JASON CLARE MP
SHADOW MINISTER FOR HOUSING AND HOMELESSNESS
MEMBER FOR BLAXLAND
LABOR CANDIDATE FOR HASLUCK
MONDAY, 2 MAY 2022
SUBJECTS: Help to Buy; National Housing Supply and Affordability Council.
TANIA LAWRENCE, LABOR CANDIDATE FOR HASLUCK: Hi, I'm Tania Lawrence, Federal Candidate for the Labor Party for the seat of Hasluck. And it's fantastic today to be here in Ellenbrook together with Shadow Minister for Housing, Jason Clare. It's an incredible announcement that was made yesterday at Labor's campaign launch around social and affordable housing. My own family were the beneficiary back in the day of being able to access affordable housing, being able to get out of renting and into the property market allowing me and my family to have the security of a roof over our head. And this area is absolutely growing. Every week, more and more families are moving out to Ellenbrook. We've got metronet literally a kilometer or two from where we're standing here. That is going to allow a huge amount of opportunity for this area. But we need to make sure that that opportunity is accessible to every single person. And to that note, I’ll hand over to Jason Clare.
JASON CLARE, LABOR CAMPAIGN SPOKESPERSON: Thanks very much, Tania. It's great to be here in Hasluck this is a very important part of the world. It's a very important part of Australia. If we win this seat at this election, we can change the government. We can change this country for the better. Albo talked yesterday about our positive plans to build a better future for all Australians. One of them is making it easier for Aussies to be able to buy a home.
It's not an overstatement to say we have a housing crisis in Australia. It's harder to buy a house today than ever before. It's harder to rent than ever before. And there are more homeless Aussies today than ever before. Think about this. Go back 40 years ago, when Bob Hawke was the Prime Minister of Australia, around about 60 per cent of young Aussies in their 20s or 30s owned a home. This is young Aussies on low incomes. So, 40 years ago 60 per cent of young Aussies on low incomes owned their own home. Today, it's about 28 per cent. That's a massive drop, and a massive drop for the worse. We're seeing a cleaving apart in our society, in our country, between people who own a home and people who don't. People who think they may be forced to rent for the rest of their life.
The Help to Buy policy that we announced yesterday is about tackling that challenge. Helping Aussies on low and modest incomes to be able to buy a home with a mortgage they can afford, rather than being forced to rent for the rest of their life. It means being able to buy a home with a smaller deposit, a smaller mortgage, and smaller mortgage repayments. And importantly, this is not just for first homebuyers. It's for Aussies, in the middle of their lives, that are on lower incomes and need a little bit of extra help to be able to buy a home rather than rent for the rest of their life.
Let me give you an example. 34 per cent of women who get divorced and have to sell the family home, are able to buy another home within five years. 42 per cent of men in the same situation: get divorced, sell the home, and are able to buy another home within the first five years. That means you’ve got a lot of people that are potentially renting for the rest of their life. A scheme like this can help them, they've got enough money for a deposit, but they don't have enough money to get a mortgage either because they're not going to be in the workforce long enough or their incomes too low. This scheme’s designed to help people like them.
I met a person last year, on the other side of the country on the Central Coast of New South Wales. Her name's Angela. And she told me her story. She works at a school canteen. Her husband is a carpenter. They've got three kids, they want to buy a house, but they can't afford the mortgage. The house they want to buy on the Central Coast is worth about $900,000, the bank will only lend them about five or $600,000. A scheme like this will help them to be able to live in a home that they own rather than renting for the rest of their life.
And what we saw in response to the policy that we announced yesterday was a wave of endorsements from different organisations. Everybody from The Property Council and the Master Builders of Australia, right through to ACOSS and National Shelter. So, organisations, whether they're representing the property development industry or whether they're representing people who are struggling to make ends meet, they know that this is a good policy that can make a difference.
It was a great place to announce here in WA because this is the home of shared equity. The WA Government, Labor and Liberal, have been doing this for 30 years. It's called KeyStart. And it's made a real difference here in WA. It's what's prompted the Victorian Government to run a similar scheme in their state. It's what's prompted the Tasmanian Government only a couple of months ago to announce that they're going to do this too. And the New South Wales Liberal Government have also flagged that they're going to do it.
Whether it's Labor or Liberal governments, people that look at this seriously know this is a way to help Aussies on low and modest incomes to be able to live in a home that they own, rather than having to rent for the rest of their life. And we're backing hardworking Aussies who want to buy a home by doing this. Scott Morrison, if he's honest, will tell you that this is a good idea. Because for the last 10 years, he's been saying exactly that. When he was Shadow Minister for Housing, when he was Treasurer of Australia. He said, this is a great way to help people on low incomes to buy a home. And now, on the eve of an election, when he's getting desperate to hold on to power, he's trying to make up reasons to say it's a bad idea. Happy to take some questions.
JOURNALIST: How long will this scheme go for? Is there a timeline for it?
CLARE: Well, we've funded and costed this over the forward estimates. But if this works, this is a long-term solution to a long-term problem. This crisis hasn't emerged overnight. And it's just getting worse and worse, with more Australians finding it impossible to be able to get a mortgage. We start with 10,000 places, we think that this will make a real difference.
JOURNALIST: What would you say to people who say this is just an enormous amount of petrol for an already out of control housing fire?
CLARE: That's not the evidence. Remember, there's about 600,000 homes that are bought and sold in Australia every year. This is 10,000. And it's targeted towards a specific group of people who aren't buying homes today at the moment. These are people who are forced to rent rather than buy because they're on low and modest incomes, and they can't afford homes that are on the market at the moment. Property Council was asked this question yesterday. They said they don't expect it to distort the market. The Grattan Institute looked at this and published a report about this two months ago, they made the same point that it would only have a modest impact. We've designed this looking at the model that the Tasmanian Government has adopted to create an incentive for people to not just buy a home using this scheme but to build a home. Homes like this where we are today. You get 40 per cent equity contributed by the government if you build, and that's a good incentive to help people to build more homes, not just buy existing homes.
JOURNALIST: It is a bet on the housing market from the Government though, isn’t it? Because it’s your equity.
CLARE: Well, this is I think anybody that's invested in housing knows that it's a good long-term investment. And if a scheme like this had been put in place any time in the last 30 years, it would create a return for taxpayers here in Australia. That's the experience here in WA. It's why whether you speak to a Liberal politician or a Labor politician here in the West, you'll get people giving it a full-throated endorsement, because it's delivered money back to the taxpayer to build social housing. And it's the same with the Poms. They've set up a scheme like this 10 years ago, and it's delivering a return to taxpayers as well. Interestingly, in Victoria, they've been doing this now for two years, one in six people that have taken up a scheme have already bought out the government's equity. So, it shows that if you give people a start, they can get a foothold in the market, they can get a mortgage they can afford, then they'll eventually, if they can, want to buy out the government's equity so they can own it in its entirety.
JOURNALIST: What will happen if the housing market does go down (inaudible)
CLARE: The way this works is a bit like the Victorian model, which is that you can't sell the house for two years. We do that for good reason, because we want to create stability here. You also don't want people selling out within a year and potentially being susceptible to capital gains tax. So, we think it's unlikely that that would happen. Overall, look at the evidence. Look at what's happened here in WA, look at what's happened in the UK, is that this is a good, long-term investment. Housing always is. And you've seen from the programs that are run here, and in the UK, that this will deliver a return to taxpayers. So, it's good for housing affordability, it's good for Aussies on low incomes who want to buy a home, and it's good for taxpayers as well.
JOURNALIST: If you do get into government, first, home guarantee scheme - is that going to be continued?
CLARE: Yeah, absolutely. These are good schemes that the government has put in place, they help a different group of people. They're often people who are earning more than $90,000 a year, and they help them to buy a home sooner. So, the value of those schemes that exist at the moment is they help you to avoid paying mortgage insurance. A lot of people until they buy a home won't know this, but unless you've got a 20 per cent deposit, the bank will charge you mortgage insurance. And that can cost $20 or $30,000. Now, when you're getting a loan, the last thing you want to do is be slugged with another big bill and the way these schemes work at the moment is the government goes guarantor over whatever deposit you've got over five per cent up to 20 per cent. So, they're valuable schemes, but what they do is more often the not, they’re helping people who are always going to buy a house to buy it sooner without paying that bill. This policy helps a different group of people who otherwise would never be able to buy a house, because, they're not just having problems getting a deposit, they're also having problems being able to service the full mortgage. The young person I told you about, might be a nurse, earning $80,000 a year and can't afford a million-dollar mortgage. Or the woman that got divorced, has a deposit, but doesn't have an income or enough time in the workforce to be able to pay out that full mortgage. This will help them by making sure that they've got a much smaller mortgage and smaller monthly mortgage repayments.
JOURNALIST: And you say it's going to make a modest impact on the housing market?
CLARE: That's the analysis from the experts. If you have a look at the work that say Dr. Brendan Coates at the Grattan Institute has done here, that's his analysis from a research paper he put out about two months ago. And that's based on a model that he developed, which was all about providing 30 per cent government equity for people who buy an existing home. We've made a calibration based on the model that the Tasmanian government's put forward here, to create extra incentive for people to build new homes. You'll get 40 per cent equity if you use this to build a new home, and that'll add to supply. One of the things people are concerned about here, of course, is that does this add to demand. We're going to add to supply as well. The Gordian knot here in the housing debate is how do you release more land? How do you smooth out the planning rules, so that we can enable Australians to be able to build more housing, at the pace that it needs to be built? By doing this, by creating incentives for people to use this fund, that will use this scheme to invest in new housing, that'll help in that regard.
JOURNALIST: So it's more if you build a house?
CLARE: No, it's more if you if you buy a new house. I know the cameras pointed on me. But if you look behind me, you can see new construction. So, we're creating incentive here for people to use this to build new housing, because we need more.
JOURNALIST: In WA though, it's pretty hard to nail down a builder in the next two years.
CLARE: So, this is part of a bigger problem, not just in WA, but right across the country. And that's why, as part of the announcement we made yesterday, we also announced the creation of a National Housing Supply and Affordability Council. It might surprise you but the Housing Minister in Canberra doesn't meet with the Housing Minister in WA, or the Housing Ministers right across the country. You're not going to fix this problem unless you've got the Commonwealth Government, the State Government, Local Governments all working together, setting targets for the release of land, getting nationally consistent data. Looking at the sort of problems you just mentioned, in terms of making sure that you've got enough skilled workers. Part of the reason we have a policy at this election of creating free TAFE places for more than 460,000 places for the areas where we've got skill shortages, is we've got skill shortages here, not just in WA, but right across the country, particularly in the traditional trades.
JOURNALIST: And what would you say to Scott Morrison saying it's just a way for Labor to make money.
CLARE: Scott Morrison is a hypocrite. He's been backing this and supporting this for 10 years. And now in a desperate act from a desperate Prime Minister and a dying Government, he's saying the absolute opposite. I think people have worked Scott Morrison out. He will do and say anything just to hold on to power. He's back to this for 10 years and now suddenly, he's doing a backflip.
JOURNALIST: So the other schemes that you talked about in Tasmania and Victoria, are they proportion based as well?
CLARE: Yeah, exactly right. This is something that's working right across the country. Labor and Liberal governments are implementing this because it's a good idea. Scott Morrison says that you don't want the government at the table. Without a policy like this, there is no table. There are hundreds of thousands of Aussies out there who are renting. There's more than that. There's more than two million Aussies that are renting. Most Aussies want to live in a home that they own. It's not for lack of trying. And we're backing them and helping them to buy the home that they want to live in, that they want to raise kids here. And this is the helping hand that a lot of Aussies need.
JOURNALIST: Can you rule out any last minute changes to negative gearing or capital gains tax?
CLARE: Yep. Certainly can.
JOURNALIST: With your modest increase or impact on the market, do you have any of your own modeling just going to show what that’s actually going to look like?
CLARE: We've had the policy costed by the Parliamentary Budget Office. That's been costed by the Parliamentary Budget Office so that we know what the cost is of the scheme upfront. The expectation is over time that this is deliver return back to taxpayers that it will deliver return back to taxpayers. In terms of modelling, that work has been done by people like the Grattan Institute.
JOURNALIST: It's been costed for you guys. So first of all, how much will it cost the Commonwealth?
CLARE: Over the forward estimates, $329 million. That's a mixture of admin fees as well as interest that we pay on the money you're borrowing to invest in these homes. That's fully offset, though, by changes that we're making to fees that the Foreign Investment Review Board charges foreigners for investing in Australian property. So, over the forward estimates, the total impact on the Budget is zero here because it's covered by that. And in the long term, we think that Australian taxpayers are going to benefit from this. Because as the value of the property goes up, and properties are eventually sold, just like in the UK, just like here in WA, the homeowner gets the value of their property back when they sell it plus the capital gain and so does the Australian taxpayer.
JOURNALIST: How about people trying to get into the housing market? If someone doesn't, there's 10,000 spots a year (inaudible)
CLARE: Again, all of the evidence here is either modest, or it's not going to have any impact. That's what the Property Council and Grattan are saying here. This is one part of a broader plan. I started this press conference by saying we've got a housing crisis, harder to buy, harder rent, more homeless Australians. We’ve got to do a bunch of things here. This is about helping Aussies who otherwise would rent for the rest of their life. That's an important thing to do. The government's existing schemes that help people who are trying to buy a house sooner without paying mortgage insurance. That's a good idea. We need to do that too. But on top of that, there's lots of Aussies out there that are scrambling to get enough money to pay the rent right now. We need to build more affordable rental housing. We also need to build more social housing. We're setting up, if we win this election, a $10 billion Housing Australia Future Fund that'll do just that. $10 billion invested, the dividend from that fund will build 30,000 affordable and social housing homes in its first five years. And just worth mentioning, while we're talking here about housing, 4000 of those homes will be for women and kids fleeing domestic violence. Over the course of the last year, we've seen 10,000 women being turned away from refuges, turned away from refuges because there full. Why are they full? Because people are staying there longer because there's no transitional or permanent housing for women and children that are fleeing domestic violence to go to. Now, the 4000 homes that we will build as part of that fund would be the biggest investment by the Commonwealth Government in permanent housing for women and kids fleeing domestic violence in Australia's history. Full stop. So, what I'm talking about here today and helping Aussies on modest incomes to buy a house is important. But it's not the only thing we'll do. We'll also build affordable rental housing for frontline workers, like nurses and cleaners and aged care workers and ambos. And we'll also build housing for homeless Aussies. In particular, women and kids fleeing domestic violence.
JOURNALIST: And sorry, the $329 million figure, that's across the forward estimates?
CLARE: That's right.
JOURNALIST: And the offset is, you described it from…?
CLARE: Foreign Investment Review Board fees, yes.
JOURNALIST: Is that entirely going to offset that $329 million?
CLARE: Yeah, and more so. If you check out the press release, it's more than $329 million. Thank you.
MEDIA CONTACT: LABOR CAMPAIGN MEDIA (02) 9165 8212