FA E6 O/? 2,
TRANSCRIPT OF NEWS CONFERENCE, PARLIAMENT HOUSE, 3 MARCH
1989 E 0 E PROOF ONLY
PM: I understand you would like me to make a brief
statement about the housing thing and then any questions
you'd like to put to me. The purpose of the conference I've
already outlined and essentially the simple fact is that you
can't put more people into housing if you haven't got more
houses and the constraint on that situation is obviously on
the supply side, particularly in regard to land. And it's
because of the shortage of land that we've had the basic
increase in prices. Let me point out to you that during
1988 if we look at the situation Australia wide there is a
increase in median house prices, 35%. In that period
interest rates increased by about That is interest
rates for housing of around 14%, at the end of the year
around 15%. In other words a 7% increase in interest rates
which was about in line with average weekly earnings but the
average price of houses went up by about 35%. In other
words you've got a situation where supply has simply not
been able to keep up with the underlying demand and that's
been reflected in the increase in prices. And so it's in
that situation that on behalf of the Commonwealth today I
and my Ministers will be putting forward a number of
significant initiatives at this conference dealing with what
therefore is the essence of the problem.
We will be announcing a major program of Commonwealth land
sales for housing development. We will announce around
27,000 blocks over the next five years and as you heard me
say yesterday in the Parliament that's equivalent to about
new suburbs and we'll make available about another 40,000
blocks over the following five to ten years and Minister
Stewart West will be releasing details of the blocks today.
We are also going to be announcing a program of measures
directed really at four associated issues. That is land
supply is one, building regulations, land regulations, and
local government approval processes. we'll be seeking
cooperation from the States in implementing and funding of
that package. AS far as we're concerned we'll be proposing
to put about $ 8.8M over the next three years in regard to
these programs and we'll be seeking in respect of some of
those matching funding from the States.
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In those areas that I've mentioned, those four areas, that
is of land supply, building regulations, land regulations
and local government approval processes, five measures are
involved in what we'll be putting up.
Firstly, a three year program of work to redress
inadequacies in the availability of data on land supply and
the composition of demand to be undertaken by the Indicative
Planning Council for the housing industry.
Secondly, a joint program under which financial and
technical assistance will be provided over the next three
years to local government to review technical residential
land development regulations.
Thirdly, a program to promote demonstration studies,
cooperation, research and information, dissemination
designed to stimulate improvement in the adminstrative
aspects of approval processes at the local government level.
Fourthly, the setting up of an expert task force to examine
the scope for significant reforms of technical regulation of
building codes and standards. It is hoped to involve local
government, the design profession, as well as the building
industry itself.
And fifthly, resources will be devoted to create the
capacity for the analysis and the development of policy in
relation to housing supply within the Department of
Industry, Technology and Commerce.
They are the five specific measures which will be involved
in this provision of some almost $ 9M by us over the next
three years. You can see each of those measures are
directed towards the supply side constraint that I have
identified as the major source of the problem.
In addition the Commonwealth recently increased its
contribution to the joint venture for more affordable
housing and I found it particularly interesting this last
couple of weeks as we've been preparing for this conference
to find out particularly as we had that meeting last week
with various representatives of the industry and local
government just how universally respected has been this
joint venture for more affordable housing. have been
quite clearly effected in demonstrating a wider range of
housing choices and the use of more innovative building and
land devlopment techniques.
Now the other area of course in talking about the supply
side constraints is the supply of skilled labour and that as
I say is another significant constraint. Accordingly the
Commonwealth concluded arrangements with the NSW division of
the Housing Industry Association on 30 January which
provided for immigration of a maximum of 225 workers in the
( PM cont): building trades in the period to 30 June 1990 in
return for an increased apprenticeship training commitment.
Further consultation between the Government and industry
groups including the Housing Industry Association, the ACTU
and the building unions with a view to developing a national
arrangement. The building and construction industry took
place in February of this year and we hope to explore the
potential for these sorts of initiatives today at the
conference. Now I conclude by making the obvious point that the major
responsibility for the supply side matters, which is at the
core of the problem, lies with the State and local
government. The rate of release of tracts of land, the
system of zoning and development control is also largely
developed and determined by State and local government. So
we will be seeking from the States a firm indication of
measures that they are prepared to take regarding both land
release and land use. I conclude those observations by
making this point. I understand that you know we live in a
rough and tough political world. I'm not upset by the fact
that in the period leading up to this conference today with
the Premiers that there has been some political point
scoring that's being carried on in some quarters, that's I
suppose par for the course. But I want to make the point
that as far as the Commonwealth is concerned we are very
serious about this issue as I think has been proven by the
work we've put into it we are making very, very concrete,
relevant, specific proposals which at our level of
government will help with this problem and I certainly hope
that we will receive and I expect to receive from my State
colleagues an equally constructive approach.
JOURNALIST: If the States don't give guarantees on building
regulations, land regulations, and what the Government
approvals, will the Commonwealth be prepared to offer
parcels of land to private enterprise?
PM: We want as a first step to make the land available
certainly the large tracts that we've been talking about, we
want to make them available to the States but we will be
making it clear that we don't want them then just to sit on
it. We have the situation, for instance, in Victoria where
there's some parcels of land that we made available two
years or so ago which is still not developed. So we will be
saying that we want a fast track development of land that we
make available. If we can't get satisfactory undertakings
on that well then you would obviously be thinking about
making it immediately available in the other way.
JOURNALIST: Prime Minister, is there any way today that you
would agree to discuss the problem of high interest rates,
perhaps tax concessions for savings, that sort of question?
PM: Well let me put it this way. We've got our items on
the agenda, then item five I think is other business. Now I
don't want to be silly about this, but I don't think anyone
can argue, I mean you look at the statistics I have given
you, the 35 percent increase in housing prices and seven
percent increase in interest rates. No-one argues that the
essential core of the problem is on the supply side and in
terms of what we can do together as Commonwealth and State
Governments, that's the area that the emphasis must be on,
it's where we can have a constructive input to help in
co-operation with the States. So we want those things
discussed. Now if under the other item they want to go to
some of these other matters, well obviously we're going to
listen to what they have got to say. But we should get our
priorities right.
JOURNALIST: Prime Minister the flip side, if you like, of
the increase in value of houses, is that the State
Governments have received enormous windfall profits by
virtue of stamp duty and so on. Do you think they've been
remiss in not turning that over into land releases or land
supply and servicing?
PM: Well I don't just necessarily relate the two. I mean,
in a sense, your question implies that this had almost been
a hypothication by them, because they got it out of that
source it would have been sensible to then relate for the
increase in income to those processes. Well they would
argue that they have other demands upon their increased
resources. They would probably argue too that we have asked
them to exercise restraint in general public fiscal policy,
as we have. We've cut back on their resources to some
extent, not as far as we have cut back on our own, but I
think it is the case that they have done well out of the
boom. But I would hope that they take the view that their
citizens would do very much better overall in a situation
where prices weren't booming like that. obviously if you
take the overall view there is no benefit to the citizens of
their States, the citizens of Australia in allowing a
situation to continue which 35 percent increases in housing
prices, on the basis well we get something on the go-by in
stamp duty. I don't think that will be their attitude.
JOURNALIST: Mr Hawke, is there a case for reviewing
immigration because of the effect on housing demand?
PM: That's a good question. There is no doubt that the
level of immigration which is running in the order of
140,000, there's no doubt no-one can honestly and sensibly
argue that that doesn't impose additional strains on the
demand side. obviously it does. It would be easy to say,
alright well cut out immigration and that will reduce
demand, but in governing this country you don't, in my
( PM cont): judgement at least, think merely of pressures
and forces of today. We're a country now of just over 16.5
million people in a world, I'd remind you, which is rapidly
approaching six billion. Now it's my judgement that if
we're trying to think about the future of this country we
really do need to be understanding that I think there's some
sort of, I don't know whether you'd call it a critical mass,
but I think we've got to be thinking in terms as we go into
the next century, in terms of 20 million. I don't think
we're going to be able to sensibly and most beneficially
develop all our resources in the absence of a significant
increase in our population. I remind you that if you look
over the last four years the rate of natural increase has
averaged about .8 percent, now less than 1 percent in
natural increase. That's very low and therefore we are very
reliant, in terms of increasing our population, upon
immigration. I recognise that there are legitimate
arguments in this area, particularly in the short term. I
don't think that good Government is just about being
dominated by short term considerations. In the end, when
you think about it, in a country of this size, supply of
land for housing shouldn't be a problem.
JOURNALIST: Prime Minister, can I clarify that 8.8 million?
Is this for joint venture development with the States
PM: I listed the five measures and to develop those five
measures like the three year program to redress inadequacies
in the availability of data, joint program under which
substantial and technical assistance would be available over
the next three years to local government to review its
technical residential zoning, it's those sorts of programs,
those five programs. Taking those together we'll be
prepared to put in about $ 8 million, just under $ 9 million.
JOURNALIST: Just while we're getting the figures right,
percent increase in the home prices, interest rates up seven
percent, what period are you talking about there?
PM: 1988. Last year, calendar year ' 88.
JOURNALIST: Mr Hawke, how long do you think it will take
before your proposals, your iniatives today will have an
impact on land prices?
PM: Well, the honest answer is I can't say. I mean whether
it will take one month, one year. I would hope though that
once it is clear that there is going to be this very
significant increase in the availability of land as a result
of our initiatives and if you take the most optimistic view
that we get very positive response from the States in regard
to accelerating the processes of land release and zoning,
then I think you're into a different climate. The
expectations will change, but it would be quite dishonest
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( PM cont): for me to say, well look within one month or two
months, I can't put a figure on it, but we will have I think
changed the culture and turned it around. I repeat the
comment I just made. I find it rather frustrating to be in
a situation where in a country of this dimension,
physically, that the basic problem in this soaring home
price situation, is land availability. It doesn't make very
much sense.
JOURNALIST: You've been asked a couple of times recently
about your comments in Western Australia on interest
rates, that they wouldn't go up before they came down. Do
you think in retrospect that comment was ill-judged or just
a mistake or how do you view it?
PM: I don't retract from the basic point I made that before
the end of this year it's my belief they will come down. In
the situation that we've been faced with since then we have
been hit by circumstances which in two respects I think were
unexpected and in the inflation area I've simply got to say
that on all the advice available to me Michelle I was
operating on the assumption of a December quarter price
index rise significantly less than the 2.1% that in fact
emerged. What came out was the sort of advice that I
had and which was operating was an outcome of less than
in the area of perhaps of 1.25% and that was part of what
had formed my thinking. We also had the much worse balance
of payments situations than one had hoped for. So all I can
say is that my economic intellectual framework within which
I was speaking was one which was, in regard to the key
indicator of expected inflation outcomes, significantly more
optimistic than in fact turned out to be the case.
JOURNALIST: In recent correspondence with Mr Greiner you
offered to negotiations on a wide agenda of housing
issues and interest rates Can you tell us what form
these negotiations will take?
PM: It's a matter for Mr Greiner. If he wants to suggest
how he'd like to process such discussions work it out
between us. You can see from what I'm saying I don't
take the position that all these other considerations
haven't got a relevance, of course they have. But you want
to say what's the criticially important thing and no-one can
argue with the analysis I've put to the critically important
thing, that's on the supply side. That's why we're
concentrating on that now. We can work out timetables and
procedures for discussing any other matters that he wants
to. In six years in government I think you'll find the
successive state premiers will say to you if they want to
have a talk to me I'm always available.
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JOURNALIST: Mr Greiner argues though that even though
having all this land made available unless there's
infrastructure provided and he said build that
infrastructure. Will the Commonwealth help by providing
funds for roads and sewerage and
PM: We work those things out in the Premiers' conference,
the Loan Council meeting and the fact is that the States
have to make priority decisions in the use of their money.
But obviously in the consideration that we give as a
Commonwealth in the lead up to the Premiers' conference, the
Loan Council meeting, we won't be making decisions which
make it impossible for States to discharge the duties they
have in providing infrastructure. I don't believe we've
done that to this point. We won't start doing it in the
future.
JOURNALIST: Will there be any though?
PM: Of course today's not about it's not a Loan Council
meeting or a Premiers' conference.
JOURNALIST: the Premiers' conference to increase funds
to the States for this area?
PM: What happens at the Premiers' conference and the Loan
Council meetings is that they plead their cases with very
great vigour not always I might say with hindsight with
great accuracy. I always have a bit of a laugh to myself
when you come to the end of the States' financial year and I
always compare outcomes with what they tell me is going to
happen, they are going to finish up with deficits you can't
poke a stick at. Somehow or other they seem to manage to
finish up in a way very differently to the picture that's
presented at the Premiers' conference and Loan Council. I
don't complain about that, I suppose that's good bargaining.
What we try and do as a Commonwealth is to make the best
assessment we can of, from our point of view, what resources
need to be applied to enable them to discharge the basic and
important function that you referred to. We won't change
from that.
JOURNALIST: So it's not necessary, further funds this year?
PM: Premiers' conference. We're now in March, the
Premiers' conference and Loan Council will be held at the
outside within about three months. We're not having
JOURNALIST: PM: We're not having a special Premiers' conference or Loan
Council meeting to do that. We're leading up to that almost
now.
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JOURNALIST: Do you have a rough figure of how many people
might be housed in the 15 new suburbs?
PM: If you say there's 27,000 blocks, just work out your
sums. I don't have to do that do I?
PM: On another matter, you've asked your ministers for some
possible suggestions to be put into the April statement.
How broad would you like that to be and how broad do you
think it is possible to make it?
PM: When you say I've asked for possible suggestions I've
given much firmer leadership than that. I have myself
indicated areas that I think are possible of inclusion and
work will be done on those. I don't intend to go to those
areas prior to the April statement. I'm conducting this
business of the Government in the way it should be. I meet
with my ministers, I say here are things we ought to
consider for possible inclusion, the work is being done on
it. It will be announced in the statement.
JOURNALIST: It's now a quite broad statement is it?
PM: I think Michelle it will be somewhat broader than some
people were thinking. A lot of people were thinking it was
just going to be an announcement of tax cuts. I think
you'll find there'll be more in it than that.
JOURNALIST: Are you worried that this might create false
expectation in the community?
PM: No I'm not. If I allowed myself to be worried by the
process of government that some people like to have, that is
that the press and this is not said critically I mean if
you run something in the press and then what's in the press
is not what we do, if I were worried about that I would've
been insane years ago. We don't run government like that.
It's unfortunate that you have at times quite unfounded
speculation about what's going to be done but we just go
about the business of doing what we think is necessary. I
don't believe if you look back Heather over the period of
the six years that our May statements and budgets have been
disappointing in content. I don't think it will be this
time. JOURNALIST: These areas are on the structural side though
rather than the spending cut side.
PM: I repeat what I said, I'm not going to announce the
April statement now.
JOURNALIST: Are you concerned about the leaks on these
issues out of Cabinet, ERC and Structural Adjustment
Committee?