STATE REVENUE LEGISLATION AMENDMENT (DEFENCE FORCE CONCESSIONS) BILL 2009
Agreement in Principle
Debate resumed from 21 October 2009.
Mr MIKE BAIRD
(Manly) [10.08 a.m.]: I lead for the Opposition on the State Revenue Legislation Amendment (Defence Force Concessions) Bill 2009. The Opposition supports the bill in its broad context. The bill will give men and women serving in the Australian Defence Force access to the same stamp duty and first homeowner concessions as other New South Wales residents when buying their first home. Many defence force personnel have been unable to qualify for stamp duty concessions as the nature of their job may cause them to serve overseas or interstate at short notice and they cannot commit to residing in their property for six months in the first year of purchase as required.
The Opposition is pleased that this inequality is being rectified. However, I will raise a couple of concerns. When this initiative was first announced the Opposition asked the Treasurer some simple questions about how many people were likely to access this concession and the likely impact on the State budget. It was established that no modelling had been done and no-one knew what would happen. The Opposition welcomes this legislation. It is a principled stand and should be implemented to support our defence force personnel. However, the process is an example of the culture of decision-making in this State. That is the crux of the Opposition's concern. The member for Port Stephens will address the impact of stamp duty and its rate of increase relative to property values. I share his concerns about those issues. However, we must examine the fact that the Government made an announcement without doing any basic analysis.
The object of the bill is to amend the First Home Owner Grant Act 2000 to allow a grant, similar to the first home owner grant, to be paid to members of the Australian Defence Force who are first home owners but who do not comply with the residence requirement for the first home owner grant. The new grant will be called the Australian Defence Force Home Buyers Grant. Schedule 1  states that the amount of the grant will be the same value as the first home owner grant and the first home owner boost. Schedule 1  also states that the amendment applies only to permanent members of the Defence Force and not to members of the reserves. Schedule 2 amends the Duties Act 1997 to provide for a similar concession to the First Home Plus Scheme, which is an exemption from or reduction in duty payable on the purchase of a first home or block of land for a first home for members of the Defence Force. That makes sense.
We must examine the process and how it was announced. The Treasurer referred to this measure during the estimates committee hearings and proudly said that New South Wales was leading the nation with these changes. The Opposition is happy for him to lead the nation with these sorts of changes. Indeed, we would be happy if New South Wales were leading the country with the lowest unemployment rate and the highest growth rate. Sadly, that is not the case. We would also be happy if our businesses had the highest confidence in the country. However, again, not only is that not the case but this State's businesses have the lowest confidence and have had amongst the lowest growth and highest unemployment rates in the past 10 years in this country.
The Government had no idea of the impact of this legislation on the State budget or how many people would access the grant. Questions were asked about the scheme and we were told that no modelling or research had been done. That is an example of how this Government makes decisions. It is a good announcement, but any announcement must be made only after a due diligence process has been pursued. The lack of such processes is the reason this State is in an invidious position with regard to the CBD Metro. This is a very serious issue. Governments cannot announce an initiative simply because it is a good idea. It is a good idea, but such ideas must be subjected to analysis and research about their impact on the budget.
When the Premier announced the CBD Metro he said that the Government and the people involved in it did not know what it would cost. Making announcements without undertaking research and analysis and understanding the full potential impact on the budget is a serious problem. That sort of approach by this Government is the reason this State is in the position it is. That is the golden nugget in understanding this State's plight; it demonstrates how decisions are made in this State. If governments do not do the research and analyses, they go around in circles and plunge the budget deep into the red—that is what we are facing in this State—and there is no credible path back to a healthy balance sheet. That is what this announcement has demonstrated. Notwithstanding the positive side of this measure, the Government had no understanding of its impact on the budget.
The Opposition calls on the Treasurer to include Treasury in every decision to ensure that we know the impact of every initiative on the budget and whether we can afford it. That process should be applied to every decision. While the Treasurer could not answer the question about the cost of this measure, in answer to a question with notice provided after the estimates committee hearing he stated that it is estimated that about 120 defence force personnel are likely to be first home buyers this year. That is based on the assumption that the Defence Force has the same proportion of first home buyers as there is in the New South Wales labour force. That represents between $2 million and $3 million, depending on the concessions. Opposition members support this policy, but it would be remiss of us not to make the point that the decision-making culture of the Rees Government must change. It must analyse all initiatives before it makes announcements that it believes will be popular and will work on the evening news. This State deserves much better than that.
As I said, the Opposition acknowledges that this legislation should be implemented. Our defence force personnel deserve this support and they should not be penalised for serving their country. They are dragged away from home and as a result do not qualify for these concessions. Members on this side of the House are pleased that this bill will enable them to get the same level of assistance that other men and women in New South Wales receive when purchasing their first home. I urge the Treasurer to ensure that the necessary analysis is undertaken in respect of all announcements in which he is involved from this day forward and that attention is given not only to leading the nation in measures such as this but also in respect of business confidence, the unemployment rate and economic growth. If he were to pursue those goals, this State would be much better off.
Ms SONIA HORNERY
(Wallsend—Parliamentary Secretary) [10.16 a.m.]: I support the State Revenue Legislation Amendment (Defence Force Concessions) Bill and I will always work to preserve the rights of and the provision of services for defence force personnel. I say that with confidence as a long-time member of the Army Reserve in Newcastle and a proud member of the local sub branch. This legislation seeks to amend the First Home Owner Grant Act 2000 and the Duties Act 1997 relating to first home benefits for defence force personnel. The First Home Owner Grant is provided to applicants purchasing a home that is intended to be occupied as the owner's principal place of residence for at least six months within 12 months of purchase. The requirements apply to the New South Wales Government's $3,000 new home buyer supplement and to the stamp duty concessions of up to $17,990.
Permanent defence force personnel must be available for posting or deployment elsewhere in Australia or overseas, often on an unpredictable basis. These deployments are frequently in response to events such as peacekeeping missions and natural disasters and are often in locations at or near war zones. As a result of the unrestricted service requirements imposed on members of the Australian Defence Force, many may be effectively locked out of eligibility for first home benefits if they choose to buy a home while in the service. This legislation will ensure that personnel serving in the permanent Australian Defence Force who are unable to meet the residency test are able to receive financial assistance equivalent to the First Home Owner Grant and State assistance schemes.
Mr DARYL MAGUIRE
(Wagga Wagga) [10.19 a.m.]: The State Revenue Legislation Amendment (Defence Force Concession) Bill 2009 will amend the First Home Owner Grant Act 2000 to allow a grant, similar to the first home owner grant, to be paid to members of the Australian Defence Force who are first home buyers but do not comply with the residence requirement for the first home owner grant. It also amends the Duties Act 1997 so that members of the Defence Force do not have to comply with the resident requirement to be eligible for duty concessions under the First Home Plus Scheme. The Office of State Revenue website shows a number of requirements that must be met by applicants for the first-time buyer grant:
Each applicant must be a natural person and not a company or trust.
At least one applicant is a permanent resident or Australian citizen.
Each applicant must be at least 18 years of age.
All applicants and/or their spouse/de facto have not owned a residential property, jointly, separately or with some other person, in any State or Territory of Australia before 1 July 2000.
All applicants and/or their spouse/de facto have not owned on or after 1 July 2000 a residential property and occupied that property jointly, separately or with some other person in any State or Territory of Australia for a continuous period of at least six months.
Each applicant has entered into a contract with the purchase of a home or signed a contract to build the home on or after 1 July 2000. In the case of an owner-builder, laying of the foundations commenced on or after 1 July 2000.
This is the first time an applicant and/or their spouse/de facto will receive a grant under the First Home Owner Grant Act 2000 in any State or Territory
At least one applicant will occupy the home as their principal place of residence for a continuous period of at least six months, commencing within 12 months of settlement or construction of the home.
Occupancy of a principal place of residence for a continuous period of six months is the nub of this bill. As we all know, occupancy for defence force personnel is transitional. There is no better example of a community in which the Defence Force is well represented than Wagga Wagga, which has three bases, Kapooka, the Royal Australian Air Force [RAAF] and, believe it or not, the Navy. The people of Wagga Wagga are very proud of the contribution made by service men and women to our community, and appreciate the ancillary economic benefit of having defence force bases nearby.
Defence personnel as well as recruits who are undergoing training are stationed at the bases. The local TAFE provides educational services and training backup for defence personnel and that creates employment for local people. Local construction companies also are engaged in providing services to the bases, and that is another example among many others of the flow-on economic benefits to Wagga Wagga produced by proximity. Defence personnel experience some disadvantage as a result of periodic transfers on a rotational basis that is usually every two years. The Wagga Wagga community is very familiar with the effects of rotational transfers. In many ways, defence personnel are disadvantaged purely by the nature of their employment. This bill is intended to address that disadvantage.
As the shadow Minister stated, the Opposition does not oppose the bill, which I suspect will produce dual benefits for defence personnel and the community. Supporting our defence personnel is important to the wider community as much as it is important to the people of Wagga Wagga. I will discuss some equity issues relating to defence personnel who are involved in transitional arrangements, including lost opportunities associated with housing. Currently the Defence Force negotiates contracts to build and lease back properties from investors. An enormous number of properties have been built for the Defence Force and are leased back. There are numerous references to that arrangement on the Defence Force website. Houses are leased back for an agreed period of five years with further options of five-year extensions.
The lease back arrangement has assisted in providing a better standard of housing for defence personnel. The accommodation standard of housing previously provided was questionable if not very poor. Upgrading housing standards was an initiative of the previous Federal Government and was welcomed by investors, the community and defence personnel who really have very limited choice regarding accommodation when they move from town to town. Another aspect of transitional arrangements is that when families move to Wagga Wagga, to Singleton or to any other base, families are quite often disadvantaged through the loss of employment.
Many spouses of defence personnel obtain employment and many are very well qualified. They have had interesting careers and they are achievers, but they have to leave their employment when they are transferred to a new town and that causes severe disadvantage. It is not only difficult to find a job but also difficult for employers who know there is a high probability of spouses of defence personnel remaining in that employment for only two years. Disadvantage associated with transitional living arrangements flows on to families as well as to defence personnel resulting from the recognition by employers that they will lose valued staff members after two years. Before I was elected to Parliament, I was an employer in Wagga Wagga. It was always a great disappointment to me after I had employed a brilliant staff member in whom I had invested a lot of time and money and I prematurely lost that valued employee. That disadvantage also works to the detriment of the families of defence personnel. When I was the President of the Wagga Wagga Chamber of Commerce, I had many discussions with the commandant at Kapooka to try to resolve problems caused by that disadvantage.
In the context of the wider ramifications of this legislation, I point out that when families of defence personnel move, they are disadvantaged in relation to health care. All members know that it is difficult even for permanent local residents to obtain dental and medical appointments and that waiting lists for appointments can be up to three months. Defence personnel have to re-establish relationships with providers of medical services when they move to a new town, and it can be difficult for their families to access treatment as well. However, medical facilities are accessible at emergency departments of local hospitals. As a result of negotiations with the commandant at Kapooka and the local area health service, an after hours medical service in Wagga Wagga has been provided specifically to assist defence personnel and their families. The service has developed and expanded. Last week I attended the annual general meeting of medical practitioners and was told that the service is beneficial, which is what it was designed to be.
While my comments on the bill have focused primarily on discussing the implications of this legislation, I hope that I have also been able to convey for the record my sincere hope that the bill will provide fair treatment for defence personnel. This can occur by improving opportunities for them to purchase their own home and, like the rest of us who are lucky enough to reside permanently in a town of our choosing, invest in bricks and mortar. I also hope that the bill may assist defence personnel and their families to return to Wagga Wagga after service in the Defence Force is completed. Many defence personnel have technical skills that make them suitable for employment at the bases or in industry. They are very highly skilled people, particularly Royal Australian Air Force personnel who are trained in instrumentation and the finer points of engineering. Industries tend to snap them up after they retire from the services.
For the reasons I have stated, I believe that this legislation will bring a number of benefits to the city of Wagga Wagga as well as to defence personnel. Wagga Wagga has always rated in the top 10 in take-up rates for first home owner grants and has been the number one region for uptake in rural areas of New South Wales. Wagga Wagga is Australia's largest inland city with a population growth rate of approximately 1.68 per cent owing to its strong local economy, which is supported by investment, industry and the proximity of Defence Force bases. Recently the Australian Air Force built 100 new defence personnel homes. I envisage a number of flow-on economic benefits for Wagga Wagga. As I stated earlier, I hope my remarks have conveyed to defence personnel and their families how important they are and how highly the Wagga Wagga community and I value the contributions they make. I also hope that the bill will treat them fairly, as they should be treated.
Mr NICK LALICH
(Cabramatta) [10.28 a.m.]: I support the State Revenue Legislation Amendment (Defence Force Concessions) Bill 2009. At the outset, I pay my respects to all branches of the Australian Defence Force and to all defence personnel. Australia would be at a great loss if we did not have our armed forces and our Defence Force looking after us. Defence personnel put themselves in harm's way at war zones for our safety; their contribution becomes even more important when we consider the concern of their wives and children who remain at home. Defence personnel not only give their time and effort to the people of Australia, but also sometimes their lives. I pay them sincere tribute for the contribution they make.
This bill will help them in some ways. It includes provisions that will ensure that permanent members of the Australian Defence Force who are unable to meet the residency requirements under the first home owner grant and other State first home buyer assistance schemes are not disadvantaged by their service to Australia. Members of the regular army, permanent navy and permanent air force are subject to an unrestricted service requirement under which they must be free to be posted or deployed across Australia or overseas if necessary. Operational needs and a rotational policy mean that Australian Defence Force personnel will normally be moved to different locations a number of times during their careers. These deployments will often occur at short notice and can involve locations at or near war zones. As a result, Australian Defence Force personnel may be unable to comply with the residency requirement for first home benefits administered by the Office of State Revenue.
The amendments will effectively remove the residence requirement for permanent Australian Defence Force personnel by ensuring that they receive financial assistance equivalent to the first home owner grant and other State first home buyer assistance schemes. The amendments would improve their ability to access the $7,000 first home owner grant and the stamp duty concession under First Home Plus or First Home Plus One, which is worth up to $17,990. Applicants may also be eligible for the temporary First Home Owner Boost and the New Home Buyers Supplement. I commend the bill to the House.
Mr CRAIG BAUMANN
(Port Stephens) [10.31 a.m.]: I will make a brief contribution to the State Revenue Legislation Amendment (Defence Force Concessions) Bill 2009. The objects of the bill are to amend the First Home Owner Grant Act 2000 to allow a grant, similar to the first home owner grant, to be paid to members of the Defence Force who are first home owners but do not comply with the residence requirement for the first home owner grant, and to amend the Duties Act 1997 to provide that members of the Defence Force do not have to comply with the residence requirement to be eligible for duty concessions under the First Home Plus scheme. Under the New South Wales first home benefit schemes, first home buyers in New South Wales are able to receive up to $34,990 in grants and stamp duty concessions, but a key requirement of the first home benefit schemes is that the new home owner must live in the dwelling as their principal place of residence.
Most Australian Defence Force personnel, due to the nature of their employment, are unable to comply with the residence requirement and are unable to benefit from the discretion to fully or partly waive the requirement. Australian Defence Force personnel are required to provide unrestricted service, which means that they must be free to be posted or deployed across Australia and overseas if necessary. Operational requirements and a rotation policy mean that Australian Defence Force personnel are likely to be moved to various localities a number of times, sometimes at short notice and often on an unpredictable basis. Thus Australian Defence Force personnel may be excluded from eligibility for first home benefits.
This bill makes amendments to provide equivalent financial assistance to members of the permanent Australian Defence Force who are unable to meet the residence requirement for the First Home Owner Grant and other first home owner assistance schemes provided by the New South Wales Government. Under the bill, members of the Australian Defence Force who are otherwise eligible for first home assistance will be able to obtain the first home buyer benefits without being disadvantaged by the requirement for unrestricted service with the Australian Defence Force. It is worth noting that these amendments apply to eligible transactions entered into on or after 21 October—last Wednesday—according to the Office of State Revenue website, and that seems to epitomise what New South Wales government agencies think of the legislative process.
However, I am sure that the grant will be gratefully received by many of my constituents, the many Royal Australian Air Force personnel attached to RAAF Base Williamtown. A great percentage of them are posted at Williamtown for varying periods between postings elsewhere, notably Canberra; Tindal, our front-line fighter base just south of Darwin; and overseas in "hot and dusty places"—their words, not mine. Many RAAF personnel who enjoy the Port Stephens lifestyle during their Williamtown postings return to retire in Port Stephens, and many buy their retirement properties while stationed there. This is an unusually generous gesture on the part of the Government. At least, it appears to be a generous gesture. When Labor was first elected, a person buying a median-priced property in Sydney paid $220,000 for that property and $6,190 in stamp duty. Fourteen years later, the Sydney median property price is around $540,000, which is a 145 per cent increase, and the stamp duty payable is $19,790, which is a 220 per cent increase. It is worth noting also that the building price index—the cost of building a house—has risen 95 per cent in that time.
So while the costs of the materials and labour needed to build a house—the money the "tradies" make, to use a trendy Government term for what we call "subcontractors" or "subbies" in the industry—rise 95 per cent and the house and land package rises 145 per cent, this Government's cut, the stamp duty, rises a massive 220 per cent. Why is it so, I hear you ask? The relatively small rise in building costs is easily explained. The building industry in New South Wales is a very efficient, competitive and professional industry generally. The occasional shonks appear and disappear and rise again phoenix like from the ashes, leaving trails of destruction for supplier, subbie and client alike. But generally most New South Wales builders are proud of their products and strive to keep clients happy about what, for the majority, is their major financial commitment in life.
The higher rise in property prices is therefore due to increased land prices. The Government seems to enjoy bashing property developers—they are easy targets. But without them where would we be? The one thing I need to build a house—the one thing I cannot do without—is a block of land. Someone has to speculate to produce that block of land. When you combine the convoluted planning process that has developed in New South Wales over the past 14 years with the huge increase in fees and charges levied on developers by this Government to provide infrastructure that, by rights, should be a State government responsibility, you can see why land prices are going through the roof. Every dollar this Government gouges out of developers is paid by the consumer—the first, second or third home buyer.
Ms Sonia Hornery:
Point of order: I ask that the member for Port Stephens return to the leave of the bill.
ASSISTANT-SPEAKER (Ms Alison Megarrity):
Order! I uphold the point of order. The member for Port Stephens will direct his remarks to the leave of the bill.
Mr CRAIG BAUMANN:
I am working through that. The Government announced the Lower Hunter Strategy in 2004. The strategy announced by then super department Infrastructure, Planning and Natural Resources effectively stopped all rezonings in Port Stephens—it stopped development in Port Stephens. The original Department of Infrastructure, Planning and Natural Resources strategy was not a bad document; it included infrastructure. But the final strategy document was half the size because the Government again ignored its infrastructure obligations.
Ms Sonia Hornery:
Point of order: The bill is about defence force personnel and the benefits we are giving them through alterations to funding. It is not about stamp duty and other issues per se.
Mr Ray Williams:
To the point of order: Much has been said in this debate about the availability of land for defence force personnel. If land is not available for defence force personnel, it will not be available for all sorts of other housing. I think it is relevant to the bill.
Mr Michael Richardson:
To the point of order: I have been listening to the member for Port Stephens with considerable interest—indeed, it is more interesting than the contribution of the member for Cabramatta, whose speech was remarkably pedestrian—
ASSISTANT-SPEAKER (Ms Alison Megarrity):
Order! What is the member's point of order?
Mr Michael Richardson:
I am speaking to the point of order. The member for Port Stephens is leading to an important issue relating to his electorate. A large number of service personnel live there—people who would want to buy houses there. I have listened to what the member for Port Stephens has had to say and I think the member for Wallsend is totally premature in interrupting him in the middle of his discourse. I ask you to let him lead us to where he is going.
Ms Sonia Hornery:
Further to the point of order: The bill is about waiving fees and giving defence force personnel the opportunity to take advantage of benefits unavailable to them because of the nature of their work. It is not about what land is available and those sorts of issues. It is a very specific bill about money for first home buyers that defence force personnel are not eligible for.
ASSISTANT-SPEAKER (Ms Alison Megarrity):
Order! I uphold the point of order. However, I acknowledge some of the issues raised by members who spoke to the point of order. I have already directed the member for Port Stephens to confine his remarks to the leave of the bill. However, he continued to speak outside the leave of the bill. I ask him to specifically address the objects of the bill.
Mr CRAIG BAUMANN:
I return to the stamp duty component of the bill. A 220 per cent rise in stamp duty in 14 years is mind blowing. The stamp duty levied on the GST component of a sale is what some would call double taxation, but the biggest slug is the sliding scale for stamp duty. For purchases under $14,000 the stamp duty percentage is 1.25; it then rises to 1.5 per cent and 1.75 per cent. For the component over $80,000 it is 3.5 per cent, and a whopping 4.5 per cent for amounts over $300,000. On behalf of my military constituents, I welcome the generous offer contained in this bill. On behalf of my electorate, I call on the State Government to get serious about carrying out the core responsibility of providing infrastructure, not the virtual infrastructure that has made this State the butt of jokes by comedians in other States. New South Wales has virtual infrastructure, virtual railway lines to the north-west and the south-west. Why build anything when the Government can announce it every year? This Government needs to provide stamp duty tables. It cannot continue to gouge those who can least afford it to pay for its inefficiencies.
Mr MICHAEL RICHARDSON
(Castle Hill) [10.41 a.m.]: The State Revenue Legislation Amendment (Defence Force Concessions) Bill 2009 seeks to amend the First Home Owner Grant Act 2000 to allow a grant to be paid to members of the Defence Force who are first home owners but do not comply with the residence requirement for the first home owner grant, and to amend the Duties Act 1997 so that members of the Defence Force do not have to comply with the residence requirement to be eligible for duty concessions under the First Home Plus Scheme. I note that the amount of money that defence force personnel could stand to benefit from is up to $29,490, and potentially an additional $3,000 for new home buyers. So it is a significant amount of money. We are talking about $32,500 that potentially would be available to defence force personnel if they qualify for these grants.
There is a residency requirement relating to eligibility for these first home benefit schemes. The new homeowner must live in the dwelling as his or her principal place of residence and must take up residence within 12 months of purchasing the property. I have had occasion to write to the authorities on this issue on behalf of constituents when the house has been a complete wreck and the owner has not been able to move in within 12 months. I am glad that in a couple of instances the commissioner has seen sense and looked after my constituents. In this case the issue is about looking after our service men and women, who are important to this country. They are called upon at a moment's notice to go and fight overseas, and the six-month residency requirement is not always possible for them.
The member for Wagga Wagga talked about leaseback properties. I rented a property to defence force housing for about nine years. Often that property was vacant, sometimes for months at a time. It was somebody's home but they were not there and they probably would not have qualified for these grants as a consequence. I am concerned that the Government has not done any modelling on the likely number of applicants or the estimated cost of the program. The member for Manly spoke about this issue at length. It is a matter of concern that the Parliamentary Secretary's agreement in principle speech did not contain an estimate—no estimate has been provided by the Government—as to the likely uptake of the grants or the likely cost to the taxpayers of New South Wales.
I note that there is no precedent for this legislation. The Parliamentary Secretary said that this is a first for an Australian government and that this program has not been initiated by other State governments; nor, apparently, has it been initiated by the Commonwealth Government. I hope that Government members will lobby their colleagues in Canberra to introduce the same sorts of concessions for the first home owners grant as they are applying to stamp duty for defence force personnel. As I said, defence force personnel should not be disadvantaged by joining the armed forces, by fighting for this country and by being sent overseas where, as we have seen tragically on many occasions, they may be injured or killed. It is an appalling travesty that these benefits should be provided to civilians when they are not provided to service men and women.
One issue that concerns me is the way in which these stimulus packages have pushed up the price of properties, which will disadvantage service personnel if they take up the Government's generous offer. Both my children, Andrew and Jane, have bought their first homes this year. One benefited from the grants; the other one did not. Andrew's wife, when she was 15 years old, was made a half owner by her father in a one-bedroom flat in Hurstville. There was still a mortgage on the property when her grandmother died. Effectively, the amount of money that was left to her in the estate was quite small, yet as a consequence of her father's decision about 19 years ago she and Andrew were disqualified from the first home owners grant.
While the Government is making concessions on behalf of service men and women—concessions with which I wholeheartedly agree—there are some anomalies in the current system that have not been examined. Theoretically, on the basis of the situation that faced my son and his wife, there could be a value of just $2,000 or $3,000 in a property. Ten children might have shared in their father's largesse at the time, and that $2,000 or $3,000 would disqualify them from getting something like $33,000 in benefits. It was $37,000 before the first home owners grant boost was reduced at the beginning of this month. As I said, while there is no question that a combination of lower interest rates and the first home owners grant boost has stimulated the property market, it has almost overstimulated the market. The statistics relating to home purchases show that properties at the lower end of the market, where first home buyers would be expected to purchase properties, have increased in price to a greater extent than properties at the higher end of the market.
A day of reckoning will come, and many young people who may have rushed into buying a home to take advantage of the grants—there was certainly a feeding frenzy when my daughter, Jane, was looking for a property—will end up having paid too much. Interest rates will go up and suddenly they will find they cannot meet the interest repayments and will end up in a mortgagee in possession situation. That is totally undesirable. I hope that that does not happen, and I hope that defence force personnel are not caught in the same trap. The first home owner's concession is designed to stimulate the market, but if it ends up overstimulating the market then it is not desirable.
Mr GEOFF PROVEST
(Tweed) [10.49 a.m.]: I note that the objects of the State Revenue Legislation Amendment (Defence Force Concessions) Bill 2009 are to amend the First Home Owner Grant Act 2000 to allow a grant, similar to the first home owner grant, to be paid to members of the Defence Force who are first home owners but do not comply with the residence requirement for the first home owner grant, and to amend the Duties Act 1997 so that members of the Defence Force do not have to comply with the residence requirement to be eligible for duty concessions under the First Home Plus Scheme. This is an important measure and I indicate support for the men and women of the Australian Defence Force, who put their lives on the line for the wellbeing of their fellow Australians.
I will provide some background to the bill. The Treasurer, the Hon. Eric Roozendaal, announced these concessions for Australian Defence Force personnel during Treasury estimates hearings on 15 September 2009. However, the Chief Commissioner of State Revenue, Mr Newbury, admitted that no research had been done on the number of personnel likely to take up the concessions. He could not provide an estimate and did not know how many funds would be required. I support the bill but echo the comments of the shadow Treasurer, who highlighted the fact that there has been no model for such a proposal, even though it has merit. It is prudent that the effects and costs of any decision made in this place be analysed if they are to have any credibility with the people of New South Wales.
If we include the cost of the first home owners grant of $7,000 and a maximum stamp duty concession of $18,000 under the First Home Plus Scheme, it is feasible that the impact of this bill on the State budget could be around $25,000 per applicant. If one assumes that one-third of Australian Defence Force personnel come from New South Wales, then in the unlikely scenario that every one of them qualifies the maximum cost could be around $25 million. I therefore ask the Parliamentary Secretary to provide updated figures when she replies to the debate. It is the Opposition's view that the measure is likely to cost the State in the vicinity of $2 million to $3 million.
I note that the Office of State Revenue will conduct checks to ensure that applicants comply with the residency requirement. Those who do not comply will be required to repay the grant and duty, and in some cases may be subject to penalties. I seek also more details on the inspection process because I am concerned, in particular, about the cost of those inspections. However, I am pleased that stamp duty savings for first home buyers, particularly in the Tweed electorate, have produced significant and pleasing results. At the end of last year I asked a question on notice of the Minister for Finance with respect to first home buyer grants in the Tweed electorate.
The Minister informed me that in 2006-07, 462 first home buyers purchased houses valued at under $500,000, and 14 people purchased houses valued at between $500,000 and $750,000. In 2007-08, 395 first home buyers purchased houses valued at under $500,00, and 27 bought houses valued at between $500,00 and $750,000. Last year there were 81 first home buyers for houses valued at under $500,000, and six for houses valued at between $500,000 and $750,000. Those are significant figures. In 2006-07 first home buyers in the Tweed electorate saved $4.7 million in stamp duty, in 2007-08 they saved $4.6 million, and as at the end of last year they were on track to save more than $900,000.
I know a number of members of the Australian Defence Force. One young lass, Captain Bree Hammond, is currently serving in Afghanistan and doing a wonderful job. She is looking at purchasing a house in the Tweed electorate. All members understand the importance of creating affordable housing so that first home buyers can enter the housing market. However, cross-border issues remain a problem. If one were to build $300,000 kit homes on identical blocks of land on either side of the border, it would cost $30,000 less to build in Queensland because of stamp duty and other charges imposed by the New South Wales Government. Those taxes have forced people, including first home buyers in my electorate, to move elsewhere. However, with the recent changes, more people are buying houses. I do not oppose the bill because any measures that assist Australian Defence Force personnel are to be applauded.
Mr GREG APLIN
(Albury) [10.55 a.m.]: I make a short contribution to the State Revenue Legislation Amendment (Defence Force Concessions) Bill 2009. I note that the objects of the bill are to amend the First Home Owner Grant Act 2000 to allow a grant, similar to the first home owner grant, to be paid to members of the Defence Force who are first home owners but do not comply with the residence requirement for the first home owner grant, and to amend the Duties Act 1997 to provide that members of the Defence Force do not have to comply with the residence requirement to be eligible for duty concessions under the First Home Plus Scheme.
As we all know, government administers a number of State and Commonwealth first home benefits schemes through the Office of State Revenue. One of the key requirements to benefit from the scheme is that new home owners must live in the dwelling as their principal place of residence. That means, of course, that one of the applicants must occupy the home as their principal place of residence for at least six months, commencing within 12 months of purchase. The Chief Commissioner of State Revenue has the discretion to reduce the period of occupation, extend the period when occupation commences, or indeed exempt an applicant from residence requirements.
Many Australian Defence Force personnel, due to the nature of their employment, are unable to comply with the residence requirement, and therefore are unable to benefit from the discretion to fully or partly waive the requirement. We all understand, too, that Australian Defence Force personnel are required to provide unrestricted service, meaning that they must be free to be posted or deployed across Australia or overseas when necessary. We have general knowledge of the nature of the work undertaken by our Defence Force, but I can speak also from personal experience. Over the past few years my son has served in many theatres while on deployment not only within this country but also overseas in areas of conflict and on peacekeeping duties.
Broadly speaking, the range of duties undertaken by defence force personnel makes it impossible for them to settle in one particular location certain in the knowledge that they can fulfil the residence requirements of the previous legislation. I support this bill because a number of Australian Defence Force personnel serve in the Albury-Wodonga area, which is home to the Army Logistics Training Centre. The centre employs an enormous number of people, who are posted there on a short-term basis for both training and trainee purposes. It is the same at Kapooka in the electorate of the member for Wagga Wagga, where so many trainees and trainers are present for relatively short periods. Indeed, my son served at Kapooka for a year in a training capacity and resided in the city but of course would have been unable to purchase a home under the scheme had he so desired. The same situation affects all our Australian Defence Force personnel.
This bill establishes some form of equity in that, rather than being excluded, personnel will now be eligible to obtain the first home owner benefits without being disadvantaged by the requirement regarding unrestricted service with the Australian Defence Force. This necessary bill takes account of the great work undertaken by defence force personnel who are constantly being moved, posted or deployed. This bill takes up the areas of concern that have been expressed and allows personnel to participate fully in the available first home owner grants.
Ms LYLEA McMAHON
(Shellharbour—Parliamentary Secretary) [11.00 a.m.], in reply: I thank all members who have participated in this debate. This is an important piece of legislation that will ensure defence personnel are able to enjoy the same first home owner benefits as other Australians. It is also an Australian first, with New South Wales leading the way in legislating for these changes, and making it easier for those in our army, navy and air force to realise the great Australian dream of home ownership. The member for Manly claimed that this decision was not based on modelling. I advise that the Office of Financial Management in Treasury did modelling, although questions from the Opposition at estimates were directed to the Office of State Revenue, which will administer the program. I am happy to assist the Opposition to overcome its confusion.
In relation to the other claims of the member for Manly, the Treasurer has constantly spoken about the green shoots of recovery in the New South Wales economy. It is an absolute shame that the Opposition continues to talk down the State's economy even when there is such good news. For the benefit of the member for Port Stephens, we have some of the most generous benefits for first home buyers in Australia and this is about extending those benefits to defence personnel. The member for Port Stephens simply missed the point. The Australian Defence Force currently has approximately 3,000 members deployed overseas to places such as Afghanistan, Iraq and East Timor. They are often called away at short notice, which in turn makes it difficult for many defence personnel to meet the residency requirement when purchasing their first home. These reforms ensure that they do not unfairly miss out on the New South Wales and Federal Government generous first home owner programs.
This includes: a $7,000 grant to all first home buyers, and an exemption on stamp duty for all homes worth up to $500,000, with a concessional rate of stamp duty payable on homes valued between $500,000 and $600,000. This is worth up to $17,990 per home and it was a New South Wales initiative. A further $3,000 grant is available to first home buyers purchasing a newly constructed home, which will give an extra incentive for first home buyers to stimulate the housing construction sector. The Federal Government's boost payments of $14,000 from October last year ended in September this year, and the payment of up to $7,000 will be available until the end of 2009. These payments have been an important part of the Rudd Government's economic stimulus plan, with the higher payments targeted to buyers of newly constructed homes. This legislation means that the men and women risking their lives serving Australia have one less thing to worry about whilst on deployment. It ensures that they do not miss out on our generous assistance programs for first home buyers. I commend the bill to the House.
Question—That this bill be now agreed to in principle—put and resolved in the affirmative.
Motion agreed to.
Bill agreed to in principle.
Passing of the Bill
Bill declared passed and transmitted to the Legislative Council with a message seeking its concurrence in the bill.