Page 1983 - Week 06 - Wednesday, 25 June 2008
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The taxpayer subsidised New Zealand scheme requires buyers to have a 15 per cent deposit, and I can only presume that this is because of the obvious depreciation problems. Take-up has not rocketed under the life of this scheme. There was an 80 per cent decline in loan applications between 1992 and 2004 because of the 15 per cent deposit requirement. This scheme has not had a high take-up.
The conditions for the loan include a requirement that the buildings bought with Papakainga loans are relocatable; that is, the houses must be demountable, single-storey and have pile foundations. This is not a scheme to create long-term investments. These are not houses with stable foundations—physical or financial. I would like the minister to inform the Assembly what the ACT government knows about the New Zealand scheme, including the cost to government and the annual level and value of defaults in loan write-offs. Let them bring this information to this place and put all the facts on the table for us to consider.
In summary, we have serious concerns with the land rent scheme. We do not believe that it will have any sort of impact on housing affordability. We believe that the small number of people who may seek some assistance—and I stress the word “may”—may well be cancelled out by many others who find themselves with negative equity. When you add up all the numbers and take into account depreciation and the cost of renting the land and servicing the mortgage on the house, it actually does not stack up very well against renting a home.
When you rent a home, as opposed to participating in a land rent scheme, you do not have the added risk of having a large loan against the depreciating asset. So while renting is not an ideal situation for most people because of the dead money, what you have here is a lot of dead money—you are not getting the capital growth that you get out of land, you are getting the risk that goes with being the owner of a house and you are still, in cash flow terms, about the same or worse off than you would be if you were renting a comparable property.
For all of those reasons we think it is a severely flawed scheme. We believe the government should take up our scheme—which is being taken up around the country now—and cut stamp duty for all first home buyers to give them a better prospect of buying a home. It would assist the government to manage land releases in a better way and allow for more affordable products and competition in the market, instead of stifling competition, as we have seen under this government through the Land Development Agency. If we had that mix, then we are confident that over a period of time housing would become much affordable for first home buyers.
We are not going to do that by flooding the market. We will do it by structural changes over a period of time: changes to taxation; changes to the way we structure land releases and changes to the way we allow competition to flourish. The land rent scheme is a poor imitation of a strategy to help first home buyers. We cannot support it.
MR MULCAHY (Molonglo) (8.24): I will be supporting the Land Rent Bill as I have formed the view that it will provide an additional option for prospective purchasers of property and land in the ACT. It will allow some who might otherwise have been
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