Page 207 - Week 01 - Wednesday, 26 February 2014
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housing action plan, and aims to move people into home ownership who would not otherwise be able to afford it by reducing up-front costs and mortgage payments
The Greens support the intent behind the land rent scheme. I think it is fair to say that whilst the scheme previously achieved its objective for a good number of people, the reality was that under the old arrangements anyone could buy up properties at four per cent rent and sell them on at a profit. The scheme was, unfortunately, used by some who were already in the housing market, some who had the capacity to enter the market without assistance, as well as those who exploited the scheme for land banking.
The changes that came through last year responded to these problems and refined the scheme to help it better achieve its objective of targeting low to middle income families. The Greens supported the changes that went through, as they were broadly consistent with our view that we should be shifting government assistance to those who most need it.
The changes that came into effect in October 2013 have removed the four per cent rental rebate that was available to all incomes, and replaced it with a single rate of two per cent which is means tested. The income cap has been changed from $100,000 per applicant to $160,000 per household, which increases depending on the number of children. So although the overall threshold is higher, it is a more accurate reflection of circumstances as it takes into account the income of both income earners.
There are clearly some people who had signed up to the previous scheme who may have been entitled to a different arrangement had they signed up at a later date after the new scheme was in place. While I understand that people in that situation may feel that they are in some way missing out, at the end of the day, as Mr Barr has articulated quite well, the government must be in a position where people who sign up at a particular time sign up to a certain deal. We make financial decisions based on the information we have available at the time, on the understanding that there are things that are outside our control that may change in the future. With interest rates, for example, we make the choice whether to sign up for a fixed or variable home loan, based on our circumstances and the prevailing economic climate, knowing that interest rates may go up or down in the future.
I really do not think the government should be changing the scheme so that lessees under the old scheme can switch to the new arrangements. I do not believe it is practical to do this. It would be a bureaucratic nightmare to move people from one scheme to another. With the administration, I think there would be quite a workload. Despite the principle, the fact is that I do not think you should be able to change nonetheless.
It is worth pointing out that, as well as tightening up the eligibility criteria, the new scheme also adds some requirements for lessees once they are in the scheme. Firstly, once their income exceeds the threshold, they must transition out of the scheme. Secondly, if the lessee wants to sell their property, they can only sell it to someone who meets the eligibility criteria. These are limitations which were not in place under the previous scheme. So although more people may now be eligible for the two per cent scheme, there are constraints on the scheme’s arrangements that may not suit everyone.
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