FIRST HOME OWNER GRANT (HOUSING GRANT REFORMS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 13 November 2012.)

The Hon. D.G.E. HOOD (17:28): Family First strongly supports the First Home Owner Grant (Housing Grant Reforms) Amendment Bill. At the outset I wish to express my gratitude to the Premier, who invited me to join the industry round table discussion to consider some ways to stimulate the building industry, and I was very pleased to be a part of that. So I just place on record my thanks to him and to the planning minister, John Rau, for the same courtesy.

The discussions were very positive, and this bill is the result, as are some other initiatives that have already been introduced. I believe it will prove to be a very positive step, both for the home building industry, and also for young couples and families of all shapes and sizes seeking to establish themselves in a home of their own where they can raise their family and build their lives.

For some time now, the housing industry in this state has unfortunately been in decline. Figures in a report from the Australian Bureau of Statistics released on 17 October this year show the following: firstly, as to the total value of the building work done in South Australia:

The trend estimate of the total value of building work done in South Australia fell 0.3 per cent in the June quarter and has fallen for eight [consecutive] quarters.

Secondly, the number of dwelling unit commencements in South Australia in the June quarter was 1,895. This is the lowest in any quarter in the 2011 or 2012 calendar years. This figure has been in steady decline since 2009-10, where the number of dwelling unit commencements was 12,007, being an average of about 3,000 a quarter. That is an average of 3,000 a quarter, compared to the most recent figures of just about 1,895 a quarter—clearly, a very substantial decline.

It is clear, from these figures and a multitude of other figures which are widely available, that both the general building industry and the housing industry are suffering at the present time. Unless something is done, businesses will be unable to continue, and managers and skilled tradespeople will have no option but to move interstate or take up other occupations, something I am sure nobody in this chamber would like to see happen.

These considerations compel the conclusion that some intervention is required. As I said, Family First supports this proposal, which will encourage the building of new houses, particularly on land newly made available, where it is affordable for first home buyers in particular. Family First supports measures that promote and assist South Australian businesses, including home builders, of course. Whilst industries should generally be self-sustaining, there are times when an industry needs special support from government, and I believe this is one of those occasions.

The other side of the coin is that Family First, of course, given the name of our party, supports families. Many of those who benefit from these grants will be young families or people intending to start a family. Those families starting out and seeking to establish themselves face daunting financial pressures. It is appropriate to support them in buying their first home in one way or another.

While grants for first home owners have been in place for some time, the increased grants available under this bill will have a positive impact and provide a positive incentive for people to get on with it, so to speak, that is, to make a decision, commit to building, and begin the process. I am confident that the vast majority of families that benefit from the grants in this bill will, in due course, make a valuable contribution back to society through the raising of a family and working to pay off their mortgage. In this way, the housing industry, families and indeed the whole community benefits.

Of course, there is also the multiplier effect, whereby people who build new homes need fridges, washing machines, carpets, curtains, driveways, fencing, etc. All of these things provide valuable employment, and it has been suggested by learned economists many times that the building industry actually has the highest multiplier effect of any of the industries that exist. So, it is one worthy of support, in my view, from time to time. It is of course subject to great fluctuations in concert with economic cycles, and I think that is one of the reasons we have seen such a substantial downturn.

I briefly mention a few of the financial incentives provided in this bill. The First Home Owner Grant is increased from $7,000 to $15,000 for contracts to build new homes. The grant for established homes will be reduced from $7,000 to $5,000 and will later be abolished. Family First is comfortable with all of these measures. The First Home Buyers Grant of $8,000 will be replaced by a housing construction grant of $8,500 for new homes.

These measures are clearly aimed at encouraging first home owners in particular to build new homes, rather than buying established homes. This will greatly assist the struggling home building industry, and indeed see all the multiplier effects ripple through the economy at times of great need. There are caps on the value of homes that qualify for these grants, and I believe that is appropriate as well.

I note with interested that the upper limit for value of a home in relation to the First Home Owner Grant is $575,000 but the upper limit of value for the Housing Construction Grant is $450,000. I am not sure of the reason for the difference in these figures, but be that as it may, the measures will have a positive effect, and Family First supports them. We support the objectives of this bill; I think they are appropriate remedies for an emergency situation.

The Hon. R.I. LUCAS (17:35): I rise on behalf of the Liberal Party to support the second reading of the bill. As was outlined by the member for Davenport in a lengthy contribution in the House of Assembly, this bill seeks to do a number of things. In particular, it increases the First Home Owner Grant for new homes from $7,000 to $15,000 for contracts entered into on or after 15 October 2012. It also reduces the First Home Owner Grant for established homes from $7,000 to $5,000, and the grant will be abolished for established homes from 1 July 2014. The bill removes the phase-out of the First Home Bonus Grant from $8,000 to $4,000 from 1 July 2012, as announced in 2012-13 budget. The First Home Bonus Grant will remain at $8,000 for eligible transactions entered into between 1 July 2012 and 14 October 2012.

As the member for Davenport outlined on behalf of the Liberal Party, he sought feedback from a number of industry groups. He received responses from some of those, which were generally supportive—as one would imagine, the Housing Industry Association and others. The Law Society raised some technical issues. I understand, when we debate the committee stage, that the minister may move amendments, which in part I think have been raised as a result of issues that the member for Davenport and the Law Society have raised. I guess we can discuss those at the committee stage.

I have only just become aware in the last 24 hours of some concerns that have been raised with the member for Davenport and the Liberal Party from Lutheran Community Housing. I want to raise with the government and, in particular, the government's advisers the questions that they have raised. I had indicated earlier that my understanding was that we were going to support the minister's amendments that picked up the issues from the Law Society and that we were happy for the committee stage to progress today.

However, what I would like to do is to outline the concerns that Lutheran Community Housing has raised and ask whether the government can at least consider those overnight and bring back a response tomorrow as to whether or not the government acknowledges that there are some concerns—or whatever their response might be—to the issues that Lutheran Community Housing has raised with the member for Davenport. For the record, I will put on Hansard what Lutheran Community Housing has raised. They state:

...I have noted the following points as key issues which are either unclear, unresolved or should be included if the legislation is going to achieve its purpose of promoting housing construction without being limited to only some projects. From my observations the economy is in need of every assistance at this moment and particularly the new housing sector.

Iain—

that's the member for Davenport—

sought clarity on 'market value' which apparently includes land and construction as opposed to the more sensible proposition of legislation relating to construction value. Inner suburb housing construction will be penalised because of the higher land value compared to development further out. In his reply, the Treasurer did not answer the question in context with the purpose of the amendment.

If multiple houses are built on one title, will the grant apply on each of the 4 houses. We have a situation whereby land is held as one title and it is proposed to build 4 houses for the purpose of affordable rental housing or a mini development under the Retirement Villages Act on that land. Either way 4 contracts to construct 4 independent houses (total value approx. $800,000) will result on land valued at approx. $200,000. 'Market Value' on the project will be approx. $1,000,000 over 4 houses. It would appear that the Treasurer did not understand the intent of the question.

In his summary the Treasurer states:

'That grant is available to any purchaser of a newly constructed home. Indeed, a person can buy multiple homes and receive the grant for each of those homes. This measure is about stimulating the housing construction market.

If an overseas investor, a trust, company or an individual investor wants to go out there and build a dozen homes, then we are achieving what we have set out to do. It is really about kickstarting the housing construction industry. It does run out on 30 June, so it does not entail any long-term liability or financial issues for the state because it is only available for a very short period of time.'

That is the end of the Treasurer's quote. Lutheran Community Housing then goes on to say:

It is critical that legislation covers various entities, including companies, trusts associations etc.

It is critical that land value is taken out of the equation and that criteria is based on construction value.

As I said, these concerns of Lutheran Community Housing have only become apparent to me in the past 24 hours. So, whilst the Liberal Party supports the legislation, we will listen to the government's arguments relating to the amendments it is going to move to its own bill during the committee stages, which we understand are possibly as a result of the concerns raised by the Law Society. We do ask the government whether it is prepared to take advice on the concerns of the Lutheran Community Housing overnight and bring back a response tomorrow when, hopefully, we might be able to conclude the debate on the bill.

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for Tourism, Minister for the Status of Women) (17:42): I thank honourable members for their second reading contributions and their support for this most important bill. This bill is about introducing legislation that requires changes to the housing assistance grants, it is about providing a boost to the state's housing construction industry, helping to stimulate the property sector and secure jobs. So, it is a very positive piece of legislation. A number of issues have been raised and I am happy to attempt to address those through the committee stage, perhaps at clause 1 or wherever the appropriate clause is, and to progress the thing as far as we possibly can this evening. I recommend the bill to the council.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. R.I. LUCAS: As the person handling this bill in the upper house, this is the first stage of the debate, so it is not as though the bill has been delayed. I have raised some questions on behalf of Lutheran Community Housing, which I have read via email from the member for Davenport's office. I have not had direct discussions with Lutheran Community Housing. I have asked the minister and the government whether they are prepared to provide advice now if they have the answers and then report progress so that I can then consult the member for Davenport and Lutheran Community Housing and conclude the debate tomorrow. If they do not believe they can answer the questions now, they can provide answers tomorrow so that we can hopefully conclude the debate tomorrow.

I have read in full the information that I have from Lutheran Community Housing. It has quoted the Treasurer's response in the House of Assembly, about which it still has concerns, and it has asked further questions. So it is really over to the government in terms of how it would like to handle it from here.

The Hon. G.E. GAGO: In relation to the question asked by the Hon. Rob Lucas regarding how market value is ascertained, I am advised that, with regard to market value, the same definitions are being used and have been used since 2008. Market value is a commonly used and accepted term and has not caused any issue with the administration of the current act.

Market value refers to the value of a home, including the land it is situated on. The act sets out how these values are to be calculated but, in most cases, transactions are done at arm's length and the market value is equal to what the purchaser pays the vendor for the home and the land. In relation to the other more specific questions, I am advised that we do not have those details available at this point in time, so I am happy to take those on notice and bring back a response.

The Hon. M. PARNELL: I will take this opportunity to put a couple of questions on the record. What analysis has the government done regarding the inflationary impact of first home owners schemes? I ask that question in light of the history of these schemes. I am advised that when the Labor federal government first introduced a home owners scheme in the 1980s, house prices jumped by 30 per cent. The Howard government reintroduced a scheme in 2000 and house prices went up 16½ per cent the following year. So my question is: what analysis has the government done to ensure that any assistance to home buyers is not just passed on through higher house prices so that there is no real benefit to anyone other than those selling houses?

The Hon. G.E. GAGO: I have been advised that there has been no specific analysis done. However, the $8,500 component is time limited, so any impact will be limited to that. The view is that, although there is an understanding that with these sorts of grants some component of that may be passed on in terms of general inflationary outcomes, the main purpose of this particular scheme is to act as a specific stimulus to the construction industry that is in significant dire straits. We believe that the benefits of that are going to far outweigh any of the other offsets that may occur.

Progress reported; committee to sit again.