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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2008-09-23 Daily Xml
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Question Time

HOMESTART FINANCE

Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (14:27): My question is to the Treasurer. Why has the government allowed HomeStart Finance to carry what the Auditor-General has described as 'very high risk loans', possibly exposing the South Australian taxpayer to risk flowing from declines in the property market and subsequent mortgage defaults? The government provided $1.2 billion worth of home loans to low income owners through HomeStart in 2006-07. On page 584 of the 2006-07 Auditor-General's Report it states:

HomeStart does not require its customers to take out mortgage insurance, due to the very high cost, such that HomeStart effectively self-insures losses incurred.

The present economic downturn and global credit market uncertainty mentioned by the Treasurer a moment ago exposes South Australian taxpayers to impact of defaults on these government-backed loans.

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (14:28): What an extraordinary question. Barely a week, a month or a day goes by when members opposite or federal Liberal Party members are not going on about housing affordability and are not asking what are we doing to get young South Australians into their home; why are we not cutting stamp duty; why are we not increasing the first home owners grant? One of the vehicles that a Labor government put in place under the Bannon government and sustained under the Liberal government was HomeStart. What does HomeStart do?

Mr Hamilton-Smith: What is your exposure?

The SPEAKER: Order!

The Hon. K.O. FOLEY: HomeStart gives South Australians, struggling families, low income earners, young South Australians and disadvantaged South Australians an opportunity to get access to a home loan to buy a home and to set up their life for a future. This Leader of the Opposition, or, as he calls himself the 'alternate premier', has now issued a policy statement that this opposition would get rid of HomeStart, does not support HomeStart. That can be the only interpretation of what he has just said.

I will get for the member—and I will attempt to get it before question time ends—the actual financials because I will not quote specifics as I do not have them in front of me. What I do know is that we closely monitor HomeStart. When I first came into office, with the Minister for Housing, we sent in a SAFA team (from memory) and we reviewed HomeStart. We have done a lot of work to improve the supervision and the monitoring of HomeStart. We put in as chairman of the board of HomeStart, Mr Claude Long, the former CEO of the Commonwealth Bank in South Australia.

My recollection—and I will get this confirmed; hopefully, my staff will have it before the end of question time—is that the default rate is well within its provisioning for such defaults. Of course, there will be defaults. There is no bank existing that does not have defaults—and it may be that the second question from the opposition is an example of a default. I will get the level of default, but the last report I read, from memory, indicated that any defaults were within provisioning and that HomeStart was performing very well.

HomeStart does self-insure against losses. It has a particular vehicle for giving itself that buffer. I cannot recall the name of it, but there is a specific fund that it puts aside to cover any losses. I understand that is an instrument that was put in place—and, again, I will get this checked—by a former Liberal government—it may not have been, but I think it was—and it may have been former treasurer Stephen Baker. I will get that checked. I am confident of and comfortable with the prudential supervision of HomeStart. I have a board observer on there and the former minister for housing, in particular, did an outstanding job in overseeing that portfolio.

From this day forward members opposite cannot legitimately attack this government for what we are doing or not doing on the grounds of housing affordability, because one difference between Labor and Tories, one difference between Labor and those who want to govern for the well-to-do in this state, is that we have put in place social policies and instruments of social policy that get working families and working people into homes. We are proud of the fact that we have put those families into homes because of a Labor policy.

No doubt, we will ensure that those people who are on HomeStart accounts, those people who want to borrow from HomeStart, those people who need a government of compassion to get them into housing, know exactly where the Liberal Party of South Australia stands when it comes to affordable housing. Members opposite have made it very clear today that they are not serious about affordability of housing. They are not serious about assisting those most in need. As we have always known about the Tories, they are there to preserve rights for the privileged.

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