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FIRST HOME OWNER GRANT (HOUSING GRANT REFORMS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 18 October 2012.)

The Hon. I.F. EVANS (Davenport) (11:05): I think I might speak on this bill, Madam Speaker, and indicate that I am the lead speaker on the bill to do with the First Home Owner Grant (Housing Grant Reforms) Amendment Bill 2012.

Mr Venning interjecting:

The Hon. I.F. EVANS: The member for Schubert says do I have a conflict of interest? The answer to that is no. The reason he might raise that, though, is that prior to entering this place I was a builder but I sold all my interests two years after entering this place 18 years ago, so I think I am clear. I have a brother who is a plumber but this will not affect him much either, I suspect.

This is a bill to offer a scheme to the South Australian public for taxpayer funded grants in relation to First Home Owner Grants or housing construction grants and also for those who wish to purchase existing properties. This particular concept has had an unusual gestation under this government. In June 2008 the budget introduced a new first homebuyers grant scheme that replaced the then current first homebuyers stamp duty concession. The first home purchase valued up to $400,000 would attract a grant of $4,000 and the grant would be phased out for first home purchases valued between $400,000 and $450,000. The $4,000 grant would be in addition to the existing $7,000 First Home Owner Grant. That was in June 2008.

In September 2010 these grants were what the government called 'retargeted'. The retargeting enhancement of the First Home Bonus Grant provided savings of nearly $80 million ($76.9 million) over four years. The grants would be increased from $4,000 to $8,000 with the eligibility retargeted towards eligible first homebuyers who build or purchase a newly constructed home only. So, grants for buying existing homes would be ceased. The bonus grant will no longer be available for first homebuyers purchasing an existing dwelling. The grant phases out for the newly constructed dwellings valued between $400,000 and $450,000. The new arrangements will commence for eligible transactions entered into after 17 September 2010.

It started in June 2008 but was retargeted in September 2010. Then in June 2011, they were going to get phased out. The government's language was that the $8,000 First Home Bonus Grant, which is currently available for eligible first homebuyers who purchase a build, a newly constructed home, would be reduced to $4,000 from 1 July 2012 and fully abolished from 1 July 2013. The $8,000 First Home Bonus Grant would continue to be available for eligible transactions entered into prior to 1 July 2012. For first homebuyers who entered into a contract to purchase or build a new home from 1 July 2012 until 30 June 2013, there would be a $4,000 First Home Bonus Grant available.

The government had them in June 2008, retargeted them to get rid of grants for buying existing homes in 2010, then in 2011 they were going to be phased out. Then in May 2012 they decided to backflip on that and then extend them. In May 2012 the government said what we are going to do is quote to provide support for the housing market. The First Home Bonus Grant will remain at $8,000 for eligible first home contracts entered into before 1 July 2013. The government had previously announced that the bonus grant would be reduced from $4,000 from 1 July 2012 and end on 1 July 2013.

The $8,000 First Home Bonus Grant is available for eligible first homebuyers who purchase a newly constructed home of up to $400,000. What we now find is the government have backflipped on that promise, and it is now all in. You can now get a grant for newly constructed homes, you can get a grant for newly constructed apartments and, indeed, you can get a grant for buying an existing home. So, they have gone virtually the full circle and then some in their policy position.

Why did the government change its policy position? The government originally changed its policy position because the Treasurer was out there saying that it was his view that the First Home Owner Grant did little for housing affordability and essentially pushed the price of houses up. You only have to go to the Treasurer's press release of 9 June 2011—which, of course, is the budget week press release—which talks about the First Home Bonus Grant scheme. In his press release, the Treasurer says:

Much of the evidence suggests that in the long-run this bonus grant has the effect of simply raising prices for those building entry level homes.

Those are not my words; they are straight out of the Treasurer's press release. The position of the Treasurer and the government has been all over the place in regards to where they stand on these particular grants. I have some other quotes from the Treasurer. The Treasurer said, as quoted in Hansard on 21 June 2011, when questioned about this, 'I think, with regard to the budget, there are better things that we can do to increase housing affordability.'

He went on to sayin Adelaidenow, 'I don't think the First Home Owner's Bonus does much for housing affordability.' So, the Treasurer is not philosophically positioned where he naturally supports these particular grants as a way of providing cheap housing. The Treasurer hopes they may well provide a stimulus to the housing industry for more sales and more houses to be purchased, and therefore, more houses constructed.

Why does the Treasurer hope that? The Treasurer hopes that because, frankly, the construction industry in general, but particularly the housing industry, is certainly on its knees in South Australia. We have had the worst building approvals in 11 years. Construction work has been in decline over the last 12 months; it fell about 8 per cent from June 2012 for the 12 months previous. We have had the lowest dwelling commencements in 11 years.

The government reacted by holding a special round table with the building industry. The building industry had been screaming for some government action for many months, and eventually, in a set-piece, stage-managed production meeting, the government brought in the Housing Industry Association and others in the building industry so they could ultimately make the announcement that they were going to backflip on all their other schemes and reintroduce what is, I think, the most generous scheme of all the schemes they have had since June 2008.

So, the government have gone through a phasing out, an abolition, a retargeting, a reintroduction, an enhancement, and now an expansion of a scheme that they said does nothing for housing affordability and would ultimately only push up prices. The reason we are here is because the building industry of South Australia is certainly struggling.

I am just intrigued as to why the government have waited to have the meeting to make the decision to go down this path, when the housing and building industries have been lobbying the government on a whole range of issues over a number of years about policy decisions taken by the government that were making it simply too hard for the housing and building industries to compete. I have just made a list of them because, having been a builder before I came into politics and having family in the industry, I tend to follow the industry with interest. I have two sons working in the industry, and I follow it with some interest.

If we can go back to former treasurer Foley and the payroll tax issue on contractors in the building industry, where a number of builders were fined significant amounts of money (some in the hundreds of thousands of dollars) over the issue of whether payroll tax was eligible on payments to contractors. We argued from this side of the house that there should be a review of that matter to get exact clarification of the Treasurer's guidelines—that is, the Treasury guidelines through RevenueSA's website—as to when payroll tax is payable by contractors or not. The government's response was that it was not interested in having that review and to let the confusion stand in the industry and let them get fined, as they have been doing. Some builders, of course, went through the hoop.

Then, of course, we had the land tax issue. The Liberal Party moved for a review of land tax in the Economic and Finance Committee. The government voted that review down. We had the Urban Development Institute at the national conference present a paper saying that, in actual fact, the high land tax in South Australia was affecting land supply.

What does land supply impact on? It impacts on the cost of housing. Go out there and ask the housing industry: what is the most expensive part of your house? It is the land. The developers say that our high land tax regime in South Australia impacts on the cost of land, which impacts on the cost of housing, but did the government want to review the land tax? No, they did not want to do that either.

In fairness to the government, the opposition recently moved another motion in the Economic and Finance Committee about having a review of the whole tax system and, finally, the government has caved in and we are about to go through the process and set terms of reference. So, maybe in the next year before the election, with their having been in government for 10 years, we may finally actually get to have a look at some of these issues and hear from some of the industry groups one on one about the impact this has on the housing industry.

Then we have gone through this charade of the occupational health and safety legislation, which is about to be debated. I cannot recall if it has been voted on last week or will be this week, but it is about to go through the upper house if Mr Darley supports the government's view. The Housing Industry Association and the building industry generally are vehemently opposed to the proposed introduction of the 'harmonised' occupational health and safety legislation Australia-wide.

Why do they oppose it? It is going to put up the price of housing. The housing industry produced modelling where single-storey houses were going to go up to the tune of about $12,000 or $13,000 extra per house and double-storey houses were going up by, from memory, something around $21,000 per house. All these things add up to making housing more expensive, and all of them have been ignored by the government.

Of course, then we had the absolutely disgraceful decision by the government, before the election, to roll out and adopt the Liberal Party's announced policy of payroll tax rebates for apprentices and trainees in the building industry. Immediately after the election, in the budgets after the election, guess what they cut out? They cut out payroll tax incentives, as announced at the election, making it harder for single builders, the single employer, to employ apprentices. It does not necessarily impact as greatly on the group training schemes, but it certainly impacts on single builders, small builders, taking on single apprentices. They have made it harder for the building industry to employ apprentices—and you would have to ask why.

Just to top it off, because the budget is in such a mess—a deficit, in round numbers, of $900 million this year and $800 million next year—what is the government trying to do? It has its hand in the pocket of the Construction Industry Training Board, trying to grab $3 million a year out of that board, to take it out of construction industry training to try to prop up the budget of DFEEST, of TAFE. So, they are making it more difficult for the construction industry to control and fund their own training.

To top it off, we have the worst performing workers compensation scheme in Australia, and we have the highest workers compensation levy in Australia. Our levy here is about two to 2½ times higher than most other levies, so it is more expensive to employ in South Australia than in any other state. We have the worst return-to-work rate in Australia so, under our scheme, if a worker is unfortunately injured, it takes longer for them to get back to work.

All those things add up to making it harder for the housing industry to produce, but the government has ignored all of them. Do not worry about looking at the payroll tax on contractors. Do not worry about looking at the impact of land tax on the cost of housing. Do not worry about the occupational health and safety costs and the increased costs on the builders. Do not worry about the impact of cutting out the payroll tax rebate for apprentices and trainees. Go and take your $3 million out of the Construction Industry Training Fund and, whatever you do, do not fix up the workers compensation scheme.

The unfunded liability on workers comp has gone from something like $56 million in 2001 to, I think, $1.3 or $1.4 billion. The one thing the government does do is go around in circles on this policy. First they had the policy; then they were restricting it; then they were retargeting it; then they were phasing it out; and now they are reintroducing it and expanding it. This government is all over the place on this particular policy.

The Treasurer will be pleased to know that, despite all of that, the opposition is not going to defeat this measure. We recognise that part of this is a reintroduction of a budget bill. We promised the Treasurer he would get his budget bill and he will get this particular measure, but I just make the point that, in my view as someone who follows the building industry quite closely, this government has been asleep at the wheel about how it can actually go about helping the building industry progress building and make it more efficient.

They have ignored all the issues the industry has raised, except this one. Previously of course when they have gone about retargeting it or phasing it out, the industry has totally opposed it. The industry has said, 'Don't do it; it will have an impact.' It is only now that the Treasurer's budget on stamp duty and land tax revenue, I suspect, is in trouble on the revenue stream that the government has decided to reintroduce and expand this measure.

The Treasurer's office rang my office and offered a briefing. We asked for a briefing. We said we were available by phone for the briefing. The briefing never occurred, which is fine; I will deal with that between the houses. The reality is that we could have had a briefing by phone—there was a time restraint, and that was offered—but there are some questions the Treasurer will need to answer during the committee stage. For instance, we were promised a copy of the modelling. The Treasurer went on radio on 16 October and said:

Well, roughly it's budget-neutral, we've aimed it to be budget neutral as far as we can, you've got to remember that a lot of this is based upon projections, we don't know precisely how many people will take up the grant...

We would like to see that modelling to show that this is somehow revenue-neutral. There have been some emails from the Treasurer's office which I appreciate, and the Treasurer's office tells us that there is a cost of around $34 million in 2012-13. I am assuming that is a net cost.

What I would like to know is how many grants they think they are giving out in that year and how that impacts on how much stamp duty they think they are going to get as a result of the increased sales. Then in the next year—2013-14—they say there is a cost of $13 million and again, I would like to see the projections and the calculations behind how we get to that $13 million.

Then if it is going to be revenue neutral across the four-year period, one could only assume that there will be some projections, some estimates done within Treasury, that show that there will be $47 million of increased stamp duty collected in 2014-15 and 2015-16, because the only way it can be revenue-neutral is if the cost of the scheme in the first two years is collected as extra stamp duty in extra revenue in years 2014-15 and 2015-16. We asked to see that projection and we have not seen that.

We will certainly be chasing the Treasurer for that between the houses, because we want to see exactly the number of extra people Treasury thinks will now be taking up this grant as a result of the size of the grant and the flexibility within the grants scheme and how that flows through, both on the cost side of the agenda and on the revenue side of the agenda. One assumes that the government is doing it to create more employment—payroll tax impact—and to create more sales, therefore stamp duty impact. We would like to see the cost impact and the projections of that particular measure.

I also need some clarification from the Treasurer about the value of the purchase of a new home; I am assuming that it includes the land component. If the grant is eligible for homes up to $400,000 or $500,000, I am assuming that it is a house and land package which to me means that you are really herding the grants out for housing in the outer suburbs. There would not be too many new houses in the inner Adelaide area—the inner ring of suburbs—that you could pick up for $400,000, so one assumes that the modelling Treasury has done would show that most of these grants are going to be in rural areas or the outer suburbs, where the value of housing is less because, if you include house and land packages, you would struggle to buy blocks of land in some suburbs for $450,000, let alone a house on it as well. We need some clarity around that issue.

As I understand the proposal in the details of the bill, the bill introduces some amendments to implement the changes announced by the government in October and also to implement changes to the First Home Bonus Grant announced in the 2012-13 budget. The bill amends the First Home Owner Grant Act 2000 to increase the First Home Owner Grant for new homes from $7,000 to $15,000 for contracts entered into after 15 October 2012. But the bill also reduces the First Home Owner Grant for established homes from $7,000 to $5,000, and this grant is abolished from 1 July 2014.

My understanding is that, for the purpose of the bill, a new home is considered to be a home that has not been previously occupied or sold as a place of residence and includes a substantially renovated home. I am not quite sure how a 'substantially renovated home' has not previously been sold as a place of residence. There would be very few people living in a house from the time it is built until it is renovated; I suspect that every house being renovated at some point has been sold. So, I cannot quite work out how a 'substantially renovated home' falls into the category of 'has not been previously occupied or sold'. I would seek some clarification around that, Treasurer.

The bill also removes the phase-out. So, the phase-out itself has been phased out: the First Home Bonus Grant of $8,000 to $4,000 from 1 July, which was announced in 2012-13 budget. So, only four months ago, the government announced the phasing out of this particular measure, and now, in actual fact, it is going to remain at $8,000. It went from $8,000 to $4,000 to nothing; now it is going from $8,000 to $4,000 back to $8,000, as I understand it. The First Home Bonus Grant will remain at $8,000 for eligible transactions entered into between 1 July 2012 and 14 October 2012 inclusive.

From 15 October 2012, the $8,000 First Home Bonus Grant will be abolished and replaced with a housing construction grant of $8,500. So, it is actually a higher amount. This grant will be available for all new home contracts entered into between 15 October 2012 and 30 June 2013, and that is for properties up to a value of $400,000. The grant phases out for properties up to $450,000. This is my point: if you are getting a grant for a new home and land valued at $400,000, then I suspect this will only actually apply to certain areas, in essence.

This bill was only introduced to the parliament a week ago, last sitting week. The opposition sought feedback from the Housing Industry Association, the Master Builders Association, Business SA, the Tax Institute of South Australia, the Property Council of South Australia, the Real Estate Institute of South Australia, the Law Society of South Australia and the Australian Lawyers Alliance. The only group that got back to us in time for the debate today (because the government has brought it on within a week) was the Law Society, and that is not a criticism of the other groups; I accept that it is a time issue.

All the building industry groups (that is, the HIA and the Master Builders Association) have been out there in the media generally supportive of the measure, so I think it is fair to say that, regardless of there not being any formal feedback at this stage, they are generally supportive of the bill.

The Law Society raised a few interesting minor issues, which I will raise in my contribution now and leave the Treasurer to contemplate in between houses: whether the amendments suggested by the Law Society have merit. The Law Society said that this particular bill was considered by its commercial law committee and its Property Law Committee, and it provided the following comments based on their input:

In relation to the Housing Construction Grant, our view is that a more detailed eligibility criteria should be specified in the bill. There are a number of eligibility criteria set out in Division 2 of the current First Home Owner Grant Act 2000. For example, the applicant must be an individual of at least 18 years of age and be an Australian citizen or permanent resident. We understand that the new Housing Construction Grant will be available to all natural persons, companies and trusts however this is not expressly dealt with in the bill. Nor are there any criteria surrounding the residency of the applicant which may need to be considered further.

The Law Society raises a very good point. I think what the Law Society is saying is that any company, any trust or any overseas citizen can buy as many houses as they want under this scheme and they will get the grant—and I will ask the Treasurer to confirm that. Whereas, under the existing scheme, division 2 of the current First Home Owner Grant Act provides that the applicant must be an individual, at least 18. So, you cannot have two year olds buying houses.

Under the scheme that the government is currently proposing, a two year old, four year old, six year old or an eight year old could buy a house, so we will have rich families going out and buying four, five or six investment properties for their children. I understand that that is the government's intention: it wants as many places sold and built as possible.

The Hon. J.J. Snelling: They don't have to because it's not limited per person anyway.

The Hon. I.F. EVANS: No, it is not limited per person. The Treasurer makes that point. I will get that on the record. The Treasurer makes the point that it is not limited per person, so there is nothing to stop people getting five, six or 10 grants. The Law Society states:

In relation to proposed section 18BAB subsection (7) regarding who is a relative, our view is—

The Hon. J.J. Snelling interjecting:

The Hon. I.F. EVANS: I'm not sure about that.

The Hon. A. Koutsantonis: He's actually Treasurer.

The Hon. I.F. EVANS: That's right, yes. I have been following your tweets with interest, Tom—gracious backdown. I will continue:

In relation to proposed section 18BAB subsection (7) regarding who is a relative, our view is that paragraphs (b) and (c) should be consistent and both refer to lineal relationships. Therefore we recommend that paragraph (c) be amended to read 'a son, a daughter or remoter lineal descendant...'

I will leave the Treasurer to contemplate that.

We also note that new section 18BAB contains the following typographical errors:

Subsection (5)(b) should read 'arm's length' (i.e. there is an apostrophe missing).

Subsection (6)(e), the words 'otherwise as a shareholder' should be 'other than as a shareholder' and the word 'conduced' should be replaced with the word 'conducted'.

The report that accompanied the bill indicated that the bill was moved to 'provide an urgent boost to the state's housing construction industry and help stimulate the property sector and secure jobs'. From a policy perspective, we query why the grants are limited to properties of the value of up to $400,000 with housing construction grants phasing out for properties valued up to $450,000. Particularly with the Housing Construction Grant, which is only to apply from 15 October 2012 to 30 June 2013, should there be that cap on the property value if the aim is to stimulate the property sector?

The Law Society is raising the issue: why is the cap at $400,000 or $450,000 if you are looking at stimulating the sector? Why cap it at that? There are as many jobs, more jobs probably, in a higher value home than necessarily in a lower value home. So, they are the Law Society's comments and I thank them for what was a quick response.

I have some questions, ultimately, for the committee stage when we go through the matter clause by clause. Some housing groups have raised with me the issue of how this works in relation to community title where you have, say, 10 allotments on a community title. The Treasurer can take this on notice (if he needs to) and come back to us. A community title includes the value of the road, footpaths and everything else. If the road value, the footpath value and the park value is on the community title, does that add to the housing value of $400,000 to $450,000 and therefore make them ineligible for the grant? They want some answer as to how that works.

They also want answers on the retirement villages, for instance, the retirement villages where you have 20 or 30 homes or in some lots just four homes, how that works in relation to the grants and the valuation of the properties. The other issue relates to the definition based on the market value of the four houses proposed on one allotment under the Retirement Villages Act or for community affordable housing. The housing group that wrote to me says it believes it will be ineligible under the criteria the government has set.

The other issue they raise is the reliance on market value as distinct from construction cost. If the driver is deliberate construction why compromise projects by tying the grant to the market value as it will eliminate, they believe, an enormous amount of projects, as distinct from construction cost? What they are really saying is that the construction costs (for them) might be, say, $250,000 but they are going to sell it at $350,000. The market value is different to the construction cost and they are wondering why the government has picked market value.

The other issue I wish to raise is that new buildings need to be ready for occupancy within 18 months. The way I read the rules you do not have to occupy them within 18 months, they just have to be ready for occupation within 18 months. I am wondering: who actually goes out and inspects them and decides when they are ready for occupancy? Does the council do that? Does Treasury do that? Who goes out and finally decides they are 'ready for occupancy' under this particular scheme? I would be interested in those answers.

Despite the government's continual change of policy position on this particular issue, as I have said, the opposition intends to make sure this measure is not defeated. It supports the measure. Hopefully, it will provide the stimulus to the construction industry that the Treasurer and Premier argue it will.

Ms BETTISON (Ramsay) (11:39): I rise today to support the First Home Owner Grant (Housing Grant Reforms) Amendment Bill. This bill is an excellent example of a government that is listening to both industry and everyday South Australians. We are experiencing difficult times in the construction industry and the property sector. People have indicated that without this new assistance new home starts were forecasted by the Housing Industry Prospects Forum to fall a further 10 per cent this financial year. Not only are we listening but we are responding.

I find it interesting that the member for Davenport wrote to many of the associations for their comments because, really, they were quite clear when this came out. The Property Council said that this is a win, win, win: homebuyers will get into the house they want, they will keep construction workers in their jobs, and they will keep the economy turning over, creating new jobs and opportunities.

The government did get quite a bit of support. The Housing Industry Association said they welcomed the announcement, as South Australia is experiencing a prolonged downturn which has had significant implications for both state employment and revenue. What they requested was 'short-term support to new housing', and this government through this bill will be delivering that.

We were hoping to see some changes in the industry. Master Builders Australia said that after a significant fall in July the industry was hoping housing approvals would bounce back and recover lost ground. It has not boosted new homebuyers (that was in October). I think what we are seeing here is that the government is responding. Peter Jones, the chief economist for Master Builders Australia, said that builders are struggling, and with little joy in the forward indicators there is an urgent need for policy action at all levels of government. This government is listening, and we are responding.

The construction industry is a major employer and a strong employer of apprentices. In the northern Adelaide region, this month there are 1,500 apprentices and trainees in the construction industry. This is an industry that has seen quite significant growth over a 10-year period. We have seen a 37 per cent increase, from 2002 to 2012, during a Labor government. We have seen an increase from 46,300 people employed to 63,500 in October 2012.

One of the key areas where we see the importance of this industry is as strong employer of apprentices, including those in carpentry and joinery, bricklaying, roof plumbing, wall and floor tiling, wall and ceiling lining, painting and decorating, solid plastering, and concreting. Only last week a Salisbury High School year 11 student was telling me he was participating in the doorways2construction program.

Commonly known as D2C, it is our premier vocational education and training program in schools for the building and construction industry. It was initiated as a direct response to the increased need to encourage young people to consider the building and construction industry as a career option, improve the entry level training opportunities, and promote career pathways. It also aimed to create a positive image of the building and construction industry.

The aims of the program are to create an awareness amongst young people and to provide students with accurate information about careers. As the member for Davenport has pointed out, both of his sons have entered this industry. The doorways2construction is also helping to develop basic skills that students can take into the industry.

Last night, when I was doing my shopping at Woolworths I spoke to a young man who was originally from Uganda and who came to Australia a few years ago. He was wearing a doorways2construction shirt, so I thought, given I was talking about this today, how about I have a chat to him. He said, 'Yes, yes, I did this at Thebarton Senior College, and now I'm working for a landscaper.' He said, 'This is great, this got me in.' He said that one of the challenges he had was getting his first job. So, I think we can see some really practical examples of where this government has supported and continues to support this industry through apprentices, training and vocational education.

This bill is supporting South Australians to achieve the goal of home ownership. In my electorate of Ramsay (covering the suburbs of Salisbury, Salisbury Downs, Salisbury Plain, parts of Salisbury North, Salisbury South, Parafield Gardens, parts of Paralowie and Brahma Lodge), the majority of homes can be purchased for under $300,000. This bill will help those people to break into the market. Checking out some of the local real estate prices, there is an opportunity to buy a brand-new four-bedroom home with ensuite and main bathroom, walk-in robe and double garage for under $300,000. This bill enables a first homebuyer to receive up to $23,500 in government support and all buyers to receive $8,500.

For my constituents, coming out of the rental market and breaking into the housing market can be the most difficult of all. I even know, from when I bought my first house in 2004, that it was the HomeStart program that enabled me to break into the market, that introduced a graduate program, which enabled me, with less of a deposit than I would have been required to have normally, to access that market. In 2004 we had seen a dramatic growth in housing prices and people, including me at the time, were starting to get priced out very quickly, and we knew that if we did not get in soon the market would continue to rise.

When you are paying rent, saving for a deposit can be a long process. This bill gives a helping hand to achieve that goal sooner, and I congratulate the government for listening to industry and responding to the needs of South Australians.

Mr VAN HOLST PELLEKAAN (Stuart) (11:46): It is a pleasure to speak on this bill and it is always a pleasure to follow the shadow treasurer, the member for Davenport, because he does his homework very well, is very thorough and includes all the information and all the angles. I share his concern about the topsy-turvy approach the government has taken to this style of support, the backflips, and I also share his concern about the fact that the housing industry is in great difficulty at the moment for many reasons, including the enormous tax impost the government has put on the industry—the highest taxed state in the nation.

Let me also say very clearly to everybody here that, like the shadow treasurer, my colleagues and I do actually support this move. It has some positives about it that are very welcome. I know that in the electorate of Stuart in my travels I come across builders, subcontractors and tradesmen who all tell me they are having some difficulty, even the ones who are still doing very well. They say that things are not as good as they were, so support in this area will certainly be very welcome.

I was talking to a builder in Wilmington on Saturday morning, and he was certainly saying that in his experience subcontractors are probably doing it tougher than just about anyone else at the moment. So support for them is welcome. As most people would know, in the electorate of Stuart the $400,000 threshold would probably buy you 99 per cent of the houses in the electorate, so it can certainly be applied to the electorate of Stuart.

There are also other benefits, which I am sure the government and Treasurer have considered, that are very positive and benefit all of the flow-on industries and not just those industries and businesses directly or immediately related to the building of a property. At any time people move, as I am sure most people here know, there are always unexpected expenses and extra things for which you have to outlay. I am sure that other industries, like landscaping, the furniture industry, home wares, removalists and many others, will benefit from this and that is very important.

One of the things lacking in our economy across the nation at the moment is a volume of transactions. There are concerns that families out there, whose incomes have perhaps not dropped, are not spending as much as they were. Hopefully this move will help speed up the transactions and also increase their volume, which is very positive for any industry.

Of course there are some risks to our economy as well. I am sure we would all agree that any time you provide a subsidy to industry there are risks, and we have seen many cases where, as soon as a subsidy is applied, it just simply increases the price straightaway. There is a lot of work to be done by the government to ensure that the application of this new support is done appropriately.

The very reason for this introduction is that things are tough, because there is an oversupply of trades, subcontractors and builders, and they are trying to inspire and improve the industry. By definition, you would expect that the cost of homes and the cost of trades would be relatively cheap at the moment, so it would be a great shame for the population at large if the application of this new strategy just quickly put prices up.

Right now, of course, while it is difficult for the industry, there are enormous benefits for consumers to have lower prices, so it would be a great shame if all of a sudden, through the application of these subsidies, prices just went up, as we saw through the federal government's stimulus package. All of a sudden, there was money available and overnight it cost a lot more to get exactly the same job done, because of the money that the federal government pumped into the economy. That will be very important.

As I said, representing the electorate of Stuart, I am very keen to see small and medium-sized businesses, particularly the small subcontractors and tradesmen, supported here through this, and I find it very curious that, at exactly the same time as the government is trying to take a positive step in this direction to support these sorts of industries, the government is putting them under enormous pressure in my electorate through a new maintenance contract through Housing SA.

Let me say very clearly, I fully support very careful oversight of spending taxpayers' money, and there is absolutely no need to be spending more taxpayers' money to maintain taxpayer owned homes which are there for the benefit of underprivileged people than you need to. I think the government needs to be very careful, and at the moment what it is trying to do, Madam Speaker, in your and my electorate, is put tradesmen under a great deal of pressure in terms of the new contractual arrangements it is trying to get them to enter into for Housing SA maintenance contracts.

One of the most starkly concerning issues here is the removal of any travelling allowance. It is quite understandable that a Port Augusta based subcontractor or tradesman should not be paid any travelling allowance to do work in Port Augusta, Stirling North, or Port Augusta West, but if they go to Quorn, Iron Knob, Hawker, Copley, Coober Pedy, Dunjiba, Marla or Marree, you would think that it would be quite fair that they would get paid for that.

I think the government is making a false assumption that there are tradesmen already based in those other locations who can do the work. If there were, it would be quite fair for them not to be paid travelling allowance, but the reality is, as you and I both know, Madam Speaker, that there are not appropriately qualified tradesmen in many of those locations.

At the same time as I support the government trying to help this sector of the industry through the subsidies on residential homes, it is also making life very difficult through the Housing SA contracts. I ask the Treasurer and Housing SA to take that into consideration, because it would not be appropriate, and I am sure it is not the government's intent, to give with one hand and take that support away with the other hand.

There are some traps and, like the shadow treasurer, I think some of the traps will be in where the subsidies are applied. I note that the member for Davenport has some questions up already about renovated homes and will come back in the committee stage, so I will be grateful for the Treasurer's responses there. Clearly new residences, brand new built homes, are pretty straightforward. I wonder whether it would perhaps apply to warehouses transformed into residences, where an existing property was not a residential property before and becomes a residential property.

I also wonder about properties that were residential properties but were vacant for a long time, and then were purchased and lived in, whether they might attract the subsidies, or whether because they were previously residential properties, they would not attract the subsidy. Our home in Wilmington, for example, was vacant for a year and a half before we purchased it. Would that style of example have attracted this subsidy or not?

I support this bill. I am concerned about potential traps with regard to unintended consequences in terms of impact on prices and I think there might also be some unintended consequences with regard to where and when the subsidy might be applied, but I certainly support the intent of this bill.

Mrs VLAHOS (Taylor) (11:55): The reforms this legislation will mean to everyone in the building and buying sector are very important and, as the member for Taylor, I would like to address some of the advantages of the changes the housing construction grant will bring to first homebuyers in my electorate in the north of Adelaide that relate to community, not just the maths of the boost the initiative will provide. The reforms in this legislation will mean everyone building or buying a new home could be eligible to receive state government assistance almost immediately from the 15 October date.

The recent boundaries redistribution in my electorate of Taylor proved it was the second fastest growing electorate in this state (next to the electorate of the member for Light, who is both my neighbour in the house and in the community sharing Angle Vale with me). Since I was elected in 2010, many areas in my electorate have become new housing areas. New communities are starting and new people are moving into the area, with mortgages and at the mercy of uncertain economic times.

There are many new housing estate areas in Taylor and these include: the expansion of Andrews Farm (which is almost 20 years old now); new homes and families moving into the Virginia Grove area and a rapidly expanding Virginia; additional homes being built in Angle Vale and Burton; Springbank Waters still enlarging; Direk, Two Wells and Lewiston; and redevelopments occurring at Salisbury North. All of these areas are attracting new families to the north, or keeping families close to where the jobs growth is strong and where their families made their homes over 20 years ago when their mum and dad were starting out in the housing market in nearby areas which are now well established, such as Paralowie, Burton and Andrews Farm.

These reforms and the grant provide the existing home owners scheme with an urgent boost that will help the state's housing construction industry and stimulate the property sector after the number of dwellings built in SA declined by 18 per cent in the last financial year. With a soft property market, the housing construction industry is doing it tough, and these measures will not only help families and young people about to make a start in the housing market but they will also assist the many apprentices and construction and building workers (who I see in my shopping centres weekly) stay employed in the building sector so they can continue to pay their mortgages and look after their families in the north of Adelaide. It will also help build the new communities and new homes that are coming to the north every day that I see when I drive around delivering new constituent letters.

These reforms are life changing for many families, and many people are dependent on construction jobs in the north. It is important this initiative is passed through this parliament. It is an example of our Labor government listening to the concerns of the building industry and people in my electorate who are trying to enter the housing market for the first time, and I praise this initiative.

Mr PEDERICK (Hammond) (11:57): I rise, too, to speak in support of the First Home Owner Grant (Housing Grant Reforms) Amendment Bill which the Treasurer introduced only a couple of weeks ago into this house. This bill introduces the legislative framework required to implement the changes to the housing assistance grants that the government announced on 14 October 2012. It also introduces the required amendments to implement changes to the First Home Bonus Grant announced in the 2012-13 budget.

We get some renaming. The First Home Owner Grant Act 2000 will become the First Home and Housing Construction Grants Act 2000. Also, the bill will amend the First Home Owner Grant Act 2000 to increase the First Home Owner Grant for new homes from $7,000 to $15,000 for contracts entered into, on or after 15 October 2012. The bill will also reduce the First Home Owner Grant for established homes from $7,000 to $5,000. This grant will be abolished for established homes from 1 July 2014. In the definitions, for the purposes of this bill, a new home is considered to be a home that has not been previously occupied or sold as a place of residence and includes a substantially renovated home.

Also, this piece of legislation removes the phase-out of the First Home Bonus Grant from $8,000 to $4,000 from 1 July 2012. This was announced in the 2012-13 budget. The First Home Bonus Grant remains at $8,000 for eligible transactions entered into between 1 July 2012 and 14 October 2012 inclusive.

From 15 October 2012 the $8,000 First Home Bonus Grant will be abolished and replaced with a housing construction grant of $8,500. This grant will be available for all new home contracts entered into between 15 October 2012 and 30 June 2013, or where building commences during that time for an owner/builder and where the property has a value up to $400,000. The grant phases out properties valued up to $450,000. I think this legislation will help people making decisions to buy housing and certainly, throughout my electorate, from Pinnaroo through to Goolwa, there will be many opportunities for people to buy homes in the budgeted band width where this money would be available.

The concern I have, as we have seen with these programs in the past, whether they have been state programs or federal programs that come in as well, is that the builders just add the grant to the price of the quote. Essentially, the incentive just gets eaten up and it just becomes a higher price structure for people to build. That is something we have to be very aware of, that it is just not used for industry to profiteer. It might all feel warm and fuzzy to get a few thousand dollars for a grant—and sometimes more than a few thousand dollars—but if it is only going to be tacked on in the background in the original quotes that people get for building a dwelling, there is really not much point apart from people getting a good feeling, because you are still spending the equivalent amount of money. I certainly think there have been such problems in the past.

With all the developments throughout my electorate—and one of the major developments that springs to mind is the Murray Bridge Racing Club proposal at Gifford Hill where there will be 3,500 opportunities for new homes—this could certainly come well into play, and I think that projects like that development could see more support from this government.

We also have to ask the question why we are in such a state in South Australia. Why is industry at such a low ebb? Why is there such a lack of confidence that the government have decided to introduce this legislation? It is because people do not have confidence, working in an environment of the highest taxed state in the nation, the hardest place to do business in this country, and it is just becoming totally uneconomic for some people to even survive with the rising cost of amenities, the rising cost of essential services like water and power, and I think that is one of the reasons we are here today debating this bill.

As I indicated, I think there is a lot of merit in this, but it will be absolutely pointless if all that happens is industry grabs hold of it and just tacks on whatever the amount is, whether it is $8,000 or $8,500, whatever the appropriate grant is for the quote at the time. People will feel good, they will think they have saved that amount of money, but it is just built into the price. I am not sure how a government of any persuasion will be able to make sure that does not happen; I will be interested in the Treasurer's remarks. With those few words, I indicate our support for the bill.

Mr PEGLER (Mount Gambier) (12:04): I indicate that I will be supporting the First Home Owner Grant (Housing Grant Reforms) Amendment Bill; it is a great move in the right direction. I think in the first place we should be asking ourselves why fewer houses are being built, and there are several reasons for that: after the global financial crisis, our bankers became much more cautious in lending people money and our people became much more cautious in borrowing money. Probably, in the long run, it will be a good thing that the people who are now borrowing money to build or buy houses are probably much more sustainable into the future.

There was also a situation where the house building industry was going along gangbusters and was probably going along at an unsustainable rate, when the number of new houses that were being built was out of kilter with the number of extra people we had. If you look at the figures, I know that in Mount Gambier the average number of people per home dropped from about 3.6 down to about 2.4, so there is a day of reckoning and you just cannot keep building new homes without building populations.

I think that where we are now is much more sustainable, and this bill will add a boost to the building industry, give a stimulus that is needed, and give more confidence to those who work in the industry, and that confidence will flow right through the whole system. I commend the government for this bill and indicate that I will be supporting it.

Mr WHETSTONE (Chaffey) (12:06): I rise to support the First Home Owner Grant (Housing Grant Reforms) Amendment Bill. I think it is a good initiative as a taxpayer-funded scheme to assist the purchase of newly constructed homes. It has been a very uncertain path for the construction industry and for people who are looking to enter newly built homes. Listening to the Treasurer's comments over a short period of time, about how we are going to have assistance schemes started and stopped, has really created an uncertain and eerie feeling within the construction industry.

Although I am not a first homebuyer, I have a son who considered it and his friends who have considered going there, and they are getting mixed messages as to whether they should go in or whether they should not. This construction grant has been an important catalyst to the decision-making process as to whether they will construct a new home, whether they will not, or whether they will sit back. That funding in today's world is, as I see it, critical for them to make that decision.

My view is that, again, the Treasurer has been reactive and, sadly, he has not taken a proactive approach in addressing the downturn in the building and construction industry. I do have an interest since, as the member for Davenport said, I have a son entering the construction industry. It is an industry that has its peaks and troughs, but it is stimulated by government incentives and government schemes that put a little more assurity through funds into the industry, and to see this new construction industry grant be presented has had some really good and positive impacts, particularly in Chaffey.

I have been contacted by several building companies in the Riverland who have told me how they think the government should be stimulating the process to enhance the industry. They were already dealing with a lot of concerns, not only within their businesses but also within building a home and customers coming to them considering having a home built. They have to deal with the customer's concerns and, obviously, land tax has been very much a disincentive to go in and buy land, and then to build on that land, because land taxes are so high. Of course, the building industry employs a lot of labour and so the payroll tax has a significant impact on its bottom line.

Many builders have come to me and said that they are spending a lot of time and a lot of effort in being OH&S compliant and putting a lot more resources into the OH&S sector. Again, that is not a reflection on them because there are very large WorkCover levies that builders and the construction industry have to pay. The Work Health and Safety Bill has, again, increased the cost of building a home, and obviously both sides of government have been heavily lobbied by the building and construction industry. To me, it is just another disincentive to build a home. I guess it has been a message of poison in a lot of cases: why would the government put this disincentive with the OH&S compliance when, all of a sudden, the balance is that they are going to put this first home construction grant?

We look at the lack of assistance with apprentices and the assistance packages in the building and construction industry taking on apprentices which, in essence, is the core of a lot of the building industry's future—the taking on of apprentices. It is a burden to particularly builders in that they have to take on the training and the role of mentor. There is also irregularity in that while going through an apprenticeship, apprentices disappear for schooling and other training, and it is not easy. I can take that on board having previously been an apprentice.

I remember the burden that it put on the workforce but also having to get into the swing of the construction of a home or construction of a particular project. All of a sudden you are left one staff member short because he is off at trade school or off doing another form of study, so that is another burden. In saying that, though, I support the first home owner grant. You have to support any measure that is an incentive for people to give consideration to building a home.

That money is there to support the decision people make when wanting to build a home. Of course, funding packages are a stimulus for people to make a decision because, as we all know, money is one of the biggest burdens when building a home but it is also one of the biggest burdens in making the decision as to when you are going to enter the home owner fray, if you like. Particularly for young people it is a life-changing decision because of the commitment they have to make when building a home. The financial burden changes the dynamics of the way a lot of people live. With an expendable wage each week you can go out and live as you like but once young people have that commitment they have to really pull in their horns and get on with the job.

Any grant from the government is something I am always wary of because government interference is always a short-term fix. Very rarely are these grants seen as a long-term solution. It really is something of a stopgap and at the moment it is for the construction and building industry. However, any minute that assistance grant money will run out and then we will have to look at another short-term fix to stimulate the construction industry.

I can give some positive feedback after that announcement was made by the Treasurer. One builder I socially catch up with was ecstatic. He had no-one walk through his doors for weeks, and all of a sudden in that first week he had four committed orders put on his desk, which does go to show that this has been a stimulus that has satisfied the customers, or the consumer, so I think it is a positive.

It is a good thing for the building industry, particularly in the Riverland. We have seen a lot of downturn. A lot of our economy has been sucked up with the drought and a lot of it has been sucked up through uncertainty with commodity prices, and this is just something that is a bit of a telltale about what people are thinking.

Obviously the announcement has put a smile on the face of the construction industry. As I say, I have spoken to several builders, and it has put a smile on the face of builders, it has put a smile on the face of the tradesmen and, of course, it has put a smile on the face of the home builder. Again, I have risen to support the bill, and I am pleased with what it has achieved in this very short space of time.

Mr PENGILLY (Finniss) (12:15): As indicated by the member for Davenport and other members on this side, we will be supporting the amendments to this bill. The building industry in my electorate, as in the electorates of a number of other members, is critically important. Indeed, the South Coast flourishes through the building sector. Also, like other members, I have two sons and a son-in-law, and one son is completely reliant on the building industry, my son-in-law is an electrician who takes some part in the building industry and my other son is at university doing a degree which will allow him to enter into the industry; so, there is some self-interest—

Mr Pegler: He must have thrown to his mother.

Mr PENGILLY: She has got a degree, yes, you're right. It is important. The point was well made by other speakers, and the member for Davenport in his lead speech made a number of points which should be considered. I know that the member for Chaffey referred to the government's reactive action in this and he is probably somewhere near the mark. The simple fact of the matter is that South Australia is in a horrendous state economically due to the complete mismanagement by the government, and it is a sad day when we have to jog it along here again to get it over the line on this bill.

It is really important that our building industry in South Australia has some continuity. It is really important that the people who are employed in that industry, whether it be apprentices or long-term tradies, have some surety about where they are going. Unfortunately at the moment I know that one business down in Victor Harbor closed its doors in the last six months, and there are probably a number of tradies who are looking at pretty limited prospects in the immediate future.

The building industry has always ebbed and flowed, like a number of other industries, but the chronic pain that is inflicted on small business in this state by this government only adds another level of impost which they find difficult to come to grips with. The over-regulation, the over-bureaucracy and the general lack of knowledge by the government about how small business operates is a sad indictment on where South Australia has gone.

Small business particularly—whether it be builders, farmers or whatever, and big business—wants government out of its face. It wants local government out of its face, it wants state government out of its face and it wants federal government out of its face. People are over big government—they are absolutely over it to the back teeth. All they are doing is trying to run a business and make a profit out of that business and they are getting screwed to the wall by different levels of government on regular occasions.

The government has chosen to come in here at fairly short order with this bill and it seeks the opposition's support to get it through as quickly as possible, and I think we are doing that. When it gets up to the other place, well, heaven's knows what will happen with it up there. However, I need the building industry to be successful in my electorate, as others do. This is a step towards assisting, but, if you get rid some of red tape, some of the bureaucracy and some of the nonsense, Mr Treasurer, you might assist the building industry a whole lot more.

Mr SIBBONS (Mitchell) (12:19): I rise today to speak in support of the First Home Owner Grant (Housing Grant Reforms) Amendment Bill 2012.

The Hon. I.F. Evans: A very popular bill, this one.

Mr SIBBONS: The member for Davenport said it is a very popular bill, and he is absolutely right. The passage of the bill is really important for my electorate of Mitchell, just as it is important for each and every one of the 47 electorates. This legislation is vital for our building industry, flagging somewhat in the face of a flat housing market and in need of a shot in the arm. The number of new homes built in South Australia last financial year was down 18 per cent and, without the assistance afforded by this bill, our new home starts are forecast to fall by a further 10 per cent in this financial year.

In recent times I have spoken with a number of my constituents who are looking for work in the housing construction area, and they certainly knew that something needed to be done. We all know that stimulus is necessary to awaken a soft housing sector, and I am very pleased that the state Labor government is getting on and doing what it can with the introduction of this legislation into the parliament.

Some 60,000 South Australians currently work in the construction industry. We need to ensure that these people remain in employment and, more than that, we need to help breed the confidence and foster the demand necessary for increased employment in the building industry. I believe these reforms will be the adrenaline the sector craves to get construction businesses, large or small, working and employing more people again. So ultimately this bill is crucial for jobs; not just jobs for those constructing new houses but also for those working in all the related trades and for a wide range of suppliers.

This bill is about jobs, but it is also about more than jobs. It is also crucial for the young people and the low-income earners in Mitchell and the other electorates who are trying to break into the housing market for the very first time. It is a helping hand for those who would otherwise not quite be able to make the step into new home ownership, carefully and strategically targeted where it is most needed.

As well as assisting first homebuyers, it will bring an incentive for many other homebuyers to build a new home or buy off the plan rather than buying an established property—the bottom line, quite simply, being job creation. The trickle-down effect of more new houses being built in South Australia will be a significant boost for those industries reliant on the building trade. The reforms in this legislation include:

creating an $8,500 housing construction grant for all buyers of brand new homes until 30 June 2013, regardless of whether or not it is their first home. This will also apply to properties with a value of up to $400,000 and will phase out for properties valued up to $450,000. This replaces the existing $8,000 First Home Bonus Grant;

increasing the First Home Owner Grant from $7,000 to $15,000 for first home owners who build or purchase a brand new home. This is ongoing; and

reducing the First Home Owner Grant from $7,000 to $5,000 for first home owners who purchase an established home up until 30 June 2014, when it will expire. This is a deliberate push to target jobs in the housing construction industry.

Along with the government's budget announcement on stamp duty concessions for off-the-plan apartments in the city and Riverbank Precinct, eligible first homebuyers could receive as much as $39,830 in state government assistance. Those first home owners building or buying a brand new home elsewhere will still be eligible for a maximum of $23,500. That will really make a difference to people saving for their first home.

I encourage all members present to consider their constituents employed or seeking employment in the housing building industry and related trades and suppliers when they cast their vote on this legislation. If, as I hope, the bill becomes law, I would encourage people looking for a new home to take a serious look at building or buying a new home, including off-the-plan apartments. There will never be a better time to do so, so take advantage of well-targeted and constructive reforms aimed squarely at delivering jobs growth.

Mr GRIFFITHS (Goyder) (12:25): I also wish to make a contribution, which will not be as long as some others. I will put on the record that it must be in the gene pool of my family that we have great aspirations to own homes. In my case, I built a home when I was 24. I am very proud of the fact, though, that my children have contributed to the state Treasurer's revenue in the last 12 months, with my son at the age of 22 buying a home in Adelaide and my daughter at the age of 20, with her partner, buying a home in Maitland on Yorke Peninsula. My son bought a house with his partner, too. It is those young people who have committed to property ownership—

Mr Pederick: You'll fund the whole shortfall the way you're going.

Mr GRIFFITHS: Not quite. I am just glad I do not have any more kids, with the contribution the old man has made to help them to buy these homes, but, anyway, that is what we do. I was really proud about that, and they have benefited from some form of first home owner grant to assist them in that. I put that on the record.

I will take up a point made by the shadow treasurer in his contribution that the really hard part of this equation is the land tax, and the development costs and the holding costs for developers when they come to do developments that create opportunities for new homes to be built on greenfield sites. Yorke Peninsula and the Goyder electorate have had some exceptional growth in the last 10 years. A lot of subdivisions have been done. People have made very strong decisions about lifestyle choices. They want either to have a holiday home on the peninsula or move there, or they transition from Adelaide to a holiday home on Yorke Peninsula and then permanent living.

Mr Pengilly: They want a good local member.

Mr GRIFFITHS: Hopefully they have one. It has put a lot of pressure on actually finding people who have the capacity for that money to build those homes. There has been a large uptake and, if you look around the peninsula, there are an enormous number of subdivisions that have been completely sold out. There are many that are still in the stages of development. There are some that are languishing a little bit, and I want to focus on The Dunes development at Port Hughes. Sadly, all members in this chamber would be aware of them having financial difficulty and I think in about mid-July going into a form of administration. Ferrier Hodgson are the company doing that.

The Dunes development was a vision of Peter Butterly. It owes, as I currently understand it, $13 million as part of the development costs, but I know a big trigger for them to make the eventual decision to walk away from it basically and go into receivership was the land tax bill that they got in July. They have developed in a certain way which has created a greater liability for land tax, and I do acknowledge that, but I am told—and quite accurately—that the land tax bill they got in July was $1 million. When you are holding development costs and sales have been relatively slow because of the unwillingness of people to commit financially to building new homes, even though it is a great site, it put them in a very difficult financial position. However, this impost of land tax of $1 million coming in as a lump sum bill early in July was, I believe, probably one of the final trigger points.

People behind the company have not told me that. I have had a briefing with the administrators about what the situation is and they have not told me that either, but it is a position that I put to the chamber. When the member for Davenport talks about the myriad costs associated with home ownership and development costs, he raises a very valid point that, yes, this form of support is necessary. That is why I will always stand up to support it, but there are also the bigger picture issues to look at when it comes to holding costs, development costs and land costs.

Mr Bob Day is quoted quite often as saying that, with respect to housing development, it is land development costs and land costs that are the more significant part of building a new home. That is an issue that the parliament and both parties will have to consider quite seriously over the next 16 months, but it is important that we review this and get it right to try to bring those costs down a little bit.

There was one point that the member for Stuart made to me, and he omitted it unfortunately from his own contribution, and he posed the question of what the impact on property prices will be as a result of this. Will it push them up? He used the analogy of solar panels which I think is accurate and which many of us can relate to. In the period up to the end of September last year, if you wanted to put on solar panels, the expense was quite high. In my case I put 20 panels on my roof (a 3.8 system) at $14,000 but as soon as September had finished and the big rush was over the price dropped enormously, and now you could probably get the same system for about $5,000.

Mr van Holst Pellekaan interjecting:

Mr GRIFFITHS: Yes, and the subsidy is removed and all these sorts of things, even though a level of subsidy still exists, but the prices have dropped enormously. Is there a similar capacity here where the prices will have an increase as a result of an additional grant being available? I know that the Treasurer's briefing to the shadow treasurer apparently talks about it being cost neutral over the forward estimates.

The Hon. I.F. Evans interjecting:

Mr GRIFFITHS: Roughly cost neutral over the forward estimates. There is no doubt at all that it will stimulate people to make decisions to either get into property ownership or to build new homes, and that is a good thing. I am lucky that, because of the development growth that has occurred in my area, there are many building companies locally who employ a lot of young people and give them opportunities to get into a trade. I have a lot of Adelaide based businesses that build in my area, too, and they still purchase things locally even though most of them sadly spend long days there and bring everything with them, but it is the complication of it all.

So, the opposition will support this because it provides an opportunity for the economy to grow. We only want to see jobs created, we only want to see people have the commitment and the courage to make big financial decisions, and there is no doubt in my mind that this grant will assist some who are wavering to make that final decision and to get into building a home or home ownership for the first time.

The Hon. J.J. SNELLING (Playford—Treasurer, Minister for Workers Rehabilitation, Minister for Defence Industries, Minister for Veterans' Affairs) (12:32): I thank honourable members for their contributions. I will try to respond to some of the issues that have been raised in particular by the member for Davenport, although I understand we will go into committee and so I will be able to provide more detail or go over anything that I have missed.

At the outset, I will talk about a couple of issues. Firstly, this measure is about stimulus. It is not about housing affordability. This is about kickstarting a market which has dropped to levels—I think the lowest level it has been since the early 1990s. Housing construction, as all members here would agree, is one of the key drivers of our economy. It employs the construction industry generally and employs more than 60,000 South Australians. Representations have been made to the government and the government has observed the state of the housing construction market and has responded in this way to the calls for us to intervene in the market to get some stimulus. Anecdotal evidence over the last fortnight or so since the announcement has been that it is beginning to achieve what we set out to do.

The other point I should make with regard to the various definitions is how there are definitions of what constitutes a first home. Essentially there is nothing new in what is being proposed here. We are simply using the same definitions and the same eligibility criteria as have always existed for these first home owner grants. So, whether someone is a first home owner, whether a home is a newly constructed home and therefore eligible for the grant or not, we are simply using the existing criteria that is in the existing act.

The member for Davenport asked about the modelling with regard to the costs and the budget effect. Broadly speaking, over the forward estimates, it is budget neutral. It achieves that budget neutrality not through any clawback, stamp duty or payroll tax, but through the wind down of the existing First Home Owner Grant for established homes. The existing First Home Owner Grant for established homes winds down basically upon passage of this bill through the parliament to $5,000 and then is wound down completely from 30 June 2014, and the clawback of the costs of the stimulus occurs through the wind down of that grant.

We have not made any presumptions about the effect on stamp duty collections or payroll tax through this measure; they will become apparent in time. But, the revenue neutrality of it comes through the wind-down of the existing First Home Owner Grant for existing homes; that is how it offsets. The first two years have a significant budget impact—$30-odd million in 2012-13 and then a smaller impact in the second year—but in the third and fourth years, that money is clawed back through the wind-down of that existing grant. If the member for Davenport wants any further information, I am more than happy to provide that.

With regard to market value, and the questions about why we are using market value, it has been used since 2008. It is a commonly used and accepted term and, as I say, it is the criteria that is used in the existing legislation. Substantially renovated homes have always been eligible for first home grants. The term is defined in the act, and so far no issues have arisen in this area with regard to the existing grants.

Whether a home is ready for occupation is a council responsibility. Applicants declare on the application form that the home has been completed, or will be completed in 18 months. Past application compliance work has also been done by RevenueSA. As I understand, in the act, the completion in 18 months is generally expected to be in the contract to build. If it is not, then there is a requirement that it is completed within 18 months. There remains, however, discretion with the commissioner, I think, to extend that in the event that, through some unforseen circumstances, the home is not able to be completed in that time.

With regard to the question about community titles, they are eligible for grants, and they have been since 2000. I am advised that a home on a community title has its own value, and no issues have arisen historically in valuing homes on community titles. Again, it goes back to these first home owner grants. The $400,000 to $450,000 tapering off for eligibility of these grants is not something that is new to this, it is something which has existed for as long as these grants have been around.

Retirement village residents are generally not eligible for these grants because, generally speaking, residents in retirement villages do not actually own the residence that they occupy. When they move into a retirement village, they are essentially purchasing a right to occupy, rather than purchasing the title the residence is on. To be eligible for the grant, the title actually has to pass and change hands.

An 18-month eligibility criteria applies, or a contract needs to state that the home will be completed in 18 months. As the member for Davenport points out, it is true that the Housing Construction Grant—the $8,500 grant which began on the day of the Premier's announcement—will wind up on 30 June next year, so it is for a limited time only. 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.

I have tried to answer, at least in an overview, the issues that have been raised. I thank honourable members for their comments, and I thank the opposition's support for the bill.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. I.F. EVANS: Treasurer, thanks for your answers in regard to the second reading contributions. You mentioned in your answer that it is roughly revenue neutral because the existing grant for existing homes is wound out. What is the annual budget for the grants for existing homes currently across the forward estimates?

The Hon. J.J. SNELLING: The existing cost of the First Home Owner Grant for both existing and newly constructed homes for the 2012-13 financial year is $52.5 million, and that obviously goes up for indexation, so it steps up over time based upon transaction numbers. About 20 per cent of that goes to newly constructed homes—roughly $10 million. The cost to the government of the First Home Owner Grant for existing homes is about $40 million year at the moment, for 2012-13. It would go up over time.

The Hon. I.F. EVANS: Is the Treasurer quoting from an electronic government docket?

The Hon. J.J. SNELLING: It is a summary of the modelling. I am more than happy to provide it to the member for Davenport.

The Hon. I.F. EVANS: Sounds good; thank you for that. So, the $40 million a year, each year, across the forward estimates, is for the existing home grant and that is being wound out. So, in the last two years, it is a $40 million saving, which the modelling shows will be picked up by the new home grants. How many new home grants do you think will be paid out for the $40 million that will be saved under the existing home grants?

The Hon. J.J. SNELLING: In terms of the impact on the budget for 2012-13, there will be a negative impact of $34.3 million. For 2013-14, there will be a negative impact of $12.9 million. From 2014-15, as the existing home owner grant gets wound down, there will be a positive impact of $25.2 million—so this is the clawback in the last couple of years—and then in 2015-16, there will be a positive impact of $28.9 million.

The Hon. I.F. EVANS: Thanks for that, but the point I am trying to make is that, in order to calculate the savings of $25 million in the third and fourth years, you must have calculated a certain number of transactions. This thing is open ended. There is no cap on the number of grants that are available, so I am interested in what number of grants Treasury has modelled in each of the years because, for all we know, Treasury could be half right or there could be twice the amount in those years. What number of grants across the forward estimates are you calculating?

The Hon. J.J. SNELLING: In terms of what we have worked on, there are a number of facets. In terms of the Housing Construction Grant—that is the $8,500—between the Premier's announcement and 30 June next year, we expect 5,019 applications and our costs are based on that. In terms of the first homebuyers, who are able to receive on top of that the $15,000 First Home Owner Grant—and that is the one that is ongoing—we expect that, for 2012-13, that will be 1,313; for 2013-14, 2,030; for 2014-15, 2,135; and for 2015-16, 2,223.

For the estimated number to receive the $5,000 First Home Owner Grant, bearing in mind that this is the grant that is stepping down for established homes, we expect that number to be 2,188 for 2012-13, 6,089 for 2013-14 and 507 for 2014-15, which is the year that it steps down. That is essentially a timing issue between financial years.

Clause passed.

Clauses 2 to 5 passed.

Clause 6.

The Hon. I.F. EVANS: Clause 6(2), which amends section 3 of the act, talks about a comprehensive home building contract as distinct from a home building contract, and I am wondering what is the importance of the word 'comprehensive', as distinct from a 'home building contract' for a new home. At what point does a contract become comprehensive?

The Hon. J.J. SNELLING: It is a term that is used in the existing act. It is defined as:

...a contract under which a builder undertakes to build a home on land from the inception of the building work to the point where the home is ready for occupation and if, for any reason, the work to be carried out under such a contract is not completed, includes any further contract under which the work is to be completed;

This is to ensure that it is a contract to build a new home and that it is done from start to finish, I am advised.

The CHAIR: Not a partial home, I guess.

The Hon. J.J. SNELLING: Yes.

Clause passed.

Clauses 7 and 8 passed.

Clause 9.

The Hon. I.F. EVANS: I want to check whether the following is possible under the scheme. My understanding is that, under the scheme, you can get only one First Home Owner Grant.

The Hon. J.J. Snelling: You can be a first home only once.

The Hon. I.F. EVANS: You can be a first home only once, but you can have as many existing home grants as you want. So, I can buy as many existing homes as I want, but I can get only one First Home Owner Grant. I could get a First Home Owner Grant to build my first home and then, at the same time, apply for five grants to buy five houses and get the existing home grant?

The Hon. J.J. SNELLING: No. The existing grants are the First Home Owner Grant and the First Home Bonus Grant, but I think what the member for Davenport refers to is the first home grant, which applies to both existing and newly constructed homes for first homebuyers. So, any first homebuyer, at the moment, whether they are purchasing a newly constructed home or an existing home, is eligible for that First Home Owner Grant.

There is also the First Home Bonus Grant, which has existed for a little while now and which is for first homebuyers purchasing newly constructed homes. But both of those grants, as they were, were only for first homebuyers. If you are a first homebuyer, you are eligible for the First Home Owner Grant. If you are building a newly constructed home, you were eligible also for the First Home Bonus Grant—the two grants.

What the difference is in what I am proposing in this legislation is that we get rid of the grant for first homebuyers of existing homes and that we have a new Housing Construction Grant, which is available to anyone, regardless of whether or not they are a first homebuyer, of $8,500 if they are building a new home. But the First Home Owner Grant as it existed was a grant for which only first homebuyers were eligible.

The Hon. I.F. EVANS: So, let me check this, then: Iain Evans goes out and buys a house as his first home; I can get a First Home Owner Grant. Can I then demolish that house and have a new house built and apply for a grant for the new house, as it is a new home, and therefore I would get two grants: one to buy the property; and then one to build a new house on the property once I have demolished the old house?

The Hon. J.J. SNELLING: You could get the Housing Construction Grant under what is proposed. So, if you had previously purchased a home, received the First Home Owner Grant under the old rules, and then today you went out and demolished that home, signed a contract before 30 June to build a new home, you would be entitled to the Housing Construction Grant (the $8,500), yes, that is correct.

The Hon. I.F. EVANS: Is it not true also that, under the new rules, I can go out and buy my first home, then demolish that home because it is a ramshackle shack, have a vacant block of land and then apply for the other grant for building a house and therefore receive two grants?

The Hon. J.J. SNELLING: If you have previously owned a house—

The Hon. I.F. EVANS: No, it is your first home. Let me explain again. A 20 year old buys an old shack on a block of land. It is his first home, so he applies for the First Home Owner Grant under the new rules. It is under $400,000, so he is eligible. He demolishes the house having not lived in it and then says, 'I actually want to build a new house—

Mr Griffiths: Or two.

The Hon. I.F. EVANS: —or two or three houses on the block.' Now, the block was occupiable. Nothing in the rules say that you have to occupy it; they just say that at the point of after 18 months it has to be ready for occupation. What I am saying is that, under the rules, I think you could actually get two grants. I am not necessarily objecting to that, I am just trying to find out what the rules say.

The Hon. J.J. SNELLING: The existing act provides for occupancy, so, in order to get the First Home Owner Grant, you have to occupy the house for six months. That is under section 12—Criterion 5—Residence requirement of the existing First Home Owner Grant Act 2000. You cannot buy a house, not occupy it, get the grant, then demolish it and get another First Home Owner Grant. Any individual can only get the First Home Owner Grant once.

The exception to that is the new Housing Construction Grant, but that finishes on 30 June next year. Yes, you are right—and that is what I was trying to explain before—if anyone, including myself, demolished their existing home and built a new home on the block before 30 June, they would be eligible for the Housing Construction Grant, irrespective of whether they had received a First Home Owner Grant previously. Anyone is eligible for the Housing Construction Grant, the difference being that it is only until 30 June next year; it is not an open-ended subsidy.

The Hon. I.F. EVANS: If they are quick, they could do it. That is my point.

The Hon. J.J. SNELLING: If anyone is quick, yes; and they can indeed get it for more than one house.

Clause passed.

Clauses 10 to 15 passed.

Clause 16.

The Hon. I.F. EVANS: Clause 16 states that the house must be finished within 18 months, etc. When is the grant paid? Is it paid up-front or when the building is actually finished?

The Hon. J.J. SNELLING: If you have a contract, which I think would be most common for people building homes, it is upon your first progress payment. Other than that, it would generally be upon settlement.

The Hon. I.F. EVANS: So, who goes out and checks whether they are actually completed, or occupied, within the 18-month period? You stipulate in here that it must be completed within 18 months, but do we have public servants running around checking the sites to make sure they are finished within 18 months, having already given them the money, because we pay them the money on the first progress payment which is always when the foundations are laid? So, we have paid them the money, then, 18 months later, how do we check it?

The Hon. J.J. SNELLING: The first thing to state is that, generally, for most people it will be sufficient for it to be in the contract. So long as the contract says the house is to be completed within 18 months, that will be sufficient. For contracts where that is not the case, yes, there is a compliance section within RevenueSA and they do risk-based assessments and, yes, they do go and check individual properties.

Clause passed.

Remaining clauses (17 to 20), schedule and title passed.

Bill reported without amendment.

Third Reading

The Hon. J.J. SNELLING (Playford—Treasurer, Minister for Workers Rehabilitation, Minister for Defence Industries, Minister for Veterans' Affairs) (13:01): I move:

That this bill be now read a third time.

Bill read a third time and passed.


[Sitting suspended from 13:01 to 14:00]


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