CHEC AGANSTDEULNITERIYLE MlB-A RAG. OME. D
SPEECH BY THE PRIME MINISTER
HOUSING INDUSTRY CONVENTION ADELAIDE 14 APRIL 1984
Thank you for inviting me to address you today, and thank
you particularly for the welcome conveyed just now by your
National President.
It is a pleasure to address the Housing Industry Association
at its Nineteenth National Convention. We hayve seen much of
each other in the past year, a year which has been a very
exciting one for the Government and for the housing
industry.
Although, as Mr Graham points out, we have not always agreed
with each other on every issue, I can say that we have come
to respect deeply the expertise and experience of the
Housing Industry Association's executive and are very
grateful for their important contribution to the development
of the Government housing policies over the past year.
Mr Graham has just mentioned that we have always been
available to speak with the Housing Industry Association in
the past. Let me assure you that the Government will always
be available for consultation in the future too.
We have been in Government now for just over a year. It is
timely to stand back and recognise just what has been
achieved. In particular, given the high priority the
Government places upon housing, and given the parlous state
of the industry when we were elected, the Government is
particularly proud of what has been achieved in the housing
a r ea.
The high priority the Labor Government has placed upon
housing has reflected our strong philosophic commitment to
the right of all Australians to decent, affordable
accommodation. Stability in both the home building industry
and in the supply of reasonably priced housing finance are
key aims of our policy approach.
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The Government believes its obligations to Australian
families extend beyond providing a favourable environment in
which most are able to arrange their own accommodation.
There are significant groups in the community who are at a
disadvantage when it comes to buying their own homes, or
even affording market prices for rented accommodation.
For example, young couples are usually among the lowest
income earners and least wealthy in the community and face
an enormous hurdle in'buying their first home.
Owning a home is usually so important to promoting attitudes
of confidence in the future, enabling young couples to
establish their positions in the community and plan their
families. Successive Australian Governments have recognised
an obligation to assist this group, and have implemented
various schemes to assist first home buyers over the years.
Further, the Government believes it has an obligation to
assist other disadvantaged groups in the community such as
the unemployed, the elderly, the sick, deserted wives,
supporting mothers with their accommodation needs.
Accordingly for many years, Commonwealth and State
Governments have co-operated in an endeavour to assist these
groups through the Commonwealth State Housing Agreement..
This Government looks forward to the day when all
Australians, no matter what their circumstances, are
decently housed. Homelessness, fear of eviction and
inadequate housing have no place in our vision of
Australia's future.
The Government has worked determinedly to promote its
housing objectives in the past year. But no Government ever
achieves anything on its own. It is always dependent upon
the co-operation and goodwill of many others in the
community. One~ of the best examples of how the consultative process has
shaped our policies is the development of the First Home
Owners Scheme. Mr Graham has just recalled how this was the
outcome of a meeting between the Government and the Housing
Industry Association at the National Economic Summit
Conference in April last year. And everyone acknowledges
the important contribution this Scheme has made to the
recovery now underway in the private home building industry
and to the turnaround in the economy more generally.
That such a successful scheme was the outcome of the Summit
Conference is, of course, testament to the value of that
experiment in the formulation of important national policies
and priorities.
On present estimates some $ 147 million will be allocated to
the new scheme this financial year, assisting some 70,000
first home buyers.
3.
The First Home Owners Scheme has been an important plank in
the Government's overall effort to get things moving in the
Housing Industry.
You will recall that * after consultation with the industry,
my Minister for Housing and Construction, Chris Hurford,
announced in April 1983 that the Government had set itself
as an objective that it should secure a massive increase in
the number of housing commencements from the trough level of
105,000 in 1982-83 to an annual rate of 130,000 to 135,000
by the second half of 1983-84.
This objective represented a statement of the Government's
confidence in, and commitment to, the home building
industry. It is an important benchmark against which we
were prepared to judge the success of our policies. And, I
am glad to say, the indications are that our objective will
easily be achieved.
Further, the Government has moved to give effect to its
commitment to assisting needy groups within the community to
obtain decent accommodation in the 1983-84 Budget. We
provided a massive 50 per cent increase in funding under the
Commonwealth State Housing Agreement. This arrangement is
presently under review, and we have every intention of
preserving its integrity as an effective instrument of a
truly needs-based housing policy which is attuned to the
requirements of Australia today.
More generally, the Government has recognised the importance
of sound and stable macro-economic policies in promoting a
healthy and vigorous housing industry. The private sector
accounts for by far the lion's share of housing activity in
this country. This sector, quite properly, looks to the
Government to conduct its macro economic policies in such a
way as to engender confidence in the future prospects of the
industry. Theze are two macro-economic forces which will particularly
impact adversely on activity in the housing industry: a high
and variable rate of inflation, and a level of public demand
for real resources so high that it constrains private
ac t iv ity
The last thing this Government wants is to allow either of
these forces to damage either the housing recovery or the
economy more generally. The centrepiece of our
macro-economic policies the Prices and Incomes Accord is
specifically designed to keep inflation in check by seeking
agreement from trade unions to contain wage demands to no
more than past price increases. A matching commitment to
restrain non-wage incomes was given by key employers and
professional groups at the time of the Economic Summit and
in subsequent correspondence.
Progress on the inflation front has been remarkably swift,
and the rate of inflation is now significantly lower than
when we took office a year ago. We would like to see it
lower still. Indeed, the CPI is likely to have recorded
hardly any movement at all in the March quarter, which
given indexation bodes well for our prospects of retaining
those hard-won gains against inflation.
On the issue~ of public sector competition for real
resources, I note Mr Graham's call for more expenditure
restraint by the Commonwealth and a lower budget deficit in
1984-85. The massive budget deficit this financial year was
part of our inheritance when we took office.
The Treasurer Paul Keating and I have repeatedly
committed the Government to exercising expenditure restraint
and reducing the budget deficit in 1984-85. You can again
be assured that we are making every effort to find ways of
achieving sensible reductions in Commonwealth expenditures
and reducing the deficit in the next budget.
I say sensible reductions because there is hardly any point
in cutting expenditure back so far that domestic demand is
contracted so sharply that unemployment begins to rise
again. However, it must be recognised that it is not only
the Commonwealth which draws resources away from the private
sector. Particularly with building resources, it is the State sector
too that must exercise restraint in 1984-85. We will be
emphasising this point to our State Government colleagues in
the upcoming Premiers' Conference Loan Council round.
High rates of inflation and high levels of public sector
spending can both produce upward pressures on interest
rates, which also harm the housing industry, particularly
because they adveresly affect both the cost and the
availability of home finance. Needless to say, the success
of t~ he Government's housing policies requires an adequate
and stable flow of finance to the specialist home loan
institutions savings banks and permanent building
s oc ie t ies
1983-84 has been an easy year for home finance with
finance usually readily available and at lower interest
rates than a year or so ago. However, this may not always
be the case, especially as the economic recovery begins to
be reflected in other industries.
Last year, the Government commissioned the Martin Group to
report on the Australian financial system. The terms of
reference of that inquiry included the Government's
commitment to ensuring adequate finance for housing. The
savings banks are central to that and, as you know, it was
announced last Tuesday that the Government would phase out
remaining size and maturity controls on savings banks'
deposits. This is a first step, if a small one.
Other issues raised by the Martin Group including that of
the deregulation of home loan interest rates are of great
importance and decisions on them will not be rushed. The
Government is hoping to have further public debate on the
issues involved and in the true spirit of consultation
which is our hallmark we would welcome your views.
So much for policy issues. Let me now turn to the " good
news" of what has been happening recently. It is no
exaggeration to say that there has been a spectacular
recovery in the housing industry.
This recovery is confirmed by every recent economic
indicator on housing: these include the December quarter
national accounts estimates on capital expenditure on
dwellings, monthly figures on home finance approvals, data
on building approvals granted by local government, estimates
on dwelling commencements; the list goes on.
Some selected examples of what the figures are showing: the
latest national accounts show a seasonally-adjusted real
increase in investment in dwellings of 7 per cent in the
December quarter 1983, following a 7 per cent increase in
the September quarter. What a contrast to twelve months ago
the bottom of the recession when investment in dwellings
had fallen some 36 per cent below its previous peak level in
December 1981.
The same trend is also apparent in the home loan figures
for example, savings banks provided finance for nearly 11
per cent more dwellings in the December quarter 1983, which
was itself up some 10 per cent on the June quarter. Again,
these trends are in sharp contrast to the home lending
figures a year ago.
Further, the figures indicate that the recovery is spread
right across Australia, and is strongest in States where the
recession hit hardest.
They also suggest that the recovery has been particularly
marked since the introduction of the First Home Owners
Scheme last October.
What about the future? A fortnight ago, a report released
by the Indicative Planning Council on the housing industry
forecast some 135,000 dwelling commencements in 1983-84
the same figure just mentioned by Mr Graham.
This represents no less than 29 per cent growth over the
level of 1982-83. Since this full-year figure represents
fairly steep growth through the year, there can be no doubt
that the annual rate in the second half year will easily
exceed our target range of 130,000 to 135,000 commencements.
The Government's earlier confidence that the housing
industry would pull off such a dramatic recovery will, in
the event, be amply justified.
We cannot, and should not expect a repeat performance of
these growth rates next year. The housing industry in
1983-84 has done a magnificent job some might have said
earlier an impossible job. But the circumstances of the
recovery have been very favourable: housing finance has been
readily available, resources were left considerably
under-utilised after the recent recession, the First Home
Owners Scheme gave a strong one-off fillip to demand last
year The task before us now is to sustain what has already been
achieved, to prevent the " bubble from bursting". On this
matter, the IPC's forecasts give us all reason for
encouragement they indicate dwelling commencements
reaching a " plateau" of some 145,000 in 1984-85.
But we cannot take this for granted. If we are to sustain
next year what we have all worked so hard to acheive this
year, we must continue what we began last year.
There must be an ongoing process of consultation and
discussion between all parties involved in the housing
industry. Only if we continue to work together can we
expect to consolidate these achievements.
Judging by the relationship we have already established
together, and by Mr Graham's very positive remarks in his
opening address, I am personally very confident of a bright
outlook for the housing industry in 1984-85.
Before moving on to open this convention formally I should
say a few words about the vexed question of the operation of
the prescribed payments system or " withholding tax" as it
is more commonly known.
We know the industry has problems with this tax and has made
several representations to the Government expressing its
concerns. It is not the style of this Government to ignore
genuine and constructive criticisms of any of its policies.
On the matter of this tax, we have already moderated its
impact by relaxing the exemption conditions following
representations from the industry. This has resulted in the
issue of some 29,000 exemptions and 99,000 variations by 3
March this year.
As a result, the tax has not produced the revenue originally
expected. However, we recognise that the industry still has
considerable difficulty with the tax and, as Mr Graham has
already mentioned, the Government will be conducting a
review of the system. Naturally, we will be keen for close
consultation with the industry during the conduct of the
re v iew
7.
Mr President, just before I officially open your Convention,
I have another pleasant task to perform. Peers in the
industry consider that you have done an excellent job as
President of the Association and that you have tendered
distinguished service to the industry at large. They have
elected you to the office of life Member and it gives me a
great deal of pleasure, John, to be able to present you with
your Life Membership Certificate. Congratulations!
Ladies and Gentlemen, I know that whatever task the
Association takes on, it does so with vigour, determination
and considerable professionalism. I have the first copy of
your new National Journal " Housing Australia" and I'm sure
it will be still going strong many years from now. It is my
pleasure to launch the Journal.
I have also had an opportunity to look through your
conference propgram. I was delighted to see that my old
friend and son of South Australia Darcy Hoysted will be
giving the luncheon address on Monday. Darcy has given me
good advice and help regarding renovations to. my home in
Melbourne and I hope to be able to call on him when
renovations are undertaken at The Lodge.
In the meantime I have much pleasure in declaring this
Convention open.