Speech by The Hon Brendan O’Connor MP

Keynote address to the 7th National Housing Conference

Location: Brisbane Convention And Entertainment Centre, South Bank, Brisbane


I acknowledge the traditional owners of the land on which we meet and pay my respects to their elders past and present.

Nearly 70 years ago, in August 1944, the final report of the first Commonwealth Housing Commission stated:

The housing of the people of the Commonwealth adequately, soundly, hygienically and effectively is a national need.

The report had been commissioned by Ben Chifley a year earlier when he was Minister for Post War Reconstruction, as well as Treasurer.

Indeed, it would be remiss of me not to remind an audience as intimately aware of the history of Australia’s housing industry that 2012 is the 70th anniversary of the ALP Federal Conference of 1942 which approved a resolution urging the new Labor government to treat post-war reconstruction as part of the war effort.

Of course, housing was a critical part of its work, with the Commonwealth Housing Commission being established the following year.

The Commission’s inaugural report led to the setting up of the first Commonwealth State Housing Agreement, the forerunner of the National Affordable Housing Agreement that I will be discussing in a moment.

Today, some of the language of that first report might strike us as quaint.

But its message remains the same – because housing plays such a central role in all our lives – decent housing is a national need.

Housing is essential to the economic and social security of all Australians.

Everyone needs a safe, sustainable, affordable place to call home.

A place to raise a family, to come home to after work, school or training, to prepare nutritious meals, to study or relax.

In the same tradition that drove the Curtin and Chifley Governments, the federal Labor Government that I am proud to serve in has made housing a top priority, stepped up to the policy task, and made historic investments that have created better housing outcomes for the community.


Our robust economy, one of the strongest performers amongst developed nations, nevertheless presents us with continuing policy challenges.

Housing affordability remains a critical issue.

We know that one of the most important things we can do to make buying a home more affordable is to keep interest rates low.

That’s why the Gillard Government is giving the Reserve Bank maximum scope to cut official cash rates if it chooses – with the cash rate now 150 basis points lower than it was a year ago.

The official cash rate of 3.25 per cent is far lower than the 6.75 per cent we inherited from the Howard Government. A family is now saving around $4,500 a year on a $300,000 mortgage compared to when we came to office in November 2007.

That’s why we have worked so hard to find savings in the recent Mid-Year Economic and Fiscal Outlook – to continue the fiscal discipline and return the Budget to surplus for the benefit of all Australians.

Creating the right conditions to maintain downward pressure on interest rates is one critical aspect of housing affordability, but nothing makes it harder to pay the rent or meet the mortgage re-payments than being without a job.

That’s why we took immediate action to stimulate our economy and keep thousands of Australians in work when the global financial crisis swept around the globe and threatened our economy. Now, our economy is known and admired for these key features:  sustained economic growth, contained inflation, low public debt, a pipeline of private investment, and an unemployment rate almost half that of other western nations.

Housing Affordability

A shortage of affordable homes, however, is hurting people on low incomes and in greatest need.

There are still too many families who cannot afford their own home, and too many who are paying a very high proportion of their weekly income in rent.

And the most recent report from the National Housing Supply Council estimated a very significant shortage of affordable rental properties for lower income renters.

This situation had been building for more than a decade when we came to office in 2007.

By 2007, a third of Australians allocated public housing had been waiting for a home, for two years or more.

The Howard Government cut $3.1 billion in real funding from the Commonwealth State Housing Agreement.

As Dr Ken Henry noted in his report to the Treasurer on Australia’s Future Tax System:

Until the new funding agreement in 2008-09, grants had been declining over time in real terms, falling by around 25 per cent in the 10 years to 2006-07.

Dr Henry went on to say:

From 1997-98 to 2007-08, public dwellings have decreased from six per cent to five per cent of the overall housing stock. Lower supply further contributes to unmet demand for public housing.

In 1995, 22 per cent of applicants for social housing were accommodated. But 10 years later, only 14 per cent were able to move off waiting lists and into housing.

Meanwhile, private rents grew by 6.5 per cent in 2007 – more than double the rate of inflation.

When we were elected, we knew we had to act urgently, decisively and with imagination.

Federal Financial Relations Framework

With the election of progressive parties federally and in every State and Territory there was a real appetite for a more co-operative approach to federal state relations.

It was a rare opportunity for nine Labor governments to work together without having to navigate the obstacle course of party politics.

Negotiations proceeded apace with common values providing a commitment to drive reform for the benefit of our most disadvantaged citizens.

The new Intergovernmental Agreement on Federal Financial Relations focused on the “achievement of outcomes, efficient service delivery and timely public reporting”.

All Governments committed to improve service delivery by being accountable for “the quality and efficiency” of those services, and the outcomes they achieved.

The National Affordable Housing Agreement

The Intergovernmental Agreement for Federal Financial Relations provides the framework for the National Affordable Housing Agreement, the National Affordable Housing Special Purpose Payment (which is where the money comes from), and our National Partnerships for Homelessness and Social Housing.

The aspirational objective of the NAHA was for all Australians to “have access to affordable, safe and sustainable housing that contributes to social and economic participation”.

In signing up to this Agreement, the Commonwealth and the States agreed to improve co-ordination across housing programs and better integrate housing with other human services.

We committed to reduce homelessness.

And we committed to providing direction for a range of measures related to both public and private housing.

Has the NAHA worked?

I know that the NAHA, its structure and its future, have been a topic of debate here at this conference.

And today, I’d like to join that conversation.

As I said, when we came to office, there was a great mood of co-operation, and a willingness on the part of the Commonwealth to give the States and Territories more autonomy over how they spent Commonwealth funding.

By giving the States greater flexibility in how they would address housing affordability and homelessness, we thought they would be in a better position to address the particular challenges in their own jurisdiction, that they could direct funds towards the programs and services that would have the greatest impact.

But have they?

The NAHA provided for the community to assess our performance in a number of areas:

  • Rental stress and home purchase affordability for low income households;
  • Homelessness;
  • Indigenous housing;
  • And the gap between underlying demand for housing and housing supply.

There are some real data challenges in measuring this performance, but there are some things we know.

The COAG Reform Council found home purchase affordability improved in all jurisdictions between 2007-08 and 2009-10, but declined between 2009-10 and 2010-11.  The Council’s conclusion:  the biggest factor in home purchase affordability is interest rates.  With interest rates at historic levels, we expect this measure to improve again in the Council’s next report.

In contrast, rental affordability has worsened since the NAHA has commenced, especially for those with the lowest incomes.

The States committed to planning reform for greater efficiency in the supply of housing, and to increase capacity to match new housing supply with underlying demand. The conclusions of the COAG Reform Council begs the question – what have the States done under the NAHA to improve housing affordability and rental affordability?  What initiatives are the States pursuing to improve housing supply, or to reduce development costs and hence the cost of housing.  And how effective are their interventions?

None of this is to say that housing affordability and rental affordability would not have worsened without efforts by the States pursued under the NAHA.  The data we do have, however, serves to illustrate that under this national Agreement none of us have the capacity to assess the impact of initiatives – positive, negative or neutral.  And we can’t determine which States have the best strategies, so we don’t know what measures should be emulated. Such a complex policy area needs empirical evidence to ensure interventions are as effective as they can be.


The Intergovernmental Agreement on Federal Financial Relations recognised that their new, less prescriptive agreements would need to be “underpinned by a shared commitment to genuinely co-operative working arrangements”.

And there are some worrying signs that with the changed political environment, that spirit of co-operation appears less than it once was.

For example, under our National Partnership on Homelessness, one of the four core outputs is:

“Support for private and public tenants to help sustain their tenancies, including through tenancy support, advocacy, case management, financial counselling and referral services.”

Strictly speaking, there is no legal requirement on the States that they must provide any specific named tenancy services, but I believe it is contrary to the spirit of this agreement for the Victorian Government to cut the Social Housing Advocacy and Support program by a third.  As is the short-sighted decision by Premier Newman to scrap altogether the Tenant Advice and Advocacy Service.

Funding for 23 services around Queensland was due to end two days ago following the Premier’s decision.

What is even more disturbing is that this was money derived from interest on the tenants’ own bonds held in trust.

Fortunately, the Gillard Government has stepped in with emergency funding to keep the doors open until next June.

And we will ensure that the States live up to their obligations in future funding agreements.

Other Housing Programs

When it comes to bricks and mortar, I have more confidence about what our partnerships can deliver.

I know that the Federal Government’s $6 billion investment through the Social Housing Initiative and National Partnership on Social Housing has delivered more than 20,000 new homes so far.  And I know those

homes have rescued at least 10,000 people from homelessness.

I know that our $4.5 billion investment in the National Rental Affordability Scheme has delivered more than 10,000 new affordable homes for more than 15,000 people to rent.

I also know that the half a billion dollars we’ve invested through the Housing Affordability Fund and the Building Better Regional Cities is delivering more than 60 infrastructure projects, which will see more than

12,000 households able to buy more affordable homes and more than 35,000 homes built earlier than they would have been without these federal initiatives.

These programs are examples of governments and communities working together to solve local challenges – of how results can be achieved through co-investment, partnerships, and leveraging private sector investment.

For example, in Bendigo 800 new homes are being fast-tracked with a Building Better Regional Cities grant to the local council.

And 100 low and moderate income families will save $38,000 each on a new home.

There will be a ballot for eligible buyers.

Just imagine the massive difference this will make to those lucky families’ lives.

The difference between a $300,000 mortgage and a $340,000 mortgage may not seem that great.

But at current rates, that would save a family $300 a month. That’s $300 towards school uniforms, kids’ shoes, running the family car, or even a day out at the movies.

Over the life of a 20-year loan, that family would save over $72,000 – and over $32,000 of that is a saving on interest alone.

That sort of saving can really change a family’s fortunes.

So, we know that our $11 billion investments in the Social Housing Initiative, NRAS, HAF and BBRC are making solid inroads on housing stock and affordability.

The contrast with what we know about the achievement of our reform and policy objectives under the NAHA is stark.

The question for me is whether States and Territories are interested in further reform under the NAHA.

The NAHA, which continues indefinitely, under current arrangements, can only be amended with the agreement of all Governments.

These matters will be canvassed at the COAG Select Council on Housing and Homelessness meeting here in Brisbane in a fortnight’s time.

And I am hopeful that some of that early mood of goodwill still remains – despite the changed political landscape.


Providing social housing, reducing and preventing homelessness and making housing more affordable are challenges that require the  effort and investment of all governments, as well as the private and community sectors.

Just as Ben Chifley identified and accepted the post-war challenges of our nation, the Gillard government is today accepting the challenges and making the tough choices in a post GFC world of economic volatility and uncertainty.

We need to respond creatively and effectively.

I believe that the Gillard Government has taken the lead in that regard.

We have instituted historic changes in the housing and homelessness area. We have invested more than ever before at the Commonwealth level.

But we know that there is more to be done, and more change is needed.

I look forward to working with all of you to improve housing for all Australians, and I thank you for your continuing efforts.

Thank you.