AUDIENCE:Well, thank you very much Mr Prime Minister. My name is Michael (inaudible), I'm state manager with (inaudible) here in Western Australia. Let me add my very warm welcome to you. I was happy to hear your comments in relation to housing. You might have deduced from my accent that I'm not originally from here. I hail from Canada. And -
PM:I thought you were Irish, actually.
AUDIENCE:I hear that a lot.
PM: It was a joke, actually.
AUDIENCE:It seems to me looking at some of the initiatives that your Government is magnanimously and diligently unrolling that a lot of the emphasis seems to be on the demand side. Back in Canada and other nations around the world that were predicate on the dream of owning one's own home, we see the introduction of urban growth boundaries having a significant impost on the price of housing. There used to be historically in this nation, from what I understand, a three-to-one multiplier whereby the median income would entitle one or enable one to purchase a home for roughly three times the price. So, given the current median income or around $60,000 one would ideally hope to be able to purchase a new home for around $180,000. We still can see this occurring in some cities around the world, such as in Canada and United States. But of course, sadly, that's not necessarily the case here anymore and I was just wondering what sort of initiatives we can anticipate on the supply side, such as the removal of upfront development contributions for infrastructure costs as well as some of the imposts associated with master planning. Perhaps the privatisation of DA applications? Because of course at the moment here in Perth we see the median income approximately a nine to one multiplier for the cost of a home, down in (inaudible), I believe, it's around 11 times. So it's clearly unaffordable and I was just wondering if we could perhaps entertain the prospect of removing some of the urban growth boundaries so that we can get back to the original Australian dream of around a three-to-one multiplier? Thank you
PM:Thanks for the question. Certainly when I was here in January, we conducted our first Community Cabinet here in Perth, and we threw the doors of the Cabinet open to several hundred people in the community hall and the discussions afterwards with families in the area, it was quite plain to me that housing affordability is a huge challenge here, huge. And it doesn't matter what part of this state you travel in, it's the same response.
The first thing we have done is to recognise this as an area not just of state responsibility but of national responsibility. It maybe of surprise to you in this room to know that prior to the election of this Government there was no Federal Minister for Housing. Now there is one, her name is Tanya Plibersek, and she has this as her portfolio responsibility.
Secondly, we acutely understand the difference between demand side measures and supply side measures in dealing with the overall housing equation.
On the demand side measure, part of the challenge is to ensure that people can actually save enough to cross the deposit threshold, and having consulted extensively with the industry, including the Housing Industry Association and others, what we've put forward how we are now consulting the industry is a First Home Savers Account, which basically provides preferential superannuation style taxation treatment for first home savers. And the objective is to make it more possible for people to get an effective deposit nest egg set aside over a five year period.
But that's one part of the equation
On the supply side of the equation, we actually have more resources dedicated. Let me just go to 2 programs in particular.
One is a half billion dollar Housing Affordability Fund which is designed specifically to deal with one of the problems you mentioned. We acutely understand what occurs in terms of the pass on of infrastructure costs from local authorities, engaged in a local development approval processes, onto the actual purchases of new homes in new housing developments.
This half billion dollar fund is specifically designed for the Federal Government to partner directly with local authorities across the country. Those who wish to participate with the objective of bringing down infrastructure pass on costs by up to 20 per cent to people buying houses in those areas.
A related measure is what we are currently seeking to advance through COAG and other forums to accelerate the development approval process across the country. Because, if there's one consistent playback from the housing industry nationwide, it's that the time lost through the development approval process is costing big in terms of the final pass on price to the buyer.
The second major program I would point to is another half billion dollar fund that we've promoted on the rental side. Part of the challenge, and I'm sure here in Perth as well, based on previous conversations here, is just the ballooning cost of rental accommodation.
We believe that we need to create a new class of investable assets for people, called affordable rental accommodation. Therefore, the purpose of this half billion dollar National Rental Affordability Fund is to provide a resources through which we can partner with large scale private developers to ensure that a proportion of a new rental housing development is provided at an overall market cost of about 20 per cent of what it would otherwise be.
That is there for a cost ultimately to the tax payer, we accept that. But we've provided funding, and again, based on advice to us from the Housing Industry Association and others, to construct 50,000 such units of affordable rental accommodation in the period ahead. And if that works, we'll extend that by another 50,000.
Both those measures, a billion dollars worth of activity on our part in supply side measures. For us, this is just the beginning. Housing policy we regard as critical. We don't intend just to wave it by and say ‘that is a problem for punters who can't make it on the way through.' We actually have a real concern in this area not to mention, not to ignore, the challenge of homelessness.
PM:You've got a very quiet audience here in Perth. I've just been at the New South Wales State Conference, it's quiet different to this. Crowd was as big, but not nearly as well behaved.
AUDIENCE:Prime Minister, (inaudible) if I can I add my welcome and also thanks for your address this morning.
You spoke in much of your talk about the need for long term planning for infrastructure and the importance of taking a long term view. I just wonder what your comments are in relation to the three year election cycle we have at the federal level, and whether that got an airing at the 2020 Summit, and just generally some discussion around that issue which does conflict politicians when it comes to making long term planning on some occasions? Thank you.
PM:I think there are both funding challenges here and regulatory challenges. If I could just back up on infrastructure a bit, because it is a big, big challenge here in the west. And I get the logic, I'm from Queensland, I understand these things. We generate a lot by way of the nation's overall export revenue, and because of the nature of the mining activity in my state and yours, then, frankly, the infrastructure needs are huge and right across the spectrum you don't have a argument with me on that.
I actually understand the conceptual underpinnings of what we're dealing with. So the question then is how do you advance it rather than just talk about it? And it flows, I think, in two categories. One is getting the regulatory settings right. And two is making sure that you've got a National Government which is prepared not to absent itself from the field here, to become active, funding, participants.
On the regulatory side, part of the problem when it comes to private participation in infrastructure investment is that nationwide we have inconsistent PPP regulations. We are now working through COAG this year, with the target date of the end of this year, producing nationally consistent PPP regulatory frameworks for large scale private investors wishing to engage in investment activity in Australia so that they don't have to chop and change from one state regime to the next when it comes to the regulatory underpinnings of those investments.
There are parallel debates about access regimes, and if you're concerned about infrastructure, can we move more effectively in the direction of a nationally consistent approach to access regimes when it come to infrastructure as well. That is a more vexed area, I'm acutely conscious of the complexity of that debate, but these are two areas where we need to see real progress if we are to provide comfort to large scale investment from the private sector.
The second challenge is what is the public sector doing.
The State Government of WA, and I know it's producing its Budget tomorrow, strong economy, strong robust performance on the part of the State Government when it comes to economic management. But the resources here, at the end of the day, are limited.
In the past, the National Government attitude to national infrastructure provision was basically absent Auslink, that is absent roads. The National Government was not interested. This is a fundamental departure. We are saying for the first time as a National Government we are interested. Roads, rail, ports, broadband. And that's why we have created firstly a Minister with responsibility for infrastructure, that's Anthony Albanese. Secondly, to be advised by infrastructure Australia, which is to be headed by Sir Rod Eddington. And thirdly, for support for this to come from what we announced prior to the election period, as the Building Australia fund.
This is a major departure in National Government policy.
There's a further add on for the west and prior to the election I came here and spoke about the need to use a vehicle called a WA Infrastructure Fund, given the particular acute needs of infrastructure in this part of Australia. I referred to that in my formal remarks today. We intend to make use of such a fund in the future, particularly to deal with your challenges here, because your state in vast, the population is small and therefore there is an added responsibility for the National Government to make sure WA gets its fair slice of the action.