Address to the Housing Industry Association

As we turn into the final year of this electoral term, it is only reasonable that we assess the various housing policies of the major parties of government.

The Government’s Policy

Labor has four main policies on housing.

Two of the four were announced before the last election: the Housing Australia Future Fund and the “Help to Buy” scheme.

The HAFF is a $10bn fund focused on social housing and Help to Buy is a policy where the Government owns up to 40 per cent of the house - both of these policies are therefore public style housing solutions.

The two developed in this Parliament are its perpetual renting plans and its housing supply targets.

1. HAFF

Mr Albanese and his Housing Minister Julie Collins said of the HAFF: “This will bring home ownership back into reach for thousands of Australians who have been locked out of the housing market.”

The Government has committed to a minimum annual disbursement from the $10bn HAFF of $500m.

But as of yet, no disbursements have been made.. It appears that the first round of disbursements should be coming soon, but the process has remained opaque..

At Senate Estimates in June, I asked how many organisations had sought this type of taxpayer support.

The Government won’t even say how many or who applied to receive HAFF funding.

So far the Government’s housing agency has spent $30m for not one new house. So far it’s all been about filling the trough for bureaucrats and consultants. The only money the HAFF has spent is on itself through Housing Australia. Not a dollar has been spent towards building a new house

Housing Australia’s call for applications states that the HAFF is designed to “help encourage private and institutional investment in social and affordable housing”.

It is unclear why institutional investors, code for super funds and foreign fund managers, need a leg up over Australians who cannot break into the housing market.

Labor’s modus operandi on the private economy is always about picking winners. They’ve decided that institutional investors should own all the housing at the expense of individual Australians. This is true to form for Labor, and consistent with their so-called ‘Future Made in Australia’ policy, and their dodgy boondoggle investment of $1bn in taxpayer funds in PsiQuantum.

2. Help to Buy

Sadly, this Labor Government’s policies are not calibrated for median income earners who are facing record barriers to entry into the housing market.

We know this from the price caps of the Help to Buy scheme released by the Treasury, as compared with median dwelling values per capital city which are sourced from CoreLogic:

In Sydney, the property price cap under the scheme will be $950,000. This is well short of the median house price of around $1.42m, and the median dwelling price of around $1.14m.

Under the proposed scheme eligible participants can access a Commonwealth equity contribution of up to 30 per cent of the purchase price of an existing home and up to 40 per cent of the purchase price of a new home.

Furthermore, noting the income limits of $90,000 for singles and $120,000 for couples, Loan Market analysis found that it would be nearly impossible for those low to middle-income earners to get a loan covering the remaining mortgage given banks’ stringent eligibility criteria.

The property price caps are well below the median dwelling prices in all capital cities, bar Melbourne.

The property price and income caps are such that the scheme will be unworkable in almost all of the major cities in the country.

Workability is not the scheme’s only problem. It has also proven to be hugely unpopular, in part because of the administrative complications that arise with participation in such schemes.

The Victorian Government in May announced that it would be cancelling its Homebuyer Fund program, an unsurprising move given its low rates of uptake.

The New South Wales equivalent filled just 172 of the 3,000 available places in the last financial year.

It is clear that Australians want to own their home – they are not interested in co-owning it with the Albanese Government.

The Help to Buy demand measure has been stalled in the Senate for good measure. Labor has been silent on the other options which exist to appropriately support demand, particularly from first home buyers, such as allowing use of superannuation or recalibrating lending regulation.

The next two policies were developed during this term. They include the perpetual renting plan and the 1.2 million new houses target,

3. Perpetual renting plan

Labor has established a perpetual renting plan. At its heart is a corporate housing policy to ensure that a generation of Australians become renters for life.

There are two elements to the perpetual renting plan: a tax break for institutions and an increase in direct payments to renters.

In the 2023-24 Budget, Treasurer Jim Chalmers announced that the Government would introduce “new tax breaks for investment in build-to-rent housing.”

Labor will halve the managed investment trust withholding tax rate for build-to-rent developments from 30 to 15 per cent at a cost of $30m by the 2026-27 financial year.

The build-to-rent tax concessions are designed for super funds and foreign fund managers so they can become perpetual landlords to Australian families.

This suits the principal donors to the Labor Party which are now the industry super funds who’ve paid $40m in super money to unions/ ALP in the past 12 months. Indeed, it was revealed last week in The Sydney Morning Herald that two State Labor MPs had received $200,000 in directors fees from Active Super. This is an outrageous conflict of interest.

I have written to APRA to inquire how this conflict of interest meets Prudential Standard SPS 521 Conflicts of Interest.

I await APRA’s reply.

We know how hard it is for renters. We have therefore supported increases to rent assistance and we recognise the important role that Commonwealth rent assistance plays to support Australians.

But it is expensive.

Put simply, it is a model which will be more expensive if, because of the Albanese Government’s agenda, more of us become permanent renters.

I am concerned Labor is calibrating tax and budget settings to formalise the Government’s giving up on home ownership by prioritising renting over owning.

I see this as part of Labor’s corporate housing policy.

The virtuous circle for Labor is super funds receive tax concessions and availability payments for build to rent, then super funds become the landlords to Australians.

Australians are supported to participate in this model through increasing taxpayer support as Labor gives up on home ownership.

Recently, I asked the Parliamentary Budget Office to produce a budget analysis comparing two scenarios. First, what would the impact be on Commonwealth Rent Assistance expenditure if super for housing was available, assuming that 20% of 38 year olds took up the scheme.

I decided to focus on 38 year olds as a sample cohort because this is a cohort with a significant average super balance, but who are also more likely to rent than older generations.

I asked the PBO to model the impact on the budget if those 38 year olds continued to rent into retirement, instead of being able to access their super to purchase a home.

The PBO found that the Commonwealth could save over $35m over the forward estimates and over $86m in the medium term in rent assistance expenditure if these 38 year olds were helped into home ownership through a super housing policy instead of perpetually renting.

This is a narrow costing for just one government payment type which shows one fiscal impact of Labor helping lock in a perpetual renting plan.

The PBO’s analysis comes after the Big Super lobby group, the Super Members Council, last month released modelling by Deloitte purporting to project a large hit to the budget bottomline through to the end of the century if super for housing was adopted.

As usual, Big Super has used members’ retirement savings to commission this research.

The SMC has pumped Dr Evil-like numbers funded by workers’ money into the media as part of a partisan campaign against Coalition policy.

I wrote to the SMC to request that they release the full modelling and to say which Deloitte partner signed off on the report. In response they simply provided a link to their media release. Furthermore, they argued that member funded policy advocacy was in the “super members’ best financial interests”.

Deloitte has not released the full modelling due to ‘client confidentiality’. While I am not surprised about the tactics of Big Super, I expect better from Deloitte.

4. Supply targets

In August 2023, Mr Albanese announced that the states and territories would receive a “new home bonus” of up to $3bn if they meet a new target of 1.2m new homes over five years.

What is the verdict on the supply measures?

The housing targets have been a spectacular failure.

At the present trajectory, the Government will miss its housing target by 300,000 dwellings. A spectacular 25 per cent shortfall.

The Chair of the National Housing Supply and Affordability Council recently declared that its forecasts indicate “the 1.2 million target will not be achieved.”

This came after the Council published its State of the Housing System report, which projected that housing supply will total just 900,000 new dwellings from 2024 to 2029.

New South Wales Labor Premier, Chris Minns, has commented that it will be “extremely difficult” for his state to meet its portion of the 1.2 million homes target.

Both the Government’s own adviser on housing and its Labor state colleagues are in consensus that the target is dead in the water.

It is well understood that the current policy settings and rates of construction are not working. Budget Paper No. 1 makes the following commentary:

Modelling from the National Housing Supply and Affordability Council shows Australia’s existing unmet demand for housing will not be satisfied unless the responsiveness of supply to demand is improved. Over the Council’s 6-year projection horizon, new market demand is expected to exceed new market supply by around 39,000 dwellings. … this suggests that without concerted action to reduce barriers to new supply, Australia’s excess demand for housing will continue to go unmet.

Nonetheless, the Government continues to hold onto a promise it knows it will not keep.

The summary of Labor’s position can be found in the key data points.

According to the Australian Bureau of Statistics, only 161,341 dwellings commenced construction in the last calendar year. This is a 13 per cent drop from the previous year.

Only 172,725 dwellings were completed in the last calendar year, 2023. Compare this with the peak under the Coalition of almost 220,000 dwellings built in 2018. Labor would need to build 240,000 new dwellings per year from July 2024 if they are to achieve their 1.2 million target.

So the scoreboard is a fail on supply and a fail on demand.

The Coalition’s Policy

Turning to the Coalition, there will be a serious effort on supply as we recognise that building more houses is essential. As my colleague Michael Sukkar said earlier this year:

“[W]hat will inform our thinking in the lead-up to the next election is how can we, within the constitutional constraints that we all know exist, work directly with local governments more and more to try and unlock sorts of infrastructure or capacity to build homes.”

We have already released a number of policies which will help address the housing crisis.

Opposition Leader Peter Dutton announced in the Budget in Reply 2024 that we would recalibrate migration policy to free up more housing for Australians.

This will occur through a number of steps. We will:

• Reduce permanent migration – from 185,000 to 140,000 for two years (then 150,000 in year three and 160,000 in year four) – while ensuring there are enough skilled and temporary skilled visas for those with building and construction skills to support our local tradies to build the homes we need.
• Return the refugee and humanitarian program planning level to closer to the long-term average – from 20,000 to 13,750.
• Work with the tertiary education sector to reduce the current, excessive numbers of foreign students – particularly at major metropolitan universities; and
• Implement a two-year ban on foreign investors and temporary residents purchasing existing homes.

These measures will free up well over 100,000 homes over five years.

To keep the Australian Dream alive, we also need to build more houses. Most Australians accept that development is necessary to house Australia’s children.

Millennials and Gen Zs need politicians to support development to keep the dream alive. It is unacceptable that a generation of Australians are being locked out of the dream of home-ownership their parents and grandparents enjoyed.

The Liberal Party must be the party of supply and development. This includes, as I mentioned, helping local councils or developers overcome needless barriers to new supply that can arise even where locals are supportive, land is available and there is demand for housing.

Sometimes, even in such favourable situations projects cannot proceed for want of some minor bottleneck to financing or construction – perhaps completion of a connecting road or some necessary drainage works. In these circumstances, we should be doing everything we can to resolve such issues, to both increase and speed up the supply of new housing.

Our other policy is the Super Home Buyer Scheme to allow first home buyers and separated women to use up to $50,000 of their own money in superannuation for a first home deposit.

This scheme will help Australians with the cost of living and reduce mortgage stress, by boosting the deposit used to purchase the house and lowering repayments - saving thousands of dollars a year.

This policy recognises that:

1. The key determinant of your success in retirement is your home ownership status, not your super balance
2. The deposit hurdle is too high for many Australians without access to the Bank of Mum and Dad, and superannuation is the biggest pool of capital many Australians possess
3. The impact on house prices would be negligible

Ultimately, we stand for choice and giving Australians options on their own money is hardly radical.

Similar savings schemes in Canada, New Zealand and Singapore all have provision for using superannuation for a first home.

I recently asked the Parliamentary Library to conduct some research on how these schemes work.

Canada’s Home Buyers’ Plan allows first home buyers to make tax-free withdrawals of up to $35,000 (CAD) from their registered retirement savings plans (RRSPs) to buy or build a qualifying home. The Canadian Government recently announced that the withdrawal cap would be increased to $60,000, with couples buying a first home being able to withdraw $120,000 together from their RRSPs.

In New Zealand, you can use all the funds accumulated in your KiwiSaver account for the First Home Withdrawal Facility, including Government contributions and employer contributions, provided you leave at least $1000 (NZD) remaining. There is no requirement to repay the amount back into your KiwiSaver account after using it to purchase a home.

In Singapore, members of the Government’s mandatory savings scheme - the Central Provident Fund (CPF) - can use their funds from their ordinary CPF account to cover the lower of the purchase price or the valuation price of the property at the time of purchase.

The Library also noted that the Singapore CPF lists ‘a fully paid-up home’ as a retirement need, and therefore the CPF system is built to assist Singaporean citizens or permanent residents to purchase their own home.

Unfortunately, the Labor Party here at home refuses to even consider the importance of home ownership in retirement.

The Senate Economics References Committee recently reported on these matters and made various recommendations.

Through the inquiry, the Committee heard from independent actuaries, Michael Rice AO and Jonathan Ng, who modelled cameos comparing the financial position of a prospective 35 year old homeowner who used their super to buy a home with their position if they continued to rent until preservation age.

The cameo concluded that if the 35 year old uses super for a 20% deposit on a unit valued at $800,000, after 30 years, the value of the equity in that unit is worth $1.2m in today's dollars. Compare this to keeping that deposit in superannuation – it would only grow to $319,000 when factoring in the costs of renting.

This massive difference is because property is a highly geared investment whereas rental payments are a pure expense. Rent rises with inflation, while the mortgage's real cost shrinks over time.

The Committee recommended that first home buyers be allowed to withdraw more than $50,000 for a home deposit.

To ensure the continued success of the First Home Super Saver Scheme, the Committee recommended that the application process be streamlined.

Finally, the Committee recommended that first home buyers be allowed to use their superannuation balance as collateral for a first home loan

The Committee is now looking at the viability of mortgage offsets and will report later this year.

The Choice

The difference between the major parties is clear. Labor has a number of schemes and funds which have produced lots of headlines, but done nothing to address the housing crisis.

Help to Buy looks dead. The HAFF has yet to create a single new home, and Labor’s supply targets are kaput.

Our policies are calibrated to help people immediately. Curbing migration and prioritising Australians buying Australian houses will provide material, near-term relief. The superannuation policy will rapidly expand first-home buyers' options for getting into a home.

There will be more policy to come but as it stands, the Coalition’s policies from Opposition will be vastly more effective than what we have seen from two years of Labor.

Ultimately we are against a corporate housing model. We stand for individuals owning homes. The Australian Dream is about people, not super funds and unions.