Page 3524 - Week 11 - Thursday, 19 September 2013
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An anonymous broker said: “How the government was misguided enough to actually introduce the legislation in the first place is way beyond me because if they knew anything about lending practices, they would realise that it has nothing to do with global economic crises or anything like that.”
Members will recall that the Auditor-General at the time responded by saying that it would represent a risk to the territory. She noted that to date they:
… have not been effective in achieving the ACT Government’s stated objectives, which include meeting demand, providing affordable land and housing, and establishing an inventory of serviced land.
She said:
Despite the current accelerated land programs, there was evidence of a shortage of the supply of residential land, capable of being built on, to meet the pent-up and on-going strong demand.
And then we had statements from residents. One said: “The failed ACT land rent scheme is one of many cosmetic attempts by the Government to delude voters that it genuinely wants to solve Canberra’s housing crisis ... There can be no solution until the Assembly’s profit-hungry land monopoly ...” That is from a Latham resident. Another said: “...under such a scheme the benefit of increases in the land’s value over the years would accrue to the Government rather than the lessee, thus leaving the lessee with equity only in the house itself. ... And as Australia’s biggest mortgage insurer explains, that’s insufficient to get a loan.” That is from RS Gilbert of Braddon.
There is some interesting historical data now. In 2008-09, of the 58 contracts exchanged, none were handed back. In 2009-10, 416 contracts were exchanged and 23 were handed back. That is an 18 to one ratio. In 2010-11, 768 contracts were exchanged and 113 were handed back, approximately a seven to one ratio. What is telling is that in the 2011-12 financial year, up until 5 December 2011, of the 182 contracts exchanged, 91 were handed back. That is a two to one ratio. That is, for every two contracts exchanged, one gets handed back.
And there is more. It took this government almost four years to clarify duties paid on land rent leases, a sign that this flawed program is still being ill managed. But the biggest mistake by Mr Barr and his government is that they tell low income families that this scheme will “assist households to purchase their own home” yet they are 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 home owners gains on land value increases. This is a flawed program and, worse still, has the potential to leave low income owners with negative equity.
The bill is continued proof of this program’s failure. By limiting the program to prospective buyers who qualify for the discount rate, you are incentivising people to stay at a low income level. What message are you sending out to low income
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