Page 892 - Week 03 - Wednesday, 2 April 2008
to reduce their level of exposure because of reductions in the value of certain commercial properties that have been financed.
The degree to which this is a problem is something that can be determined only by looking at the financial data. But the point is that it is not only would-be home buyers that we have to think about. There are others as well who, sometimes through substantial sacrifice, have entered the property market in recent years and rely on the high value of the property they have purchased as security to cover their loan obligations. Just as the large and rapid increases in property prices have caused problems for many people, a drastic reduction in property prices could also cause significant problems.
What is needed is a rational assessment of the magnitude of the two opposing problems and an assessment of how land release will impact on people who have bought property in the property market in recent years since the property boom. We may like to think that there is a panacea for all of our woes, but the truth—as in so many other areas of economic policy—is that there are often only trade-offs.
My message and word of caution in this debate is that we have got to remember that around 76 per cent of Canberra people own their own homes. I am keen to hear what message we are sending out to those people—to say how much they should lose in personal wealth and equity in their home to achieve this notion of housing affordability that Mr Seselja has raised here today. Is it 10 per cent on a typical family home in Gungahlin or is it 15 per cent? They will have to address that issue in terms of their personal stake in the home, and they will have to take that into account in terms of their relationship with their finance source.
It is not as simple as simply uttering a bit of rhetoric and keeping some people happy by saying that we should have more building going on. We have to consider what the consequences are. Those of us who were around in this town back in the early 1990s would recall a situation when the release of land, in my view, was not well managed. It led to quite an adverse impact on home values, with many people incurring losses on sales of property.
We need to be very careful about this. I do not accept that the ACT is an isolated environment. I reject what the Chief Minister said in terms of having a decade of financial mismanagement through the federal government. For heaven’s sake! We have two per cent unemployment in this town. There has not been any record of it being that low since the history books were collecting data in this territory. And the rest of Australia has seen prosperity on a scale that is without precedent.
The economic boom that we have had over the last decade has produced wealth on an unprecedented scale. There is wealth in superannuation. There are many people in our communities who have become millionaires through growth in property prices. There are people who have made fortunes on the equities market. It is arrant nonsense to say that this community and this country have suffered through 10 years of economic mismanagement. The fact of the matter is that we have done very well.
Things are certainly under pressure on a global basis. You only have to go across the Tasman to New Zealand: they are now typically paying between 10 and 11 per cent