Mike Elliott: First Home Owners Grant Bill

Extract from Hansard

Legislative Council
3 July 2001

Mike Elliott
Leader Australian Democrats
Member of the Legislative Council

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The Hon. M.J. ELLIOTT: As a couple of people have already gone through the purpose of the bill I will not make further comment upon it other than to say that I recognise value in some stimulation to the domestic construction market. However, it needs to be recognised that the slump in housing construction was overemphasised because there had been a boom in construction just prior to the GST being implemented. It would have been fairly reasonable to adjudge that, having brought construction forward, there would be this hiatus-a period when little construction would occur-after which one would assume that it would pick up depending upon where the economic cycles were heading at the time. There is also some question about whether or not this was brought in too soon.

On radio the other day I heard an interesting analysis-that one of the side effects of the scheme is that the wrong houses are being built, that what is still being built are new homes on quarter acre blocks when the growing demand for housing in South Australia is for the ageing population-the empty nesters-who need a different style of housing. If that housing was available then their houses on the quarter acre blocks would have been available.

I think that what we have done in this scheme, probably unwittingly, is to build up the stock of the style of home that is likely to go into surplus and have done nothing to address the area of real demand. If there is a criticism of the scheme I think it is that it was a fairly blunt instrument to fix a problem that was perhaps not quite as severe as it first seemed.

It has created its own boom, and the one thing that is guaranteed is that if you have a boom there will be a bust at the end of it. Everybody is rushing out to take advantage of the $ 14 000 while it is there and once it has soaked up that lot of demand and people bring forward their decisions, particularly in the current low interest rate climate, builders are about to face the next barren period in probably another 12 months. I do not know whether the commonwealth will up the scheme to $21 000, but I think we need to be a bit more creative.

People might harken back to the days when we had a Housing Trust in South Australia which used to construct counter-cyclically and by doing so provided a great deal of certainty in building and work for private contractors-and in the later years private builders were doing the building. It underpinned what to this day is still a cheaper housing market than what it is in most other capital cities, but there is a danger that that advantage over time will be lost. The only thing that is maintaining it at this stage is the fact that our economy is still fragile relative to other states.

In summary, the Democrats support the second reading. One hopes that this has not been too blunt an instrument and that it does not create its own set of problems in another 12 months.