Legislative Assembly for the ACT: 2009 Week 8 Hansard (24 June) . . Page.. 2847..
MR CORBELL (continuing):
is currently considering the issues raised by the ICRC. I have tasked my department—the Department of the Environment, Climate Change, Energy and Water—given its responsibilities for energy policy more broadly, to look at the issues raised by the ICRC, to work with the Department of Disability, Housing and Community Services to administer the concession scheme and to identify mechanisms to make sure that we can update the concession arrangements to make sure they keep in pace with increases in utility prices, particularly electricity.
MR SMYTH: My question is to the Chief Minister. Chief Minister, the Community CPS website states as of today that they are willing to fund up to 95 per cent of a home loan. However, as revealed in the Canberra Times article this morning, they will only fund your land rent scheme up to 80 per cent of the value of the home. Has the lender informed you as to why they have a different lending standard for your scheme, and what is the reason for this?
MR STANHOPE: These are commercial decisions, of course, for CPS. The basis on which CPS chooses to lend and to whom it chooses to lend are issues for CPS. But I understand, from advice I have received from Treasury in relation to issues around loans, deposits and ratios, that an 80-20 loan-deposit ratio represents the standard mortgage arrangement in the context of most financial institutions. That is a starting point, I understand; I will probably have to get some slightly more fluid advice in relation to this, but the standard mortgage loan arrangement is an 80-20 arrangement. Most financial institutions vary that. I think the standard mortgage arrangement is 80-20, but I understand that most lending institutions actually require a 10 per cent deposit. In the context of standards I understand it is 80-20, but I will just confirm that. Most lending institutions have variables of that, depending on the client and the nature of the loan.
These are issues for lending institutions. Really, I am not able to answer for commercial decisions that CPS have taken, and whether or not indeed CPS will maintain an 80-20 ratio or indeed whether they will maintain it for some candidates or applicants for loans and not for others.
It does need to be understood that the essential nature of the land rent scheme is that the loans that CPS will be offering are loans on essentially half only of a traditional house-land mortgage package. In the context of land rent, it is relevant, I would have thought, that a lending institution that is careful, that is responsible, that is prudent and that is exploring a brand-new product—a product that does not exist anywhere else in Australia and, as far as I am aware, a product that does not exist anywhere in the world—a lending institution with the background and the lending history of CPS, would approach the issue prudently and responsibly. Indeed, in discussions between my officers and CPS there has been a real concentration on the need for CPS to maintain its traditional standard responsible approach to lending.
The last thing we want in relation to this particular scheme or indeed for any member of this community borrowing is that they overstretch themselves and put themselves into a position where they cannot maintain or sustain their mortgage payments. CPS