By Lara Pullin
The 1996-97 ACT budget launched a new Liberal government program to move people out of secure and affordable public housing and into the private home-buyers market. The "Kickstart" program is the result of the suspension of the ACT housing department's Home Purchase Scheme and deals government ministers have made with their mates in the private sector.
The Home Purchase Scheme enabled low and moderate income earners in the ACT (not necessarily public housing tenants) to obtain a loan through the housing commissioner which guaranteed repayments at no more than 27% of their gross income. The scheme was earlier suspended for "evaluation and review", supposedly so it could be made more equitable, but the Liberal government has not waited for the evaluation outcome before replacing it with the Kickstart program.
The new program, combined with the housing department's policy of decreasing its holdings in the inner suburbs and relocating to outer suburbs, will free up valuable land in inner northern suburbs of Canberra. This land is being re-zoned for up-market medium- and high-density development, despite widespread resistance from local residents' associations.
The government claims its new program will create 800-1000 jobs in the building industry. But given the large number of privately constructed, vacant, new dwellings being flogged jointly by the Housing Industry Association (HIA) and ACT Housing through this program, it seems the work is already done.
The ACT government has given no undertaking to maintain existing stocks of public housing. It has said it wants more people in private rental accommodation with government grants — leaving rental tenants open to insecurity of tenure, fluctuations in market rent, poorly maintained properties and abusive landlords.
Specifically, the Kickstart program consists of grants of $5000 to buy 1000 ACT Housing low-income tenants out of their current public rental housing. The grants will be used as a non-refundable deposit to buy housing on the private buyers' market, and are matched by private sector "cost-saving benefits" which can bring the total grant value to $8800. These "private sector benefits" include the two banks in the scheme — St George and Advance Banks (which have since announced their merger) — waiving their home loan application and establishment fees ($750) and the HIA's builders providing a range of discounts. The ACT electricity and water services have also waived their connection fees.
You have to ask why these grants are only for existing public rental tenants — if the government really wanted to assist any low-income renters into home purchase there would simply be an income or means test for the grant. The government has clearly said "let's target public rental housing".
To be eligible for the grants, you must be an ACT Housing tenant with an annual combined family income less than $45,000. On this income, depending on some variables, the banks are prepared to loan up to $140,000 — buying these people out of secure public tenancy.
Unlike the previous Home-buyer Scheme, the repayments on the private market may be up to 40-50% of gross income for low-income earners. For example, a family of four earning $600 gross per week with a $100,000 mortgage under the previous scheme would have a weekly $162 loan repayment — about the same as their rent for public rental housing. Of course there are rates, insurance and maintenance payments in addition. Yet, of the home-buyers who were funded under the previous income protected scheme, only 12 loans in 12 years resulted in people losing their homes.
Under the new scheme, a family of four earning $600 gross weekly with a $100 000 mortgage will be repaying $217 weekly plus rates, insurance and maintenance — $45 a week more. When you consider that family has a net income after tax and HECS repayments of $401, that's over half of their income going to accommodation. Child-care, food, education, medical care, transport, electricity and phone costs have still to be paid for.
The Kickstart program has been extensively promoted by ACT Housing which has sent two large packages of material to all its tenants, including publicity jointly produced by ACT Housing, the HIA and St George-Advance banks.
But the ACT government hasn't seen fit to even notify the public, or tenants, or mortgagees, of the outcomes of the review of the Home-buyers Scheme.
Further information can be obtained from the ACT Council of Social Service on (06) 248 7566 or ACT Shelter on (06) 247 3727.