Page 938 - Week 03 - Wednesday, 25 February 2009
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details of that at all. The broad experience of these people is they cannot find finance. The problem is not with them; it is not with their savings history; it is not with their capacity to pay; it is with the scheme itself.
They have been led into a scheme about which we have grave concerns, even if they do get finance. Because of the way that it is set up, we have grave concerns that these people will find themselves in difficulty in a few years, they will see themselves in negative equity and they will not get the benefits that people ordinarily get when they purchase a house and land package. They will not get the security that comes from seeing your asset value grow over a period of time.
The government have not been able to point to how that will happen. They do not have any answers on it. We deserve some answers now on this flawed scheme which has led so many people astray. We deserve to have the Chief Minister get up and tell us who these financiers are, whether he will allow these people to opt out, whether he will reimburse them and whether he will ensure that he does not lead struggling Canberra families into further financial difficulties as a result of a poorly thought out and ill-conceived scheme.
MS BRESNAN (Brindabella) (10.34): The ACT Greens supported this scheme when it was introduced in June last year and still do so. We do have some concerns about the story to date, however, and take the view that some of the problems might have been addressed earlier on if the ACT government had brought a more open mind to its development.
As many people pointed out when this scheme was first proposed—both advocates and adversaries—having at least one interested credit provider on board was going to be crucial in its operation. The failure of the scheme to date has been, without a doubt, the failure to find money.
Any condemnation of the operation of this scheme, and its failure to actually bring a bank or other mortgage provider on board, needs to be tempered by an appreciation of the impact of the global financial crisis that broke with enormous velocity and power over the world economy through August and September last year. The pointy end of the global financial crisis back then was a shortage of credit. Since then, of course, it has spread more widely to manufacturing, resources and the economy more widely.
The credit crisis, however, flattened banks, finance companies and insurance businesses around the world. Here in Canberra, the mortgage insurance for the nascent land rent scheme which was coming out of the USA did dry up. Mortgage insurance is a protection for banks, not consumers, so do not think that we should have been surprised that the banks, in their nervousness at a difficult financial moment, faced with a dubious proposition of backing a very new product, instead backed away from the scheme.
I do not believe that this initial failure of the land rent scheme was inevitable. A little more care in setting it up, with some financial partners on board from the start, might have made a difference. Treasury’s confidence in its modelling and the expectation that with the right regulations in place the market would rise to the occasion was, even at the time, a little unconvincing.
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