KEYNOTE SPEECH
POWERHOUSING AUSTRALIA AWARDS DINNER
NATIONAL MUSEUM OF AUSTRALIA
TUESDAY, 26 NOVEMBER 2019
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My dad’s got a cigarette tin.
It’s a bit of a family heirloom. Inside is a bit of metal.
In a few weeks’ time it will be 77 years since it implanted itself in my grandfather.
It didn’t kill him. But it did end his war in New Guinea.
It also took him to meet the woman he ended up marrying. He got rushed to Townsville to get patched up and that’s where he met my grandmother.
That little piece of shrapnel affected him most of his life.
He used alcohol as a crutch. He stayed in the army most of his life and never owned a house.
When he left the army he rented for the rest of his life, living off his army pension.
And when he died there was nothing in his bank account.
It was only the couple weeks he spent in intensive care that meant there was enough money to pay for the funeral.
What happened to my grandfather also affected my dad.
He doesn’t drink and he bought a house in his twenties. He and mum still live in the same place today.
He also lectured me incessantly when I was in my twenties about the importance of buying my own place.
I remember him saying, “You don’t want to be renting when you’re retired”.
For my old man, buying a house wasn’t about making a fortune; it was about making sure that what happened to his dad didn’t happen to him and his family.
I took his advice. And I am lucky I did.
But it was a lot easier to take that advice 20 years ago than it is today.
In the early 1990s the average home was three and four time’s average income.
It’s now a lot more than that.
In places like Sydney it’s now more like 12.
And as a result, Australians are a lot more in debt than we have ever been before.
Our ratio of household debt to income has nearly quintupled in the last 40 years.
We have got the highest level of household debt in the G20.
Even though interest rates are now really low, we are now spending a lot more of our income on paying off the mortgage than we were when interest rates were high back in the nineties.
All of that means if and when interest rates go back up a lot of Australians could find things very tough.
Particularly people who aren’t ahead in their repayments.
It also means a lot of people are opting out.
The percentage of people who own their own home is now at the lowest level in 50 years.
A greater proportion of Australians owned their own home when Menzies was Prime Minister back in the 1960s than do now.
The ‘Great Australian Dream’ has been great for some.
It has created the sort of economic security that my dad talked about for a lot of people.
It has also done more than that. It has become a retirement plan.
A lot of people have been able to fund their retirement using the capital growth on their property investments.
For some people, it has been a way to accumulate a lot of wealth.
But for a lot of others that good fortune has shut them out.
It’s bred the sort of “OK, Boomer” resentment we see today.
Over the last 20 years the number of people in their twenties and thirties buying a home has gone off a cliff.
And things are unlikely to get much better any time soon.
The Government’s First Home Loan Deposit Scheme might help a bit. I hope it does.
But at best it will only help about 1 in 10 first home buyers.
There is a mad scramble at the moment to set it up by the first of January.
And there’s the risk that the banks that are part of this might charge customers higher interest rates.
If that happens, it will bugger up the whole scheme.
It will defeat the entire purpose of it.
So I hope the Government sorts that out.
The announcement today that NAB will be part of this and won’t charge higher interest rates is welcome news.
But more concerning is this.
The economy is weak. Unemployment is up.
Under employment is chronic. Part time and casual work is becoming more the norm.
And wages are flat. The Deputy Governor of the Reserve Bank Guy Debelle said today low wage rises are ‘the new normal’.
At the same time property prices in places like Sydney are predicted to increase by up to 10% in the next 12 months.
If that happens, the gap between average wages and the cost of the average home is only going to get bigger – and saving up to get your first home, and pay it off, is only going to get harder.
We are also not building enough homes.
Housing construction is down.
Last year we built around 195,000 new homes across Australia.
This year we only built 175,000.
Next year it’s expected to drop to around 168,000.
Building approvals are down 22 percent.
And UBS estimates 50,000 jobs have been lost in the construction sector just this year.
We have already got a housing shortage – mainly in NSW and Victoria.
And the drop in housing construction is only going to make this worse.
The Master Builders’ Association tell me they don’t expect the number of houses we build to go back up to about 185,000 until 2023/24.
If that’s right, over the next five years the construction crisis we are seeing right now is going to mean the shortage of affordable housing in places like Sydney and Melbourne is going to get even worse.
We took a bunch of policies to the last election to tackle some of these problems.
And we lost.
Inevitably we won’t take exactly the same policies to the next election.
But the problems we were trying to fix still exist.
As I just said they could get worse.
And at the pointy end of this it’s not people struggling to buy a home.
It’s people struggling just to find one.
There are more people in Australia today who are homeless than ever before.
And forget the old misleading stereotype of the old bloke on a park bench with a brown paper bag and a bottle of grog.
Almost half the people who will be homeless in Australia tonight are mums and their kids.
The fastest growing group of homeless Australians are women aged 65 to 74.
And one in ten people sleeping rough in Sydney is a veteran.
People who served this country like my grandfather.
There are lots of things that explain this.
But one thing is clear.
Construction of social housing hasn’t kept up anywhere near with demand.
Over the last decade the population has increased by 18 percent.
Over the same period the amount of social housing has increased by 2.5 percent.
And a lot of the housing that is available is in terrible shape.
My office is helping one person at the moment who lives in a bed sit that is that full of mold it is in his sheets and has infested his clothes.
The problems are just as real in the private rental market.
More people are renting than ever before.
They are renting longer, and it’s costing more.
I talked earlier about the increase in the cost of buying a house and paying it off over the last 20 years.
But think about this.
Average housing costs for people with a mortgage have gone up by 36 percent in the last 20 years.
Over the same time average housing costs for renters have increased by 56 percent.
And you will see the impact of that in the Rental Affordability Index released tomorrow.
What it shows is if your household income is about $60,000 a year there is almost nothing affordable for you to rent in any capital city in Australia.
Hobart is the worst.
Greater Adelaide comes next and then Greater Sydney.
In my own electorate rents have increased at three times the pace of wages in the last few years.
It helps explain why homelessness has also increased in parts of my electorate by almost 200 percent.
It’s an ecosystem.
If one part is out of whack there is a flow on effect.
If housing is too expensive to buy, more people will rent.
If rent is too expensive, more people will need social and affordable housing.
If there is not enough social or affordable housing, more people will be without a home at all.
It also affects where you live and how far you have to travel to get to work.
The stress and anxiety that all of this causes can also affect your health, your mental health and family breakdowns.
And all of this is only going to get worse when NRAS winds up and up to 37,000 families have their rent go up by about 20 percent.
There is no quick or easy fix to any of this.
Even though the housing construction industry could do with some help, I don’t think the government is going to open up the wallet.
And it will take big amounts of money to make a big difference.
Organisations like Industry Super say we need about 250,000 new affordable homes. We are talking about billions of dollars.
The reality is public funding is never going to keep up with the need and demand for more affordable housing if we don’t fix some of the overall problems with the housing market.
That’s why things like the National Housing Supply Council were important.
Unfortunately the Liberals abolished it.
NHFIC is useful. But it won’t give you everything you need to build more affordable homes.
Super funds could help.
Self-managed superannuation funds have certainly made a lot of money out of bricks and mortar, so why not the bigger retail and industry funds.
It is early days.
But this could become an asset class that makes superannuation funds a lot of money and helps build the affordable rental housing we need.
Build to Rent is also a big opportunity if we get the tax incentives right and if governments’ help with things like land supply and planning incentives to make sure affordable housing is part the mix.
I don’t have all the answers.
No one does.
But I am keen to work on them with you.
Thank you for listening to me, and more importantly thank you for what you do.
You put a roof over peoples’ head.
More than that, you give them a home.
There is not much more important than that.
And it deserves praise and recognition.
That’s what these awards do.
They recognise excellence.
Congratulations to everyone who has been nominated.
It is an honour to be with you tonight.
ENDS
