a few moments ago.
The National Housing Finance and Investment Corporation Amendment Bill 2018 implements amendments to the National Housing Finance and Investment Corporation Act 2018 that strengthen and improve the recently established National Housing Finance and Investment Corporation. The National Housing Finance and Investment Corporation is a new corporate entity dedicated to improving housing outcomes for Australians. It operates a $1 billion National Housing Infrastructure Facility and an Affordable Housing Bond Aggregator. The infrastructure facility will provide local governments, registered community housing providers and other eligible applicants with finance for infrastructure that will unlock new housing supply, while the Affordable Housing Bond Aggregator aims to provide cheaper and longer term finance for registered community housing providers.
This bill makes explicit that the board of the National Housing Finance and Investment Corporation must collectively have an appropriate balance of qualifications, skills and experience in a relevant field of banking and finance, law, housing, infrastructure planning and financing, local government and public policy, and that at least one board member must have appropriate qualifications, skills or experience in social or affordable housing.
The bill also provides for the statutory review of the operation of the NHFIC Act to occur after the period of two years from the commencement of the act, rather than three. The bill provides for the creation of a special account for the purposes of the $1 billion line of credit appropriated to the Department of the Treasury for the bond aggregator function of the National Housing Finance and Investment Corporation. Upon the commencement of the bill, the $150 million already appropriated to the Commonwealth for the purpose of the AHBA is credited to the special account. The bill also appropriates the remaining $850 million of the $1 billion line of credit, which is to be credited to the special account over four years from the commencement of the bill.
These amendments bring forward planned annual appropriations for the purpose of the Affordable Housing Bond Aggregator and allow the National Housing Finance and Investment Corporation to redraw amounts repaid to the Commonwealth. The amendments ensure that the National Housing Finance and Investment Corporation is better placed to respond to demand from community housing providers. The amendments also provide certainty over the National Housing Finance and Investment Corporation's available finance in future years so it can commit to potential own transactions. The amendments fulfil the original intent for the line of credit to be ongoing, by providing for the $1 billion to be reused and by avoiding the lapsing of any undrawn funds at three years after appropriation.
This bill will help secure and improve the National Housing Finance and Investment Corporation, a new independent corporate government entity, which will improve housing outcomes for Australians, particularly vulnerable Australians who need social and affordable housing. I commend this bill to the House.
Question agreed to.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.