Page 1989 - Week 05 - Thursday, 3 May 2012
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time, the government failed to follow up with the fact that there was no lender willing to underwrite people who signed up for the scheme.
Mr Barr continues the rhetoric. He tells us that this scheme will “assist households to purchase their own home”, but he is silent on the fact that one of the benefits of owning a home is the way the land value increases over time to match or even outpace cost of living increases. In other words, while it may allow some who otherwise may not be able to own a home to buy a house, the scheme denies these homeowners gains on land value increases. In fact, it perpetuates the two-class Canberra that Mr Barr has referred to.
This is the government’s message. The land rent scheme, make no mistake, is the government’s message to members of our community—we heard it from Mr Barr again this week—that they will never own their own house and land package; they will never have that opportunity and the security that goes with that. These are the people this government has given up on. They are saying to them: “You can have land rent. You can rent the land.” I will get to how they treat some of those people when we get to the Duties Amendment Bill, which is why we will not be supporting that.
When we looked at what industry had to say, we saw that the reason the government took so long to find lenders for this scheme was that there were some inherent problems in the scheme. It was too risky. Here is what they had to say. We had St George Insurance saying:
… there was no appetite for participating in the scheme for the following reasons. In the event of a borrower default it would be difficult to distinguish house versus land value upon the sale to repay the housing loan.
Genworth Financial went further. They said:
The cost of construction may not equal the value of the dwelling. Without the land component balancing out any negative equity issues realised in the value of the dwelling it is possible from the outset that the borrower may, in fact, have negative equity.
I again point to the fact that this is what the Labor Party are consigning some members of our community to. They are saying: “You will never own a house and land package. And you will, therefore, have to use the land rent scheme.” What Genworth Financial are saying to them is: “You may actually find yourself in negative equity immediately.”
That is a really serious thing. We know that one of the great benefits of homeownership has been that over time the appreciating land asset puts people in a better position. It has been true in Australia across the board over, particularly, the last 50 or 60 years. We have seen a great boom in homeownership. With that ownership of homes, which includes the land, we have seen people who otherwise do it pretty tough scraping together money to pay their mortgage but seeing that capital growth. They look back after 10 or 20 years and, having scraped that money together, they see themselves having something of value—actually having equity in their home, having an asset that they can sell if they choose to or that they can borrow against if they
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