Andrew Leigh

HOUSING AFFORDABILITY

Matter of Public Importance
Tuesday, 20 August 2024

My grandfather Roly Stebbins was born in a tent in 1922. At age 14, in the middle of the Great Depression, he left school to provide for his family. He worked as a boilermaker. Then, after World War II, he and my grandmother Jean Stebbins, a teacher, set about building their first home. They got a cheap block of land in Seaholme near Williamstown and fired the bricks by hand. Roly would get help from his mates, building the house bit by bit when they could.

My grandfather's story was the story of Australia in those postwar decades. Through the interwar period, the homeownership rate in Australia was about half. By 1966, it had risen to nearly three-quarters. This was a huge surge in the homeownership rate spurred initially by the Curtin and Chifley governments and, to their credit, continued by the Menzies government. But it's a very different situation today. Under the former Coalition government, the homeownership rate hit a 60-year low and their policies only made the problems worse. We had the HomeBuilder program, which blew out to five times the expected budget and which, according to the former Governor of the Reserve Bank, Philip Lowe, increased construction prices. We had the former government's policy of raiding your superannuation to pay for a home, which Malcolm Turnbull referred to as the 'craziest idea I've ever heard'. We had the government walk away from social housing and from investing in tackling the problem.

As a result, here in Canberra you have families like Michi Moses and her husband, a professional couple who say that they may have to leave the city in order to buy a home. We have the second-highest house prices in the country. Australia faces a huge challenge on homeownership. But to hear the Liberals talk about it is like hearing the arsonist shouting, 'Fire!' It is coming from a party that did nothing to tackle these serious challenges. Believing the Liberals are the party of homeownership would be like believing they're the party of multiculturalism and Medicare, the party of gender equity and workers' rights.

They are anything but. Since coming to office, Labor has set about investing in housing. In just our last budget, we invested more in housing than all of the nine Liberal budgets put together. That's how important it is to us and how unimportant it was to them. We've ensured that 110,000 people move into homeownership through the Home Guarantee Scheme—twice as many people as under the former government. We've put in place back-to-back increases in Commonwealth Rent Assistance, helping a million Australian renting households to the tune of more than $1,000 a year. We've set an ambitious target to build 1.2 million homes over five years. That will involve working with states and territories. Next week, the housing minister will be out in Western Sydney bringing together state and territory housing ministers. This is usual business for us, but for the last five years of the former government, it didn't happen once.

While we have the Liberals who are blocking any serious moves to act, we also have the Greens—the housing supply denialists, whose spokesperson says that Australia has enough homes, against evidence from every serious think tank and the fact that on the OECD measures the number of homes per person in Australia is lower than the advanced country average. While Labor is building, the coalition and the Greens are blocking. 'Build to rent' and 'help to buy' are being stalled by an unholy coalition of Liberals and Greens, and now we have the Liberals claiming that the reason that homeownership is pushing out of reach for many Australian families is construction workers are being paid too much.

Let's go through some of the facts. The biggest factor driving up costs in the construction sector are supply chain issues such as the cost of materials driven by the war in Ukraine and the Houthi rebels restricting access through the Red Sea. Labour costs as a share of total expenses have actually been falling over the recent period for which we have data, from 2020-21 to 2022-23. Labour costs in the most recently available year were 18.7 per cent of total costs—they were 19.6 per cent of total costs two years before that. And if you look in building construction, labour costs are 10.2 per cent—significantly less than the average for the construction sector as a whole. Labour costs in construction have been growing more slowly than other costs, suggesting that labour costs are not the primary driver of total costs. Don't take my word for this—this is Treasury analysis that I'm speaking about today. Differences across states don't support the idea that the chief driver of housing affordability is labour costs. It is the cost of materials that is the single biggest challenge on housing affordability.

That's not to say that we shouldn't be tackling bullying and thuggery in the construction industry. The construction union members and construction workers deserve a strong, effective union—that's why this government has moved legislation to put an administrator in place in the construction division of the CFMEU. If the Liberals had supported that last week then the administrator would have been more quickly at work cleaning up the CFMEU. Extraordinarily, we've had the Greens political party voting against that—voting against an administrator going in and cleaning up the problems in the CFMEU which are undermining the rights of workers to get a strong, effective union.

Housing affordability is a major issue for Australia, as is the cost of living more broadly, but while we have those opposite asking not a single question in question time about the cost of living, we on this side of parliament are getting on with the job, with tax cuts for all Australians and energy bill rebates for all households. We've got an increase in the Medicare levy low-income thresholds, benefiting over one million low-income earners. We've had an increase to the JobSeeker payment, and our cheaper medicines policy ensures that Australians are better able to access the medicines that they need.

Around three million Australians have benefited from the change to HECS-HELP indexation, championed by the minister at the table—which has benefited those who have gone to university in order to get the additional skills that the economy needs. Capping the student loan indexation rate to the lower of the CPI and the WPI ensures that debt can't outpace wages or prices.

We're also investing in the skills that we need in the construction sector. Not only is this government committed to vocational training for early childhood workers and for aged-care workers but we also recognise it's vital to have a pipeline of construction workers. Fee-free TAFE has been vital in the construction sector for ensuring that we have more well-trained workers to build the homes that Australia desperately needs.

We've also been dealing with the cost of living through our competition reforms. When we came to office we banned unfair contract terms and raised the penalties for anticompetitive conduct. We're making the Food and Grocery Code of Conduct mandatory, and we've tasked CHOICE with quarterly grocery price reporting so that people can ensure that they get the very best deal.

We've got the biggest merger shake-up in 50 years, and we're tackling unfair contract terms that make it harder for workers to move to a better job. We understand that competition is a Labor value, and it is vital to ensuring that we put downward pressure on prices and upward pressure on wages.

Only Labor can be trusted to build the homes Australia needs. Only Labor can be trusted to tackle the cost-of-living crisis. Only Labor can be trusted to deliver back-to-back surpluses, turning Liberal deficits into Labor surpluses and delivering for all Australians.