National Rental Affordability Scheme Bill 2008; National Rental Affordability Scheme (Consequential Amendments) Bill 2008: Second Reading

Governments have been taking unprecedented actions to arrest the crisis. The global financial crisis has dominated the nightly news. It makes for bleak watching, with boards of prices in the red, downhill graphs that represent quantifiable losses, stockbrokers shouting into phones and others staring numbly at the screens. This is the stuff that has dominated the news.

It is all immediately noticeable and it is dramatic. It is reported quickly and analysed as it is happening. Not all economic problems are like this. The crisis in rental affordability we are debating today is bad news-there is no doubt about it-but it is less immediately dramatic. It has been incremental over a number of years. Until recently it has been rarely mentioned on the nightly news. The effect of the rental affordability crisis, however, has been profound.

When housing costs are the biggest slice of the family budget, any change in housing costs has an immediate effect on Australian families. I have spoken a number of times in this House about the plague of mortgage stress in my electorate. There are plenty of other households in my electorate that suffer from rental stress. More households in the electorate of Blaxland are suffering from rental stress than in almost any electorate in the country. The Australian Bureau of Statistics reports that there are 8,475 households renting in the electorate of Blaxland and 4,130 of these are suffering from what is known as rental stress, or more than 48 per cent of renting households. That means, in simple terms, that they are paying more than one-third of their income in rent.

Workers on the front line, workers who help tenants with basic advice, can tell you just how serious the situation is. Mr Brij Datt of the South West Sydney Tenants Advice and Advocacy Service has seen a dramatic increase in the number of people coming to his service and asking for help. In 2004-05 the tenancy service received one or two inquiries a year from tenants who were facing eviction because the homes that they were renting were being repossessed from their landlords. They now receive one inquiry every two weeks; sometimes it is once a week. That is a big rise. That demonstrates the difficulty that everybody in the community faces when people cannot afford to pay for their homes.

Two main factors have contributed to put greater pressure on tenants: first, there is an increasing shortage of rental properties and, second, landlords are finding it increasingly difficult to meet their weekly mortgage repayments, leaving many tenants having to pay ever-increasing rents. Homeowners are finding it tough. This makes the situation even tougher for renters. Brij estimates that there has been a 30 or 40 per cent increase in calls to his service for help from people facing rent increases. He has dealt with many cases where the rent has gone up every three months, sometimes by as much as 30 per cent. This means that someone who was paying $150 a week at the beginning of the year has found themselves paying as much as $270 a week at the end of the year.

That is why I welcome these bills, which establish the National Rental Affordability Scheme. This is a supply-side measure. It seeks to make rental accommodation more affordable, bringing down the price by increasing the supply of available housing. It does this by offering incentives to the private sector and to community organisations to build affordable rental accommodation. The incentives will be in the form of a Commonwealth contribution of $6,000 per dwelling per year and a state or territory contribution of $2,000 per dwelling per year in cash or in kind. This will be linked to the rental component of the CPI, therefore ensuring that these increases hold their value into the future. Provided that the conditions of the scheme are met, investors in affordable rental accommodation will be able to receive incentives every year for up to 10 years.

The scheme will allow for up to 50,000 new rental properties to be built across Australia over the coming four years. The Minister for Housing has announced that, if demand for the scheme is still strong in 2012, then the government will consider extending the scheme to another 50,000 dwellings, which is a good thing. I hope that many of those dwellings will be built in my electorate, where we need them, where demand for affordable rental accommodation is as high as it is anywhere in the country. The national vacancy rate currently stands at around two per cent, but in Bankstown, in my electorate, it is less than one per cent.

I am glad to see that demand for participation in this scheme has already been strong. I understand the government has already received 244 expressions of interest in the first funding round, with the potential to build 12,770 new affordable rental dwellings. Investors are interested, obviously, in becoming involved in the scheme. The effect is that more affordable rental accommodation will be built. More affordable housing means more families that are doing it tough at the moment will be just that little bit better off.

The scheme has been receiving support from all parties all across the country. Christopher Atkins, the Executive Director of the Tasmanian Master Builders Association, said:

… the scheme will put new homes on the ground in a reasonable time period and provide affordable rental accommodation for families on low incomes. … the Scheme will stimulate the supply side of the residential construction market; the Scheme will be a catalyst for an increased supply of affordable land and housing.

That is good news for families on low incomes and it is good news for builders. Real estate agents have also supported the scheme. I note that that the President of the Real Estate Institute of Australia, Mr Noel Dyett, said:

We need this because the private market is not going to cater for lower-income earners without some government incentives.

The scheme has also got the support of those who represent the interests of people that are doing it tough. The President of ACOSS, the Australian Council of Social Service, Lin Hatfield Dodds, described the scheme as:

… really a significant plank in terms of housing affordability. It is a good way of energising investment. … we think this is a very important initiative.

The support of these people is important and I value their opinions, but when it comes to housing there is one guy that I have a lot of confidence in. His name is Mark Newey and he has been a real estate agent in Bankstown for his whole working life. He has seen booms and he has seen busts and he knows the housing market in my local community like the back of his hand. I was talking to Mark about the scheme the other day and this is what he told me. In 2003 he usually had about 30 rental properties on his books every week. He had a regular banner ad in the Bankstown-Canterbury Torch newspaper, and each week he would advertise the best 10 properties that he had going. He told me that the weekly advertising meetings would be very colourful affairs. Each of his staff would argue for their accounts-the properties that they were trying to move-to be included in the ad. He does not have that problem anymore. Now he is lucky if he has four or five places that are available to rent.

Mark tells me that things began to change at the end of 2003. As interest rates rose, asset prices began to fall. People become less willing to invest in the housing market. Changes to superannuation arrangements, although worthy, also encouraged people to move away from investments in property. The result was that construction of new rental properties began to slow about the end of 2003. Eventually it got to the point where building just about stopped. This was occurring as demand for rental properties continued to grow. You do not need to be Nostradamus to see that in a market where supply is slowing and demand is increasing the price is going to move upwards. This trend began in late 2003.

There is no point in asking why no-one in government back then did anything about this emerging trend. There was not even a minister for housing. When the Rudd government were elected in November last year we promised to do all that we could to address diminishing rental affordability. We promised we would have a minister for housing, who would work hard to improve housing affordability more generally. These bills, which establish the National Rental Affordability Scheme, are an important part of keeping that promise. The scheme fits into the broader housing affordability plan that is being rolled out this year. That includes the first home saver accounts, the Housing Affordability Fund and $30 million to fast-track the national rollout of an electronic development assessment, or EDA, system.

Add to this the boost in support for first home owners: the first home owners grant being increased from $7,000 to $14,000, as announced by the Prime Minister just last week; and an increase in the grant to $21,000 for those first home owners who decide to purchase a new property in one of the new areas. That has the additional benefit of supporting the construction industry at its most desperate time. It has that multiplier effect, if you will, of supporting the retail industry, the manufacturing industry and all those who contribute to the construction of new houses. These grants will allow many renters to get into the housing market for the first time.

The Minister for Housing is doing a good job, but she is not developing this package on her own. Some of the credit for the shape of the National Rental Affordability Scheme needs to go to the National Summit on Housing Affordability group. The group has for the last few years helped in the development of this scheme. People like Professor Julian Disney, Adrian Pisarski, Dr Ron Silverberg, Grant Bellchamber, Carol Croce and Carrie Hamilton have all been part of making sure that this scheme makes a real difference in the affordable rental accommodation market.

Rental affordability is a national issue that has serious local consequences. Members will know that in July this year I held a housing stress information night in Bankstown to give my local community the chance to have their financial questions, their issues and their concerns addressed by a panel of experts. That night was facilitated and chaired by financial and money expert Paul Clitheroe. The night was a great success; 250 people came along. I think it was such a success-that is, I think that we were able to give the sort of practical advice and the sort of useful information that people need-that I am doing it again. This time I am doing it in Cabramatta, at the other end of my electorate. On Tuesday next week I will be holding a second housing stress information forum, and I will do that at the Cabravale Leisure Centre. This time I am doing it during the day, to encourage young families to come along. I will also provide free child care to make attendance that much easier. Like the session that we held in July, this event will feature a panel of financial experts who will take questions from the audience from the floor. They will include Karen Cox, from the Consumer Credit Legal Centre; Jenny Reid, from Creating Links, a local NGO; David Bell, from Centacare; Ricci Bartels, from the Fairfield Migrant Resource Centre; and John Moratelli, from Legal Aid. The panel discussion will be led by respected financial journalist Karen Tso, previously of the Nine Network and now working as an anchor for CNBC. She is one of Australia’s most respected financial reporters, and she has very generously agreed to participate in this event to assist the people in Cabramatta who are doing it very tough.

As well as talking about mortgage stress, the panel will focus on the difficulties that families in my electorate are facing with renting. I am glad that Brij Datt from the South West Sydney Tenants Advice and Advocacy Service will be on the panel to provide advice to people that are really struggling with rental stress. Can I take this opportunity to place on record my thanks to the local press in my area, both the Fairfield Advance and the Fairfield Champion, for the support they have shown in promoting this event and bringing it to the attention of people that need this support. I also thank the Bankstown-Canterbury Torch newspaper for the support they showed for the forum that I held earlier this year in Bankstown and for the support they are showing for this event in Cabramatta. The front page of the Bankstown-Canterbury Torch newspaper today says ‘Rent spike: forum offers specialist rental stress advice’. You cannot do these things alone. You cannot get the information that is necessary for people to take action to get practical advice without the help of the mass media. My local newspapers have been extremely helpful in that regard, and I thank them most profusely.

When we find ourselves in financial difficulty, it is hard to speak up and it is hard to get help. That is why this event will also include stalls set up in the foyer to allow people one-on-one to get specialist help. There will be about 10 organisations that will hold stalls next week. They include Creating Links, Wesley Mission Credit Line, the Smith Family, Financial Services Union, the Salvation Army, the Office of Fair Trading in New South Wales, Legal Aid, the New South Wales Department of Housing, Centrelink and the South West Sydney Tenants Advice and Advocacy Service.

The theme of the day is ‘Don’t wait until it’s too late to get help’. What I hear all the time when I talk to counsellors and experts in this area is that people wait until it is too late to get help. For those who have a mortgage it might be waiting until the sheriff knocks at the door or the bank forecloses. For those people who rent it might be that they wait until they get the knock at the door asking them to leave immediately. My message today and the message that will be conveyed to all who come along next Tuesday is: don’t wait until it’s too late to get help; there are plenty of people out there who can help to provide you with free and independent advice. Many of those people will be there on the day.

If one local family struggling to pay the rent or the mortgage is put in contact at this event with a person or an organisation who can help them then it will be a success. That is what happened at the last housing stress information night that I held. A woman named Sophia Helene came along. She was just about to start work as a real estate agent. She came along because she wanted to learn a little bit more about the housing market and her potential clients. But, while she listened to the panellists speak that night, she realised that she could do with a little bit of help herself. At the end of the night, she went up to the Smith Family stall in the foyer and she spoke to a bloke named Gary Ingels. That night she signed up for a free budgeting course from the Smith Family.

Sophia and her husband have been working with Gary since then to improve their financial situation and ease the mortgage stress that they are currently under. I ran into Sophia a couple of weeks ago in the street and she gave me a big hug. She said that she had come along to the forum not realising that she could benefit from the information that was being offered that night. But the information she received changed her life and put her financial situation back on track. She was extremely grateful. I said: ‘It wasn’t me that provided that help; it was the experts that were on the stage. The politician just provides the opportunity. By putting someone in need in touch with people who can provide that help, assistance and practical advice, I can do a good thing.’ I recommend it to all members of this House.

Sophia is coming along next Tuesday. I have asked her to come along and she has been very willing to do that. She will speak as well at the forum and tell others to seek help before it is too late, before they get into deeper financial trouble. I hope people take this opportunity to seek help before it is too late. Just as the problem of rental affordability was not created overnight, it will not be solved straightaway. The National Rental Affordability Scheme is a long-term solution that will, in time, address the need for affordable rental accommodation in our community. I hope it makes a difference because no place needs it more than my electorate of Blaxland. I commend the bills to the House.’