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Legislative Council - Fifty-Fourth Parliament, Second Session (54-2)
2020-07-02 Daily Xml
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Bills

First Home and Housing Construction Grants (Miscellaneous) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 30 June 2020.)

The Hon. K.J. MAHER (Leader of the Opposition) (15:22): I rise to speak on this bill and indicate that I will be the lead speaker for the opposition. Labor will be supporting this bill and understands its urgency. This bill seeks to implement the National Partnership Agreement on HomeBuilder, the federal government's $25,000 HomeBuilder grant designed to stimulate the building and construction industry.

The bill ensures that there are appropriate compliance measures and an appeal process for applicants in line with that available for the existing First Home Owner Grant. Whilst the federal government's HomeBuilder scheme is welcome, without any new supplementary state government assistance offered by the Marshall government it may leave our building and construction industry here in real trouble, compared to other states.

The federal HomeBuilder scheme provides a $25,000 grant towards a new home build of up to $700,000, including land, or significant renovations valued between $150,000 and $750,000 where the value of the property does not exceed $1.5 million. The program is expected to provide around 27,000 grants at a total cost of around $680 million, with the scheme expected to add only 10,000 properties out of 27,000 projects.

In South Australia, a first-home buyer may be eligible for a $40,000 grant; that is, $25,000 under this scheme and $15,000 under the First Home Owner Grant scheme. Unfortunately, other states have put together a much more expansive and thorough package to support their residential construction industries.

In South Australia, we were told of 1,000 new homes over a 10-year period, on average 100 homes per year, and the repackaging of already budgeted for housing maintenance money to be spent to stimulate the housing industry—hardly adequate support for an industry crying out for it. Western Australia has led the way with their stimulus package. In Western Australia, $444 million of housing stimulus consisted of:

$117 million for $20,000 building bonus grants to homebuyers who sign up before 31 December 2020 to build new houses or purchase new property in a single tier development prior to construction finishing;

$8.2 million to expand the 75 per cent off-the-plan duty rebate;

$97 million to construct social housing;

$142 million to refurbish 1,500 existing social housing dwellings; and

$80 million for targeted maintenance programs for 3,800 regional social housing properties.

The views of the industry are telling and explain the need for better and more well thought out state government support. The Master Builders Association has forecast a 40 per cent decline in home construction activity in 2020-21 which would result in roughly 60,000 fewer dwellings to be built.

The Housing Industry Association forecast that building numbers will be down by 65,000 homes this year and notes that the HomeBuilder grant only provides enough funds for around 27,000 homes. You only had to listen to the views of those two industry bodies at a forum in which they talked about the issues which are facing South Australia. Ian Markos from the Master Builders Association of South Australia said on Monday, and I quote:

We have been saying for some time that obviously in particular the housing and commercial sectors were being severely challenged, and that was before COVID-19 even hit this country. We are off a low base already, let alone the economic impacts and the effect on the economy that the current situation has caused. When you come off a low base already and the predictions were that we weren't going to be doing that well this year and next year, this has just compounded the situation even further.

In relation to dwelling commencements, the Master Builders Association of South Australia expect a decline of about 38 per cent, and whilst HomeBuilder may plug some of the decline it certainly will not cover it all. Mr Markos went on to say that in relation to the response of the state government, and I quote:

We have put plenty of submissions in to the government. We have had conversations, obviously, with the Treasurer around this, coupled with eliminating stamp duty for first-home buyers, and increasing the First Home Owner Grant for country people in particular. That would help country employment. More tradies would be out there building more homes. But, at this stage, it's the government's policy that there will be no reduction to stamp duty whatsoever and there would be no increase to the First Home Owner Grant or any increase specifically for country regions, which is disappointing.

The opposition has called for the government to temporarily suspend stamp duty for first-home buyers to try to encourage them to make a decision to enter the housing market now, particularly when we have the lowest interest rates on record.

The Master Builders Association of South Australia believes that, if the state government matched the HomeBuilder scheme, it would enable 2,000 to 3,000 further homes to be built which would help start to fill the gap left by COVID-19. The Housing Industry Association has also stressed the urgency of housing stimulus by stating that the pipeline of current work is predicted to begin to dry up in August, with some smaller builders reporting that they only have four to six weeks of work ahead of them.

Stephen Knight, from the Housing Industry Association, stated that they expected a further 30 per cent downturn in the next few months. We know from figures released from the National Housing Finance and Investment Corporation that home construction has the second largest economic multiplier of all 114 industries that make up the Australian economy and that, for every $1 million spent on residential construction, nine jobs are supported, while three new ones are created.

Hopefully, the Marshall Liberal government will soon realise this and see the need to support the building industry as many other states have. With that, we support this bill and hope that the government provides further relief.

The Hon. R.I. LUCAS (Treasurer) (15:29): I thank the honourable member for his indication of support for the second reading. Just briefly, because I have addressed a number of these issues in question time this week, whilst we noted comments that the industry's stakeholders made some time ago and repeated over recent weeks about the potentially pessimistic nature of the housing and construction industry market in South Australia—and the member has just quoted a number of those figures—the state government's position has been quite clear on this, and it remains the same. We have not and will not be providing further first-home owner grant assistance in this particular area, no matter how much the pleadings of industry stakeholders might be.

It is important that governments are prepared to stand up to the pleadings of industry stakeholders if they have evidence to the contrary that it would not be good public policy. Bear in mind that we are spending taxpayers' money, potentially tens if not hundreds of millions of dollars of taxpayers' money, which, in the current environment, clearly we do not have because we are going to have to borrow it to fund any of the commitments that we make.

The state government has publicly acknowledged and was pleased to note that the federal government introduced its $25,000 HomeBuilder grant. The Leader of the Opposition is now indicating that the state government, like the Western Australian government, should add to that particular grant in South Australia; that is, instead of $40,000 for a first new home builder, it should be more than that, whether that be $50,000, $60,000 or $70,000—I guess that will be a commitment the Labor opposition will have to make—and for a new home build but not by a first-home builder, instead of $25,000 it goes up to some higher sum, $35,000, $45,000 or $55,000.

We believe the evidence now shows the accuracy of the government's judgement. There are a range of offerings that both the state government has made in last year's housing stimulus package and the federal government has now made in relation to the HomeBuilder grant of $25,000, and the government is contemplating a range of other initiatives, not by way of first-home owner grants but in relation to some potentially further stimulatory policy for the housing construction industry generally.

As I indicated in question time today, the fact that we have now had 6,205 expressions of interest from new home builders with the current structure of the scheme—that is, the state grant of $15,000 and the federal grant of $25,000—is a fair indication that, in the South Australian housing market, a grant of $40,000 maximum is very generous in terms of providing assistance to encourage people who are contemplating new or first home construction to express interest and potentially to receive such a significant grant.

As I said in question time earlier this week, a $40,000 grant from the taxpayers in South Australia's housing market is much more significant than a $40,000 grant in the Sydney housing market. The brutal reality of the costs of homes and land packages in Sydney compared with Adelaide should be self-evident to everyone. It is always easy for political parties to say the taxpayer should just pay more and more—'Why doesn't the government just give more and more taxpayers' money in relation to this area?'—when the evidence demonstrates, as I said, that we now have 6,205 expressions of interest in a scheme for which the federal government originally estimated the share of the national total in South Australia to be fewer than 2,000 potential grants.

Treasury in South Australia did not have as pessimistic a view of the South Australian housing construction market as industry stakeholders did in South Australia. Yesterday, I placed on the record recent figures, which I think were from the MBA quoting the ABS, which showed that from the lowest point of the COVID pandemic in terms of housing construction jobs to the most recent figures of about a week or so ago, I think it was 13 June, the growth in the number of housing construction jobs in South Australia had been over 600 jobs, or about 1 per cent growth, which was three times the growth rate of the equivalent national figure during that same period.

So the decline in housing and construction jobs in South Australia was not as significant as the national decline, and as we emerge from the trough of the lowest point of the impact on the housing and construction industry, our growth, at least on the most recent figure the MBA has sent to us from the ABS figures, shows treble the growth rate in terms of housing and construction jobs.

Also, I note that the MBA today has acknowledged what they refer to as a pleasant surprise—again, it was not inconsistent with the view that some within Treasury had—that new detached housing approvals in May, so the most recent figures in South Australia, were up 11.7 per cent. They were also up 4.1 per cent on the same time last year. So the new detached houses market, which is the important sector that we are talking about—a very significant growth of 11.7 per cent in May but, importantly, 4.1 per cent up on the same time last year, the May on May comparison.

The evidence all indicates that, yes, the housing and construction industry, as with every other industry, has suffered because of COVID-19. It has not suffered as badly as retail and hospitality and tourism because, frankly, government edict just closed those industry sectors down, whereas the construction industry was allowed to continue, albeit it was nevertheless significantly impacted.

In South Australia it is emerging—there are some optimistic signs in relation to the housing and construction industry, but the very optimistic sign is the fact that the current structure of HomeBuilder and the First Home Owner Grant scheme in South Australia has seen very significant interest, and we are likely to see very significant activity as a result of that.

Bill read a second time.

Committee Stage

Bill taken through committee without amendment.

Third Reading

The Hon. R.I. LUCAS (Treasurer) (15:38): I move:

That this bill be now read a third time.

Bill read a third time and passed.

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