Page 1990 - Week 06 - Wednesday, 25 June 2008
I think the issue that we have with this proposal is indeed part of the opportunity cost of this approach. We will have the Stanhope government proposing to spend $85 million over four years to buy around 120 blocks each year for the scheme. Let us say 500 blocks over five years will be available for the land rent scheme. I think that represents a significant opportunity cost or, I think you could also say, a loss to the ACT taxpayer.
The intention of this scheme will enable people, initially on lower incomes, to be able to commit to buying their own home and, while they are not paying off the land component but renting the land, the assumption is they will be able to save to buy the land in due course. This might sound like a good theory. As I say, it may have sounded like a good idea at the time but at the end of it the Stanhope government is assuming that only a very small proportion of these people, something like 20 people, will be able to convert from renting to buying. So after four years something like 20 people will have genuinely benefited from this proposal, worth $85 million, and actually ended up owning the home and land that they live on.
In part, this will be because these people will have to buy the land at its then current market value and, in all probability, the value of the land will continue to increase, and increase substantially. What does this mean? It means a very small proportion of renters will become owners.
There are also significant efficiency concerns about this as a use of public funds. The opposition questions whether the use of the $85 million in the way proposed by the Stanhope government is, indeed, an efficient and effective use of money, particularly when contrasted with alternative uses for these funds—for instance, using these funds to provide relief for first homebuyers from the stamp duty impost.
But there is another concern about the group that will be accessing this scheme and, indeed, is the suggested target group for the scheme. The planning minister, Mr Barr, has been quoted on ABC online on 24 June this year as saying that this scheme is targeted at people earning around $50,000 per year. That in itself is an admirable objective. The concern—and I think this goes to the concerns that Dr Foskey and Mr Seselja were also talking about—is that this may ultimately place these people in situations where they are actually unable to sustain their financial commitment.
The fundamental question is how sustainable this approach would be in the longer term and how the ACT government would respond to people who find themselves in trouble. For these reasons, it is a flawed policy. I believe it is a policy that is unlikely to help many people in the long term. We do not know how much this policy will really cost the ACT taxpayer in the end, because it is, of course, uncapped. Indeed, one of the comments I made was: “If you had enough people who were interested in the policy, it might be something like a second appropriation or a transfer through the Financial Management Act.”
I do not believe this policy is a good use of public funds and I do not believe that the government has actually thought through the policy to a great level of detail. For instance, when we questioned officials during the briefing, we found there was no money for the advertising budget; there was no money to promote the scheme. We