DR Dossetor Address to the Housing Industry Association, Conrad Jupiter’s Casino, Broadbeach
I would like to pay my respects to the traditional owners of the land on which we are meeting – the Yugambeh people – and to their elders past and present.
I also acknowledge:
- Jill Lee, HIA’s National President;
- Shane Goodwin, HIA’s Managing Director;
- HIA’s National Board of Directors; and
- Other distinguished guests.
Thank you for inviting me to present this year’s DR Dossetor address.
When the forerunner to the Housing Industry Association was established at the end of the Second World War – the industry faced a different set of challenges to those it faces now.
The aftermath of the war was a difficult time because of the acute shortage of materials – and the massive need for new homes not just for returning service personnel, but the post-war immigration boom.
Bill Hunt and Perce Newton decided to form an organisation – I am told after an hour and a half of exchanging complaints about their problems.
Randal Dossetor was an influential member of the earliest recorded general committee.
As the Prime Minister said when he presented this address to you in 2008 – few Australians did more to pursue the dream of universal home ownership than Randal Dossetor.
Dossetor’s generation was the first generation of Australians to embrace mass home ownership.
Immediately after the war – barely half of all occupied private dwellings in Australian were owned outright or with a mortgage.
Fourteen years later, in 1961, the rate of home ownership was over 70 per cent.
It is not hard to understand why.
For those that had grown up in the depression – and experienced the desolation of being without money, a job or a home – home ownership was a source of the security that could not be taken away.
For those that had returned from war – home ownership gave them the freedom that they had fought for.
For new immigrants – home ownership was a stake in Australia, their own part of their new community.
In January 1966 Dame Annabelle Rankin became the first woman to oversee a government department in Australia when she was appointed Minister for Housing by Harold Holt.
In 1967 she said:
“This Government’s policy has always been to encourage home ownership: we believe in home ownership … according to the 1961 census 70.3 per cent of occupied private dwellings were either owned or were in the process of being purchased. Australia has, if not the highest degree of home ownership in the world, at least very close to it.”1
In the 40 years since – Australia’s rate of home ownership has been remarkably stable.
In 1961 the rate of home ownership was 70.3 per cent, in 2006 it was 69.8 per cent.2
What the figures do not tell us is how much harder it now is for young Australians and their families to buy their first home compared to 40 years ago.
Whereas land was once cheap and construction costs made up most of the cost of a house – now land is expensive and supply tends to be scarce.
Once we bought new houses and waited years for streets to be sealed and curbed. Now we expect new homes to be fully serviced up front.
The Government still supports home ownership as strongly as it did in the days of Annabelle Rankin.
We want a housing market where an ordinary person who works hard and saves hard can afford a reasonable home of their own.
This is exactly why the Rudd Government has put so much emphasis on housing supply since we came to office.
It was clear that it was time for the Commonwealth to get involved in housing again.
One of the first things we did was to set up the National Housing Supply Council – to give us all the evidence we needed.
The 2010 State of Supply report is a stark reminder to us all that housing supply is simply not keeping up with housing demand.
The report found that demand for housing began to exceed housing starts ten years ago and has continued every year since.
The result is that in June 2009 Australia was 178,400 homes short of meeting underlying demand.
The report also concluded that to increase housing supply we need planning reform, greater clarity and consistency in the basis for developer charges and mechanisms to ensure the implementation of urban strategic plans, including the delivery of infrastructure.
Over the last two and half years, the Government has acted to tackle housing affordability on a number of fronts.
At the macroeconomic level – we have had to get the broader economic settings right.
Dame Annabelle Rankin said in 1970:
“… the tasks of the Government … are to set the general social and economic conditions which will make possible the building of sufficient good quality homes to satisfy the needs of most families … and, I believe, to provide housing for … low income earners.”3
If only setting ‘the general social and economic conditions’ was so simple!
Few predicted that within a year of the Rudd Government taking office – our economy would be confronted with the worst global economic circumstances since the Depression in the 1930s.
Housing was a core part of our response – initially with the First Home Owners Boost and then with an historic investment in new social housing construction.
The Boost saw an immediate increase in traffic through display villages and new developments.
In total it helped 246,000 first home buyers into homes of their own.
Other established home owners made the decision to upgrade while interest rates were at record lows – and there was a strong market for their existing home.
We also made the single largest investment in social housing ever undertaken in this country.
More than 2,000 individual social housing projects across the country have given local builders an alternative business line while the economy recovers.
In the last two years I have visited a lot of building sites.
The common story has about jobs – people are putting people on when they expected to be putting people off.
In Melbourne’s south east, Charlton Knight from Blue Bay painters won a contract to paint 20 houses and told me that he was able to put two staff back on the books to complete the extra work.
In Canberra, Stuart Sampson from Vogue Constructions said to me:
“…the increase in workload due to the social housing initiative has created more job opportunities for new staff within my organisation.”
In Adelaide, Don Belperio, owner of Lodge Constructions, said that winning nine contracts meant he had to put on more subcontractors – electricians, plasterers, concreters and labourers.
The Stimulus Plan is also having another important effect – it is helping businesses keep their development pipelines open.
In total the States and Territories estimate that 3,000 extra private homes are being built on top of the 19,300 being delivered through the Stimulus Plan.
This is because developments that stalled due to finance drying up have been able to proceed because we bought some of homes as presales that in turn convinced the banks to provide finance.
The Government’s goal was to support jobs and protect business from the worst impact of the downturn.
That’s why we provided a 50 per cent tax break for small business who bought assets during the global recession.
It is also why we now want to give small business a two year head start on proposed cuts to the company tax rate from 1 July 2012 and allow small businesses to write off in the year of purchase the full value of assets costing up to $5,000.
As well as getting the macroeconomic settings right – the Government has acted to support to first home buyers.
Even before the First Home Owners Boost – we aimed to reverse the decline in the number of first home buyers in the market through First Home Saver Accounts.
As house prices rose – first home buyers were finding it harder to get a big enough deposit to enter the market.
In March 2008 – first home buyers accounted for 16.4 per cent of all home purchasers – compared to 25.8 per cent in December 2001 and more than 20 per cent throughout the 1990s.4
The Government established First Home Savers Accounts to help aspiring first home buyers to save a bigger deposit to buy a home.
The Government provides a 17 per cent contribution on the first $5,000 (indexed) of individual contributions each year.
This means that anyone who contributes $5,000 to their account will receive an $850 deposit from the Government.
Changes to the Accounts announced in the Budget will make it easier to access the savings that a potential first home buyer accrues.
So while First Home Saver Accounts were overshadowed by the First Home Owners Boost last year – they remain a very important part of the Government’s housing agenda.
The Government is also helping those Australians in the rental market.
We established the National Rental Affordability Scheme aims to boost private investment in residential property.
The Scheme puts an incentive on the table to encourage the housing industry to invest in affordable rental homes.
An annual incentive – currently a total of $9,140 per home – is provided each year for 10 years to build new homes and lease them at 20 per cent below market rates to low and moderate income earners.
The Government has committed more than $1 billion to the Scheme over the next four years to stimulate the supply of 50,000 new homes.
I have been extremely pleased at the rate of uptake.
In the first two rounds – we awarded 11,000 incentives to around 80 organisations for new homes all around Australia.
A number of builders – including Devine Homes, Payce and many smaller builders across the country are now involved.
This week I approved the first large scale application led by Yaran Residential Investments in Western Australia.
Yaran will deliver more than 1,100 homes at 47 sites across Perth and southern areas of Western Australia.
Yaran is one of eight large scale applications we have received covering a total of more than 12,000 incentives across Australia.
Two years after it started – the National Rental Affordability Scheme is delivering on its goal of stimulating private investment in housing.
Yet despite improved macroeconomic conditions, new support for first home buyers and growing investment in residential property – the long-term problem of housing supply remains.
Increasing housing supply through a more efficient development pipeline is one of the great challenges for the planning reform.
Although State, Territory and local governments hold many of the levers – I believe the Australian Government can play a role too.
Planning is on the COAG agenda and we have reached agreement with the States and Territories to improvements in capital city planning.
Treasurers are looking at a number of specific reforms for their impact on housing supply including land aggregation, zoning and the consistency of building regulations.
Infrastructure fees are also being considered by Treasurers and are sure to come up in submissions to the Productivity Commission inquiry into planning and zoning issues.
We will keep working on systemic reform but that should not prevent us working right now on projects that deliver more homes at a local level.
Right now we are using the Housing Affordability Fund to support local projects that lift housing supply and improve affordability.
The Fund helps reduce the costs of new homes by tackling the barriers developers face in supplying affordable housing – reducing planning and infrastructure costs in new housing developments.
To date 59 projects have shared in around $390 million under the Housing Affordability Fund.
They will deliver direct savings on more than 10,700 homes and indirect savings on another 385,000 homes through faster approvals and shorter development times.
Some projects are funding small infrastructure like sewerage and roads, while others are buying local reform that will have a long-term impact on housing supply and affordability.
Earlier this month the Prime Minister and I announced a new Housing Affordability Fund project up at Caboolture.
Moreton Bay Regional Council – the third largest municipality in Australia – and PEET Caboolture Syndicate Limited proposed a joint venture to deliver infrastructure for 852 residential lots at Riverbank Estate at Caboolture.
Moreton Bay will receive $10.5 million under the Fund – $10 million to build a vehicle, bike and pedestrian bridge at the project site, and a $500,000 investment in planning reform.
Without this funding the project would not have gone ahead. The whole project was not feasible if the bridge had to be paid for by levies.
With the funding we will get more homes, now.
There will be direct cost savings worth $15,000 for 100 home buyers with 1,300 benefiting from reducing holding costs.
Many other Housing Affordability Fund projects are achieving local reform.
Last year we invested $3.6 million to the Council of Mayors of South East Queensland’s ‘Target Five Days’ project to achieve a 75 per cent reduction in approval timeframes by assessing low risk residential developments within 5 days.
The project started by examining the performance of the South East Queensland councils looking for obstacles to quicker assessments.
In one council it was found that it was taking an average of 67 days to complete a development assessment on a code assessable home.
There is still some work to be done but already one council – Logan City – is well on the way to its goal of a 75 per cent reduction in processing times on residential developments.
Some applications are already being approved within the target five days.
The National Housing Supply Council has projected that we will need to find houses for 3.2 million more households by 2029.
One in five of those homes are expected to be needed in South East Queensland.
About 50 per cent of new housing in South East Queensland is planned to come from infill development – most of it medium density.
You all know that infill and medium density development can be a difficult process – but it makes good sense.
Over the next 20 years, the number of single person households in Australia is expected to grow by 1.5 million households.
We are going to need to a greater mix of housing in the future.
There are many examples where greater density has improved amenity through better public transport, more shops and improved local services.
Yet many people can also point to poorly designed developments they do not want in their neighbourhoods.
This is one of the great challenges for local governments across Australia – how to meet infill targets in a way that is supported by the community and consistent and efficient for industry.
I am pleased to announce today that the Council of Mayors of South East Queensland will receive a further $1.78 million under round two of the Housing Affordability Fund to tackle this problem.
The Liveable Compact Cities project will develop best practice policy guidelines to inform the policy of state and local government in South East Queensland on medium density development.
The Council of Mayors want to agree locations, standards and processes that reassure the community that new development will be well designed and set out a consistent process that removes unnecessary barriers and that industry can rely on.
Over the next 18 months the Council of Mayors will lead a design pilot of the new approach in a number of locations across South East Queensland to build trust within the community that infill development can deliver more housing and better amenity for existing residents.
The Council of Mayors tell me that this will improve the planning process for 15,000 homes in the first year following completion of the project and up to 75,000 homes in the following five years – a big contribution to housing supply at a local level.
If we are to hold onto the dream of universal home ownership that was so important to DR Dossetor – there are big challenges for all levels of government – and for industry.
The challenge is for all levels of government and industry to continue to work together to promote reform and ensure a better match between housing supply and demand.
The Federal Government stands ready to play our part – through well targeted programs, support for industry and an ongoing reform agenda.