I don't share Julian's enthusiasm for a general fall in house prices. I think many families see their home as their greatest investment and economic security. What we need is more affordable homes at the entry level, to help more people into the housing market.

PLIBERSEK: Can I just add to that Kevin? One of the reasons for looking in particular at a savings vehicle to help first home buyers rather than simply increasing the First Home Owners Grant is because we don’t want to see an inflation in the housing market. If you simply double the First Home Owners Grant as many Liberal backbenchers have suggested recently, you would see that sort of inflation and indeed average house prices have more than doubled since the First Home Owners Grant was introduced.

Home > News > Housing affordability; National Summit on Housing Affordability; Peter Beattie; John Robertson
Housing affordability; National Summit on Housing Affordability; Peter Beattie; John Robertson
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Doorstop Interview - 2nd July 2007
Kevin Rudd - Federal Labor Leader
Kevin Rudd
Tanya Plibersek - Shadow Minister for Human Services, Housing, Youth and Women
Tanya Plibersek

RUDD: We’ve just been talking today about the challenge of housing affordability. Housing affordability is a challenge for more and more working families across Australia. If you look at the basic figures, they themselves cause you to realise, we have a problem on our hands. If you look at the data which has been produced by the Commonwealth Bank and the Housing Industry Association, back in 1996, we were seeing that Australians were spending approximately, something in the order of 18 per cent of their average income, when it comes to their overall mortgage repayments. Roll the clock along to 2006, 2007 that’s gone up to something in the order of 30 per cent of their average income. When you look at the relationship of the price of an average house to average wages, a decade or so ago, an average price for a house was about four times what you’d have by way of average wages, now it’s up to seven times what you have by way of average wages.

That’s why the Commonwealth Bank Housing Industry Association affordability index says that we’ve now got record lows when it comes to housing affordability, in fact some 40 per cent lower than it was back in 1996. This is a problem affecting working families right across Australia.

Mr Howard’s response has been to say that: ‘working families have never been better off.’ Well, the story we find from working families is pretty different to that and we think it’s time that we made a difference.

What Tanya Plibersek and I, the Shadow Minister for Housing are doing today is, we are addressing, or I’m addressing the Property Council here and we’re going to be announcing the calling of a National Summit on Housing Affordability in Canberra later this month. We intend to bring together state government, local government, the property industry, the finance industry and the community sector as well, to come together to work out what we can do better, in order to improve housing affordability for working families.

It’s not just first home buyers that have a problem here. It’s those who are also paying rents, such as the family that we’ve been visiting with this morning and it’s also those who are trying to save enough to put a deposit on a house for the first time, who are currently having to survive the rental trap.

On top of that we have an increasing shortage when it comes to community and social housing and there’s a problem with homelessness itself. The figures on homelessness have some 100 000 people right now in Australia who are classified as being homeless and then when we look at the waiting list for community and social housing, something in the order of 200 000 on that list.

If you look at the definitions of those who are under stress, financial stress at the moment, in terms of what they’re paying for rentals, something in the order of 250 000 households are now paying in excess of 30 per cent of their income, when it comes to rentals and the projection from NATSEM is that figure will go up to something like 400 000, by the year 2010. So whether it’s first home buyers, those paying rents, those relying on social and community housing or the homeless, right across the spectrum we have a real problem when it comes to housing affordability.

Our plan of action is to convene this National Summit on Housing Affordability in Canberra, in Parliament House, later this month and today we’ll be releasing this document, New Directions for Affordable Housing, which puts forward our proposed agenda for that Summit. It outlines a number of practical proposals that we’re putting forward for discussion. Each of those proposals deals with the overall costs which are impacting on working families, including local infrastructure costs, which find their way through into the prices which people are paying for new houses, as well as the overall impact of such things as the first homeownership scheme as well.

What we want to do at this housing industry summit, this housing affordability summit, is work through an agenda of proposals. They will deal with how we can better deal with the taxation system for those who are trying to save a deposit in the first place, what we can do to improve the First Home Ownership Grant Scheme, what we can do with local government and the state government to reduce the overall impact of charges and taxes on those who are putting new developments into the market and overall looking at the overall development approval scheme and how it affects the overall land release scheme, which applies to this country.

None of these things represents a magic solution in itself but we want to put all these proposals on the table so that we can have a debate about them. Finally, by way of policy I’d say this, once we’ve had this National Summit on Housing Affordability, we then want to work through the individual responses from the finance sector, from the housing sector and others, to then define and shape exactly the proposals that we’ll take to the next election.

I conclude by saying this, before asking Tanya to comment, housing affordability is now a crisis facing many, many working families across Australia and we don’t want the Federal Government just to play the blame game with this and blame somebody else. Our national government has to show leadership to find better ways of making it easier for working families to save for a deposit on their first house and to deal with the overall problem of affordability. Tanya…

PLIBERSEK: Thank you Kevin. My name’s Tanya Plibersek. I’m Labor’s Housing spokesperson and I’m very excited about Kevin’s speech at the Property Council today and about this housing New Directions paper that we’re launching today.

This paper goes through some of the critical reasons for the housing affordability crisis in Australia. House affordability has never been lower in Australia. We’re finding average families paying more and more for rent. That’s making it harder to save a deposit for a home. We’re seeing record low numbers of first home buyers moving into the housing market and we’re seeing critical shortages in the area of social housing as well. So, across the spectrum from home purchase, to rental, to social housing, we’re seeing shortages as never before and prices as never before.

This paper outlines a number of options that Labor is interested in discussing with the housing sector. We’re talking about builders, people who finance housing, community housing providers, social housing providers and we’ll have that discussion again, at the Summit later this month.

We’re very interested in engaging in this public debate because it is a key issue for many working families and it’s growing as an issue as housing affordability declines. This paper covers a number of suggestions, including one that’s been in the news already today, which is a suggestion that we could have a vehicle, something like superannuation, to help people save a deposit for their first home. We’re seeing young families finding it very difficult to save a deposit because of the very high costs of rent. For many families, it’s not paying for the monthly mortgage that’s the problem, it’s the saving $30 000 or $50 000 to put a deposit on a home, so that they can then start paying a mortgage rather than rent. So it’s a very exciting opportunity today and we’ve had an enormous amount of help from industry associations such as the Housing Industry Association, the Property Council, the large superannuation funds, community housing providers and many, many others that are reflective of some of the ideas in this paper.

RUDD: Good, thank you Tanya. Over to you for questions.

JOURNALIST: Is it a myth now that Queensland is an affordable state?

RUDD: Well, Queensland, like the rest of the country has suffered from eight interest rate hikes on the run and four since the last election and those four since Mr Howard said at the last election that interest rates wouldn’t go up again. The four interest rate rises that we’ve had since the last election have contributed about $73 000 to the overall cost of a mortgage over time. That has affected affordability across the country. Mr Howard’s response is simply to say: ‘working families have never been better off’. We’re putting forward a difference solution, outlined in our National Housing Affordability Summit, together with the agenda of ideas that we’re putting before that Summit.

JOURNALIST: (inaudible)

RUDD: Because we believe in consulting with the finance industry, the property development industry, state government, local government and guess what, they don’t all agree and therefore we intend to bring the best minds from around the country, round the table in Canberra, in a few weeks time, later this month, in order to go through each of the proposals we’re putting out there. We’ve spent a lot of time in early negotiations with these sectors, in the many separate sets of proposals which have been put on the table.

Tanya’s mentioned one of them and it’s been in the media this morning, namely, how can we encourage families, like the family we’ve been visiting here with today, to save more by changing the taxation system to make it easier for them to save for the deposit on their first house. We don’t have a particular tax formula in mind but we want to talk to the industry about how that might best be constructed. I think it’s a sensible debate to have.

JOURNALIST: (inaudible) just going to keep going up, you know (inaudible)?

RUDD: When you look at the overall question of housing, you’ve got to look at both supply and demand. What we’ve put forward is a proposal for a National Summit on Housing Affordability which looks at both the supply and demand side factors.

On the supply side factors, for example, what are we going to do about the overall land release strategy for the country? What are we going to do in terms of the developmental approval process for the country? What about urban infill, in cities like Brisbane, but elsewhere across the country as well? What are we going to do about the skills shortage in the housing sector? All of these things are ultimately affecting the overall price of housing, together with, critically, state and local government infrastructure charging. We need to get the whole picture right on these things so that the overall supply of housing can be improved. The price can be improved and made more affordable for working families, as well as looking at how we can assist those families more directly through some of the taxation measures I went through before.

PLIBERSEK: Can I just add to that Kevin? One of the reasons for looking in particular at a savings vehicle to help first home buyers rather than simply increasing the First Home Owners Grant is because we don’t want to see an inflation in the housing market. If you simply double the First Home Owners Grant as many Liberal backbenchers have suggested recently, you would see that sort of inflation and indeed average house prices have more than doubled since the First Home Owners Grant was introduced.

RUDD: So, that’s why we’ve got to look at a whole package of difference measures and we want to test those, with the finance industry, property development industry and with local government as well.

JOURNALIST: (inaudible) property market (inaudible) charging too much?

RUDD: I think state and local governments across the nation need to review carefully their level of charging. Some of the advice that I’ve got in my private discussions with the property development industry have gone to the level of local government charging at present. Of course, that invites an entirely different debate as well, and that is the adequate degree of federal funding for local government infrastructure needs and all of this, needs to be put on the table. Because, right now, working families are picking up the bill. Affordability is collapsing for housing and as a result, governments across the board need to act, national, state and local.

JOURNALIST: Mr Rudd, would Peter Beattie be welcome to join your team in Canberra?

RUDD: Peter would always be welcome to come to Canberra. I’ve said that many times before and I’ll continue saying it. I heard what he had to say yesterday at the ALP State Conference, I wish him well in his decision making process. He’s been a good Premier of Queensland and will continue to be one.

JOURNALIST: Do you (inaudible)?

RUDD: I think we’ve got a little problem at the moment, which is that we’ve preselected everybody but I’m sure if Peter wanted to come to Canberra at some stage in the future, we would be more than happy to accommodate him.

JOURNALIST: But not this time round?

RUDD: Well, we’ve actually pre-selected everybody. That’s a bit of a challenge.

JOURNALIST: Mr Rudd, in New South Wales, John Robertson said he seems to think (inaudible) you after the next election. How do you respond?

RUDD: Oh, I think he’s gotta be dreaming. The, look, the bottom line here is that people swagger a bit and say a few things like that. For me, it doesn’t add up to a row of beans. My job, is to put myself forward as the alternative Prime Minister of the country and if I’m elected to govern in the national interest. Governing in the national interest means governing for the nation’s overall wellbeing, not for any part within that and that goes to an individual trade union leader as well.

JOURNALIST: Is that akin to bullying?

RUDD: Oh look I think there’s a bit of swagger and a bit of silliness in all of that and probably be useful if he pulled his head in.

Ok, better run.

PLIBERSEK: Thanks everyone.

"There won't be an increase in the First Home Buyers Grant, because we've seen from experience what happens when you provide a grant like that — or increase it — is that it goes straight into the pocket of the seller."