Marise Payne (NSW, Liberal Party, Shadow Parliamentary Secretary for Indigenous Affairs) Share this | Link to this | Hansard source

I wish to resume discussion on the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008, which were being discussed in the last sitting week. The debate was interrupted by question time, when we had, again, a larger presence than usual in the chamber, which was gratifying for those interested in the National Rental Affordability Scheme. I indicated at the time the details of the primary bill and the secondary bill.

Can I go on to say that, of the more than $600 million which has been allocated over four years for the scheme in this year’s budget, almost $500 million has been allocated to fund the tax offset. The balance has been allocated for direct financial grants and for administrative costs, and the majority of the funds allocated for the scheme have been earmarked for the final year of the scheme. That is four years away and, as I stated in my earlier remarks, over that period it seems, according to reports and assessments, that the accumulated undersupply could be as high as 200,000 housing units nationwide, which is a very significant gap.

This scheme is part of a number of measures being introduced by the government in a promoted effort to address the deterioration which Australia has been experiencing in housing affordability. The others, some of which have already been discussed in the chamber, include the first home saver accounts and the Housing Affordability Fund.

As the coalition has already made quite clear, we will not be opposing the bill. However, as I have also remarked, we do have a number of concerns—particularly in relation to certain aspects of the bill’s design—which I would like to put on the record briefly. The most significant of those is the likelihood that the scheme will fail to meet the government’s targets. Even if it does meet those targets, it still can only make up a very small proportion of the projected undersupply of housing. We had the opportunity to discuss those targets with the department in the estimates process, including how they were brought together in the promotion of the scheme—and we learnt at that stage that, as sophisticated as the government may now claim it to have been, it was merely a part of opposition policy at the time—and that they are not in fact modelled targets; they are not based on any research which the department was able to supply the committee with in that discussion.

We are also concerned at a potential flaw that might have the capacity to undermine the success of the scheme, and that is its fairly rigidly structured parameters, which we are concerned in a free market may have the impact of reducing the scheme’s appeal for the kind of investors that the government is hoping to attract to this new institutional investment asset class. As it happens, there is actually quite a low amount of institutional investment in residential stock in Australia, relatively speaking. That is for a number of reasons, which might include a lack of scalability, higher transaction costs and unwieldy asset management arrangements.

Another barrier to institutional investment in the NRAS, which we have identified through the work of the shadow minister, Mr Morrison, is a lack of compelling evidence that the scheme will produce a competitive rate of return. With all the best will in the world, investors and those people intending, not unreasonably, to make money out of their business will not participate if they are not going to find a reasonable and competitive rate of return. We have seen reports that under this scheme the passing yield could be as relatively low as 4.5 per cent. The residential property council has said that, in order to be competitive, a new asset class of this type would need to return a passing yield of a minimum of five per cent and total returns of closer to nine per cent, with some estimates going as high as 15 per cent.

There is another aspect of the design of this scheme which is probably quite constraining, and that is the value of the incentive being fixed at $6,000 per annum. The value of the incentive will be far greater for areas in which there is relatively low demand for housing than for areas in which there is relatively high demand—for example, the inner-city areas of the three large cities of Sydney, Melbourne and Brisbane. As we and the shadow minister have said, the value of the scheme’s incentives might be more beneficially tied to the value of the project and the projected rents, with a sliding scale offered for the incentive. The Australian Housing Industry Association made that suggestion, which we have reported with interest. That may assist in making projects more viable.

Another potential design issue we see is that the tax offsets are to be limited to those parties who will draw, as I understand it, a rental income from the investment, which might reduce the flexibility with which a potential investment itself might be managed. Of course, we will still see state and territory governments reaping significant revenue in stamp duty and GST. We believe they should at least match the Commonwealth’s contribution to the scheme to increase its viability.

So we do have a scheme in front of us but it does have tight parameters, and the risks to a potential investor are not insignificant. For example, consider dwelling vacancies, completion delays and turnover created by tenants moving in and out of the income band. The finer points of the management of those aspects may potentially lead to the withdrawal or suspension of the incentives. They are all factors that one would consider as an investor when comparing the scheme to other investment opportunities. So, as the incentives currently stand, it is certainly possible that the only projects which will be commercially viable will end up being those on the fringe of our cities or in smaller metropolitan and regional areas.

On the point relating to the fringes of our cities, I refer again to the report of the Senate Select Committee on Housing Affordability in Australia—and I see Senator Moore nodding with interest—because this was a subject that we considered at some length. Really, it becomes a rather self-defeating process to merely add housing to the fringes of those cities and not match that at the same time with the sorts of infrastructure and support that communities need to be viable and, most importantly, to have employment in situ.

I do note with interest that, in the initial rounds of the scheme, the requirement for a minimum of 100 lots has been relaxed. We have said that, in order to encourage the supply of housing in those areas of greatest demand, that requirement may require permanent relaxation, or the government may be risking potentially worthy projects.

We have also had a look at the eligibility criteria for tenants, and there seems to be a degree of rigidity in those parameters as well, particularly with regard to what are known colloquially as ‘key workers’. So we have a scheme from the government which is one of a number of measures to increase homeownership and housing affordability but, because those criteria for tenant eligibility in this regard are quite restrictive, we are concerned that a significant number of potential tenants in need of affordable housing may be locked out. So investors, for example, will want to be very sure that potential tenants have a reliable source of income. Potential tenants who are in need of affordable housing might be those who are saving a deposit to buy their first home or those who unexpectedly find themselves in need of housing in the private rental market. And if the scheme’s objective is to reduce rental stress in the private market then perhaps, for breadth of application, greater numbers of potential tenants, all potential tenants who are currently struggling in the private market, should be included in the scheme.

This is another point that the Residential Development Council highlights in a submission which refers to ‘key workers’. That would include teachers, childcare workers, nurses, police, firefighters and ambulance officers—all those emergency services personnel—who it seems would almost all, under the criteria as we read them, find themselves in a position of being ineligible for tenancy under the scheme. Key workers on award rates are often stationed in areas where housing costs are especially high. It is not really clear to us or to me how they are going to be able to compete in the local housing market and then compete on the other hand for eligibility in the NRAS. We think it would be inequitable for them to be excluded from the scheme, particularly if the affordable housing is located some distance from their employment. As we see it, the tenant eligibility criteria may be so prescriptive that perhaps the only tenants who will qualify are in fact current public housing tenants, and I am not sure that that is the best way to address the problems that the government is trying to solve.

We also had some concerns—which are ongoing and I know are shared by Senator Ludlam—in relation to the charitable status of not-for-profit organisations that may seek to participate in the scheme. Just before the bill was introduced into the Senate there was a consequential amendments bill produced by the government seeking to address that, and there was a media release by the Treasurer. It will be interesting to see where that takes us.

I also want to acknowledge the work of the Standing Committee on Community Affairs and the report that the committee has brought down under the chairmanship of Senator Moore, and note the valuable contribution of opposition senators in that report. It has certainly given us some interesting material to consider. I also move the amendment standing in my name on the Notice Paper:

At the end of the motion, add:

but the Senate calls on the Government to make such amendments to the National Rental Affordability Scheme as would:

(a)

provide for incentives to be given on a sliding scale to take account of the different development and land costs in different locations;

(b)

provide for successful applicants to transfer their tax offsets on a once-only basis to project financiers in return for a lower cost of funds, including providing such tax offsets to not for profit entities for this purpose;

(c)

require that State and Territory Governments match the incentives provided by the Commonwealth under the Scheme;

(d)

extend project eligibility criteria to include conversions to affordable housing from existing residential stock, particularly where such projects involve substantial redevelopment to provide for specific needs groups such as aged or disabled accommodation;

(e)

extend the upper level income limits for tenant income eligibility criteria by 30% in each band to ensure greater access for key workers and those seeking to save to buy their first homes;

(f)

provide ‘as of right’ eligibility for the Federal Government’s solar panel rebate and solar hot water rebate schemes; and

(g)

extend the establishment phase criteria that approximately 20% of incentives be available for projects of not less than 20 dwellings, to the entire Scheme.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

The Greens will be supporting the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008. I concur with many of the concerns that were raised by Senator Payne around the way the scheme will actually function once it has been operating for a couple of years. We recognise that, as the government has put it, it is quite an adaptive policy and that it is intended to be changed according to the uptake—the rate at which the community sector or the private sector eventually decide to take on the scheme. We will also be following this with a great deal of interest, as the successive rounds under the NRAS roll out, to assess whether it is actually meeting the demand.

The demand has obviously reached appalling proportions. In 2007 more than one in five households in private rental spent more than 30 per cent of their income on rent and one in 10 low-income households in private rental spent more than half of their income on rent. So the scale of the issues in the private rental market is clearly very grave.

This policy is aimed at easing the undersupply of rental properties; at being deflationary; at increasing supply, thereby benefiting other renters not necessarily residing in NRAS dwellings; and at lowering the proportion of income that low- to moderate-income households spend on rent. The Australian Greens are certainly supportive of those objectives. It was made very clear to us in the course of the hearings of the brief Senate inquiry that we undertook that this scheme will not resolve the issues of housing affordability and homelessness in isolation, that it is really part of a package of measures. So we are looking forward to seeing the substance of the National Affordable Housing Agreement and other measures to ensure that everyone in Australia is adequately and sustainably housed.

I want briefly to recognise the work of the community housing sector, for providing the initial impetus and ideas for the scheme, for the enormous amount of work they have put into pursuing this and for the work that they do in the course of daily operations in providing affordable housing. They have been tireless and selfless advocates for the disadvantaged, and that came through very clearly in the hearings that were held. So the scheme has been designed to encourage their participation. Our understanding is that so far their participation has been fairly solid, certainly in the first round.

Of course, as Senator Payne mentioned, there was a near miss that looked as though it could quite seriously derail the scheme. All we really have is a temporary fix and we cannot wait around for another two years, which is all the time that the Treasurer’s media statement has bought us. We certainly cannot afford to wait for another two years before the issue of the charitable status of community housing organisations seeking to participate in the scheme is resolved. That needs to be resolved, I would suggest, in the first quarter of next year so that the scheme can roll out with a bit of certainty for everybody involved.

Another thing, which goes to the second reading amendment that have been circulated in my name, is that housing sustainability criteria were certainly addressed in the government’s policy but they were not addressed in the regulations. We need to get away from the idea that sustainability in building and building stock, particularly for people on low incomes, needs to increase the costs. In fact, there is a very strong argument to suggest that there are two components of housing affordability in the rental market: one is how much you pay in rent and the other is how much you pay in utility bills, including energy and water, and your access to employment and your access to public transport. These have not really been addressed in the regulations, so the second reading amendment that has been circulated explicitly mention energy and water efficiency and access to public transport as the criteria by which NRAS properties are judged. I do not think that there is anything all that controversial in them. I received a letter from the minister this morning suggesting that those things would be taken into account in further NRAS rounds, but I suggest that that is actually an opportunity missed. The sooner that energy and water efficiency and access to public transport are included as criteria by which these properties are judged, the better. As I said, rental is only one component of affordability. We need to be making sure that people on low incomes are not stranded in energy and water inefficient properties and that access to services and public transport has been taken into account when the properties are established.

A couple of other points were raised during the course of the inquiry. The national housing affordability summit quite strongly put to the government the idea, as future rounds of NRAS roll out, of a panel consisting of:

… a person with high-level experience in business and finance, another with substantial experience in provision of low-rent housing and a third person with expertise in schemes of this kind.

They are suggesting a panel of no more than about three people with expertise in projects such as this to ensure that the large institutional investors come on board and that this scheme actually works on the scale that the government intends. The government has announced that it is committed to reviewing the scheme after two years, but I would suggest that such a panel should be incorporated much sooner than that to make sure that the scheme is functioning as was intended.

The other thing—and I think Senator Payne picked up on this in her second reading amendment—is that 20 per cent of the incentives be available for projects of not less than 20 dwellings, and that that would not be quarantined to the first few rounds but would last for the life of the scheme. I will leave my comments there and foreshadow the Greens second reading amendment.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I seek leave to incorporate my speech and speeches by Senators Sterle, Xenophon and Wortley.

Leave granted.

The incorporated speech read as follows—

I rise to speak on the National Rental Affordability Scheme Bill 2008. This bill gives legislative effect to the Government’s National Rental Affordability Scheme, announced as part of the Government’s $2.2 billion affordable housing package in this years May budget.

The Scheme represents a bold and innovative commitment by the Government to increase the availability of affordable housing around the country and reduce the number of Australians suffering from rental stress.

Indeed the measures contained in this bill, along with several others previously announced make good on the Government pre-election commitment to tackle housing affordability in Australia.

In recent times the Government has also launched the first expressions of interest round for the $512 million Housing Affordability Fund.

It has passed legislation giving effect to the $1.2 billion First Home Saver Account initiative- enabling banks to offer such accounts to aspiring first home buyers. On top of this the Government has also announced a boost to the first home owner’s grant- from $7.000 to $14,000 for existing dwellings and to $21,000 for newly built homes, as part of its $10.4 million economic stimulus package.

Finally it has also began the process of rolling out projects under its Place to Call Home initiative, including I am proud to say in my home state of Tasmania, delivering on its dual commitment to tackle homelessness.

These represent the actions of a Government committed to assisting all Australians find the housing solutions that they need -the actions of a government which has made housing a key element of its broader social and economic policy agenda.

Indeed the Government recognises that finding viable and affordable housing solutions is causing a problem for many Australians.

It also recognises that investing in affordable housing infrastructure will not only ease the burden on people seeking affordable housing options solutions, by increasing the number of affordable houses available, it also makes good economic sense, through stimulating greater infrastructure production and investment.

The bill provides the principle legislation for the establishment of the National Rental Affordability Scheme. The Scheme will be established by regulations. It is desirable for most of the administrative detail of the scheme to be in regulations rather than a bill, to ensure the flexibility to address, if need be, the changing circumstances and conditions in the rental market.

The object of the bill, as stated, is to increase the supply of affordable rental housing and to reduce rentals costs for low to middle income families. The scheme encourages large-scale investment in affordable rental housing by offering an incentive to investors providing of new housing, on the condition that they rent them to low and moderate income families at 20 per cent below the market rates.

The incentive comprises of a commonwealth contribution of $6,000 per house per year, and a state and territory contribution in the form of direct financial support or an in kind contribution to the value of $2,000 per dwelling per year.

The incentive can be in the form of either a refundable tax offset or payment.

The incentive will be provided each year for 10 years and will be indexed in line with the rental component of the Consumer Price Index.

Importantly, the scheme will be reviewed in its early years of implementation to ensure that it is adequately focused on and delivering for those Australians who would otherwise be in rental stress, and to make sure the scheme that it remains simple and its administrative costs are minimal.

As the Minister for Housing, pointed out in her second reading contribution, the scheme represents the first major housing intervention by Government in over a decade. If supported and passed, it will be the first time in a decade that the Australian Government has engaged in the housing market and sought to actively foster the development of affordable housing solutions for low to moderate income families, who have up until this point been faced with a crucial lack of supply.

The Scheme contained in this bill will see the establishment of an additional 50,000 affordable rental property by 2012. Further if the demand for affordable housing remains high the Government is committed to looking at extending the scheme to include a further 50,000 incentives over the following five years.

This I am sure will come as a welcome relief for low income families, pensioners, young people and many workers who are struggling to find affordable housing and keep up with the cost of rent, and who I might add, where offered little assistance by the previous Government.

Statistics proved by the Australian Bureau of Statistics show that nearly 30 per cent of Australian households rent. Further that between 1996 - 2006, the number of people renting in Australia increased.

While families may choose to rent for a variety of reasons, figures show that renters are more likely to be younger and have a lower income.

Indeed, research produced by the National Centre of Social and Economic Modelling (NATSEM) supports this. It found that as of December last year a staggering 1.1 million low to moderate income families where suffering from rental stress right across the country. Nearly 700,000 of these families are currently spending more than 30 per cent of their incomes just on paying rent.

For those 700,000 thousand, that leaves significantly less to budget for other essential household expenses such as groceries, petrol, and childcare and education fees.

On top of this the current undersupply of affordable housing has pushed vacancy rates to a critical low, and with increased demand inevitably comes an increase price that can be charged for rent.

The practical reality of the decline in availability and increase in cost of housing in Australia means that many people are being forced to move, to live in cramped and less than desirable conditions, go without essentials such as food, just to pay the rent.

An unacceptable number are even being forced into homelessness.

Indeed the practical reality associated with increased housing costs in Australia, is that it is having an enormous impact on families, pensioners, young people and lower paid workers. Many are going without food, heating, proper health care because when it comes to the crunch, they are being forced to spread themselves too thin.

The Rudd Government recognises that something needs to be done to ease the burden on Australian households by increasing the availability of affordable housing, and by coming up with adequate housing solutions for all Australians.

It recognised this way back in July last year when the Prime Minister Kevin Rudd, then in opposition put the issue squarely on the agenda by hosting a Housing Affordability Summit to discuss the issue and come up with viable, long term solutions.

Since then the Government has kept to its word by delivering 2.2 billion worth of housing initiatives as part of this years budget, hosting a national forum on homelessness, delivering a green paper on homelessness, Which Way Home? A new approach to homelessness.

The Government’s Budget housing package involves a $2.2 billion investment over the next four years on boosting rental stocks, helping people save for their first home, lowering housing construction costs and building new homes for the homeless.

Alongside the 622.6 million set aside to establish the National Rental Affordability Scheme over the next four years, the Government has already begun the process of rolling out its First Home Saver Housing Affordability Fund and Homelessness initiates.

On October 1 banks around the country began offering First Home Saver Accounts.

Under this initiative the Government is investing around 1.2 billion over four years to help young Australians realise their dream of owning their first home by giving first home savers, with accounts up to $850 dollars for every 5,000 they save each year.

On top of this, as a mentioned earlier in light of the current global economic conditions we have, as part of our Economic Security Strategy, the Government has also doubled the first home owners grant from 7,000 to 14,000 for people who purchase established homes and to 21,000 for people who purchase a newly constructed home.

With ABS figures showing that younger people on lower incomes are most likely to be stuck in the rental market, these incentives are design to support and encourage people to save for their first home.

As part of this years budget the Government also announced a $512 million Housing Affordability fund to assist in the construction of new homes, making more affordable dwellings for those who need them.

This $512 million investment over 5 years is designed to provide a partnership with Governments and others across Australia to bring down infrastructure and holding costs for a new house in a new housing development across the nation.

In my home state of Tasmania where affordable housing is such a critical issue the launch of the Housing Affordability Fund has been met with strong praise from, the then State Minister for Housing, the Hon Lara Giddings.

As I have mentioned previously, the Tasmanian State Government has already established a new Housing Innovations Unit to work with local councils and other stakeholders to investigate areas of Crown Land which may be available to utilise the Housing Affordability Fund, I am confident the State Governments Housing Innovation Unit and the Federal Governments Housing Affordability Fund will together be able to provide Tasmanians with more affordable housing.

Application guidelines for the Affordability Fund were recently announced by Minister Plibersek and the Prime Minster.

The first round expressions of interest in our $512 million Housing Affordability Fund closed on the 15 October, with successful applicants being notified in December. The HAF will assist in the construction costs of new homes, making more affordable dwellings available for those who need them.

Finally, in light of the Governments commitment to provide better, more affordable housing for all Australians, it has committed to investing $100 million over the next four years, and another $50 million in 2012/13 to build 600 new homes for the homeless.

The A Place to Call Home scheme is a down payment on the Rudd Labor Governments commitment to reduce homelessness.

I am pleased to say, one of the first announcements made as part of the Scheme took place in my home state of Tasmania, consisting of a $20 million joint announcement between the Commonwealth and State Governments to help build a new supported accommodation facility for Tasmania’s homeless.

When combined with the measures contained in this bill, all of these measures add up to a substantial commitment by the Government to do all it can to address housing affordability in this country.

Each of the initiatives have specific benefits and have been the subject of praise, and the National Rental Affordability Scheme is no exception.

When the Scheme was first announced, last year, it was welcomed by the Housing Industry Association director, Dr Ron Silberberg, who said that the scheme was and I quote “… a very positive step as it provides incentive for investment..” and that the design of the scheme ensured that investment would be targeted where it was most needed.

Indeed, an increasingly important point to make is that in economically turbulent times, the Scheme will provide a solid incentive and surety for investors to continue to build new affordable housing options.

Further in such circumstances the scheme will help facilitate new and creative partnerships to emerge between with state governments, local councils, not for profit organisations, investors, developers and community houses to adequately address the supply of affordable housing and target it directly to the areas that need it most.

This can only be viewed as a positive thing.

The Senate Select Committee Inquiry into Affordable Housing recently handed down its report. In relation to rental schemes the Committee found, and I quote:

“… That the current supply of rental housing is severely inadequate. Vacancy rates are at record lows. The committee acknowledges the federal governments National Rental Affordability Scheme and its national target of an extra 100,000 affordable housing dwellings with 50, 000 by 2012. The Scheme will provide annual tax incentives over 10 years to investors in affordable rental housing.”

The operation of the Scheme has also been recently considered by the Senate Community Affairs Committee. Indeed the Committee’s report was handed down ahead of schedule.

The Report notes that he National Rental Affordability Scheme attracted strong support from a wide variety of submitters. However that the major reason for the widespread support for the scheme was the significant undersupply of affordable rental housing options for those on low incomes.

Indeed the submission from the Department of Families, Housing, Community Services and Indigenous Affairs, concluded at the unmet demand in the construction of housing is currently running at around 30,000 dwellings per annum.

Further and most importantly the Committee noted in the report that it was left with little doubt that the parts of the housing sector that concern itself with low to moderate income earners considered the passing of this bill as a matter of public urgency.

The report noted that the primary concern regarding the scheme was that participation in the scheme may potentially impact on an organisations charitable status.

The Government has already sort to address this, with the Treasurer announcing on the 12 November an extension of the relevant act so as to circumvent this possible situation occurring.

Indeed the committee anticipated that this amendment would address the primary concerns raised by witnesses in relation to the potential loss of charitable status and would provide the necessary certainty for investment in the scheme to commence.

In response to these concerns the Treasurer also announced yesterday that the Government would introduce a transitional safety net for charities looking at participating in the scheme.

This has left no doubt that charity organisations will be able to participate in the scheme with the confidence that their charitable status will not be jeopardised in anyway.

The Committee concluded that while the Scheme was not likely to address in full the current shortfall of affordable rental housing for low to moderate income earners, and a medium to long term approach to the issue was needed, the scheme would serve the purpose of effectively and efficiently supplementing the supply of affordable housing stocks in Australia. Further that any concerns raised during the course of the inquiry could be adequately addressed in the post- implementation of the scheme and did not warrant the further delay of the introduction of the Scheme.

Therefore the Committee recommended that the Senate pass the bill.

Indeed in light of the plethora of evidence which demonstrates the harsh reality of the current significant undersupply of affordable rental housing in Australia is that an increasing number of Australian families are suffering from housing stress and in extreme cases left with no where to live, the measures contained in this bill are most timely and most welcome.

I commend the bill to the chamber and support its passage.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

The incorporated speech read as follows—

I wish to speak in support of the National Rental Affordability Scheme Bill 2008. This is a landmark bill. It will pave the way forward in addressing many of the problems that currently exist with the capacity of the private rental market to provide affordable rental housing for households on low and moderate incomes.

There would hardly be an adult living in Australia over the past seven years, who would not be aware that housing stress brought on by rapidly declining housing affordability has become a major issue across the country.

The problem of housing stress because of declining affordability really took off in this country in a big way in the years after 2001. The first indication, that this was an increasingly serious problem for large numbers of Australian households attempting to enter the housing market, showed up with the huge surge in house prices after 2001.

In the period 2001 to 2007, figures published by the Housing Industry Association, show that the median cost of a first home more than doubled. To make matters worse over the same period average monthly repayments on a new first home purchase increased by approximately 130 per cent. Not only was there a dramatic rise in the cost of a first home owner house, the cost of repaying the mortgage on the house increased even further.

These rates of increase in the cost of home ownership, particularly for first home buyers, would not have been a problem if average household income had risen by a similar rate. Again, figures published by the Housing Industry Association with the Housing Industry Association/ Commonwealth Bank of Australia (HIA/CBA) Housing Affordability Index show that average household disposable income increased by only approximately 25 per cent in the period 2001 to 2007.

These trends were bound to have serious implications for the housing rental market and that is exactly what has happened.

To illustrate how the decline of housing affordability has affected individual Australian households you only have to look at the effect on household disposable income.

Based on figures published by the Housing Industry Association, in 2001 monthly repayments on a median priced first home would have amounted to approximately 20 per cent of average household disposable income.

By June 2007 monthly repayments on a median price first home amounted to approximately 37 per cent of average household disposable income.

The effect has been that successive groups of first homebuyers have been going back financially as inflation and higher mortgage costs have been taking a greater share of household real disposable income.

This has resulted in many Australian families, due to no fault of their own, being shut out of the benefits of Australia’s economic growth over the past 5-8 years.

It would do well for senators opposite to dwell on this fact and then perhaps it might dawn on their leader mismanaged their time in Government.

Whilst first home buyers particularly those on low and moderate incomes were, in relative terms, the first to feel the full effect of the Howard Government’s neglect of the problem of declining housing affordability, it has not taken long for increased rental costs to become the most pressing issue concerning housing stress in this country.

The latest figures on CPI growth, published by the ABS, show that over the 12 months to March 2008, the housing component of the CPI rose by 6.8 per cent. This was the largest annual increase since the June Quarter 2001. More importantly, the ABS’s September 2008 CPI release notes that this rise in the housing cost component of the CPI was in large part due to rent, up 8.2 per cent.

Clearly, we are seeing a rapid increase in rents brought on, by increasing numbers of people unable to afford or purchase their own home and because rental housing market supply has not kept up with demand, particularly in respect to the low cost end of the market. Large numbers of low and moderate income earners who have been priced out of home ownership are now being hit hard by unaffordable rent.

Today, it is estimated that there are 1.1 million Australian households in housing stress. Put another way, well over 1 in 10 households in this country are in housing stress. This is a situation that no responsible government can ignore

Furthermore almost 700,000 renters are in housing stress because of having to pay rents that are affordable only if renters scrimp and forego on what most other households regard as essential living costs.

Available statistics suggest that approximately one third of all renters are experiencing housing stress. This is the scale of the problem inherited by the Rudd government.

No wonder this was a key issue at the last federal election. No wonder communities across the country have for years been up in arms about the situation regarding housing affordability.

While there has been some debate on why the cost of housing went through the roof after 2001, what was really appalling was the lack of a meaningful response from the Howard government.

Unfortunately the Howard government, rather than grappling with the issue in a constructive way and providing national leadership to deal with what had become a particularly serious national problem, resorted simply to blaming state and territory governments for the problem.

For the federal government at the time to infer that it had no, or very little responsibility to materially assist in responding to seriously declining housing affordability across the nation was a travesty.

We only have to look at one of the major factors that contributed to dramatically rising housing costs after 2001, namely immigration.

In the years immediately prior to 2006/07 Australia experienced a very high increase in the level of net migration, a federal government policy responsibility.

The result was that in the 5 years to 2006/07 there were over 600,000 new permanent arrivals to Australia. In comparison, in the previous 5 years there were only approximately 450,000 new permanent migrant arrivals.

You have to go back to the second half of the 1980s to find a similar period of high migrant intake. I am in no way criticising the high migration policy but the Howard government should have been well and truly aware of the likely consequences for housing demand and costs that would flow from such a policy.

The Howard government’s attitude to simply leave it to the market to fix the problem has come at considerable long term cost to the national economy and to the individual financial and social cost of many hundreds of thousands of Australian families.

This is why housing affordability has been given a very high priority by the Rudd government. After years of neglect by the Howard government this is not a problem that is going to be easily or quickly fixed.

The National Rental Affordability Scheme is a key part of the government’s $2.2 billion affordable housing package. The initiatives contained in this package will increase the supply of affordable rental homes, help people save for their first home, lower housing infrastructure costs and build new homes for homeless Australians.

The Rudd government’s National Rental Affordability Scheme has been structured so as to encourage large scale private investment in rental housing for low and moderate income earners. This is something that for far too long has been sadly lacking in Australia’s private rental market.

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.

Importantly the scheme will offer institutional investors and other eligible bodies annual rental incentives every year for 10 years, provided the conditions of the scheme continue to be met.

The Rudd government’s National Rental Affordability Scheme is a long term scheme for a long term purpose.

The incentives in the scheme are made up of 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.

Incentives will be indexed to the rental component of the consumer price index.

The scheme is deliberately targeted at low and moderate income households.

Incentives are only available to providers on condition that dwellings are rented to low and moderate income households at 20 per cent below the market rate.

The Minister has estimated 1.5 million households will be eligible for tenancies under the scheme, including entry level police officers and teachers, carers, apprentices, cleaners, hospitality staff and childcare workers, for example.

The priorities listed by the Minister are backed by the findings of a study of occupations particularly affected by housing stress. This study was conducted and published by the Australian Housing and Urban Research Institute in 2006.

The study found that the occupations with the highest incidences of housing stress were hospitality workers (27 per cent), sales assistants (19 per cent), cleaners, carers and aides (16 per cent). As well researchers from the Australian Housing and Urban Research Institute found that over 16,000 households with road, rail and transport drivers were experiencing housing affordability problems.

While these occupations are predominately low paid, they perform essential functions in to-day’s society. However there are now many instances where the supply of people required to undertake these important functions is being compromised because of a shortage of affordable housing in required locations.

The Minister in introducing the bill in the other place acknowledged, on behalf of the government, the efforts of the National Housing Affordability Summit group which, over the last four years, has helped develop the idea on which the scheme is based.

In this regard it is important to recognise that the Summit group is a coalition of the Housing Industry Association, the Australian Council of Trade Unions, the Australian Council of Social Services, National Shelter and the Community Housing Federation of Australia.

In short the National Rental Affordability Scheme has been a collaborative effort and has engaged the advice and support of a wide range of stakeholders.

The scheme provides a new opportunity for all levels of government, the business sector and not-for-profit organisations to work together to increase the supply of rental housing for low and moderate income households.

In evidence given to the Senate Standing Committee on Community Affairs at hearings held in Canberra on Thursday 6 November 2008 in reference to the Senate inquiry into the National Rental Affordability Bill 2008 the Chair of the National Affordable Housing Summit, Professor Julian Disney had this to say;

“The first thing to say very strongly is that we greatly welcome this scheme. It is something that we think is a very high priority and a very important initiative, but it will take time to deliver. This is a major long-term change. In our view, many of its greatest benefits will be seen 10 years or more out from now. It is achieving a substantial readjustment in the range of resources and the effectiveness to which they can be put to address problems of low-rent housing.”

Also at the Senate committee hearing were senior executives from the Housing Industry Association.

On the same day, Mr Christopher Lamont, Chief Executive of Policy with the Housing Industry Association stated to the committee:

“HIA welcomes the commitment of the Australian government’s aim to increase the supply of affordable housing. The National Rental Affordability Scheme is one of the most innovative measures we have seen in recent times to encourage institutional investment and increase the supply of affordable rental accommodation for the private rental market”.

These are powerful and ringing endorsements from the Chair of the National Housing Affordability Summit and from the Housing Industry Association.

Mr Lamont from the HIA went on to say:

“It is clear from HIA’s perspective that without an increase in government spending and/or additional incentives for investment in new affordable residential accommodation the incidence of rental stress and homelessness will surely increase.

Insufficient housing supply necessary to meet growing demand, a consequence of Australia’s rapidly expanding migration program, and household formation rates, will put further pressure on existing public, community and private rental housing stock and emphasises the importance of housing supply measures.”

You have to ask yourself if these facts where obvious to Australia’s leading housing industry body, located less than 2 kilometres from the Australian Parliament, why weren’t they obvious to the Howard Government.

The Minister is to be congratulated for bringing forward this scheme so quickly.

I commend the bill to the Senate.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

The incorporated speech read as follows—

I will be supporting both the National Rental Affordability Scheme Bill 2008 and National Rental Affordability Scheme (Consequential Amendments) Bill 2008.

These bills aim to stimulate private investment in the low to medium income rental market. They are intended to help people on lower incomes, or in the early stages of their professional careers, to afford rental accommodation and possibly make the transition to future home ownership.

More specifically, these bills will enable entities participating in the Scheme to claim a refundable tax offset in their annual tax return, or through lodgement of an application by not-for-profit entities. Importantly, the bill has the support of the states and ensures state and territory contributions, either through cash or in-kind.

I am conscious that these bills have been the subject of a Community Affairs Committee report and do not wish to replicate in detail the contributions contained therein. However, I do wish to put on record a number of matters that I believe must be addressed for the viability and affordability of housing development in the future.

Whilst I welcome what is proposed in these measures, the magnitude of the problem must not be underestimated. According to Demographia, a demographic research organisation, Australian urban markets have one of the worst levels of housing affordability compared with nations such as the UK, the US, Canada and Ireland.

A January 2008 survey found that Australian’s pay on average 6.3 times household annual earnings. In contrast, the UK’s average is 5.5 times, Ireland is 4.7 times, the US is 3.6 times and Canada just 3.1.

Acting Deputy President, I believe one of the keys to creating more affordable housing in this country will have to be a wholesale revamping of planning laws.

It is getting too hard, too complex and too costly to build affordable housing in Australia.

A key to affordable housing is to tackle the myriad of red tape and myopic restrictions dealing with planning laws. These restrictions delay much needed projects, creating a shortage of housing which is driving prices up. The Commonwealth can play a key role in dragging local and state governments into the 21st Century on this issue.

And we’re not just facing a shortage of dwellings.

I believe there is also a shortage of vision.

In Paris, in New York, in many of the world’s great cities, families live in the city.

City buildings aren’t just workplaces, they’re also living spaces and planning laws accommodate this.

In my home town of Adelaide at the end of World War II, about 46,000 people lived in the city area that was known as the ‘square mile’.

Life was good.

These families made great use of the parklands all around the CBD, and none of them contributed to urban sprawl.

Fast forward six decades and the number of people living in the City of Adelaide has more than halved to around 22,000 people.

Earlier this year I spoke to the Mayor of Adelaide, Michael Harbison, about Adelaide City Council’s plans to increase the population in town back to WWII levels.

And whilst I endorse this initiative I also ask, why can’t we go further? Why not aim for 100,000 people living in the CBD?

Why does Adelaide have height restrictions on construction that keep buildings low and the cost of buildings high?

More has to be done, because right now we are failing homeowners and potential homeowners and the Great Australian Dream must not be allowed to become an unattainable pipe dream.

With these things in mind, I indicate my support for these two bills.

We are failing homeowners and potential homeowners and tragically the Great Australian Dream is becoming little more than an unattainable pipe dream.

Dana Wortley (SA, Australian Labor Party) Share this | Link to this | Hansard source

The incorporated speech read as follows—

I welcome the opportunity to contribute to the discussion on the National Rental Affordability Scheme Bill.

The Government’s housing initiatives, among which is the National Rental Affordability Scheme we are discussing today, are significant and will have considerable impact on many in our community.

The Rudd Government is delivering on the promises it made prior to, and since the election 12 months ago today.

As we all know, our predecessors squandered that trust and confidence over twelve long years.

Let us not forget, among so many other examples, lack of action on climate change, the no-choice WorkChoices legislation, non-core promises, Tampa, children overboard, the savaging of education and training programs, disinvestment in infrastructure to the detriment of our economy, and the slashing of funds to the States under the Commonwealth-State Housing Agreement.

And it is this last example of the former government’s casual disregard, that so resonates today, as we discuss the National Rental Affordability Scheme Bill.

That phrase ‘working Australians have never been better off’ sounds very hollow, now. Very hollow indeed, and very arrogant too when we consider the plight of so many, as a direct result of the former government’s housing policies.

When speaking earlier in this session about the First Home Saver Accounts, I reflected on the deep importance of housing in our lives. Those remarks were made in the context of home ownership, but are quite universal in a sense when it comes to the hierarchy of need.

I said on that occasion that the enjoyment of shelter from the elements, and of those essential feelings of security and community with family and friends, is part of us – and part of the way we want our children to live, too. Communities of people living in houses share the advantages of stability, inclusion and social cohesion.

The availability of affordable housing impacts at the most basic level on a person’s ability to access work, education or training opportunities.

Regions and cities where jobs are more plentiful generally have high house prices and high rental rates.

Poor housing can obviously affect a person’s health, well-being, and ability to provide for a family.

The Government’s $2.2 billion affordable housing package will assist Australians to share the advantages of stable, secure housing.

To access affordable rental accommodation.

To save for their first home.

To decrease the cost of housing infrastructure.

And to provide new homes for the homeless.

It’s the first of these - affordable rental accommodation - that we’re here to talk about today.

It is truly shocking to find that 1.1 million Australian households are experiencing housing stress, meaning that they pay more than 30 per cent of their gross income on recurring housing costs.

And of these households, nearly two-thirds or 700,000 households are renters – many of whom are low- to middle-income earners.

Many of these people are experiencing housing stress to an extraordinary degree. Not only is there insufficient stock – BIS Shrapnel has estimated that at the end of June this year Australia’s housing stock was about 56,000 homes - less then the number required – but rents in the private sector are growing ever higher.

I believe that rental vacancies in most capital cities are now at two per cent or less. This is unprecedented.

For many, it’s a struggle for people to keep a roof over their families’ heads and food on the table.

Not to mention clothing, power, school and transport expenses, health requirements… we are all well aware of that lengthy list.

The situation may well have been different for people on low- to middle-incomes had the Howard government not slashed funds to the States under the Commonwealth-State Housing Agreement.

But Labor is acting to fill the breach. Labor will keep its compact with the electorate.

Some of the key features of the National Rental Affordability Scheme are as follows:

Institutional investors and other eligible entities will be offered an annual incentive for up to ten years as long as certain conditions continue to be met.

These conditions include the meeting of an income test by a prospective tenant, and that the rent is set at least 20 per cent below the market rate.

The value of the incentive will initially be $6,000 per dwelling annually, and the incentive may be exemption of capital gains from tax; a tax offset or payment to the investor, and/or the non-assessability for tax purposes of contributions to the investor by the relevant State or Territory.

Where the investor is liable to pay tax, the tax offset would apply.

If the investor is not liable to pay tax - an example would be a not-for-profit housing body - a Commonwealth payment would apply.

State or Territory governments will also contribute an annual incentive by way of financial or in-kind support, the value of which will be $2,000 per dwelling annually for up to ten years.

Both Commonwealth and State or Territory contributions will be indexed to the rental component of the CPI.

Also involved will be the not-for-profit charitable sector, which knows at first hand how difficult circumstances are for many in our community.

And significantly, this legislation will operate retrospectively, with eligibility to be acknowledged from as early as 1 July 2008.

The National Rental Affordability Scheme is an innovative plan which will assist those in need – low- to middle-income young people and families, those saving for a deposit for their own home (many via the First Home Savers Account initiative), age and disability pensioners, those on public housing waiting lists and, so importantly, those 100,000 who have no home at all.

It represents an opportunity for truly co-operative collaboration between investors, developers, all tiers of government, not-for-profit organisations and others in the welfare sector.

Significantly, this bill provides for the making of the Scheme by regulations, which will confer the necessary flexibility to manage a number of variables including the mechanism for the determination of market rent, eligibility criteria, tenancy tenure, and acquittal and other reporting requirements.

And of course, review provisions will apply so that the measures I’ve outlined can be evaluated. We intend to ensure that resources are being consistently targeted towards those in our community who are experiencing housing stress.

The Rudd Government has moved quickly and decisively to address housing problems, including rental affordability.

The Rudd Government’s reform program follows many years of neglect and disinterest by our predecessors.

The principles on which our package of interconnected, coherent reforms is based are fourfold:

• security for working families,
• adhering to our commitments,
• investment for the future and
• fiscal responsibility.

The bill we discuss today goes directly to these principles.

It looks towards security for working families – not only those who will find reasonably-priced, secure rental accommodation through the scheme, but also those many thousands of Australians who will be directly employed in the building sector.

It will give security through work to those many thousands more who will be indirectly employed as a result, providing materials, other goods, and services to those building, equipping, residing and provisioning those new dwellings.

Building houses stimulates the economy in so many ways, and that’s exactly what is required in the present global climate.

It adheres to the commitments made in consultation over many months with an enormous array of stakeholders, from the Housing Industry Association, the ACTU, ACOSS, National Shelter and the Community Housing Federation of Australia to representatives of welfare and charity organisations and numerous other groups and individuals.

It represents, clearly, investment for the future.

For the future Labor envisages in its every grassroots meeting, its every industry consultation, its every policy initiative, its every new piece of legislation.

It is economically responsible, and has been formulated so as to ensure that all Australians have access to basic accommodation regardless of income and circumstance.

This is the least we can do for our fellow Australians.

As I’ve said before in this place, the Rudd Labor Government is determined to act on this country’s needs now and for the future, and the measures outlined in the bill truly represent that determination.

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

There is widespread support for and commonality of enthusiasm about moving forward with the National Rental Affordability Scheme Bill 2008 and the related bill. I will be reporting, in the same way that many of the previous speakers in this debate have done, about the horror of the situation in our country at the moment around the need for affordable housing—and I am using that word quite deliberately; it is a horror. The figures are before us. We have heard about it in a range of committees—certainly in the inquiry of the Senate Select Committee on Housing Affordability in Australia earlier this year. Whilst it was not a particular point in the terms of reference of that inquiry, the issue of rental housing in our country—that is, the growing need for affordable rental housing and the need for a response—came up over and over in public evidence and submissions to the inquiry in every state of Australia.

And it was not just that inquiry. I refer also to the Senate committee inquiry on poverty that was held several years ago, from which we have a longstanding report in this place. A full chapter in the report on poverty in our community was dedicated to the issue of available rental housing across Australia. Horrific stories are on record. I am not going to repeat them because, when we have figures that talk about 1.1 million low- and moderate-income households in housing stress in December 2007 and nearly 7,000 families now spending more than 30 per cent of their limited incomes just to pay rent, we are not talking about mortgages; we are talking about people needing to pay rent for shelter. Behind each of those figures we have stories on record that indicate the ongoing impact on our families and communities, and what consistently has been brought out is that so many other social problems with which our community is struggling can be traced back to the issue of appropriate housing.

The bill we have before us is not automatically going to solve all of those issues. It does not purport to do so—in fact, the government has consistently been saying that there needs to be a wide-ranging response to the issue of effective housing within our community—but it is one step towards a response. Through the very short inquiry of the Standing Committee on Community Affairs into the National Rental Affordability Scheme earlier this month, as referred to by Senator Ludlam, we heard a message to everyone that something needs to be done. It had reached the point of urgency and, more important than the need for urgency, there was a degree of hope and enthusiasm that something could be achieved.

The proposal before us has, I think, a number of elements to it, but the one that is most important for me is that this is a cooperative response to an issue. We have a response that includes two levels of government—state and federal—signing up to a long-term process and picking up the essential element, which I believe is the community housing sector. Senator Ludlam has already pointed out the role that this sector has played in our community over many years. This is something that we have heard about through a number of inquiries. What the community housing sector has been effectively doing for many years is operating in a professional, inclusive and community focused way in the area of providing housing. It is now part of a cooperative response looking at how we can move forward in this area. I think that is one small step to ensuring that we will have a structured, forward-thinking process around a community problem which has been bedevilling our community for many years.

The Senate community affairs committee heard from a number of people who have been feeding their information into issues about housing for many years. I want to stress the sense of urgency that came through in the evidence. In our report we quoted from Mr Adam Farrar from the New South Wales Federation of Housing Associations, who said:

The introduction of NRAS responds to an absolutely critical need … we still have a significant undersupply problem, and so supply initiatives are very important, and that is one of the things that is so welcome about NRAS.

He went on to say—and once again I stress the urgency of the process:

I do want to stress that it is absolutely essential that the process that has begun isn’t delayed. Our members have been very active in taking up the opportunity, but that does mean entering into agreements, going out and identifying opportunities, to acquire land, to acquire new properties to bring into the marketplace, and they are very concerned that those opportunities will be lost if there is any greater delay.

For a number of years now we have been focusing on leading up to a solution. We have had the National Housing Affordability Summit. When this government were in the electoral process, just over 12 months ago, one of the key planks of our election promises was that we would move forward not just in the area of providing permanent housing but also in looking at the very real need in the area of rental housing. So the National Rental Affordability Scheme fulfils one of our election promises. Perhaps ‘fulfil’ is the wrong verb because fulfilling in itself is not what this particular piece of legislation will achieve. It is a step towards a response to the need.

We have had a number of papers out in the community and a large-scale consultation process—which has been not just going out and telling people what is going to occur but, more importantly, engaging those people in suggesting what responses should be taken. Core elements of the policy that is before us have come through that consultation. They have not been determined in isolation. They have not been imposed. They are responsive to the needs that were identified and to the clear demand that the response not be reliant on just one sector taking up their responsibilities. This is significant enough and widespread enough—and it is certainly across all elements of Australian states—that it must engage at least state and federal governments and the community housing organisations but must also, over the longer term, draw more and more people into looking at the solution.

As we have already heard today, one of the key sticking points—and the element that took up the most discussion during the committee’s inquiry—was the issue of charitable status. It is genuinely regrettable that it took so long to have a response come forward and that that took up so much of the important time for discussion. Nonetheless, we do have an immediate response in that this legislation provides first-round certainty for people as they engage in the process. But it also highlights the particular difficulties in our community around issues of investment and the status of charitable organisations. That has been for many years a genuine obstacle to these incredibly knowledgeable, experienced and intellectually strong organisations taking part in elements around economic development—that is, because of the concerns about exactly how they will be handled under the taxation processes. That was highlighted very clearly in the submissions that came before our committee. The response that we have had from the Treasurer indicates that the issue has been acknowledged and will, I think, be part of the ongoing process of looking at the whole area of taxation in our community. In fact, that is where it should be. It should not be tacked on the outside or be some sort of side issue; it should be a core element of how we as a community look at how people operate within our taxation system.

Most important whenever we are talking about effective social policy is the strength of the review process. Throughout the debate that has been going on for the last few months about how this scheme will operate there has been a strong, consistent commitment from the government to an independent review of how the whole program is working over a two-year process. That will allow a number of stages of the scheme to be implemented. It will give people an opportunity to see exactly how it is operating. It will also give the independent reviewers the opportunity to see the impact of this legislation across our whole community. There is a genuine belief that there is not a one-size-fits-all model that can be imposed in any part of this community process.

We must have an acknowledgement that there are serious issues of public housing and a shortage of available housing everywhere in Australia. In fact, one thing we looked at during the Senate housing committee hearings and in the recent discussions around this process was whether there is a place anywhere in this country where there is a surplus of housing. So far we have not identified anywhere. Across all parts of my state, Queensland—and it has been exacerbated recently with the storm damage that has occurred—there continue to be immediate shortages. Other senators in this debate have pointed out the difference between the obvious need to provide effective housing and what is available at this moment. There needs to be a flexible response. I note Senator Ludlam earlier spoke of an ‘adaptive’ process. I quite like that adjective. I had not heard it before. I might start using it quite regularly. We must not be too tightly constrained into any particular process; we must engage people across the industry. I know that the various construction and investment groups and the retail housing organisations have all been part of the debate around where we will be able to go.

We also need to engage the people within the state and federal governments with what is going on and also engage with the community. Down the track another player that will be increasingly engaged in our responses across the board in the area of housing will be the massive local government network. Whilst they do not have an immediate role in this piece of legislation, I think it would be inappropriate to talk about any issue to do with housing in this country unless we ensured that we had people from the three levels of government being engaged and active in the process to see exactly where they could fit it.

Once again, if we continue to segment, divide and marginalise the people who are involved, we will get back to a competitive process, which does not meet the needs that have been clearly pointed out through discussions at the summit and through discussions with the various people who gave evidence to our committee, who consistently looked at some form of hope that this piece of legislation was going to provide, not just the subsidy. The investment of $623 million over the first four years to create 50,000 affordable rental properties is a significant investment but, considering the issues we are facing and the demand that we have, it is very clear that it is not going to meet the full demand.

Given that this is going to be the first step in a staged process, it was particularly encouraging to hear the real commitment and sense of hope from the people who came before our committee. Professor Julian Disney, who has been active in this debate not just over the last two or three years but over many years, spoke on the issues of homelessness and the difficulty in translating between being able to rent or being able to buy. And there is also real acknowledgement that for a large number of our community long-term, lifelong rental is a reality. It is something that needs to be acknowledged and not seen as a lesser, or a somehow punitive or negative aspect of housing. One of the things that came forward in our committee on housing affordability earlier this year was evidence from a number of people who felt that over many years in this country there has been almost a labelling of people who are reliant on rental housing. That has led to a sense of them not being part of the whole process of living in our Australian community. One thing that the National Rental Affordability Scheme brings forward is an acknowledgement that there are many people in our community who will be renting. It is a genuine process of obtaining real shelter and it is something that they have a right to—effective, affordable and available housing in their own communities.

I take the point that Senator Payne raised earlier in the debate, which is that there needs to be consistent planning of where these projects are to be activated and that, once again, we are not in any sense creating marginalised areas where people are forced to live. This is a process of engagement and of effective community building, and we should be very wary of any concerns or fears that these developments would be available only in fringe areas. Again, that would need to be part of any ongoing review of the process.

We know that there is a real expectation in the community that the government will move forward with the promises made during the election about addressing the issues of housing in this country. We know that there is an expectation among the community that their voices will be heard. We see the National Rental Affordability Scheme Bill as a step towards a response to the need that has been clearly put before us over a long period. We know that there are issues around how the scheme will be implemented that can only be addressed and reviewed as the scheme is put into place. That is why it is so important that the review is constantly in front of us as we move forward.

We cannot delay. I think there is a real opportunity in the process because, as I said, when you see the commitment that has been expressed by people from all levels—people within governments, people within the housing community and people within the social research area, who have been working on the issues in our community for many years—there is a challenge to which the government must respond. We must now implement the scheme, ensure that people’s expectations are balanced as we work through it and ensure that we genuinely respond to the voices that have said this is an issue we cannot ignore. I think that the various issues that have been brought forward, both in the committee reporting stage and in the various discussions that have been going on, have worth. There is a real need for those issues to be considered when we are moving forward with the legislation.

I am reminded, when I think about the people who came before our committee, that it is time for action. We have talked about this for a long time and while we were sitting in our committee hearings we knew that across the community there were numerous families struggling with how they were going to find affordable rental accommodation for themselves for the next period of time. It is always a particularly difficult time as we lead up to Christmas, as any of the social welfare agencies will tell you.

One of the key issues that we hear about is effective accommodation. The statistics show us that rental prices have been soaring in every capital city and in most regional places as well. This scheme is not restricted to various locations. There is a real opportunity for this scheme to be operational in many regional centres as well as in major centres. I think that it is something that we have a responsibility to work with into the future.

As we move forward the other important thing must be to continue the engagement with the people who are the most affected by the process. We have set up various consultative bodies to ensure that that will happen. Certainly, having the scheme involve government and the community sector is a positive point and an opportunity for us to work together. But as we move forward it is most important that, through this scheme, we also encourage those people who have ideas and who are involved in the process to continue to contribute to our social policy.

As Julian Disney said during our inquiry, and as a number of people have said in the debate so far, ‘This is a step towards achieving a solution.’ How effectively we succeed will rely on how open we are to working with people who are prepared to continue to give advice, to give information and to ensure that the issue of homelessness does not fall off the agenda—that it is not seen as a one-off step but acknowledged as one step towards achieving good public policy in an area that has been suffering for way too long.

David Feeney (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the National Rental Affordability Scheme Bill 2008, a bill designed to assist some of the millions of Australians who, whether out of choice or necessity, depend on the private rental housing market for affordable housing. The purpose of this bill is to establish the National Rental Affordability Scheme, to encourage private investment in rental housing by offering an incentive to participants. It aims to increase the supply of affordable rental dwellings and reduce rental costs for low- and moderate-income households. The scheme will offer 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 bill provides for a refundable tax offset or payment to the value of $6,000 per dwelling per year, provided there is also a state or territory contribution in the form of direct financial support or an in-kind contribution to the value of $2,000 per dwelling per year. 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. The scheme is estimated to cost $622.6 million over the coming four years.

The modelling that underlies the bill calculates that the provision of these incentives will lead to the construction of approximately 50,000 additional new rental units by 2012. Since it is a condition of participation in the scheme that these units must be rented to people on below average earnings and at a rent below current market levels, the scheme is targeted at those who need it most. The construction of these 50,000 units will serve to reduce pressure in the rental market and help restrain the rise in rents. The scheme will thus make a contribution to housing affordability across the board and indeed, hopefully, across the nation.

This bill will be widely welcomed by the Australian community, particularly by middle- and low-income people such as those I represent in Victoria. It is part of the Rudd government’s commitment, foreshadowed during last year’s election campaign, to ensuring that the benefits of the long period of economic growth and prosperity that Australia enjoyed following the economic reforms of the Hawke-Keating governments are now equitably shared by all Australians. It may be that, as a result of the global financial crisis—GFC, as it now seems to be known to us all—triggered by policy failures in the United States, those years of growth may be coming to an end. I certainly hope not and know that the Prime Minister and the Treasurer are doing everything they can to ensure that Australia does not go into a phase of negative growth. They will be helped by the burst of confidence that the election of Barack Obama as President of the United States of America will cause and also by the massive stimulus package of $850 billion, the largest in history, announced recently by the Chinese government.

Australia’s efforts to avoid recession will not, however, be helped by the obstructionism of those senators opposite who appear determined to block key elements of the Rudd government’s budget, thus making it more difficult to keep the budget in surplus and the growth rate of our nation positive. We know what the Australian people think of the negativity and obstructionism of the opposition. The recent Newspoll showed that Mr Turnbull was the preferred Prime Minister by a mere 22 per cent of voters, down from 25 per cent only some two weeks previously. Mr Turnbull’s approval rating is now nearly as bad as that of Dr Nelson at the time that the Liberals dropped him as their leader. That has been the reward for two months of irrelevance and obstructionism by Mr Turnbull. All I can say is: keep up the good work! It is left to us on this side of the parliament to do the hard work necessary to ensure Australia’s economic future. That will no doubt involve some difficult decisions on spending and some difficult decisions on priorities. But this government, true to the traditions of Labor, will make sure that the burden of these uncertain times will not be allowed to fall entirely upon those least able to bear it. We will do everything in our power to protect low-income Australians and we will continue to ensure that our policies reinforce and build social solidarity and cohesiveness rather than undermine it. That is why this bill is so important.

As population and employment have grown, the provision of affordable rental housing has not kept up. With house prices in the capital cities booming, investment has gone into booming inner city apartment towers, often for those with better incomes than the average, and new homes in the suburbs for private buyers. As a consequence, there has not been sufficient investment in rental housing for those on average or below average incomes, and that is particularly acute in regional areas. The phenomenon I have just described is quite understandable—investments go where the profits are likely to be the greatest—but when this kind of phenomenon occurs it is the duty of government to intervene to ensure that everyone shares in the benefits of prosperity. Market failure is not a figment of our imagination.

The failure of the Howard government to see the benefits of economic growth flow to all Australians, not just to those who are already well off, means that large numbers of people are struggling to find and keep affordable housing. The Howard government coasted on the back of economic growth, assuming that the market could take care of all problems and that everything would be fine as long as the people they represented were doing well. So, while housing prices in Sydney, Melbourne and Perth, to name just three, have doubled and doubled again, making millionaires out of some of the people who inhabited them, in the rest of Australia rents have risen sharply and the availability of rental housing has fallen, and fallen dramatically.

Between 2000 and 2005 the average price of a home in Australia’s capital cities increased by an extraordinary 170 per cent. Not surprisingly, many young families, who in the past would have been buying a new home, are now unable to do so and they are staying in the rental market. We can see the increasing strain on the budgets of middle- and lower income Australians caused by rising housing costs when we look at the Housing Industry Association’s housing affordability index. In December 2001 the median house price was $210,100 and average monthly repayment was $1,049, which meant that the repayment-to-income index was at 14.6 per cent. Between 2001 and 2007, under the stewardship of the Howard government, there was a dramatic fall in housing affordability. By March this year the median house price was $425,600 and the average monthly repayment was $2,799. The repayment-to-income index had grown to 29.1 per cent. The index had thus more than doubled since 2001. The effect of this has been to push large numbers of young, hopeful homebuyers out of the market, forcing them to pay rent. That is why Mr Harley Dale, the Chief Economist of the Housing Industry Association, warned the Howard government in 2007:

This situation for new home building will in turn sustain the current problems of struggling aspiring home buyers and tightening rental markets.

The Howard government ignored that warning, as it ignored so many other warnings on so many other issues. Mr Dale was of course quite right: the high interest rates and increasing unaffordability of housing under the Howard government has indeed flowed through to the rental market. Between 1995 and 2005 the total number of rental households increased from 1.5 million in 1995 to an incredible 2.1 million. This increased demand has kept rental vacancy rates very low and has pushed up rents across all of the capital cities and in many regional centres. In the June quarter of 2008, rents across Australia increased by 2.2 per cent in the quarter, the largest quarterly rise since 1989. The increase for the whole of 2008 is expected to be 7.7 per cent. This is, of course, higher than the rate of growth of average weekly earnings and higher than the rate of inflation. Rents overall are now, on average, 60 per cent higher than they were in 1990. This is a very significant problem for working families living on average or below average incomes, trying to raise a family, to juggle work and family and to send kids to school, all the while paying a quarter or even a third of their income on rent.

The Rudd government understands this and the previous government did not. That is why Kevin Rudd announced during the election campaign that he would make housing affordability, particularly for renters, a key priority for a new Labor government. That is also why Kevin Rudd, together with Wayne Swan and Tanya Plibersek, held a housing affordability summit before the election, meeting with economists, developers and industry representatives to hear ideas and develop real solutions.

This year, a study by the National Centre for Social and Economic Modelling found that rental stress was affecting an increasing proportion of Australians. The definition of rental stress is when households have to spend more than 30 per cent of their income on rent. This study found that nearly 300,000 Australian households, more than 10 per cent of the total number of households in rental accommodation, are already suffering from rental stress. That means that about 750,000 people are living in households affected by rental stress. The centre estimates that this number will continue to increase sharply unless there is firm leadership from government to address this very real shortage of rental housing.

Rental stress contributes to a number of other very real and damaging social problems: substance abuse, child neglect and abuse, poor school retention rates, homelessness and rising crime. The notion that these problems are interconnected is of course not new. They all impose costs, social and financial, on the community as a whole. It is the responsibility of government to see that this scenario is prevented. I do not think that the Howard government, with its focus on growth as the solution to all problems and its faith that the market will always provide what the community needs, understood this. The Rudd government does and it understands the need for a constructive role for government in tackling housing problems and the other very real problems that Australia faces.

It may be that, as economic growth slows and house prices begin to come down, some of this pressure will begin to moderate. But the backlog of demand for rental housing is so high and the rate of construction of new rental units for middle- and low-income earners so slow that it will take a long time for the hundreds of thousands of Australians currently suffering from rental stress to gain any tangible benefit. So action by the federal government to help stimulate growth in the supply of rental housing remains timely and necessary.

This bill does not try to impose a government solution on the housing industry. We do not believe it is the role of the state to provide housing for the entire population. We want to see the private housing industry build the houses and flats that people want. But we acknowledge that at present the incentives provided by the market are not producing enough investment in rental housing for average income and low-income working families. That is a fact and that is why this bill is so important.

This bill is part of the government’s overall housing strategy, which includes $2.2 billion worth of housing commitments made in this year’s budget. Much of the pressure on the rental housing market has been caused by young Australians being pushed out of home ownership by the 10 rises in interest rates under the previous government. Hundreds of thousands of young Australian families who would like to start saving for and buying their own homes have not been able to do so because of skyrocketing house prices and high interest rates.

One of the proposals that came out of the housing affordability summit was the Housing Affordability Fund. The fund tackles two major impediments to housing supply: costs that result from planning delays and the impact of infrastructure charges. The fund will give local councils the chance to improve housing affordability in their communities. The fund has been welcomed by local government and the housing industry. Mr Wilhelm Harnisch, the Chief Executive Officer of Master Builders Australia, said:

The HAF is a welcome return of the Commonwealth into this vital part of the Australian social fabric and the economy. There has been a decade of policy neglect in addressing the supply side barriers and the HAF is supported by industry as a first and vital step in redressing this area of policy neglect.

It is pretty extraordinary that a leader of the private housing industry, not known in the past for its enthusiasm for the Labor Party, should make such a scathing assessment of the record of the Howard government. Let me repeat: he summed up the record of those opposite as ‘a decade of policy neglect’. That is the verdict of someone who has worked intimately in this area of public policy and this area of the market.

The Rudd government has a mandate to tackle the problem of housing affordability, and since last November the government has taken that mandate seriously and has delivered on its commitments. I am very proud to be part of a government that is delivering on its commitments; a government that is keeping its promises. I remind those opposite that the Howard government did not even have a housing minister. I do not know whose responsibility this issue even was under the previous government, but I suspect the answer is that it was none of them. Now, at least, the opposition has a shadow minister for housing. That person, I discover, is Mr Scott Morrison, the member for Cook, who was only elected to parliament last November. I am not, of course, being critical of him—I am, after all, a newbie myself—but it does show what little priority has been given to this area of policy and to the issue of solving the housing crisis left to the nation as a result of a decade of policy neglect. I commend the Minister for Housing for bringing in this bill. I commend the minister in her fulfilment of our election commitments. This is a government which keeps its promises, and that is why the Australian public is showing such confidence in this government and its stewardship of the economy. I commend the bill to the Senate.

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

I am pleased to contribute to this debate on the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008 and to reinforce the message that is being delivered by, I am sure, all sides of this chamber: our concern at the affordability of housing. What is important is not, however, the extent and the sincerity of our concern. What is important is the extent to which we are able, through legislation, to actually make a difference to the issue of housing affordability and housing accessibility in this country. That is the crucial test of any government on the question of housing affordability.

There is no doubt that Australia faces a serious challenge at the present time in that housing affordability is a very real problem for a large proportion of the Australian population. The solutions to that problem are not simple, however, and I think it is worth understanding a little bit about the background to that before we pass this legislation. Senator Feeney made the comment that there had been a dramatic fall in housing affordability during the later years of the previous government. He laid that problem at the foot of the previous government, suggesting that we had neglected housing policy during that time. I want to put a few facts on the table to make Senator Feeney, and others who might buy that line, think again. Firstly, during the whole of the life of the Howard government, real wages were rising in Australia. Those real wages were rising after taking into account increases in the cost of mortgages. Whilst it was getting more difficult, in many respects, to obtain affordable housing, this was not due to the fact that living standards were falling. On the contrary, living standards were rising notwithstanding the increasing cost—as a result of increasing interest rates—of mortgages.

The problem with housing affordability in Australia in the last few years has stemmed not so much from increasing demand as from the failure to deliver increased supply to keep up with that demand. If one looks at the structure of Australian government, it is obvious that the federal government does not have a great capacity to increase the supply of available land. There are some areas where opportunities exist for Australian federal governments to increase land supply, but that is very much on the margin of this problem. At the core of this problem of housing affordability in the last few years have been policies by state and territory governments to restrict the release of new land into the marketplace. As a result of such policies, that land which was released became much more expensive. Whilst returns to state and territory government coffers increased—which was no doubt part of the reason for these policies—housing affordability became an increasing problem for many people. This emphasises the fact that these problems cannot be solved at any one level of government. They must be solved at several levels of government—not only at state and territory and federal government level, but even at local government level.

In that respect I might say that one of the disappointing elements of this legislation is that we have a contribution being made by state and territory governments to this scheme which, on the face of it, is much smaller than the contribution being made by the federal government—or, if you like, by the federal taxpayer. I think it is fair to say that, in many respects, state and territory governments are being let off lightly in this arrangement. For each dwelling that becomes eligible for a subsidy under this scheme—a subsidy of $6,000 from the federal government—there is a matching subsidy required of state and territory governments of only $2,000, and even that can be delivered partly in kind rather than in cash. When one bears in mind the benefits that flow to state and territory governments in these circumstances in the areas of stamp duty and other benefits, one might say that the state and territory governments are not really doing the heavy lifting with this scheme. I may come back to that theme a little later on.

We, on this side of the chamber, do not begrudge an initiative of this kind in the attempt to deliver more affordable housing to those people who are in the rental market. It must be a very important focus of government policy in the next few years. We do, however, question the government as to whether or not it has thought through all the elements of this scheme, and whether it will, in fact, deliver major changes in the levels of affordability of housing in this country. Let us even take the extent of the government’s ambition in this area and consider how much that actually will change the landscape with respect to affordable rental housing. Let us bear in mind that next financial year it is expected that there will be a shortfall between demand and supply—of both rental housing and housing for purchase—in Australia of something like 200,000 units. This scheme, on the government’s own projections, will provide only about 10,000 new dwellings into the marketplace to address that problem, leading to an attack on the problem which could, at the best estimate of the government, only reduce the shortfall in the demand for housing by something like five per cent. So, even on the government’s own estimates, this is not going to solve the problem of unaffordable rental housing in this country.

There are other elements of this scheme which I think deserve to be carefully considered by the government and by all senators. We are confronted with a scheme where, as I mentioned, the federal government provides a subsidy of $6,000 to landlords who build new accommodation, which is contributed to by state and territory governments with a further $2,000 subsidy, so we have a subsidy of $8,000 per dwelling per year for the 10 years of the operation of the scheme. On paper, that is a very good contribution towards more affordable housing. But let us consider that the average rent in Australia at the moment is something in the order of $20,000 a year. Therefore, for a landlord to deliver a subsidy to the tenant of 20 per cent off the average rent or the rent payable for that property would, on average, contribute a benefit to the tenant of $4,000 per year. We need to ask ourselves: are we getting the best value for money for the Australian taxpayer by handing over to a landlord a flat benefit of $8,000 per year to deliver to the tenant an average benefit of only $4,000 a year? Some people might say: is it not better to deliver, or is there some way of delivering, that $8,000 benefit directly to the tenant so that there is greater capacity on their part to afford housing in a tight market?

The government’s response to that problem has been that we need to make a much larger subsidy to the landlord than he or she delivers to the tenant in order to encourage the building of new housing in the marketplace. That may or may not be true, but it depends very largely on whether or not the economics of this proposition actually work. The Senate Standing Committee on Community Affairs, which conducted the inquiry into this legislation, heard evidence that bodies such as the residential property council have highlighted that certain minimum passing yields would need to be achieved before it would be an attractive proposition for landlords to build and then take advantage of the subsidy available under this scheme and that the passing yields projected by the architects of NRAS, the National Rental Affordability Scheme, were actually lower than the minimum that the residential property council speculated would need to be provided.

The committee did hear that there was substantial interest in the scheme on the part of landlords, and we welcome that fact. It is appropriate for builders and others to be interested in making the scheme work and participating in it. But, if those figures from the residential property council, representing property owners in this country, are indeed accurate, there may be a significant problem with buying into this scheme. It is already clear from the evidence presented to the committee that the government is expecting a very small buy-in—directly, at least—by not-for-profit organisations. I think the figures suggested to the committee were that about half of the subsidies provided in the first year of the scheme’s operation would be coming from the not-for-profit sector and it was anticipated that that would fall over the life of the scheme. So it is important that the propositions on which this scheme is based are financially viable and that they do stack up in the eyes of the private sector. It is not at all clear at this point whether they do or they do not.

What is also concerning is that we do not have any evidence available to us about the broader impact on the housing market of this scheme. There is no economic modelling on the operation of the scheme, and that does give rise to some concerns. For example, if we have a particular community where there is a relatively modest shortfall of supply over demand, and if the scheme is used to deliver a number of dwellings which more or less meet that shortfall and you then find existing landlords in the marketplace whose capacity to rent their properties is compromised because the next-door property receives a subsidy of $8,000 a year which their property does not, do we run the risk that some existing operators may choose to pull out of the marketplace because they are not eligible for a subsidy? Perhaps that is not a widespread problem, but, frankly, no-one can be sure about that because there has been no modelling done on the operation of the scheme.

What difference it makes in particular communities as to how the scheme is delivered will depend a lot, of course, on where the scheme is actually rolled out—where projects are approved. Senator Payne made reference in her remarks to the way in which the scheme will be delivered as being a very important part of whether it works or it does not. I would prefer to have seen some indication of how it would affect existing operators. That was not available to the committee. We are also aware that those with existing accommodation cannot move their accommodation into the scheme—say, by conversions of certain sorts, which can only occur in certain circumstances—and that is also a matter of concern.

We are also concerned with the fact that the subsidy is a flat subsidy. It is $8,000 for everybody. If you are building in a particular marketplace where the rental is low, then the subsidy you have to deliver to your tenant in order to attract the government subsidy is relatively small, but the size of your benefit from the government remains the same. That might have the effect—unless the government is able to prevent that occurring by the way in which it rolls out the scheme—that in some parts of Australia we see a rush to take advantage of this arrangement where rents are relatively low but in places where housing stress is most severe, like Sydney and Melbourne, we do not see a great take-up because the extent of the subsidy that the landlord needs to deliver is about equal to the extent of the subsidy that he or she receives from the government. In those circumstances, why would a landlord want to be involved unless they had some altruistic motive?

Given that we have seen evidence that the not-for-profit sector is not anticipated to be the major player in this new scheme, particularly with the uncertainty surrounding the charitable status of not-for-profit organisations in the long term, it is important to understand what motivates players in the private sector and consider whether they will think it is attractive to invest a lot of money in a marketplace—which is under stress but in which rents are high—when they may not get a good return vis-a-vis the subsidy on their investment. Again, this is not a condemnation of the scheme; it is simply pointing out a possible weakness in it. Frankly, coalition senators would rather see a sliding scale where the level of subsidy is pitched to meet the extent of the need in a particular marketplace. I think it is inappropriate to consider that a property in, say, Mount Gambier should attract the same level of subsidy as one in inner Sydney.

I mentioned previously that I thought state and territory governments had been let off lightly under this arrangement. It is their constitutional responsibility to deliver for the housing needs of their communities, particularly when it comes to state housing schemes for those unable to afford to rent in the marketplace. They have a primary responsibility to do so, and under this scheme—on paper at least—they are lifting about a quarter of the total burden of delivering the scheme. It may be that in some cases they will do more than they are required and will provide more than the $2,000 per annum per dwelling subsidy, but I would not count on many state and territory governments being overly generous in that respect. So that is a matter of concern.

I also want to put on record a concern that the coalition senators identified as to the way in which the scheme will actually be delivered. It concerns a more technical detail but it is one that is of considerable concern to us. We are told that the legislation contains no criminal penalties. One might say that is appropriate for a scheme delivering housing benefits. But the concern that has arisen on our part is that it is up to the landlord to identify whether a tenant is eligible for the subsidy. The tenant does not go through the government to establish that fact. The landlord needs to be satisfied that the tenant falls within the particular income brackets that qualify for the benefit. If it so happens that the tenant lies to the landlord about that, it is extremely unclear as to what the consequences of that particular action might be. In fact, it appears to us that there are no circumstances in which the tenant will be prosecuted for this. The landlord may end up losing the subsidy retrospectively—and this could amount to tens of thousands of dollars over a period of time—if it transpires that the tenant was not eligible for the subsidy. But, because there is no penalty applying to the tenant for providing false information to the landlord, there is arguably no comeback against that tenant; there is possibly civil action but certainly nothing criminal.

I ask members of the government to consider whether that is a weakness in the scheme which needs to be addressed. That is quite apart from the question, if there are cases that come to the attention of the media of people rorting a scheme designed to provide accommodation to people on low incomes, of what kind of impact that might have on the way in which the public views a scheme of this kind.

Other senators have touched on the question of the status of not-for-profit organisations and whether they can continue to have charitable status and meet the NRAS criteria. I welcome the government’s decision to clarify this issue for the next two years, but I point out that this is a 10-year scheme, not a two-year scheme, and those in the not-for-profit sector participating in the scheme need to be satisfied that they can make a 10-year commitment to these things and not put their charitable status at risk.

I cannot understand why this issue was not cleared up long ago and why the government did not rush to indicate that there is no question or doubt about this and that it will provide that the not-for-profit organisations who want to be involved do not risk their charitable status under the tax legislation. But the fact that a two-year guarantee only has been provided suggests to me that the government does have serious doubts about whether it can or should do that in the longer term. If that is the case, I would not blame any not-for-profit organisation for hesitating to take on this commitment, because the cost of losing that status would be a severe penalty to that organisation despite the benefits that they might obtain by taking part in the scheme.

I emphasise again that the opposition does not oppose a measure of the kind that would deliver more affordable housing to the Australian community, particularly rental housing. This measure is welcome in principle. But good intentions are not enough to ensure that those people in Australia who need this kind of accommodation will get it. It must be delivered in a sound and responsible way. The government has said that the scheme has great flexibility. It may need that flexibility to ensure that what we see as the weaknesses of their scheme do not bring it down. The test of this measure will be in its execution.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

Home is a word that encompasses so much: a place to belong, somewhere safe, a haven or a refuge. But for 100,000 Australians home is a transitory thing. It is huddling in a cardboard box, sheltering in a doorway out of the rain or being bunked down on a friend’s couch with nowhere to go the next night. Home for these people is a temporary thing and does not come close to being a refuge from the world. A submission to the Senate Standing Committee on Community Affairs inquiry into the  National Rental Affordability Scheme Bill 2008 quotes a homeless woman from the Women’s and Girl’s Emergency Centre. She said:

Boarding houses are expensive … dirty, men bang on your door all night, you have no rights and you can get kicked out at any time.

It is appalling that we have such a high standard of living in Australia yet we walk past people sleeping in the streets every day and think that is normal. Homeless people are invisible and in this time of economic fragility we can expect to see more and more people become part of the invisible army of the homeless. It is an indictment on us all that this is the reality for so many Australians. This is especially so when overseas studies show that it is cheaper on the public purse to make a big investment to fix homelessness by providing rental accommodation rather than allow it to just fester and create a bigger sore to mend.

The government’s plan for a National Rental Affordability Scheme was sold to the Australian public as a key component of a $2.2 billion housing package to address the chronic shortage of affordable rental homes in Australia, to help those saving for their first home and to provide homeless people with the opportunity to live in a new home. In these difficult economic times having a home to return to, a haven of refuge, is of huge importance to Australians. Not since the days of the Great Depression has it been so under threat. There are now nearly 1.1 million Australians struggling to maintain a roof over their heads, according to the statistics released by the Department of Families, Housing, Community Services and Indigenous Affairs. Further to those statistics, we are told that almost 700,000 of those 1.1 million people rent their homes and have what most of us would consider a low income, offering them few options when it comes to where they can afford to live.

Let me share some information with you. A report by the Australian Conservation Foundation and the Victorian Council of Social Services found that average rents for three-bedroom homes have jumped a massive 82 per cent compared with just 52 per cent increase in wages since 1996. At the same time properties available for rent have dropped below two per cent in all capital cities. As these renters struggle to hold onto the place they call home, the private rental market continues to squeeze and often they get forced out. Many of these people shared their fears in the submission made to the Senate inquiry. They spoke about home being a place where they could feel safe and secure but about being unable to rely on a place in the long term because of the rent hikes. They spoke about being forced out of supportive communities because of rate increases and of the only accommodation they could find being far from these vital support networks. They spoke honestly about feeling isolated and lonely. A homeless person at the Matthew Talbot Hostel was quoted in another submission to the Senate inquiry saying:

It’s hard to start over in a new place, especially when times are tough. It’s hard enough to make friends in the first place.

Earlier this year the Australian Institute of Health and Welfare released a report showing that in 2006-07 almost 70,000 children went with their parents into crisis centres for the homeless. I say that again: 70,000 children. That figure is up almost 30 per cent from the previous year. More than two-thirds of the children sleeping in crisis accommodation were under 12 years of age. The average age was just six years. Most of the school-age kids were not attending school. These are damning statistics and these statistics should make every Australian want to act to stop another child having to look at this sort of existence as any measure of home life. This is not what home should mean to anyone, particularly young Australians. These statistics demonstrate so fully that homelessness and finding decent, affordable accommodation is not just about the vital issue of shelter but also about making sure children can get to school and have a stable home life and that they have somewhere to feel safe and secure. In a report by the Melbourne 2030 auditors it was found:

For those in greatest need, the consequences of high housing costs affect not only the individuals themselves but all of us through the costs of health care, social services and declining economic viability and liveability in poor areas.

Is this what we want for our fellow Australians: a home that bears no resemblance to what we know that to mean?

The government tells us that the National Rental Affordability Scheme will help create up to 50,000 new rental properties rented to low- or moderate-income, single families at 20 per cent below market rate. The scheme is expected to cost $620 million in the first four years. It will be funded using money from participants including banks, developers, property trusts and superannuation funds, which will then receive an indexed incentive of $6,000 per dwelling per year through a fundable tax offset or payment from the federal government or a $2,000 incentive from state or territory governments provided through cash payments or in-kind financial support. The incentives will be provided each year for 10 years to large-scale investors who meet the criteria.

Family First has acknowledged for some time that the not-for-profit sector has been leading the way in caring for homeless people without much financial help. It would be extremely disappointing for this sector to be excluded from the scheme simply because of a tax loophole that compromises their charitable status. The focus here should be on providing struggling Australians with a chance to create a home in affordable rental accommodation, and the not-for-profit sector, which has supported those struggling people in the past, should not be left out of the scheme.

This plan to harness the support of industry has merits but what is critical is that these homes are constructed in areas that have adequate support networks and transport and are energy efficient. What we do not want are homes rapidly thrown together, erected in suburbs on the outer fringes without sufficient public transport, and for people to feel isolated and without support. The Rental Affordability Scheme will help many not fall into homelessness but it will do very little to help the 100,000 people who are already homeless. Family First has a plan to tackle Australia’s homelessness crisis. Having 100,000 homeless people in Australia, a prosperous nation, is a national disgrace. Of course solutions to major social problems like homelessness are never cheap and there is temptation to drop them in time of financial crisis. But we have to be careful not to forget these vulnerable Australians.

Family First’s plan is a big plan to tackle this national disgrace of 100,000 homeless Australians. The big plan is $1.5 billion to provide 100,000 accommodation units over five years, as well as support services like counselling, case management and employment assistance to help people get back on their feet. This can be implemented over a number of years but we should start now so that we can begin the big task of getting people off the streets and into homes. There is no way that Australia should accept the proposition that 100,000 Australians being homeless is okay. We call on the Rudd government to look at Family First’s plan—a $1.5 billion plan—to provide 100,000 units for the homeless over the next five years.

Ursula Stephens (NSW, Australian Labor Party, Parliamentary Secretary Assisting the Prime Minister for Social Inclusion) Share this | Link to this | Hansard source

In summing up the debate this afternoon, I thank senators for their contributions and for raising what have been some very important issues confronting the government and also thank the senators who were involved in the Senate Standing Committee on Community Affairs inquiry into the National Rental Affordability Scheme Bill 2008 and the National Rental Affordability Scheme (Consequential Amendments) Bill 2008.

These bills give legislative effect to the Australian government’s $623 million investment in the National Rental Affordability Scheme. The scheme is one element of the $2.2 billion affordable housing package that was announced by the government in the May budget, and its implementation is part of the government’s housing agenda, which is well underway. The first round of expressions of interest for the government’s $512 million Housing Affordability Fund has closed. I can advise the Senate that 91 applications have been received from around Australia. Banks have started to offer new first home saver accounts—a $1.2 billion initiative that will help aspiring home owners to save for their first home.

The government has also made changes to the first home owners grant that will provide a $1.5 billion stimulus to the housing market, helping to shore up confidence at a time of global economic turmoil. This shows that housing is central to the Rudd government’s social and economic policy agenda. Boosting housing supplies is a crucial part of responsible economic management. Access to secure and affordable housing is fundamentally important to the everyday lives of all Australians. Access to secure and affordable housing is a critical feature of our social inclusion agenda and will underpin our initiatives to address the growing homelessness in Australia that Senator Fielding just referred to.

The National Rental Affordability Scheme is the first major housing intervention in over a decade. For the first time in a decade, the Commonwealth is engaged in the housing market. It is quite directly putting forward a solution to the critical undersupply of affordable rental housing for low- and moderate-income Australians and their families. There are now 1.1 million low- and moderate-income households in housing stress, with nearly 700,000 of these households in the private rental market. Rental stress, as we all know, puts enormous financial pressures on families, key workers, young people and, of course, on pensioners. We know, too, that the key reason for the rapid escalation in rents over recent years is a lack of supply of affordable rental properties. The National Rental Affordability Scheme intends to tackle this head-on. The scheme will increase the supply of affordable rental properties by 50,000 over the next four years. If there continues to be demand, the government will expand the scheme by another 50,000 properties over the following five years, further growing Australia’s affordable rental stock. This demonstrates the government’s long-term commitment to affordable rental housing.

The scheme creates a new asset class for institutional investors in affordable residential housing. It will encourage many institutional investors to enter the residential rental market for the first time. The government anticipates that the scheme will leverage private sector investment worth up to $13 billion over the next four years. More than 1.5 million low- and moderate-income households will be eligible to rent these dwellings at a 20 per cent discount to market rate. These households will include key workers such as entry level police officers, teachers, carers, apprentices, cleaners, hospitality staff and childcare workers. Under the scheme, there is a new opportunity for all levels of the government, the business sector, the community housing sector and the not-for-profit organisations to work creatively together to increase the supply of the rental housing stock.

The rental incentive will be paid either as a refundable tax offset or as a direct payment. The direct payment arrangement for the not-for-profit sector reflects the government’s strong support for the work of that sector, whose involvement is important to the successful implementation of the scheme. The participation of both investors and the not-for-profit charitable sector and partnerships between investors and charities are crucial to the scheme’s success. That is why the Australian government will introduce a transitional safety net to cover not-for-profit community housing providers who participate in the scheme.

The supplementary amendments to the National Rental Affordability Scheme—the National Rental Affordability Scheme (Consequential Amendments) Bill 2000extend the definition of ‘charitable purpose’ to include the provision of rental dwellings under the scheme. The amendments will apply to charities endorsed by the Commissioner of Taxation, who are approved participants of the National Rental Affordability Scheme and who receive incentives under the establishment phase of the scheme for years 2008-09 and 2009-10. The safety net will cover these not-for-profit providers for the 10 years they receive incentives under the scheme. The amendments directly address one of the key issues raised in evidence to the Senate Standing Committee on Community Affairs inquiry into the bill. The scheme itself and the safety net the government has introduced for community housing providers will bring substantial growth to the community housing sector, whether as tenancy managers, owners or developers in a consortium.

The National Rental Affordability Scheme will be given effect through regulations. This arrangement gives the government the flexibility to address changing circumstances and to ensure that the scheme continues to meet its objectives in the most efficient way. A draft of the proposed regulations was released 10 days ago to assist senators to understand the scope and operation of the scheme. The details of the regulations directly address many of the issues raised by the opposition’s amendments. The government acknowledges that others have flagged the possibility of the scheme being used to enhance sustainability outcomes in private rental properties. Reducing greenhouse gas emissions and improving sustainability are also a national priority of the government. So we accept a target to reduce Australia’s greenhouse gas emissions by 60 per cent on 2000 levels by 2050.

Debate interrupted.