I rise today to speak in favour of the National Rental Affordability Scheme Bill 2008 and cognate bill. The National Rental Affordability Scheme Bill 2008 is part of the governments response to the housing affordability crisis which is besetting our country. Two-thirds of the private rental market are devoting more than 30 per cent of their income to housing costs and the vacancy rate in most capital cities is below two per cent. This is not a problem that is going to go away. The Australian Housing and Urban Research Institute estimate that the total number of households in the private rental market in Australia will increase by 80 per cent in the next 40 years. The number of low-income households in the private rental market is expected to increase by 120 per cent over the same period.
I rise today to speak in favour of the National Rental Affordability Scheme Bill 2008 and cognate bill. The National Rental Affordability Scheme Bill 2008 is part of the governments response to the housing affordability crisis which is besetting our country. Two-thirds of the private rental market are devoting more than 30 per cent of their income to housing costs and the vacancy rate in most capital cities is below two per cent. This is not a problem that is going to go away. The Australian Housing and Urban Research Institute estimate that the total number of households in the private rental market in Australia will increase by 80 per cent in the next 40 years. The number of low-income households in the private rental market is expected to increase by 120 per cent over the same period.
While the Australian housing market is much better capitalised than that in the United States and arrears rates on outstanding Australian loans are much lower than in most other countries, 1.1 million Australians are suffering from mortgage stress. The problem of housing affordability is very evident in my electorate of Isaacs. Mortgage stress data from the 2006 census shows that 5,141 households in Isaacsor 30 per cent of all households in Isaacs with a mortgageare spending more than 30 per cent of their income on housing costs. This is double the number of households that were in mortgage stress in Isaacs in 2001, when 17 per cent of all households in the electorate with a mortgage were under mortgage stress. In terms of rental accommodation, there are 3,318 renting households in Isaacs that spend more than 30 per cent of their income on rentthat is, 36.4 per cent of all renting households in the electorate and, with vacancy rates in Melbourne of one per cent, even if you can afford to rent, it can be extremely difficult just finding a property.
In southern Melbourne, which includes Carrum Downs, Carrum, Chelsea, Edithvale, Aspendale Gardens and Chelsea Heights in my electorate, rents rose by 3.2 per cent in the last quarter. Rents are higher in inner Melbourne than in my electorate but they tend to be more stable and thus registered no quarterly change in March 2008. Rents in Isaacs, by contrast, outstripped both wages and inflation. Comparatively, people in my electorate are some of the hardest hit in Victoria. The largest rises throughout Victoria have occurred in two- and three-bedroom houses, substantially increasing the pressure on young families. As of March 2008, only 3.2 per cent of available one-bedroom dwellings were classed as affordable for low-income singles, so students and single or widowed pensioners have an especially difficult time finding affordable housing. Similarly, between 60 per cent and 70 per cent of private rent, low-income households in Sydney, Melbourne and Adelaide are lone-person households or one-parent families. These families are twice as likely as the general population to live in flats.
The national housing affordability scheme is a direct response to these trends. The National Rental Affordability Scheme is designed to make the development of apartments more attractive so that students, single age pensioners and one-parent households can find affordable apartments without being pushed out of metropolitan areas. The scheme will also stimulate growth, providing investors with a new type of investment in low-income housing. It will guarantee a supply of affordable rental properties by providing incentives for landlords to rent to low- and moderate-income groups at 20 per cent below the market rate. Under the scheme the Commonwealth will provide $6,000 per dwelling in refundable tax offsets or a direct payment, which will be matched by a $2,000 contribution from the state and territory governments. The incentive will be paid each year for 10 years and indexed to the rental components of the CPI. It will only be provided for new dwellings or dwellings that were previously uninhabitable and have been restored. Up to 1.5 million households who are currently in the low-rent housing market will, potentially, be beneficiaries of this scheme.
This initiative builds on the increased cooperation between the Commonwealth and the states since November last year, especially the work done by the Council of Australian Governments Housing Working Group directed to better integration of federal and state housing policy initiatives. It will ensure the scheme results in new properties being released onto the market and does not simply subsidise homes that are already rented to low-income earners. If market demand remains strong, as seems very likely, the scheme will include a further 50,000 dwellings to be made available over five years from July 2012.
This scheme will provide real incentives to developers to invest in an often neglected part of the property market. During the inquiry of the Senate Select Committee on Housing Affordability in Australia, the Australian Council of Social Service said of this scheme:
We think that it is a big breakthrough, because it provides for the first time a real incentive for people to invest in low-income housing.
I know from talking to developers both within my electorate and further afield, particularly in Melbourne, that they too believe that the National Rental Affordability Scheme will provide them with incentives which are not presently there to start projects that they might not otherwise have undertaken.
The interest level that has been shown since the scheme was announced, the number of developers who have expressed interest in participating in the scheme, is in a very real sense evidence that the scheme is a well-pitched one and one which is likely to achieve its objective of providing a greater stock of housing in a part of the market that is presently woefully undersupplied.
The action that this government is taking to address the issue of housing affordability is particularly significant at this time of global financial crisis. In contrast, the previous government had what can only be described as an abysmal record on this issue. In 1996, when more than one in 10 families were under mortgage stress, the coalition government abolished the position of housing minister. This issue was of such little importance to the coalition that in 1997-98 it cut $92.7 million from the Commonwealth-State Housing Agreement based funding and, at the same time, put pressure on state governments to increase the rent for public housing. It did this at a time when working families were struggling to find affordable housing.
The $622 million in the National Rental Affordability Scheme, as well as the $1.5 billion directed at housing objectives in the Economic Security Strategy announced by the Prime Minister last week, provides a very clear distinction between the Rudd government and the 11 years of neglect of the policy area of housing and housing affordability under the Howard government. This initiative is a fulfilment of a commitment at the 2007 election but, more than that, it is a key part of the decisive action that this country needs on housing affordability. It will have a large and timely impact on housing affordability in my electorate. I commend the bills to the House.
