Page 3237 - Week 09 - Tuesday, 19 August 2008
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We see the government saying to them that we have made it too hard now; you do not get this level of ownership any more. You do not get the security that goes with owning house and land. You do not get the benefits and the capital gains that flow from that. What this government says is that what we are going to offer you is a second-class ownership structure. It is an ownership structure of a depreciating asset. That is all you will own; you will own the house and not the land. We know that the house is a depreciating asset and the land is the appreciating asset.
I think the reason that the Treasury does not expect many people to take it up is because it is not an attractive scheme. It is something that most people would look at and they would immediately see the problems with it. We have seen it operating in New Zealand, as members have mentioned in previous speeches in this place. I have outlined the extraordinarily low take-up and the fact that the banks have not been willing to lend. It has had to come from government. The government has had to guarantee it in New Zealand.
There are major questions about this central plank of the government’s housing affordability strategy. It is essentially saying to young people, to people on low and middle incomes: “Forget about owning a house and land package; forget about the traditional benefits that go with that; you will own a house. You will own a house which will depreciate in value over time. You will not see the capital gains that go with owning land.” We know that over time land appreciates whereas buildings and structures depreciate over time; they get less valuable over time.
We have seen the charts that have been produced by Treasury that do not take all the factors into account. They do not take account of the fact that the reason houses cost more now than they did, say, 10 years ago is because they are larger and because people spend money to improve those houses. If you take a house now and do nothing to it, it will get less valuable over time. That is the way that taxation arrangements treat building, that is the way we traditionally understand it and that is what we have seen.
Yet this government is saying to these people, “You can own a house, but not land and you can go backwards.” Essentially, that is our fear. It is worth looking at the Treasury’s assumptions too. The Treasury’s assumptions for the average person or couple that would access this land rent scheme are that they would have a family income of around $50,000 and that they would have a deposit of $40,000. That is a pretty good effort.
There are not many people who could get to that level of savings. That is a high level of savings. If you are on a $50,000 family income, to get to $40,000 cash in order to have a deposit to buy a house—not a house and land—that is pretty rare, I would suggest. We have people in this situation who are very good savers, but they are going to be put into a situation where their savings will be essentially subsidising the depreciation in the price of their asset. Their $40,000 deposit will soon diminish and they will have less money than they started with when they bought into this scheme.
There are significant problems, Mr Speaker, with what is going to happen with transfer of ownership. There are unanswered questions when a person who has been
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