Tom Connell:
Joining me live now to respond, Assistant Treasurer, Michael Sukkar. Thanks very much for your time.
Minister Sukkar:
Good day, Tom.
Tom Connell:
$500 million for vital repairs and Labor says that it would push state governments to match if it were in that position. It seems like a win for residents and for tradies as well. What’s your response?
Minister Sukkar:
Well it would be a very heroic assumption for them to make that the states would match it. Secondly, the experience from the global financial crisis is clear with programs like this, particularly being administered through state and territory housing departments, not a dollar of this would be seen until late next year and that’s the reality of it. So as a stimulus measure, it clearly wouldn’t work and when you look at the size of it, $500 million, and you compare it to what the Morrison Government is doing with HomeBuilder which – according to the HIA – leads to $10 to $15 billions of investment which has turbocharged the residential construction industry. It would make no difference, and it wouldn’t assist for the critical moment, now, which is what HomeBuilder does and what the First Home Loan Deposit Scheme does which supports ten thousand places. So, last night I think, was very underwhelming to see that announcement, and to bill it as a stimulus measure, is clearly false. It would not have any impact until late next year.
Tom Connell:
They’re not talking about scrapping any of the schemes that you mentioned so this is in addition. Is it true that 100,000 of our social housing stock need urgent maintenance?
Minister Sukkar:
Well there’s no doubt that around the country, that state and territory governments have allowed there housing stock, to some degree, to be degraded. I think that the heroic assumption, again last night, was that $500 million would somehow renovate 100,000 homes. That works out to be $5,000 per home. That I think, again, looking at the GFC experience, is false.
Tom Connell:
Labor hasn’t said that it’s going to fix every house, though, in this policy, has it?
Minister Sukkar:
No, no, they’ve stated that it would assist 100,000 homes. Completely inadequate for the funding that they’ve put towards it. So, they haven’t done their maths. It’s not a measure that would help the residential construction industry now and it certainly wouldn’t help the thousands of builders around the country who are being assisted by the Morrison Government because you’d have to be one of the very fortunate builders who have a contract with a state government to even engage in this sort of program.
Tom Connell:
Presumably if you get a big program like this you get a lot of contractors in?
Minister Sukkar:
That’s the point. It’s not a big program at all. It won’t make any difference, certainly not in the most critical moment which is between now and the end of the financial year. This is when we need to keep tradies busy, that’s why HomeBuilder – a wildly successful scheme – and the First Home Loan Deposit Scheme, are really front-ended to the moment when the construction industry needs it which is between now and the middle of next year.
Tom Connell:
I want to get onto HomeBuilder in a moment but just on this as well, I mean this was a huge budget, $218 billion in deficit. What was spent on social housing, specifically social housing?
Minister Sukkar:
Well social housing we spend, each year, $1.3 billion through the National Housing and Homelessness Agreement, $4.6 billion through Commonwealth Rent Assistance, $2.5 billion through the National Housing Finance Investment Corporation, with an additional $1 billion on Tuesday night, which we announced through the National Housing Finance Investment Corporation.
Tom Connell:
That is for affordable housing, that last amount?
Minister Sukkar:
That includes social, community and affordable housing so that’s through the mechanism that delivers to all of those types of housing stock. $1 billion, additional, that we put in.
Tom Connell:
How does that split? That was described more often as affordable housing rather than social housing? Does that split in a particular way?
Minister Sukkar:
Absolutely. So, the National Housing Finance Investment Corporation through its bond aggregator, assists with Community Housing Providers. We’ve just announced, for example, fast-tracking of 781 new homes with the New South Wales Government which includes social housing for their social housing stock. Our budget delivers more for social housing than what the Labor Party proposed.
Tom Connell:
They’re proposing it on top. Just to clarify that.
Minister Sukkar:
They’ve proposed it as a stimulatory measure that we know from experience, would not have a single person working on a home until late next year. That’s not stimulus for when we need it and the maths is wrong. Saying that somehow $500 million would lead to repairs of 100,000 homes is wildly wrong. So, they’ve not done their maths, they’ve been very lazy in this policy and I note that this morning, there’s not a great deal of enthusiasm for it because it is so inadequate.
Tom Connell:
The HomeBuilder scheme that you spoke about, there are complaints that deadlines are too tight. So there are these deadlines for a contract signing and then the beginning of the build and a lot of builders are saying that we’re having to turn away business and others concerned that people that have signed up, they won’t have the soil turned, if you like, within that March deadline. Is that being looked at?
Minister Sukkar:
Well there’s already flexibility within the scheme, for states to extend the deadlines. I mean, it’s a nice problem to have that in the midst of a pandemic, one of the issues with the HomeBuilder scheme is that it’s been so successful, it’s brought forward to much demand, that, as you say, builders are now getting to the point where they’re thinking that we might struggle to do all the work on the order. So, we get that…interrupted.
Tom Connell:
Well it’s not a nice problem for someone who thought they were getting $25,000 and they might not?
Minister Sukkar:
Well it’s a nice problem for the industry, I can tell you.
Tom Connell:
But not nice for the person who thought they were getting a $25,000 cheque.
Minister Sukkar:
Well there’s still no doubt, capacity in the industry to be able to do those projects. There’s flexibility for the state governments – through their state revenue offices – to extend deadlines where, effectively through no fault of the applicant, there’s a delay, whether it’s a delay on approval that’s required, a delay in titling the land. So, there’s already an opportunity for them to extend that by three months. Having said all of that, because HomeBuilder has been so remarkably successful, we’re keeping a very close eye on it, we’re looking at it. There’s been significant calls from the industry, whether it’s the MasterBuilders Association, the HIA who have said that ‘HomeBuilder has rescued our industry, we want you to extend it’, and the PM has made clear that we’ll keep a very close eye on it between now and its deadline on 31 December and in watching it closely, there might be opportunities to do that.
Tom Connell:
And that could be crucial because Treasury actually reports – and you said this as well – it’s pulling forward demand so that means not creating new demand. Immigration is set to go backwards, a massive change. There could well be a cliff we’re approaching for home building and the construction sector?
Minister Sukkar:
That’s why we’ve focussed so much effort on first home buyers. In the budget on Tuesday night, we announced an additional 10,000 places under the First Home Loan Deposit Scheme – which allows Australians to purchase a property with a deposit of as little as 5 per cent – but we added one additional requirement for that extra 10,000 and that was that it must be for the purchase of a new home because we recognise that in order to fill that pipeline of work which is needed – and it’s a pipeline that’s needed now – we’re going to need to bring new demand into the market and that’s Australian first home buyers. The Morrison Government – whether it’s the First Home Super Saver Scheme, the First Home Loan Deposit Scheme or HomeBuilder – we’re the party of aspirational first home buyers and I’m very comfortable filling that hole with Australians who want to get into their first home.
Tom Connell:
Right and you can do as much as you can to funnel that demand. There’s a bringing-forward, there’s perhaps creating some new. But these houses, you don’t build houses for nobody. We’re talking about 200,000, possibly, fewer homes and these are Treasury estimates based on immigration. Something is coming down the pipeline, isn’t it? If somehow all these new homes are built, there’s going to be empty rental homes all over the place?
Minister Sukkar:
But Tom this is our objective. Our objective is to make sure that in this time, we don’t have a lessening of supply because what that will do is over the long-term and the long lead times with property means that when net overseas migration gets back to a normal level…interrupted.
Tom Connell:
When is that though? It would be years away.
Minister Sukkar:
No, no. In the budget we outlined that over the medium term that will happen. But you don’t want another situation as we’ve had in the past where the demand for housing far exceeds supply. We need to make sure that…interrupted.
Tom Connell:
When does that happen? When do we get to normal immigration?
Minister Sukkar:
Well over the medium term. I think that it’s very, very difficult, very, very difficult for me to pinpoint exactly when that will happen but what you don’t want, Tom, in the context of housing, is for supply to be so constrained now that when that does happen you have an imbalance between supply of new housing and your demand for it. And what happens in that situation? You see exponential rises in pricing and unaffordability and that is, again, what HomeBuilder will do. It assists that and is a very successful scheme and we can understand why so many Australians are calling for it to be extended.
Tom Connell:
Michael Sukkar, thanks for your time today.
Minister Sukkar:
Good on you, Tom. Thank you.