Senate debates

Monday, 14 October 2019


National Housing Finance and Investment Corporation Amendment Bill 2019; Second Reading

12:09 pm

Photo of Murray WattMurray Watt (Queensland, Australian Labor Party, Shadow Minister for Northern Australia) Share this | | Hansard source

I'd like to make clear at the outset that Labor senators support this bill. That's because there is currently a housing crisis in Australia. Today the percentage of Australians who own their own home has dropped to its lowest level since Sir Robert Menzies was Prime Minister back in the 1960s. Of course, it is young people, people in their 20s and 30s, who are finding it hardest to get their feet on the property ladder. In Sydney it takes more than 11 years to save for a standard 20 per cent housing deposit. In Melbourne it's more than 10. In Adelaide it's more than eight. In Brisbane and Perth it's more than seven, with similar high numbers in many regional centres around Australia. This is cutting generations of Australians out of the housing market. As research released by The University of Sydney last month revealed, whether someone owned property was the greatest indicator of someone's wealth. There are even specific ways to break up this system based on whether someone was an investor or a homeowner, a mortgage holder or an outright owner. The lowest, according to this research, was renters and the homeless.

It's not just first home buyers though who are doing it tough under this government. Today the number of people in Australia that are behind in their mortgage is at its highest level since the global financial crisis. This is extremely concerning given we are currently experiencing the lowest interest rates in decades. Yet when wages are flat and the cost of living continues to increase is it any wonder that Australians are struggling to meet their repayments?

Renters are doing it tough too. As a report by the Australian Institute of Health and Welfare showed just last week, in 2017-18 11.5 per cent of households spent 30 to 50 per cent of their gross income on housing costs, with another 5.5 per cent spending a staggering 50 per cent or more. Over one million low-income households were in financial housing stress in 2017-18. Today we have more homeless Australians than ever before. The last census recorded the number of homeless Australians as more than 116,000. This is just not good enough. There is no way to put a positive spin on this figure, as at least one member of the government has encouraged us to do.

The bill before us will enable the National Housing Finance and Investment Corporation, the NHFIC, to provide guarantees to improve housing outcomes and undertake research into housing affordability—what the government calls the First Home Loan Deposit Scheme. The legislation does not address much of the detail and administration of the scheme and this will be handled through the investment mandate and developed by the corporation.

We know from the bill's explanatory memorandum and the government's other public commitments that the new scheme will allow first home buyers to purchase properties without the need to pay lenders mortgage insurance or meet the standard 20 per cent deposit requirement. Applicants will only have to provide a five per cent deposit. The scheme is to be capped at 10 per cent purchases per annum and eligible applicants must have earned less than $125,000 in the previous financial year as a single or $200,000 as a couple. The new scheme will be funded through the Consolidated Revenue Fund. As the explanatory memorandum makes clear, the scheme will require an update to the NHFIC's investment mandate and we understand that this will go through a process of public consultation.

This bill was considered by the Senate Standing Committee on Economics. Members of this committee supported the passage of the bill. Labor members of the committee provided additional comments to that report and highlighted some of the issues the government will need to overcome when implementing this scheme. The first was that this scheme may not increase the number of first home buyers and, instead, it will mean that first home buyers will buy properties sooner. This was supported by Mr O'Shaughnessy from the Australian Banking Association who said in oral testimony to the committee:

… I actually think there will initially be a slight bump in numbers—

Of first home buyers—

but, given the cap of 10,000, it will perhaps bring forward a number of potential borrowers who now qualify, where this product is suitable for them. That would be early in the first year of operation, and then I think it would very much settle. I don't think it will have a significant distortive impact on the market.

A similar view was put by Brendan Coates from the Grattan Institute:

It is unlikely to make much of a difference to homeownership rates for young Australians or house prices. Most of those taking up the scheme will probably have bought a house anyway.

As did Dr Fotheringham of the Australian Housing and Urban Research Institute:

As currently written, I think it will help accelerate people to homeownership rather than get to homeownership people who would not otherwise.

Let me state that increasing the speed at which first home buyers can buy a home is a good thing. Increasing the number of first home buyers would be an even better policy outcome. I don't think anyone in this place would disagree with that statement. Labor members look forward to assessing the scheme's development and implementation, paying particular attention to any evidence that there is an overall increase in the number of first home buyers as a result of this scheme.

The second point that is worth raising is that the bill in front of us does not have any real detail of the scheme. It does not include what the price caps will be. It does not provide any detail as to how this will change depending on the regional location. In fact, almost all of the detail of this scheme will be included in an updated investment mandate. The updated investment mandate was not provided to the committee as part of its work. What actually became clear through the hearing was that the government itself had not finalised the draft and all stakeholders were keenly awaiting its publication. While it's understandable that a lot of the detail of this scheme would be included in the investment mandate, it should not be beyond the ability of those opposite to provide the mandate for the committee and the parliament to examine together.

For these reasons, it's important that the scheme is properly scrutinised. In the next 12 months, the scheme could potentially be used to guarantee up to 20,000 purchases. The explanatory memorandum of the bill states that the scheme will be subject to a review in up to three years. We on this side think that this is too long, given the importance of housing for the economy and the struggles currently faced by first home buyers. That's why I have circulated an amendment in my name that will ensure this program is reviewed every 12 months. We on this side do not think this is unreasonable, and I hope the government and crossbench members will support it.

12:17 pm

Photo of Richard Di NataleRichard Di Natale (Victoria, Australian Greens) Share this | | Hansard source

There's a simple rule about housing that was set down by Saul Eslake. He said, 'Anything that allows people to spend more on housing than they otherwise would has one effect and one effect only: people spend more money on housing than they otherwise would.' That's what the National Housing Finance and Investment Corporation Amendment Bill 2019 does. This bill will continue to inflate house prices beyond the reach of young Australians and add to the unearned pool of wealth for those who were fortunate enough to have already bought a property.

The answer to the problem of affordable housing is not to induce more demand, like this bill will do. The property bubble is reinflating now—despite a short hiatus—because, at the insistence of the Treasurer, credit rules have again been relaxed. That means there are more people at an auction with a bigger wad of debt approved standing ready to buy the same house. The property bubble is reinflating now because we continue with measures that give huge taxpayer funded handouts to developers and landlords at the expense of schools and hospitals—handouts like negative gearing and the capital gains tax concessions baked into our tax system, which make it easier to buy your third or fourth house rather than your first. So the big winners of this policy are the big banks and property owners. The losers are young people trying to get into the property market. And, of course, we all suffer when there's long-term financial instability.

What this bill will do is increase Australia's record-high personal debt of almost 130 per cent of GDP, which is one of the highest in the world. People can't save up for a deposit right now, because property is so overvalued in this country. The government covering the 15 per cent gap needed for a 20 per cent deposit will simply bring more people in to buy the same number of houses. That has one effect and one effect only, and you've guessed it: it means pushing up house prices even further. That means marginalising an even bigger group of young people than this policy would actively help to own their own home.

We keep hearing about it—we hear about it in this place too—that what we have to address is the issue of supply. Both sides of this chamber are holding out hope that the private sector will build so much supply that it will depress prices. Just think about that for a moment. You are hoping that developers will intentionally deflate prices and cut their own profits. Why on earth would they do that? They won't and they never will. Yes, part of the answer is supply, but it's supply driven by government investment. We need half a million new, publicly-built homes over the decade to meet the crisis—the lack of affordable housing. It's what the experts at the front line of the housing crisis are telling us. It's what many economists are telling us right now. Of course, that was the policy the Greens took to the last election.

We can afford to build these public assets. Don't for a moment be lied to by a government that refuses to invest in essential public infrastructure, because investing in public housing is a damn sight cheaper than the $325 billion of tax cuts that this government has passed, both before and since the election. And it would be a hell of a lot more productive as well. When you lower housing costs, people spend more in their economy. They spend more on productive assets rather than on property, which currently dominates their spending. Of course, we know that finance has never been cheaper for us to build a new, fairer, more decent society, an investment that will bring a financial and social return.

Creating this pipeline of crucial public infrastructure is what will help people on housing waiting lists. It will help the people who need community housing and, of course, the entire generation of young people who are currently locked out of the housing market. Let's not forget that over 100,000 people don't have somewhere to sleep tonight. Where is the government's action on the over 100,000 people who, on any given night, have nowhere to sleep? Of course we know that the people who are doing it toughest in this country aren't in the position to host a secret fundraising dinner for the major parties or offer post-ministerial employment, so they get forgotten. They're left to fend for themselves. We see a government creating a dog-eat-dog society where, if you're well-off, good for you, but if you need support, you're on your own. This bill doesn't even tinker at the edges of this crisis that stretches across society and across generations. It's a piece of legislation that is regressive and counterproductive. It's legislation that will push up prices further by artificially inducing demand, just like negative gearing and capital gains tax do for property investors.

I'll make this point again: we currently live in a nation that makes it easier for people to buy their third or fourth or fifth house than to buy their first. There are parallels with this government's approach to the climate crisis, where, rather than acknowledging that we have a problem and rather than understanding what the solutions to that problem look like, the government keeps finding new fuel to pour on the fire. We know that it'll be up to future governments and to future generations to put these fires out and to clean up the mess that's left behind.

We know why this policy is here. We know why we're debating it right now. In the heat of an election campaign, where a government refused to tackle the great challenges that face our country, we saw a spontaneous announcement thought up on the back of an envelope and dropped in the heat of an election campaign to put pressure on the opposition. Of course, in a rush to look just like the Liberal Party, the Labor Party supported it before the day was out, even though many of them, I know, because I've spoken to them, understood in their heart of hearts that this was bad public policy.

So my challenge to the Labor Party is to not take on the government by becoming like the government. Take a stand and make it clear that you stand for something different—something better, something fairer. Rather than supporting the billions of dollars in tax cuts, as you have been doing, and ensuring that one of the most regressive pieces of legislation passes this parliament, how about supporting the Greens' plan for massive investment in public housing to create half a million affordable homes and the investment that will flow from that as a result of the jobs that we can create in the construction industry? This will ensure that there is not one person in this country who's sleeping rough tonight and that a whole generation of young people benefit from the same opportunities that this generation has been able to enjoy.

This is the generation of politicians that got cheap housing, free education, affordable health care and a safe and stable climate. The challenge for us in this parliament is to make life better, not harder, for those young people who follow us. Instead, what we have is a policy that continues to screw young people over and make life harder for those people who struggle to find secure housing. Of course, the tragedy of this bill is not just that it does not address the crisis in affordable housing in Australia; it's that it make it worse. It's inflationary. It will make it harder for young people to afford their own homes. It gives no-one who's sleeping rough tonight the support that they need. That's why the Greens will be opposing this poor piece of public policy, and we hope the Labor Party will change their minds and join with us in opposing more legislation that screws over young people.

12:27 pm

Photo of Claire ChandlerClaire Chandler (Tasmania, Liberal Party) Share this | | Hansard source

I rise today to welcome and support the National Housing Finance and Investment Corporation Amendment Bill 2019. This bill will amend the National Housing Finance and Investment Corporation Act 2018 to implement the First Home Loan Deposit Scheme and establish a research function within the National Housing Finance and Investment Corporation, the NHFIC. The bill expands the NHFIC's functions to enable it to provide guarantees to improve access to homeownership and undertake research into housing affordability, including supply and demand. The bill also establishes the funding mechanism for scheme claims, and a standing appropriation will provide the NHFIC with the funds it needs to meet claims made on the scheme's guarantees as they arise.

Over the years, we've seen that it has become increasingly hard for first home buyers to save a deposit in order to purchase their first home. This government, the Morrison coalition government, understands the importance of Australians buying and owning their first home and understands that that is a noble aspiration that many Australians seek out. However, in recent decades, it has become more challenging for first home buyers to break into the market. As a young person who, with my husband, has been fortunate enough to purchase my own home, I know just how difficult that can be. Based on the median household income and a 15 per cent saving rate on before-tax income, it takes approximately eight years to save a 20 per cent deposit on a median priced home. That's a long time for a couple or a household that is ready to move into home ownership—where they have secure work and the ability to service a mortgage—to wait to purchase their home, purely on the basis of requiring that 20 per cent deposit, which we know many banks require.

Research indicates that the ability for prospective homeowners to save a deposit is a greater constraint on homeownership for first home buyers than their actual ability to service a home loan. I know from speaking to many people my age that they see the need to have that 20 per cent deposit as a significant inhibitor, particularly when in many cases these young people are already paying a similar or comparable amount of money in rent to what they would be paying in mortgage repayments anyway. But for the need to have that significant deposit, these young people are already in a financial position to service a loan. As a result, young people have to stay in the rental market for longer, taking up a rental property, when in reality they would prefer to be able to purchase their own home and free up a rental property for another couple or family. That's why the Morrison government is backing the First Home Loan Deposit Scheme established through this bill.

I'm very supportive of the intention of this bill to assist young first home buyers, particularly because, as I've said, I've recently gone through that process myself and I understand how difficult it can be. The scheme is designed to help first home buyers enter the market earlier and realise the goal of so many Australians to own their own home. The scheme will provide up to 10,000 guarantees per year to help Australians into homeownership by enabling eligible first home buyers to purchase a modest home sooner. Instead of saving the 20 per cent deposit that I've been referencing, they will only need to save for a deposit of as little as five per cent. The scheme will provide a guarantee on eligible loans for the difference between the deposit paid by the prospective owner and 20 per cent of the property purchase price, provided the borrower has met a minimum deposit of five per cent. We are by no means handing out free mortgages. There is still a requirement that any first home buyers will need to save that five per cent deposit before they are eligible for the scheme.

While many prospective first home buyers have the ability to service a mortgage, it can take a considerable amount of time to save that 20 per cent deposit—as I said earlier, about eight years on a median income for a moderately priced home. Of course, the alternative is that first home buyers, if they don't have that 20 per cent deposit, are instead required by the bank or their lending institution to take out lenders mortgage insurance. Lenders mortgage insurance adds to the cost of borrowing in that the first home buyer would be required to save the five per cent deposit plus the lenders mortgage insurance for the difference. Alternatively, often banks will permit the first home buyer to add the LMI, the lenders mortgage insurance, onto the mortgage as a whole. It sounds good in principle, but in reality all that happens is that the first home buyer ends up paying considerable interest on the lenders mortgage insurance, which is again just increasing the cost of borrowing by adding on to their mortgage repayments. That's why the government is supporting first home buyers and is helping them get into the market sooner.

We know that we can't rely on the big banks to help Australians get a fair deal when it comes to housing. I'm very pleased to see that action has been announced today to direct the ACCC to undertake an inquiry into the pricing of residential mortgage products after the banks failed to pass on the RBA's recent interest rate cut in full. While to the fullest extent possible we should allow markets to function without interference, it's clear that this is a market that has flaws and challenges. I believe there is a role for government to play to support Australians who may otherwise be locked out of the housing market to get into their first home, and that is fundamentally what we're try to do with this bill.

The amendments in the bill will apply from the day after royal assent and are subject to timing of the passage of the bill, allowing for the issuing of guarantees from 1 January 2020, so it's not too far away. Not only will this scheme be good for first home buyers themselves, it will also take pressure off the rental market and will hopefully further stimulate the building of new homes, which, of course, is a key component in housing affordability and creates jobs and apprenticeships in the critical building and construction industry. The scheme builds on the government's comprehensive housing affordability packages announced in the 2017-18 and 2018-19 budgets. The majority of the 2017-18 measures have been successfully implemented and include, for example, establishing the First Home Super Saver Scheme in the NHFIC.

The Morrison government has made a priority of helping Australians into housing, whether it's their own home or a rental property. We're doing that through measures such as this bill, which directly supports first home buyers, but we as a government are also contributing heavily in the range of housing options available to assist with affordable housing. In my own home state of Tasmania, the government has acted to support the unique housing pressures caused by economic and population growth in my state by freeing up the state's historic housing debt, to enable more money to be put directly into building affordable housing in Tasmania. As well as this, through the Hobart City Deal, the government has made a $30 million investment for the supply of more affordable housing for the Greater Hobart area. This funding will facilitate more than 100 new social housing dwellings across Greater Hobart and was greatly welcomed by the sector to help address the issues of housing stress being felt, particularly, in the state's capital.

As I mentioned in my opening remarks, the bill also gives effect to the government's election commitment to establish a research capability within the NHFIC. The bill sets out the framework for the NHFIC's new functions with the core details of the scheme, including eligibility and conditions of the guarantee as well as a research function to be set out in the investment mandate made under the NHFIC Act and issued by the minister. The research function will examine housing demands, supply and affordability in Australia, complementing existing housing related research. I think this is a really important area of research for the NHFIC to be looking into, to ensure that the government is responsive to the challenges of the sector that I discussed earlier in my contribution and that we have the information to hand to enable us as a government to make appropriate decisions to correct any issues in the housing market.

This government, the Morrison coalition government, understands that it's important to Australians to buy their own home, and it's important, particularly for young people that are looking to get out of the rental market and into the homeownership market, for that process to be easy. Obviously, a home is a significant investment to save up for, and we're certainly not saying that first home buyers should be able to enter the market without any requirement to save a deposit, but we recognise that the need for young savers to come up with a 20 per cent deposit before purchasing their own home is a significant ask, one that is acting as an inhibitor to some young people entering the market. As I've said today, it can take eight years for a first home saver to save up the money to do that, and that's why we as a government are addressing this through the establishment of the scheme that we're discussing here in this bill today. On that, it's important for this government to recognise this issue, and we have recognised this issue and put in place a process that will address this. I'm very confident that this scheme will enable many Australians to enter the housing market and achieve the dream of owning their own home. So I commend this bill to the Senate.

12:39 pm

Photo of Alex GallacherAlex Gallacher (SA, Australian Labor Party) Share this | | Hansard source

At the outset, I'd just like to advise the Senate that the work of the secretariat in this space on the Senate Economics Legislation Committee team is first rate. I commend the report to anyone with an interest in this space. It is exhaustive, extremely comprehensive and ticks all the boxes. As always, the ever-efficient staff have combined submissions and evidence taken in a very cogent, concise report.

We are in support of this attempt to get more first home buyers into the market. We are also supportive of an amendment that we have a much shorter review period than what the government has proposed. We do that for this reason. When we took the evidence from the Treasury and other parties, Senator McAllister vigilantly took on the officials from the Treasury and asked:

… At the time of the announcement, when this proposal was announced, Treasury had not been involved in the preparation of the scheme. Is that correct?

And the answer was:

… This was announced during an election campaign, and we were in caretaker.

She asked:

… So Treasury was not involved in undertaking work relevant to this scheme prior to its announcement?

The answer came back:

… Treasury were in caretaker mode, and, in that mode, we are not able to provide advice to anyone.

She then asked:

Noting your explanation, could you, for the purposes of the record, just answer my question: was Treasury involved in any way in providing advice on this scheme prior to announcement?

'No' was the answer from Ms Wilkinson.

We then moved on to QBE, a very large LMI provider. Ms O'Loughlin said:

… We weren't aware of it at the time of announcement. We saw the announcement, like everyone else did—

Senator McAllister asked:

… So no consultation prior to announcement of this scheme?

Ms O'Loughlin replied:

… Not prior to the announcement, but once the announcement came out.

So, the industry wasn't consulted and the Treasury wasn't consulted.

We went on to do an assessment of the 10,000 first home buyers. A key component of this scheme is to cap the scheme at 10,000 first home buyers. Apparently there are about 100,000 first home buyers in Australia and there are about 205,000 per year who use the lender mortgage insurance process to get into their new household. When asked about the figure, Dr Fotheringham from AHURI, which is a research organisation, replied:

… The 10,000 number hasn't come from any AHURI evidence. I suspect it's more about a scheme funding threshold rather than a demand threshold.

I said:

So the actual figure of 10,000 is not an identified research need; it's just something we decided to do.

And he responded:

… That's right.

I asked the Treasury:

… Can someone point to me the evidence where we arrived at a need for 10,000 as a total number of first-home buyers to target?

Ms Wilkinson replied:

… It was an announcement by the government, during the election campaign, of this program, and 10,000 was announced at that stage.

I responded:

… I understand what was announced. I understand that we support it. I just want to know if there is any evidence or research in the marketplace which underpins a need for 10,000 places, 5,600 places or 12,200 places.

Ms Wilkinson replied:

… That is not something that Treasury has looked at.

So we had an announcement made in the heat of an election campaign. I think it was in the last week of an election campaign. And, look, the opposition said, 'We'll do it as well.' Why wouldn't you try and get more first home buyers into the marketplace? It's a great thing to do. But what we've got here is a piece of legislation—which I think will pass this place, hopefully with an amendment about reviewing it sooner rather than later—that is entirely unclear.

There is no evidence underpinning the 10,000 places. There is no evidence from the Treasury about the need for the scheme in its entirety. When pressed on that issue, the Treasury said, 'We think about 20 per cent of the people who are currently renting properties in Australia would like to buy one.' Well, I think the number is probably higher than 20 per cent. But the fact is that it is capped at $125,000 for a single and $200,000 for a couple. If you do the sums on that, a single person can borrow a tad over $410,000 and a couple can go to $680,000 or $690,000, which will probably buy them something in every capital city outside of Sydney. So it's not underpinned by clear evidence and research, and it's not underpinned by advice from the Treasury or from industry.

Were we to pass this legislation, which we probably will in this next short period of time, the investment mandate, which actually contains the operational mechanisms of the scheme, will not be there. We haven't seen it. The industry haven't seen it. The investment mandate is completely obscured. We don't know what's in it. There's been no draft provided to the committee. There's been no draft provided to the industry. The investment mandate is being worked on for a scheme that comes into place on 1 January 2020. Last I looked, that's in a very short period of time.

Does that mean that first home buyers who know this is coming along will stop buying this year and wait until 2020? Then, we would have an oversubscription, so there would be losers. You don't get the government guarantee on your 15 per cent, so do you wait another 12 months? It's supposed to bring more people to the market. It's supposed to be a boost for people trying to get into their first home, and all of it is completely obscure. There doesn't appear to be any cogent advice from Treasury on it or industry on it. It was an election campaign announcement which is now going to be legislated with an investment mandate yet to be seen.

Once again, that's the calibre of this government. They do things in a very strange and unorthodox way. You would expect a scheme like this to come to the legislation committee to be tested and looked at in its entirety. That certainly hasn't happened. We're not opposed to new home buyers getting a leg up—that's entirely the way it should be—but we should have support from the other side about reviewing this scheme earlier, because there are plenty of people in the industry who are extremely nervous about what's going to come out of the investment mandate and who will be on the panel. These are all matters that are completely unclear. They're at the minister's discretion—they're not allowable or disallowable instruments, so this will pass. The investment mandate will get put out there, and we would hope it is beneficial in the aggregate to the housing sector and first home buyers.

12:46 pm

Photo of Andrew BraggAndrew Bragg (NSW, Liberal Party) Share this | | Hansard source

I want to make some general context points about the issue of housing policy because we just had an election in May which you could describe, in some ways, as being a referendum on tax policy, especially related to two very flawed policies that the opposition took to the Australian people: one related to retirement savings and another one related to housing policy. The opposition's policy on housing was to introduce a new tax. I think their logic was: more tax equals more houses—I think that was their logic. But, of course, anyone with a rudimentary knowledge of how life works would know that, if you have more tax, you will have fewer homes. Of course, our policy is to have fewer taxes and therefore more homes.

These housing tax policies, which the opposition took to the last election and are still their policies, were tested by various organisations independent of the government. One such analyst, SQM Research, said that Labor's housing tax policy would increase rents in Sydney by 10 per cent—Sydney, of course, in New South Wales. That's hardly surprising, because the last time Labor tried a housing-tax-like policy in the eighties, where they abolished negative gearing between the years of 1985 and 1987, you saw rents increase in Sydney. Of course, supply and demand and the iron laws of arithmetic are very hard to suspend, so it was quite extraordinary that Labor would take a new housing tax to the last election which they claimed would create new houses or would at least do something for housing affordability. You really couldn't make this stuff up!

As I mentioned, we hear that the Labor policy on housing taxes is now under review—we hear that there's a big review. Still, there's no white smoke, so we have to suspect that that's still their policy in its entirety. I again remind the Senate that the logic here from the Labor Party is: we'll put more taxes onto houses, which will make the houses more expensive to build, and that will create more houses. It really is quite extraordinary!

To now move to a more positive subject, our policies are consistent with our Menzian philosophy, and yesterday marks 75 years since the creation of the Liberal Party. Going back to the days of Menzies, the Liberal Party has always been about supporting the vast bulk of Australians to be able to afford their first home. We've always supported any measure that we could think of to encourage homeownership, because we understand that it is very important that people can get access to a first home. Having a roof over your head is a very important financial benefit, frankly. As an elected official, I'm not in the business of giving unlicensed financial advice. I know that there were a lot of politicians from the other side of the chamber who wanted to give unlicensed financial advice during the last election. Apparently some people were over-invested in Australian shares, and I won't be making that mistake. But it is true to say that having a home is a good thing for an Australian and for Australian families. That's why our policies, going back to Menzies, have always put emphasis on getting a home.

Beyond trying to keep taxes low, which of course we've been able to do in recent years—in the last parliament, we cut business taxes for small and medium enterprises. Of course, one of the first acts of this new parliament was to cut taxes for all working Australians. We think that your money, which you earn, is in fact your money, and you will do a better job of spending it than we will. Keeping taxes low is a very important principle, because if you want people to be able to assemble the capital that is required to purchase a first home, then you need to give them at least a fighting chance. Trying to give them more of the money they earn is a very good idea.

It is hard to get a first home. It is much harder than it was in decades past. Prices have increased significantly in large markets, where state governments have failed to build infrastructure and therefore there has been pressure on prices. Beyond trying to keep taxes low, we have decided that it was appropriate to unleash some initiatives to try to boost homeownership. The National Housing Finance and Investment Corporation Amendment Bill provides that there will be 10,000 opportunities for people who can assemble at least five per cent of a deposit to then access the remaining 15 per cent, which takes them to 20 per cent, to have a first home. This bill, which sets out in detail how this will work, was an election commitment. As I mentioned before, this was the commitment given in the context of an election, where we had a very clear policy to improve the capability of people to get a first home. Our opposition was keen to impose a housing tax, which would have made it so much harder to get a first home at all. That's 10,000 guarantees per year, and this begins from January next year.

The private economy, which provides some form of lenders' mortgage insurance, has not raised any significant concerns with this bill. Their view is that this will not undermine that market, and it will be a complimentary activity. It will be targeted at people who genuinely have no other capacity to assemble the necessary 20 per cent which is often needed to get a deposit. That's how the guarantee scheme will work.

As I said, this policy sits alongside our general disposition to keeping taxes low and not imposing measures which are totally discredited, like the taxes that we saw during the last election, which is still the policy of the Labor Party, even though they failed to learn the lessons of 1985 to 1987. We've also unleashed in recent times the First Home Super Saver Scheme, which allows people to save up to $30,000 as an individual inside a superannuation scheme. If you are a couple, that means you could get $60,000 assembled in a superannuation account, which would be concessionally taxed and then released to you if you wanted to buy a first home—which could even be a block of land, let's say.

Going right back to Menzies we have been committed to keeping taxes low. We've always valued the idea of all Australians having access to a first home. We think it's a very important bedrock which goes right back to the Liberal Party's creation 75 years ago yesterday—and what a great contribution we have made to modern Australia. But this particular bill today, again, really is consistent with our ethos that we are on the side of working people, we are on the side of all Australians and we are prepared to set aside any commercial concern in order to do the right thing by the Australian people, because, although there may be some concern from some quarters in the banking or other financial sectors about legislation that comes before this place, we always take the view that we are elected by the Australian people and we will deploy targeted measures which are required to solve difficult issues. The problem of homeownership is acute in many ways in large cities, and so I think this is a creative solution which sits very neatly alongside the first home saver super scheme, which is also an initiative of this government. With that, I commend this bill to the Senate.

12:56 pm

Photo of Mehreen FaruqiMehreen Faruqi (NSW, Australian Greens) Share this | | Hansard source

I rise to speak on the National Housing Finance and Investment Corporation Amendment Bill 2019. I'll say from the outset that we all know that our housing system is broken. In fact it is monumentally messed up; there are no ifs or buts about it. For many years we've gone from one news headline to another about the housing crisis only to be met with a very lukewarm policy response from the government. Here we are today with another one that will not work. Let's be clear: this government does not have an agenda to reduce homelessness, to pull struggling people out of housing stress or to make housing fairer for everyone. We are reminded of this again as we are here today debating this absolutely flawed piece of legislation.

We know that, for decades, governments of both stripes have treated housing like a commodity and created a system that works best for big developers, for the rich and for the big corporate donors. The federal government has shrugged off its responsibility to make sure that everyone who lives here has a roof over their head, has a place to call home. It's a national shame that over 100,000 people are homeless. We have a lot of catching up to do in this area of public housing. But, unfortunately, that's not what we are here debating today, because it's the last thing on the government's mind and agenda. They are too busy promoting housing as a portfolio. Responsibility for housing affordability has bounced between different departments. The cynical view this government has of our social services means that the housing crisis never gets the attention it deserves at the national level.

The entire housing debate is an exercise in political expediency. They're interested only in hollow promises they made on the campaign trail, and this is what this bill is all about. It is bad policy and bad economic management to encourage risky borrowing. If people can't afford to put a deposit down for a home, that means prices are just too damn high. The system is rigged, but we are not in here talking about that, and we should be. Why are we not here talking about that? It's because that's something this government really doesn't want to touch, doesn't want to debate. You may have the luxury of pretending that we don't have a housing crisis in this country, but many are struggling to find a place to sleep in, a roof over their head. They are struggling to pay rent, struggling to save for an ever-expanding deposit. Tax breaks that favour investors have dominated policy under one neoliberal government after another. We know that decades of Labor and Liberal tax policies have rigged the housing market in favour of their big donors: property investors, who can afford to play the so-called housing market; and big banks, who profit from mountains of mortgage debt. This bill is yet another attempt to appease the developer industry and big banks, further inflating house prices.

The reality is that the only way to support first home buyers is by dismantling this rigged tax system. The capital gains tax discount has encouraged wealthy investors to gamble on future price rises. Negative gearing has encouraged speculation, causing house prices to soar. By backing these policies for decades, it has been made easier for investors to buy their fifth property than for a young person to buy their first. We need to abolish these unfair tax breaks, like negative gearing, and phase out the deeply unfair capital gains tax discount. It's only by reforming our tax system that we can build a fairer housing system where an affordable home is a reality for every one of us.

The bill establishes a first home loan deposit scheme to be operated by the National Housing Finance and Investment Corporation. But that's about the extent of detail on the scheme that you get from reading this bill. Core elements of the proposed scheme are totally missing from the bill. There is no detail on funding appropriation, the number of guarantees to be issued or eligibility; no legislated annual caps; and no price cap on homes or loans that will be guaranteed. What's more, the government wants to leave this crucial detail of the scheme to non-disallowable regulation, which means that parliament will never be able to scrutinise the details of this proposed scheme. This bill is really an affront to those who do not have a roof over their heads. It is disgraceful that we are in here discussing this flawed and terribly drafted bill when thousands of Australians do not have a place to call home, and this bill will do nothing for them. What an outrage.

Housing is a human right. Everyone has the right to a safe, secure and permanent home. That is a basic need that everyone has. The federal government must show leadership in tackling the housing crisis. They must intervene to reverse the decline in social and public housing, and they can do this by making an unprecedented investment as is needed in public housing. We know that we need at least 500,000 new public homes in this country—actually, we needed them yesterday. Let's also not forget that this is the start of Anti-Poverty Week, and this government has refused to increase Newstart, despite calls from within its own ranks. We know that this government is intent on stigmatising people who have landed on hard times, who need support. It was only a couple of weeks ago that Senator Ruston, Minister for Social Services, attacked people on Newstart—so callous, so shameful. And what about rent assistance? Let's talk about rent assistance, which even the Productivity Commission has said has not kept up with rising rents. They have shown that two-thirds of lower-income renters spend more than 30 per cent of their income on rent—the commonly used benchmark for identifying rental stress—and half of those remain stuck in stress four years on. Why aren't we talking about increasing Commonwealth rent assistance today?

The 2016 census found that there was a 14 per cent increase in homelessness on the previous five years, with a staggeringly high jump of 37 per cent in my home state of New South Wales. We know that social housing has not kept pace with demand. It really is a big national problem that tens of thousands of people are still on public housing waiting lists. Public housing is a crucial part of our social safety net, but it has been eroded over time—not much investment, states and territories selling off existing public housing. We need to reverse this. We, at the federal level, need to take responsibility for this. But here we are: we have this bill that does nothing to address one of the most urgent problems facing the people who live in Australia today. The government itself admits, in the explanatory memorandum to the bill, that housing affordability has dropped in recent years. But, rather than addressing the actual cause of this problem, they are encouraging risky borrowing that could actually drive house prices further up. There is no doubt that this is a bill for their mates, the big developers and the big banks.

Everyone in Australia is paying the price of the housing mess we are in, but low-income households are being squeezed the hardest. A growing number of Australians are becoming homeless every year, and more and more are finding themselves in temporary accommodation. And this is all because successive governments in Australia haven't had the guts to make the bold policy decisions that are needed to fix the root causes and the real problems. We all know that policy is a really powerful tool and Commonwealth funding is a really powerful tool; but there is no help in sight for those struggling unless the government decides to use these tools properly and effectively. This bill is not the right policy for housing. The Greens will not be supporting this bill.

1:05 pm

Photo of Slade BrockmanSlade Brockman (WA, Liberal Party) Share this | | Hansard source

I rise to commend the National Housing Finance and Investment Corporation Amendment Bill 2019. As my colleagues have correctly stated, this was an election commitment. This is something that we took to the people of Australia at the last election and the people of Australia, by returning us to government, supported this particular initiative. It is an initiative that does not pretend to be a silver bullet. What it does seek to do is give the opportunity for more Australian families—in particular, young and lower-income families—the opportunity to enter the housing market and gain access to a mortgage even though they perhaps have not been able to save the 20 per cent deposit that is required to get a mortgage without requiring lenders' mortgage insurance. They will then be able to enter the housing market in a more advantageous position with lower total costs than would otherwise be the case.

What this bill does is provide the framework. Yes, Senator Faruqi is correct: a lot of the detail will be in the investment mandate. And I will get to why that is very important a little later on—why the investment mandate is the correct vehicle, rather than a disallowable instrument, in which the details of the program are to be contained. I will go through what this bill does. It enables the existing corporation, the National Housing Finance and Investment Corporation, the framework under which it can implement the First Home Loan Deposit Scheme—the scheme we took to the Australian people at the last election. But also—and this is very important—it establishes a research function within the National Housing Finance and Investment Corporation to do some of the research work that is required to more wholly and completely understand what is happening within the Australian housing market and access to homeownership, which is a very fundamental part of the Australian dream.

The bill expands NHFIC's functions to enable it to provide guarantees to improve access to homeownership and undertake research into housing affordability, including supply and demand. The bill also establishes a funding mechanism for scheme claims. A standing appropriation will provide NHFIC with the funds to meet claims made on the scheme's guarantees as they arrive. The bill sets out a framework for the new functions with core details—including eligibility and conditions of the guarantee, and the actual operation of the research function—to be set out in the investment mandate, which of course will be issued by the minister.

The scheme itself will provide up to 10,000 guarantees per year to help Australians—in particular, young Australians and, I hope, young Australians in rural and regional Australia—to realise the great Australian goal of owning their own home. Owning your own home is a really fundamental path to economic security in this country; it has been for generations and will continue to be so. It provides a level of security throughout your life whether you are in the early stages of life—starting a career or starting a family—or in middle age or approaching retirement. Homeownership provides a level of security and stability that has been a hallmark of Australians' experience of their economic life. It remains a goal of many, many people in our society.

Facilitating younger Australians—my hope is particularly Australians in regional and remote and rural Australia—to gain access to purchasing power to buy their own homes when they do not necessarily have the ability or have not had the ability to grow a 20 per cent deposit is something that is very important. In recent decades it has become more challenging for first home buyers to get into the property market. That is something that we have seen over time, particularly in the larger capitals, but not solely in those areas. In parts of rural and regional Australia the 20 per cent deposit has also become a significant constraint. While many prospective first home buyers have the ability to service a mortgage, the time it takes to gain that 20 per cent deposit as savings is significant and it holds people out of the market for a lot longer than they would otherwise wish. As a result, the market has come up with a solution, and I do want to talk about this further as well: the lenders mortgage insurance. This developed over time, partly as a result of previous government actions many decades ago. A private market did develop, and it does provide an important provision for people to gain access to a mortgage when they do not have the 20 per cent deposit. Part of setting out the investment mandate, in consultation with those lenders mortgage insurance providers, is to make sure that that market is not significantly disrupted. I think one of the important things that came out of a Senate Economics Legislation Committee inquiry I chaired was that the lenders mortgage insurance market was comfortable that the 10,000 figure would not adversely affect the operation of that current lenders mortgage insurance market. I think that is very important.

I will, in passing, add my compliments to Senator Gallacher's comments earlier on the work done by the secretariat of the economics committee, in terms of putting together that report. I commend it to all those interested in this particular topic.

As I said, one of probably the two key issues that came out of that inquiry was the potential impacts on the lenders mortgage insurance market. They were very clear that they did not feel that the 10,000 figure would have a significantly detrimental impact on the lenders mortgage insurance market. It does enable people to gain access to the housing market when they don't have a 20 per cent deposit. It obviously does add a cost to the provision of a mortgage, but it is a product that is out there and that is utilised by a percentage of the market to gain access to a mortgage when they perhaps do not have the 20 per cent deposit that is required for a mortgage without insurance attached. I think that was a very important aspect that came out of the inquiry.

Probably the other aspect that was discussed most during that inquiry was whether or not the 10,000 and other details of the investment mandate should be either in the legislation or in a disallowable instrument. On first blush, I can understand where those views were coming from. On first blush, it sounds like a good idea—that it should be in the legislation or in a disallowable instrument so the parliament has some oversight of it. But, when you think about it in a little more detail, when you think about the potential level of uncertainty that that would place into this marketplace and when you have a government instrumentality through the National Housing Finance and Investment Corporation who is operating with a number of commercial entities, providing these guarantees to Australians seeking a mortgage, that level of uncertainty would potentially disrupt the market to a significant degree.

The investment mandate is something that actually needs to provide certainty to both the NHFIC board, who have to carry out their duties responsibly, and the market participants, who are obviously seeking to supply many of the mortgages with a full 20 per cent deposit but also access lenders mortgage insurance products through a second party. They need certainty in the provision of all those aspects of exercising functions and powers. That certainty comes not through a disallowable instrument but through an investment mandate provided by the minister which gives NHFIC and all the players, be they the banks, the smaller nonbank lenders and the borrowers themselves, certainty in the marketplace on how this is going to work, without the level of uncertainty that would come if it were a disallowable instrument.

For example, it is expected that the commercial lenders will have to make long-term commitments to participate in the scheme. Mortgages are not gone within a couple of years. For most of us—and I will include myself in this category—mortgages are something you take on for a long period of time, not just from the borrower's point of view but also from the lender's point of view, and they need certainty and stability in how those market rules will operate. Lenders expect and in fact need a level of certainty in the operation of the scheme and the manner in which any changes to the scheme are made. That certainty would be compromised due to potential delays and unpredictability in market conditions and the regulatory environment if the investment mandate were disallowable. It would also place NHFIC in an exceedingly difficult position and would lead them and their board to a great deal of uncertainty and impracticality. That would then flow on, obviously, to those who would participate in the scheme.

These sorts of ministerial directions are not unique. They're not something that we only see in exceedingly rare cases. Ministerial directions like this are completely consistent with the way ministers interact with corporate Commonwealth entities on a regular basis. To say there are no checks and balances in that process I think completely misunderstands our system of government and completely ignores the many opportunities that this chamber has, particularly through the Senate estimates process, to, for example, inquire into the operation of government agencies, including NHFIC. I think that the investment mandate is the correct instrument by which these rules are put in place. An investment mandate is required to be tabled in parliament. It is required to be registered on the federal register of legislative instruments. Again, this enables both the parliament and the public to hold the government accountable.

Once again, this was an election commitment. This is something that the Australian people, as part of a raft of measures, looked at when they chose who would govern this nation. I think that this is a vehicle by which younger Australians and lower income Australians—and, as I said, hopefully many of them are from rural and regional Australia—will be able to gain access to a mortgage at a slightly lower total cost of entry, and that is something I think we should all support. Thank you.

1:19 pm

Photo of Malcolm RobertsMalcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | | Hansard source

As a servant to the people of Queensland and Australia, I want to make comments on the National Housing Finance and Investment Corporation Amendment Bill 2019. Let me first say that in support of Senator Hanson's decision to not vote on legislation other than critical legislation until the government has addressed the plight of dairy farmers, I will not be voting on this bill. Firstly, though, some background comments. Let's get to the basics. Housing affordability is deteriorating because of the exorbitantly high prices of housing. We are experiencing the world's greatest-ever resources boom, yet young Australians cannot afford homes.

Under Liberal-Labor governments, electricity prices have gone from the world's lowest to the world's highest. That is due entirely to UN policies that the Greens drive, Labor adopts and the Liberals follow. Under Liberal-Labor governments, tax has become a convoluted mess that is crippling and drives counterproductive behaviours across society. According to a New South Wales housing industry body, tax accounts for almost half the cost of a new house. Let me quote from housing and other industry bodies that were cited in a Sunday Telegraph article of 19 February 2014. That might seem like some time ago, but the article foreshadows the current mess. It was all so predictable. The article is titled 'Nearly half the cost of a new house is gobbled up by a range of "hidden" taxes and can add up to 250k per property'. It was written by Tim McIntyre, the real estate reporter for the Sunday Telegraph, and says:

The taxes make up 44 per cent of the price of a property, with the extra costs being blamed on a shortfall of new housing in Sydney.

"Most people are aware of things like stamp duty, but not the hidden taxes in housing," said Stephen Kirchner, research fellow at the Centre for Independent Studies.

"The added tax can make the price unaffordable."

Mr Kirchner said the tax burden was contributing to a dwelling supply shortfall in NSW, tipped to reach a deficit of 55,000 houses in 2014, according to QBE Insurance Group's report Australian Housing Outlook 2013-2016.

A Centre for International Economics report found that taxes accounted for $267,879 of the average total dwelling cost of $639,533.

"Government taxes are forcing developers out of the market," said Peter Icklow, CEO of developer Monarch Investments. "I’m selling house-and-land packages for $500,000 each and then paying the government $50,000 for each settlement.

"That's after paying taxes all the way through the development process."

Mr Icklow said the introduction of the GST on settlements had all but crippled many developers. In addition to the GST, the hidden taxes severely affected the viability of developments.

Glenn and Pai Ferguson recently bought in the Ingleburn Gardens Estate at Bardia, in Sydney's southwest.

The affordability of a house and land there compared with their former suburb of Sutherland convinced them to move, but they were unaware that 44 per cent of the price was taxes.

"I had absolutely no idea," Mr Ferguson said. "It's definitely something that needs to be addressed. We need more affordable properties."

Personal taxes are also high, and that leaves little room for saving. And then governments waste our money. This is so infuriating for taxpayers. Last May—five months ago—I was in Mount Isa and I bought something at Woolies, and a middle-aged lady who was supervising the Woolies automatic checkout said that she works two jobs, sometimes three. She was staggered with the level of tax in this country. Worse, she was disappointed with Canberra's politicians wasting money. It just alarmed her, frustrated her and angered her.

Thirdly, we have unbridled and excessive immigration, driving house prices through the roof. So we have an increase in house prices and a decrease in people's ability to afford houses, through energy and tax and many other factors.

And let me dwell on a few other things that gouge people and hurt people and suppress people. We have the UN's Lima Declaration, which Gough Whitlam's Labor government signed in 1975 and Malcolm Fraser's Liberal-Nationals government ratified the following year, in 1976. That destroyed manufacturing and incomes. A friend of mine gave me three plastic bags. They were not the sort of plastic bag that the Labor Party uses to collect cash. But one was, in fact, an Aldi bag, which had been made in Germany, and there was a Woolies bag that had been made in Thailand and a Coles bag that had been made in Malaysia. We don't make cars here anymore. Value-adding industries are being exported. Jobs are being exported.

Then in 1992 we had the UN's Rio de Janeiro declaration for 21st century global governance, which Paul Keating's Labor government signed and which the Liberals have since implemented. We had the UN's 1996 Kyoto protocol, which John Howard's Liberal-National government committed to fulfil. They said they would fulfil the commitments under the Kyoto protocol for the UN. Subsequently, the Labor government, under Kevin Rudd, signed it. Then we had the UN's infamous 2015 Paris Agreement. In my office I have a copy of some 7,000 bilateral and multilateral treaties to which our Liberal and Labor governments had signed us as of the 1990s. Heaven knows how many have been signed since then. Does anyone know? UN policies, agreements, protocols, declarations and treaties are killing our country's productive capacity and making housing unaffordable.

Then we have the housing land stock, which is under state and federal government control. They withhold land and that drives up the price of land. Added to that is the high regulation in this country, which adds tens of thousands of dollars to the price of a home. Liberal and Labor governments are failing the young, failing farmers and rural communities and failing the middle class.

Liberal and Labor have been reluctant to manage and constrain the banks, as the royal commission recently showed so clearly. We need competition in banking. We need a people's bank, such as the one that worked so successfully from 1912 to 1923, until it started to be dismantled by successive Liberal and Labor governments. That was the Commonwealth Bank—a people's bank. It was killed because it was effective in providing competition to the private banks, just as is the case now with the state owned Bank of North Dakota, which provides loans to farmers, small businesses and individuals. It is one of the only banks—I think it might be the only bank—in North America that has made a profit in every year of its existence.

The basics for housing were in a mess. So what happened then? The government didn't address the mess or the basics. The government, as part of its 2017-18 budget, established the National Housing Finance and Investment Corporation. This was recognition, supposedly, that greater private and institutional investment was needed to expand the community housing sector and provide more Australians with access to affordable rental housing. Let's put a bandaid on it or put it on life support without addressing the basics!

The National Housing Finance and Investment Corporation operates the Affordable Housing Bond Aggregator to provide lower-cost and longer-term finance for community housing providers by aggregating their borrowing requirements and issuing bonds into the wholesale market at a lower cost and longer term than traditional bank finance. Because the government is doing it, there is less perceived risk to the investment, so the government enables lower interest rates. But, in doing this, it transfers risks from purchasers of bonds to the government—or rather, more accurately, to the taxpayer. The government says that the benefits of accessing finance more efficiently will allow community housing providers to reinvest into expanding the supply of affordable housing. This will, they say, help to improve outcomes for social housing and homelessness.

The National Housing Finance and Investment Corporation also administers the $1 billion National Housing Infrastructure Facility. The National Housing Infrastructure Facility will provide the $1 billion to support local governments through a range of options to finance critical infrastructure designed to expand housing supply through, for example, special purpose grants for spending on transport links, power and water infrastructure and site remediation works.

This pair of initiatives has only been underway since March, when the corporations executives were appointed. Now we have a third part of the package: guarantees to improve homeownership. The guarantees provided by the National Housing Finance and Investment Corporation on eligible loans will be equal to the difference between the deposit, which is at least five per cent, and 20 per cent of the property purchase price. Firstly, because this will drive up housing prices so high, those who did the right thing—young people who saved and parents who went as guarantors for their children—will pay more for housing. Secondly, there will be an annual cap of 10,000 guarantees issued, leading to 50,000 houses being guaranteed over the five-year forward estimates. Thirdly, eligibility requirements for applicants include that the applicant must be a first home buyer and an Australian citizen purchasing property in Australia, and they must satisfy an income test—that is, taxable incomes up to $125,000 per annum for singles and up to $200,000 per annum for couples earned in the previous year. Fourthly, there will be eligibility requirements for loans. A loan is eligible if the residential property will be owner occupied and the purchase price of the property is less than the price cap that applies in the area where the property is located. These regional price caps will be set with the view to ensuring, so the government says, equitable access to the scheme across Australia. This is an unknown future regulation at this time.

Let's look at what the bills committee had to say about this. The bills committee objects to this legislation on the basis that all the rules around the actual operation of the guarantee scheme will be non-disallowable legislative instruments. As such, there is no parliamentary security on this scheme. How can we accept that? We can't. Further, those rules are not provided with the bill, so we are voting to set up a scheme that we do not know how it will operate and over which we have no supervision. What could possibly go wrong!

Let's have a look at the big-ticket policy. Let's calculate a simple understanding of the cost of guaranteeing the purchase of homes. Remember, there are 10,000 homes a year, so over the five-year forward estimates that's 50,000 homes. The average price of a house is, say, $600,000. The difference between five per cent and 20 per cent, which is what the government is guaranteeing, is 15 per cent of $600,000, which is $90,000. When you times that by 50,000 owners, that's $4.5 billion of taxpayers' money at risk. I'll say it again: that's $4.5 billion of Australian taxpayers' money at risk. The Australian housing bond aggregator issues bonds backed by mortgages and then lends that money to builders to build more low-cost housing. As such, the Australian housing bond aggregator is on the hook for a reduction in the performance of those mortgages, which is also tied to housing valuations. By 2021, the Australian housing bond aggregator expects to be holding $1.25 billion in housing finance bonds. Is there a limit to how far the government will go to keep the housing bubble going?

What about the administration cost? The administration cost is $25 million over the five-year forward estimates. This distorts the market. This whole bill distorts the market. The federal Liberal government's liability is just going to keep going up and up under this system both in guarantees and construction bonds through the Australian housing bond aggregator. By tying the federal government up with direct financial exposure to the housing market, it is building in a failsafe so that, no matter what happens, the federal government cannot allow or afford the market to crash. This feels like the government is putting a safety net in place for a potential looming property crash. Homes that fall below mortgage value can be moved over to this scheme so that the federal government can give banks a 15 per cent buffer and prevent foreclosure. If values fall even further in a wider or deeper crash, then the effect of this will be for the federal government to wear 15 per cent of the original valuation of each property as a straight up financial loss so the banks don't have to. Nice if you're a bank! The actual effect will be to sustain irresponsible lending by banks, as they will know that they are not wearing the risk. The federal government is wearing the risk; the taxpayer is wearing the risk. In turn, that holds up values in an environment where the direction should be downward, driven by falling affordability and falling demand. Perhaps this bill should be called 'keep the housing bubble going a bit longer bill' and 'make the federal government and the taxpayer pay for the crash bill 2019'.

I trust nothing about this bill. People can either afford a house or not afford a house. Government intervention just makes housing more unaffordable, not less; it'll drive the price up. Let's get back to basics, where I started with this speech. Let's stop the lazy and dishonest Liberal Labor government. Let's get back to basics: Let's restore affordable energy to increase take-home pay, useable pay, discretionary pay. Let's restore access to water. Let's comprehensively reform tax so that it is once again fairer and efficient. Let's cut immigration to put downward pressure on house prices. Let's restore our country's productive capacity—lower house prices will follow and will be sustained.

1:35 pm

Photo of Paul ScarrPaul Scarr (Queensland, Liberal Party) Share this | | Hansard source

I'm delighted to have the opportunity to rise to speak in favour of this bill, the National Housing Finance and Investment Corporation Amendment Bill, this afternoon. In doing so, I note that this is the delivery of another Liberal-National government commitment made at the last federal election.

At the outset, I'd like to address a number of comments that have been made in relation to this bill by some of the previous speakers. Firstly, in relation to my good friend Senator Bragg from New South Wales: he is absolutely right when he says that homeownership, the right of every single family in this country to own their own home, was part of the philosophical basis of the establishment of the Liberal Party, and we're honoured to be in Canberra this week to celebrate the anniversary of the establishment of this great party.

Menzies, in his 'Forgotten people' speech, spoke about the importance of the family home—not just the bricks and mortar, but the spirit of the family as it's encapsulated in that home to engender that sense of family which is so crucial to our country. I should note that over the course of Menzies' time in parliament, homeownership materially increased in this country—more Australian families had the opportunity to own and live in their own home than was previously the case. And that is the aim of this legislation that is being considered here today.

In relation to the comments made by Senator Faruqi, I must say that I am always impressed with the sincerity Senator Faruqi brings to any debate, and there is no question whatsoever that she has a genuine concern for those in our community who need more support, be it from the government sector or non-government sector, and I do admire that. On this occasion, however, I must disagree, with respect, with a number of points raised by Senator Faruqi. I don't believe that the housing system in this country is broken. I think the evidence to that is to the contrary. There is no question that everyone—government at all levels, so federal government, state government and local government; non-government organisations; and people in the community—has an interest to make sure that every single person in this country has the opportunity to have a permanent roof over their head. I absolutely agree with that.

The government does, in fact, have a number of initiatives where it is supporting measures to assist the homeless in our country, and I'd just like to run through a number of these as part of this discussion. As I said, the government understands that having a roof over your head is crucial to the welfare of all Australians. The government is contributing more than $6 billion a year to support states and territories in that regard, and that includes $4.6 billion annually through the Commonwealth Rent Assistance program, more than $1.5 billion per year through the new National Housing and Homelessness Agreement, and $620 million over five years from 1 July 2018 in dedicated funding for homelessness services. So there are measures being taken by the federal government to address homelessness in this country.

The other point I'd like to make in relation to the issue of homelessness in this country is that, and I believe this passionately, we should not bring ideology to this topic. It's a question of solutions to try and assist people the best way we know how, to give them the benefit of that homeownership. In my own home state of Queensland, the previous state Newman government had introduced what was called the Logan Renewal Initiative—one of the most disadvantaged communities in my home state of Queensland. Under that project, 2,600 units of public housing were being transferred to a non-government organisation—a community, not-for-profit organisation. Through that, it was expected that an additional 2,300 homes would have been constructed by that non-government, not-for-profit organisation to provide homes for those people who are on the public housing waiting list that Senator Faruqi referred to. Unfortunately, it was scrapped on ideological grounds by the Palaszczuk government when it came to power. And what was its replacement? The construction of 70 public housing units. That's it!

So there was a system where the not-for-profit sector could have been used and mobilised in this country. The local community in Logan and the good people of Logan are passionate about providing housing for the local people in that area, many of whom are new Australians and many of whom have fallen on hard times and need assistance. It was going to have had 4,900 public housing units, and what was the state government's answer in my home state of Queensland? Seventy—on purely ideological grounds.

The reason I refer to that is to emphasise my point that ideology needs to be taken out of this debate. On an ideological basis, there would be some who would say that the government shouldn't be involved in this at all. But why is the government stepping in through this legislation to provide assistance? In this regard, I want to come back to a comment that my good friend Senator Brockman made earlier in the debate, and that is that we have an opportunity, especially in this low-interest-rate environment, to assist potential first home buyers to make up ground and to build up their first deposit to 20 per cent. That is what this legislation is seeking to do. You've saved and you've got your five per cent, but you need an additional hand. You need an additional hand to get your deposit up to 20 per cent. We know there has been no better time—certainly whilst I've been alive—to service a home loan in this country than today. There has been no better time, with historically low interest rates. But if first home buyers can be given just that bit of a boost to put their foot on the first step of the ladder of homeownership then they'll do the rest.

I note Senator Roberts's comments with respect to this scheme. I'd simply say that we should keep it in perspective. We need to keep it in perspective. Last year there was a total of 386,000 residential property transactions in this country. What we're talking about here is providing assistance, with respect to a guarantee to cover that five per cent to 20 per cent margin, for up to 10,000 first home buyers a year. That's 10,000 out of 386,000—or, hopefully, 10,000 out of 396,000, because there'll be some people who'll be able to buy their first home who were not able to do it prior to this legislation coming into effect.

To summarise, I think this legislation does a number of things. Firstly, it provides that well-needed boost for first home buyers to enter the market for the first time and to achieve that goal of owning the family home. As I said, the research indicates, the facts indicate, that we're only talking about 10,000 out of a potential 400,000 property transactions a year. So, while Senator Roberts raised concerns about what impact this would have on market prices, I think the reality is that we're looking at a marginal impact at best. I'm quite satisfied that this bill does not offend any principle in that regard.

Secondly, research is part of the mandate of the corporation, and I think that that is absolutely fundamental to this legislation. We need the research to continue to look at housing affordability in this country, so I'm pleased that research will be part of the mandate, as it will be enacted in this legislation if it's supported by the Senate today. Thirdly, I think the legislation is measured and moderate. We're talking about the increment between five per cent and 20 per cent—it could be between 10 per cent and 20 per cent in some cases—and we're only talking about 10,000 transactions out of a potential annual pool of residential property transactions of 386,000 or 400,000 a year. So this is a measured and moderate proposal.

Fourthly, it's responsive to the regions, and as a senator representing the great state of Queensland, which is the most decentralised state in our Federation, I must say we need to do more. We need to do more to assist first home buyers to buy their first home in the regions. We need to do more to actually attract first home buyers to move from Sydney and Melbourne, where the property market is more challenging, and to take advantage of the great opportunities in my state of Queensland, especially in regional Queensland.

Last week I attended a committee in Mackay that was looking at jobs in the regions, and we heard testimony from the Mayor of Mackay during that hearing. He emphasised to us that in Mackay at the moment there are something between 1,200 and 1,400 job vacancies. There are opportunities in this country, and I believe that we need to do a better job of marrying up those people who are seeking the opportunity with those places where the opportunities exist. Hopefully, when the mandate is considered, and consideration is given as to where people will be residing—when they can take advantage of this incremental benefit to help them to afford a guarantee—that will be considered as part of the mix, because there are tremendous opportunities in regional Australia, including, in my home state, in Mackay.

Lastly, I note that there is provision for appropriate reporting with respect to how this proposal progresses. The National Housing Finance and Investment Corporation will be reporting annually with respect to the take-up of the guarantee and all of the other material information that we need to know with respect to the performance of this legislative proposal, including with respect to the outcome of the research which is undertaken within the mandate.

In conclusion, I must say that I'm delighted today to stand up and support this legislation. I'm delighted to support the government meeting another one of its election commitments and delighted to be part of assisting those first home buyers aspiring to homeownership to achieve their dreams.

1:47 pm

Photo of Jane HumeJane Hume (Victoria, Liberal Party, Assistant Minister for Superannuation, Financial Services and Financial Technology) Share this | | Hansard source

I thank all senators for their contribution to this debate. This bill sets out the framework to enable the National Housing Finance and Investment Corporation to provide guarantees to improve access to home ownership for first home buyers and undertake research into the housing market in Australia. The 10,000 guarantees provided by the National Housing Finance and Investment Corporation each year will enable eligible first home buyers to enter the housing market sooner.

The government wants to take the opportunity to thank stakeholders that have assisted with the development of the First Home Loan Deposit Scheme. The government has been working with stakeholders throughout the design phase and will continue to do so ahead of the commencement of the First Home Loan Deposit Scheme on 1 January 2020.

The bill will be supported by an investment mandate consistent with existing arrangements. The government will provide broad direction to the National Housing Finance and Investment Corporation on the operation of the First Home Loan Deposit Scheme through that investment mandate.

The bill also establishes the National Housing Finance and Investment Corporation's new research function into housing affordability in Australia. With this role the National Housing Finance and Investment Corporation will embed itself in Australia's research landscape and assist in identifying and addressing existing research gaps. Both the First Home Loan Deposit Scheme and the National Housing Finance and Investment Corporation's new research function complement other housing measures introduced by the government, such as the establishment of the First Home Super Saver Scheme and reinforces the government's commitment to helping Australians achieve their goals years earlier. The bill is an important part of the Commonwealth's objective of making the dreams of first home buyers a reality, and I commend this bill to the Senate.

Photo of Cory BernardiCory Bernardi (SA, Australian Conservatives) Share this | | Hansard source

The question is that the National Housing Finance and Investment Corporation Amendment Bill 2019 be read a second time.