Page 1988 - Week 06 - Wednesday, 25 June 2008
note that there are other protections being put in place, including a cap on rent increases, whatever the fluctuation in land values and some averaging out of income growth may be. While that is pleasing, it is not a sufficient reassurance to me that those who take on a home purchase and rent the land will necessarily be safe from market fluctuations and that their greater vulnerability in terms of income limits means the level of risk might be much higher than they appreciate.
I am seeking some assurance now from the Treasurer, when closing the debate perhaps, that he and his department will work with community experts, even perhaps the social inclusion board, to provide the kind of scrutiny and support that will be needed.
I note that land rent will initially only be available to people earning $75,000 per annum. That figure has been and will in future be determined internally by Treasury. I am concerned that it has not been thought necessary to set up any mechanism to advise Treasury on setting this income threshold amount, and here I would have thought that a reference group of some kind would at least represent the views of the target market to government. I will talk more about that in a moment. It seems to me that the Treasurer and his department are very confident that they can get it right but my concern is that, if they get it wrong, they will not be the ones who will suffer the pain.
I am also aware of the opposition’s opposition to the scheme on the basis that people’s houses will devalue and the value of the land they rent or maybe want to buy will keep going up. The government’s answer to Mr Seselja’s question on this matter points out that the value of both houses and land has increased over the past five or six years and that the house value increases are not much different from land value increases.
My concern is that these figures might largely reflect the super-sizing of houses rather than the rise in their intrinsic dollar value or the sale of new houses rather than resale price. I note, however, that Treasury’s figures are based on median house and land prices—that is, the price in the middle of the spread where there are just as many above or below. So it is fair to take from that response some reassurance that well-maintained houses have increased in value at a rate not much less than the increase in land value.
Indeed, there is considerable analysis that suggests that the value of land will fall or rise at a lower rate while the value of the house could rise more consistently. However, I believe that needs to be watched very closely, because what appears in analysis and economic modelling does not always show up in daily life and I am not sure whether these figures are not biased towards the changing value of new houses where we are looking here specifically at houses over their lifetime.
The one profound weakness of this bill is that it does not seem to have within it a kind of body to provide the scrutiny of the effect on the people it is designed to assist, other of course than the Legislative Assembly itself because it will be a disallowable instrument. And I am concerned that, having set the scheme up for some purchasers, it may be a trap rather than a way forward.