Minister Sukkar:
Well good morning. Thank you so much for being here in Cranbourne where I’ve been very fortunate to visit the home of Shalika, who will say some words shortly, and also to catch up again with two people that we’ve met with before, Brendan and Chandler, who have made use of the Morrison Government’s First Home Loan Deposit Scheme. Today I’m very pleased to be announcing a couple of changes to the First Home Loan Deposit Scheme which we do each and every year, at the beginning of the new financial year, and that is to set the house price caps for the First Home Loan Deposit Scheme.
The First Home Loan Deposit Scheme was put in place on 1st January 2020, with an initial allocation of 10,000 places to help first home buyers purchase a home with a deposit of as little as five per cent. Shortly after the scheme commenced, I think that was when we first met, Brendan and Chandler who were one of the early couples to take advantage of the First Home Loan Deposit Scheme, purchasing a home with a five per cent deposit and I understand they have built their home in Cranbourne East and have moved in seven months ago with the assistance of the Morrison Government.
The First Home Loan Deposit Scheme then saw another 10,000 places under the New Home Guarantee. This was a measure we put in place in the October Budget, which saw 10,000 places under the New Home Guarantee which saw those places, again, allowing for a purchase with a five per cent deposit, but for new homes only, and that was put in place as part of our pandemic response measures to support the residential construction industry.
In total under those schemes, we have already seen nearly 30,000 first home buyers purchase either an established or new property with the five per cent First Home Loan Deposit Scheme and Brendan and Chandler will give some of their perspectives on what the First Home Loan Deposit Scheme did for them.
Now in Shalika’s case, a single parent, who has just recently built a new home with the wonderful family business, Simonds, great builders who have built a wonderful home for Shalika and her two daughters. Shalika will speak a little bit about the aspirations of single parents to purchase their first home and this really dovetails nicely into the Morrison Government’s announcement in the last Budget, of the Family Home Guarantee. The Family Home Guarantee is a separate allocation of guarantees to the First Home Loan Deposit Scheme, which allows single parents with dependent children to purchase their home, not their first home, they can have owned a home in the past, but to purchase a home with a deposit of two per cent. As I said in the lead up to the Budget, single parents are one of the most important cohorts in our society. People who are working hard every single day to raise the next generation of Australians, and we know that for single parents, the deposit hurdle is the biggest barrier to home ownership for them. So with the Family Home Guarantee, single parents that are eligible will be able to purchase a home with a deposit of two per cent. We know that’s going to unlock home ownership for thousands of single parents throughout Australia.
Today’s announcement of the increased price caps do two things. They continue to provide house price caps for our capital cities, house price caps for our large regional centres and house price caps for regional areas as well and they have been published today. We’ve seen increases in the house price caps which is sensible given that the First Home Loan Deposit Scheme started some 18 months ago. So it’s a reflection that those caps need to increase to accommodate first home buyers particularly, purchasing a modest first home, or in the case of single parents, purchasing a family home. We’re very proud of these schemes, we’re very proud of the First Home Loan Deposit Scheme. We believe that the Family Home Guarantee is going to be very enthusiastically taken up as well and today’s announcement of these increased house price caps will put these programs in reach of so many more Australians.
I might ask Shalika at first instance - given that we’re at your home - just to say a few words about the importance of home ownership for single parents and some of the challenges particularly that single parents face in purchasing their own home.
Shalika Perera:
Thank you, Michael. It’s a great opportunity to share my experience at being a single parent, working hard, having two daughters and looking after them full time. I am a full-time accountant and running my small business - Saree Galore Australia. You can imagine how hard I am working to make my dreams come true for me and my children. To be honest, during the pandemic, we had a very hard time for businesses and workplaces but still I never give up. The scheme introduced for single parents is really amazing. Thank you so much to Scott Morrison’s Government for concentrating on this segment in the economy. We have the opportunity to enjoy the new homes and comforts with our children which we may never have been able to. So my dream has come true, you can see my beautiful home and I still can’t believe that it came through and I’d also like to thank you, Michael, for introducing these new policies. It’s like a miracle for me, I never ever thought that this kind of thing would happen because life has been so hard and very busy and finally I’m there. I’m going to pass my special thanks to Simonds Homes experienced builders, their team right behind me today to support me like they did. They made their promises, and they gave me the house on time, with actual quality. As you can see everyone is really appreciating how beautiful the quality is and most of my friends now are following me, they say that they ‘want to build a house like you’. I’m very happy and I’m sharing my experience with everyone. At the end of the day, being a single parent, it’s a very hard time but giving this support - we do really appreciate it and we’re thankful to Scott Morrison’s Government. Thank you so much.
Minister Sukkar:
Thank you, Shalika. Wonderful. Well as I said at the beginning, Brendan and Chandler are a very early couple who have taken advantage of the First Home Loan Deposit Scheme. Brandan and Chandler, it might be great to hear your experience given that you’ve been in your home for about seven months now?
Chandler Mullen:
Yes so we’ve been in our house for seven months and I think without a scheme, we wouldn’t have…
Brendan Frew:
We wouldn’t be in a house.
Chandler Mullen:
Not at all. We’d still be renting.
Brendan Frew:
It saved about five years, I reckon, for our time to get a house. With this scheme, we’ve essentially been given an extra five years of saving money for our other needs in life because we don’t need to pay rent any more…
Chandler Mullen:
We’re no longer paying somebody else’s mortgage.
Brendan Frew:
Yeah, not paying somebody else’s mortgage so it’s great for us.
Chandler Mullen:
It’s nice to see that money going towards ourselves and having the opportunity to actually be able to get in a house that is for us as opposed to feeling, I suppose, confined in somebody else’s house that…
Brendan Frew:
Stuck in the rentals.
Chandler Mullen:
Yeah, rentals don’t necessarily feel like your own home whereas once you’re in your own home, you’ve customised it yourself. We’ve built, so seeing the build process, particularly during Covid as well…
Brendan Frew:
Seeing our own choices…
Chandler Mullen:
Yeah, it’s been fantastic. It’s something that we wouldn’t have been able to experience otherwise.
Brendan Frew:
We’re very grateful for the First Home Loan Deposit Scheme. It’s been a great, great opportunity for us to increase our quality of life.
Chandler Mullen:
We’re also thankful to the banks as well and our mortgage broker, for assisting us in getting us into that position as quickly as what they could.
Brendan Frew:
Beachwood for being able to build a quality house for us.
Chandler Mullen:
Yes, it’s been fantastic.
Minister Sukkar:
Great, well done. That’s excellent guys, what a great story.
Brendan Frew:
Thank you.
Journalist:
That’s great, you were both brilliant. Maybe you guys should be the politicians. Minister, if I could just ask you a couple of questions? Many banks require a 20 per cent deposit. The average price of a home at the moment in Australia is $500,000 meaning $100,000. That just seems impossible for so many people?
Minister Sukkar:
That’s right. In coming up with the First Home Loan Deposit Scheme, it was clear that the hurdle for first home buyers was primarily getting that deposit together. In a record-low interest rate environment particularly, that 20 per cent deposit in Sydney means, on average, people are saving for up to ten years. Here in Melbourne, people are saving for up to eight or nine years to get that deposit together. So, what the First Home Loan Deposit Scheme does is it breaks that cycle. It brings the deposit hurdle down to five per cent with a Morrison Government guarantee, enabling - as Brendan and Chandler said - first home buyers to get into the market many years in advance of when they would otherwise or in some cases getting in where they would otherwise never be able to save up the required deposit. Similarly with respect to what Shalika was speaking about with the Family Home Guarantee, with actually even dropped that deposit hurdle even lower. The Family Home Guarantee only requires a 2 per cent deposit for single parents with dependent children. Obviously 2 per cent compared to 20 per cent being the deposit requirement means that the Family Home Guarantee is going to convert so many renting single parents into homeowners and to give their children the stability that home ownership provides. So, very proud of these schemes and there’s no doubt that that’s the reason why they’ve been so enthusiastically taken up with nearly 30,000 people having already benefited from the First Home Loan Deposit Scheme.
Journalist:
With the deposit scheme, it works well for a couple and also for single parents. What about someone who is single - not in a relationship, marriage, de facto or otherwise - how are they being helped?
Minister Sukkar:
Well interestingly, the First Home Loan Deposit Scheme data shows that single individuals are already a really big cohort of this scheme. Nearly half of all First Home Loan Deposit Scheme recipients are single as well. The scheme with a 5 per cent deposit, sure it appeals to couples - like Brendan and Chandler - but the data shows it has been enthusiastically taken up by single people who don’t have dependent children either. One of the reasons why we were so keen to put in place the Family Home Guarantee though, is while there’s a lot of state-based support in the form of stamp duty exemptions and other deposit programs for first home buyers, there’s absolutely no assistance in the market for single parents. None. This is the first program of its type, the first program that supports single parents into home ownership. That’s where this is really a landmark reform and we’re very excited to see how it progresses after 1st July.
Journalist:
Playing total devil’s advocate here but as we know, interest rates for home loan repayments are at record lows at the moment, helping people get into the market. At some point interest rates will go up I suspect - how do you ensure that you’re not setting people up to fail?
Minister Sukkar:
The beauty of this program is the Government doesn’t decide who gets a guarantee. In the end the program ensures that the people who obtain a guarantee are people who are able to obtain finance. We know that, through our regulatory system with APRA and ASIC, banks will only lend to customers who are reasonably able to fulfil and repay the mortgage. There are income buffers, there are interest rate buffers that are applied to all home loan applications, so we have a very rigorous process. In the end, the Australians who obtain a guarantee are people who can meet all of those credit requirements. Again, if we look at the data for the nearly 30,000 people who have already obtained a First Home Loan Deposit Scheme guarantee or a New Home Guarantee, the default rate there is running lower than the general default rate. Our First Home Loan Deposit Scheme participants - like Brandan and Chandler - have actually turned out to be a better credit debt than the average Australian market. It’s quite extraordinary and almost counterintuitive but it just shows you’ve got a cohort of people who are very dedicated to doing everything they have to do to meet the requirements to keep their home.
Journalist:
Andrew Leigh is on record as saying today that the Government ruled out such an increase just two years ago in Senate Estimates, Jane Hume did. They’re accusing you of a backflip. What would you say to that?
Minister Sukkar:
Well they don’t understand the program. This program has house price caps that we set for the 1st July each year and that’s what we’re doing. We’re setting these for the new financial year. The house price caps that are currently in place, we put in place when the scheme began on 1st January so its quite a bizarre statement to say that it’s a backflip. These are refreshed every single financial year. This time next year, we’ll be probably doing something similar to this and announcing the house price caps for the following year. I’m not sure how that can be characterised as a backflip. The house price caps do change each year.
Journalist:
I just have a question not related to this. International students contribute so much to the Australian economy, particularly in Victoria. Are we considering extending the bubble? Where are we at in that process and which country would we start with?
Minister Sukkar:
The Prime Minister, the Education Minister, have spoken about this topic and clearly international education is a crucial part of our economy. But we cannot rush to doing anything with bringing in those from offshore if it’s going to jeopardise what has been the most successful health response to the pandemic, I think we could argue, around the whole world. There’s a tension there and there’s a fine line to walk. I know that there’s certainly thinking going on as to how that can be facilitated but we’re certainly in no hurry to rush to a position where we could be jeopardising the health outcomes. As we’ve seen in the pandemic response thus far - unemployment now at 5.1 per cent, more people in work now than were at work at the beginning of the pandemic - it has to some extent been driven by the extraordinary health outcomes that we’ve been able to drive. We’ve been able to do that because we’ve had very, very strict processes around not only international arrivals in how they’re quarantined but also in the quantum of international arrivals. Clearly the thinking in this respect will be around the quantum, if any, but in the end the Prime Minister and the education minister I know are looking at this very closely and they’ll have more to say about it.
Journalist:
Totally respect that it isn’t your portfolio. The Prime Minister is on record though because we have had extraordinary health outcomes, but he’s telling Premiers to open up your borders and that people should be allowed to travel freely because an economy will crash if we don’t. International students bring in so much money, where is that balance between those health outcomes but also, we need more money in this country to survive?
Minister Sukkar:
I think on internal borders we’ve all seen the devastation that can be wrought with arbitrary internal border shutdowns and hopefully we’re getting better at that, hopefully the states and territories are improving the way that’s communicated and decided. But if we look back at the commencement of this pandemic, I think the great success Australia has had is the determination that we have had to have very rigorous borders, starting with the ceasing of travel between China and Australia. We were criticised quite heavily by the Opposition when we did that. In fact, we were criticised by many quarters for having closed that border quite quickly. Now I think that was the commencement of what has been a very successful process throughout the pandemic. Lots of bumps on the road along the way but by and large, very successful. If you look at what’s underpinned the success of our response being very controlled borders and a very rigorous process for returning Australians, I think we would be very hesitant to be too forward leaning on international borders because as we know, this virus is raging all around the world. In fact, there are many parts of the world where the virus is exponentially worse now than it was 12 months ago. So internal borders I think are a very different story to international borders and I think our success as a national has been largely driven by the very strict approach we’ve taken to those external borders.
Journalist:
What if the international students or people who are coming were fully vaccinated and are still prepared to do a 14-day quarantine? Would that shift the view?
Minister Sukkar:
I think there all very valid arguments ultimately in favour of a process to allow students back in, no doubt. That will be informed by the health advice, obviously, that’ll be informed by a range of factors including the jurisdictions they’re coming from and the rigorous nature in which they may have been vaccinated. This is a really complicated area. I think that it’s fair to say though that we need to be very cautious. We’ve been cautious thus far with our external borders, we know it’s been very hard for many Australians, but what that has meant is that we’ve been able to proceed, not only avoiding the mass deaths that have occurred overseas but also to ensure that livelihoods are maintained here as well. I think looking at that experience, it would be a very high bar once that decision is made to have returning students. No doubt we’ll get there at some point in time, I just think that it’ll be a high bar to jump.
Journalist:
On international borders, Minister, do you think that it’s a bad look when you say that we’re keeping the borders closed for the right reasons, that the Prime Minister and travelling media have special quarantining arrangements with returning from the G7?
Minister Sukkar:
No, I think it was very important our Prime Minister attended the G7. Extraordinarily important in progressing our interests as a nation and inevitably, he will still be undertaking a full quarantine, he’ll be spending 14 days quarantining, so we achieve the health outcome required there. But there are some things that we all know are almost must-haves for pushing our national interest and being invited to the G7 was extraordinary, I think we’ve all seen the outcomes of that and how beneficial it’s been for Australia. Obviously on the sidelines of the G7 the free trade agreement with the UK has been very significant but a number of other really important measures that go to our sovereignty and national security that have been progressed by the Prime Minister being there. I think it’s really important that we continue to engage in those sorts of forums and for that reason, I think it’s wholly appropriate and the PM will be undertaking 14 days of quarantine.
Journalist:
How will the Government maintain public confidence in the vaccine rollout?
Minister Sukkar:
I think we’re working very hard to educate Australians about the importance of being vaccinated. I think if you look at and hear the experience that I hear of family members and others, there’s clearly a huge group in society who are very enthusiastic about getting their vaccination as soon as possible. All you have to do is look at the forward bookings at vaccination centres. So in that sense I think there’s been a broad success in communicating the safety and the importance of it. This is an imperfect process and as we’ve seen during the week with the health advice from ATAGI having slightly changed with respect to AstraZeneca, that there’ll be bumps in the road no doubt. But if we look at over six million Australians vaccinated thus far, I think we can say that we’re well and truly on the road and as that just gains more momentum, I think anybody that is wavering or a large proportion of those people that are wavering, I think will look around and feel confident to get their vaccine. We’ll just keep plugging away, that’s what we’re going to do.