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FIRST HOME OWNER GRANT BILL 2000 (No. 15)

Second Reading

Mr LLEWELLYN (Lyons - Minister for Primary Industries, Water and Environment - 2R) - Mr Speaker, I move -

That the bill be now read the second time.

Mr Speaker, this bill establishes a scheme for the payment of a $7 000 grant to first home owners who purchase or build their first home on or after 1 July 2000. This scheme will provide a major stimulus to first home ownership in particular, and to the property market in general, in Tasmania.

While the scheme was initiated to compensate for the impact of the GST on new dwellings, and the flow-on effect of this on market prices for established dwellings, in many parts of Tasmania the $7 000 grant represents a direct bonus to first home owners. This is because the Tasmanian property market has been depressed for several years, making it highly unlikely that prices for established houses will rise immediately in response to the increase in the cost of building a new house. That is, in many circumstances, first home buyers will receive a $7 000 grant without having to pay a higher price for their home.

The $7 000 grant will contribute directly to the deposit available at the time of the purchase and, as a result, will open up new opportunities for Tasmanians, especially young people, to secure a housing loan and to purchase a home for the first time. It will encourage this group to bring forward their decision to buy their first home, and it will also make it easier for another group of people to step into the home owner market who previously might never have had this opportunity.

The intergovernmental agreement which was signed by the States and the Territories and the Commonwealth in June 1999, outlines the principles for the first home owners scheme and requires each State and Territory to introduce separate, but consistent, legislation to give effect to a nation-wide scheme from 1 July 2000. The States and Territories have been working together to ensure that the legislation introduced in each jurisdiction will give effect to a uniform scheme with consistent eligibility criteria.

Mr Speaker, this bill establishes the First Home Owner Grant Scheme in Tasmania and is, in all major respects, identical to the legislation that has been, or shortly will be, introduced into the Parliaments of each of the States and Territories. The bill details the eligibility criteria, the process for making applications and payment of the grant, objection and appeal provisions together with administrative and other provisions necessary for the effective operation of the scheme.

The scheme will provide a once-only grant of $7 000 to eligible persons buying or building their first home in Tasmania. Applicants will be eligible if they enter into a contract for the purchase or construction of a home on or after 1 July 2000, or in the case of an owner-builder, construction does not commence until on or after 1 July 2000. The eligibility criteria for the first home owner grant are as follows -

the applicant must be an Australian citizen or permanent resident, although in the case of a joint application only one of the applicants needs be an Australian citizen or permanent resident;

neither the applicant nor the applicant's spouse have previously held an interest in residential property prior to 1 July 2000 - this criteria extends to an interest in a residential property for investment purposes - and

the applicant must occupy the home as a principal place of residence within twelve months of:

(a) settlement, in the case of the purchase of an existing home; or

(b) the home being ready for occupation, in the case of the construction of a home.

Eligibility for the grant is not subject to any form of means test. The Commissioner of State Revenue is responsible to the Treasurer for the administration of the scheme, with the Revenue and Gaming Division within the Department of Treasury and Finance responsible for the day-to-day administration of the scheme. An application for a first home owner grant is to be made to the Commissioner of State Revenue in an approved form.

A national database is being established by the States and Territories for use by each jurisdiction when assessing applications. Each State and Territory will use this database to process and record information in relation to all first home owner scheme grant applications. Each jurisdiction will be able to access information contained in other State and Territory databases to determine if an applicant has received a first home owner scheme grant in another State or Territory. Payment of the grant to a successful applicant will be made at settlement if the applicant is purchasing an existing dwelling; at the time of possession, last contract payment or completion if the applicant entered into a construction contract; and at the time of completion if the applicant is an owner-builder.

The first home owner grant will be paid to an eligible applicant or to someone to whom the applicant directs the grant to be paid. The grant will be paid to the applicant by electronic funds transfer, cheque or may be offset against any conveyancing and/or mortgage duty relating to the purchase of the property. It should also be pointed out that the possibility of financial institutions processing applications for first home owner grants is currently being investigated.

The option of enabling a first home owner grant to be paid directly to a financial institution and held in trust until the requirements of the legislation have been met is also provided for in this bill. An eligible applicant will be able to utilise the grant as part of a deposit towards their housing purchase. This flexibility will provide significant benefits to those people on low incomes who are able to meet their weekly house payments but find it harder to put money aside to save for a deposit on top of all their other ongoing costs.

It is expected that in the 2000-2001 financial year, $14.8 million will be paid to first home owners under this scheme in Tasmania. The Government will be strongly promoting the scheme. A number of promotional activities - including fact sheets and brochures, public education seminars and industry group seminars - will be undertaken to raise public awareness in relation to the first home owners scheme. In summary, Mr Speaker, the first home owners scheme will greatly assist Tasmanians purchasing or constructing their first home after 1 July. Therefore I commend the bill to the House.
Mrs SWAN (Lyons) - That is a nice place to finish. An excellent scheme, part of the GST arrangement, a huge benefit to the State of Tasmania and something that might prop up the falling property market and might add a little bit of value to the diminishing value of our properties here in this State if people get up and rush off elsewhere. This offers a little bit of help and hope and it is rather a nice moment to end today's debate as we consider what might happen as the $7 000 first home owners' grant comes into being on 1 July 2000.

Mr Rundle - More money cascading south.

Mrs Jackson - No, the State Government's funding this.

Mrs SWAN - It is for the first purchase -

Mr Rundle - What? Don't be ridiculous!

Mrs SWAN - Don't be ridiculous!

Mrs Jackson - I'm sorry; it's part of the GST. It's part of an agreement they signed. You want to get your facts right.

Mrs SWAN - Well, that adds a silly aspect to the debate, Mr Speaker.

Members interjecting.

Mr SPEAKER - Order! I am missing my afternoon nap.

Mrs Jackson - It's part of the agreement that all the States made with the Commonwealth.

Mr SPEAKER - The time being 6 p.m. the debate stands adjourned. Are there any adjournment issues?

Mrs SWAN (Lyons) - We had just commenced the debate yesterday with regard to this very -

Mr SPEAKER - The honourable member for Lyons, Mrs Swan, has 38 minutes left.

Mrs SWAN - Thank you very much, Mr Speaker. Thirty-eight minutes will not be anywhere near enough to speak about this excellent piece of GST package, which I am sure we all welcome in the State of Tasmania, given the flatness of the housing market and the poor prices that we are achieving for real estate and have been over this past eighteen-month period.

The scheme of course was brought in and was designed as a compensatory measure to offset the charges that were likely to flow as a result of the introduction of GST on housing prices as of 1 July 2000. This is of course a scheme which is designed to offset that and compensate people for any rise in housing prices. However as we observe and as the minister has already said in his second reading speech there is a double bonus if you like in this proposal, because what happens in this market where housing prices are particularly flat and are not likely to be influenced by the cost associated with home building the effect is that this will result in a straight-out win for first home owner purchasers with a $7 000 grant that they can use as a bonus for the purchase of their first home. I think that in Tasmania in particular it will have an extremely good effect.

The point and the help with regard to this is that we are all hoping that this will roll the market on to a certain extent, that people are currently waiting around for the $7 000 bonus before they actually purchase or build their first home. I think many of us are aware of people who are doing precisely that. I think the real estate agents at the current moment are saying that there is a good deal of information in the market that a number of young people in particular are waiting for their first purchase in order to comply with this scheme because $7 000 of course will go a long way to offset the deposit that they will have to put down and will no doubt be helpful. Of course the aspect of this will be that as they purchase their first home, if that is a built home, then the owner of that home of course will be able to lift up to the next level so that will have a ripple effect right through the marketplace which we hope will make some impression on the housing market and do something to brighten the economy. As we all know, housing and home building is of course one of the critical and easiest ways to get the market to respond and to build up.

Australia has been well known for its policy for many years now to drive the housing sector in order to get a quick response in the short-term economy by introducing cash immediately into the system for this purpose. So we have become for very good reasons a nation of home builders and that has had a huge effect in expanding the gross national product and also the economy of course as a whole because that money is, as I say, quick. The market responds extremely quickly to it and as a device it is a very good one for increasing general economic wellbeing. When we look at what has happened with Tasmania in the past year or so clearly that is the case because we have seen a general falling away in the building market that has flattened out the general consumption and had an effect on gross State product.
I did have a series of figures here for building approvals in Tasmania. For the 1997-98 year - in fact we actually go back to the 1996-97 year, the total numbers both private and public sector units built in that year were 1 861 units built. Only a year or so before that, probably two or three in fact, the building units actually commenced and completed in a single year were well over the figure of 3 000 units. In 1996-97 1 861; and in 1997-98 we saw that figure come down to 1 643; and then in 1998-99 the figure has dropped quite substantially to 1 410 units, both private and public, total dwelling units. As we say, 1 410 is only half the figure that was achieved only a handful of years ago in the mid-1990s and of course the economy is showing the pressure of that effect by being particularly flat and all of us know just what general effect the housing market can have on economic prosperity.

I do note that in the figures for 1999, in April of last year, the actual total dwelling units had dropped to 95 for that month. Some of the other figures down that series were 180, 160, and in former years of course they would have been considerably higher again. If you examine that figure and do some assessment, it seems to us on this side that that is probably the lowest total dwelling unit numbers for private and public building for a single month, if not on record then for a very long time indeed, which is an illustration of the concern that people have with regard to investing capital in the State at the current time and it underpins exactly what we are saying on this side of the House with regard to the Government's position and investment and also the concerns that they should clearly have with regard to population loss.

We keep making this point on this side of the House, that when you have a falling population and when you have people who are unwilling to invest their capital even in that first essential capital project, and that is one of building your own home, then the economy has very poor chances for actually improving. We look forward to the possibility of this $7 000 first home owner grant being able to provide an incentive to the market so that many young people in particular will get out and purchase their first home and, as I say, roll on the market so that a ripple effect is created by other people moving up to higher grades of dwelling.

We have some evidence, in fact, which should be a happy matter for the Government because when we contacted some real estate agents around the State and around the city of Hobart we found that a particular real estate dealer on the other side of the river, on the Eastern Shore, who operates in the lower priced homes that are on the market has just recently put on eight extra staff in anticipation of the activity that will be occurring with the result of this offset to GST.

We had some debate yesterday about who actually owns the scheme and we have seen the Treasurer come out and make a public statement that the State of Tasmania is delighted to be able to offer this fund in order to ensure that first home owners get $7 000 off their purchase price but clearly if we look at the agreement that was struck with the Federal Government this is an offset, this is written into the package where your general purpose grants are part of the deal with regard to this scheme. It has been done for a very valid reason and that is that home ownership, its effect on the economy and the feeling people have for owning their own home has been an elemental part of Federal policy and thus the States and the Territories and the Commonwealth struck a deal in order to make sure that this offset was written into the GST provisions.

We will know quite clearly, as the Government should, that when they receive their returns out of the GST repayments through their general purpose grants or in place of their general purpose grants this will be one of the elements of that return, and that is indeed part of the deal with all the States and Territories at the moment, and to profess otherwise is not to have a full understanding about how Commonwealth and State arrangements have been made with regard to this finance.

Mr Llewellyn - You were professing otherwise last night.

Mrs Jackson - You said there was money coming down from Canberra.

Mrs SWAN - Well, it is quite clearly, is it not, part of the package, quite clearly part of the compensatory package -

Mrs Jackson - It is not extra money and it is not capped, so it will depend on the demand of how much we - it is not an amount of money that is being paid.

Mrs SWAN - This is the offset for what you achieved in the agreement with regard to what you would be paid back as a result of the introduction of the GST, and the arrangements made were that GST would replace general purpose grants, and this would be one of the elements in consideration for it. It is very definitely written into the financial package that has been achieved between the State and the Commonwealth and all other States. And, as I say, to indicate otherwise is quite clearly to mislead the public with regard to what was done as a national agreement as to the GST. In another minute the other side will be actually saying they inspired the GST because this was a really good deal as part of it.

Mr Llewellyn - No, we don't like the GST.

Mrs Jackson - Hadn't you realised that? Don't you see the Labor Party doesn't like the GST?

Mrs SWAN - We hear so much, Mr Deputy Speaker, from the other side of the House with regard to the horrors of the GST and how they really loathe the idea of what it will do to them, how the implications for the State will be quite horrendous, how the effect on their own budget line will be monstrous, and yet what do we find but every time they have the chance the hand is out and now they are signing the documents that actually will allow them to lock in the substantial achievement they made in the 1999-2000 Budget wherein they received $87 million extra, and still they say this was a poor deal. They appear to have neglected the fact that for the three prior years the arrangement with the Commonwealth was that we paid, I think, to that Federal black hole left by your colleagues, I think, in national government, $15 million-odd in the first year, about $8 million-odd in the second year, and about $15 million again in the third year as our contribution to the Federal deficit program in order to get rid of that black hole.

Mr Llewellyn - We had to pay about $45 million a year for your big black hole that you left, too.

Mrs Jackson - $45 million? $65 million.

Mrs SWAN - And still you sit there and you say the GST is a foul thing, even though we have just got $87 million extra in our budget process and this of course will be locked in for the whole period of the GST compensatory package until you finally achieve some further net gain even though you of course have already concreted in the net gain that you received last year and that will go on and cannot be taken away from because of the intergovernmental agreement that you have succeeded in applying. And again quite clearly, if you look at the basis on which you have done this, and we have had a fair debate with the Under Treasurer and the Treasurer on this matter with regard to the particular proportion that Tasmania occupies in achieving this grant, we say that the general purpose payments are currently paid at the rate of 4.5 per cent of the total of the general purpose payments for Australia. That is clearly indicated in your budget documents. You continue to insist that in fact it is a lesser figure. I suggest that if you look at that table you will quite clearly see that you have a very good deal indeed running at almost double the size of this population, and I am quite sure that the expert members of Treasury were doing everything they could in order to make sure that that proportion was written into the IGA, and for that they have done extremely well, and I am sure that when you insist that the figure is lower you ought to remind yourself that in fact we are doing particularly well out of the response from the Commonwealth as to general purpose payments.

The minister has already indicated some of the criteria that will apply to the First Home Owners Scheme. The applicant, of course, must be an Australian citizen or a permanent resident, although in the case of a joint application only one of the applicants needs to be an Australian citizen or permanent resident, so that will be helpful for someone who is marrying someone from elsewhere. This is quite clearly something that will be particularly important for young people just marrying, and will help to answer the issue of GST in that area. The other element is that neither the applicant nor the applicant's spouse have previously held an interest in residential property prior to 1 July 2000 and this criterion extends to an interest in the residential property for investment purposes as well.

I do propose just for a short while, Minister, to go into Committee to have some questions put with regard to some matters that I would like answers on and they are to do with - and you may be able to indicate in your response, in fact - the matter of an investment in property, for example, before 1 July 2000 and a home-owner then goes on to build on the land afterwards whether in fact the applicant is still eligible under that arrangement. I think that in fact under the provisions of the bill they probably are but I would just like to have that confirmed; that if they actually purchase their land before 1 July, if they then go on to build and apply after 1 July whether they still -

Mr Llewellyn - Yes, but if they add the purchase price of the land to the proposition then I think that's a problem.

Mrs SWAN - Right. Well, you might be able to indicate in your response or we might just be able to quickly go into Committee and have that ironed out so that we can understand what position is occupied by someone who actually buys their land before the date of the commencement of the program.

I notice too that there is a requirement that there are special accounts set up to deal with these funds and I would like to know just what progress is being made or how the Treasury will be accommodating that arrangement. Obviously that will not be set up as yet but I would like to know just what provision is being made with regard to how those funds are kept because the agreement of course clearly indicates that there cannot be any crossover with Commonwealth funds coming in from other sources for housing so that there could be a mixture of funds. I think that is important for us to have an understanding of.

The other thing that was important too I think was with regard to what we will do after the luncheon break where we are in fact moving to make some further amendments to State charges under the new tax system so that GST can in fact be applied to a number of the charges and fees that are still, if you like, able to charge GST -

Mr Llewellyn - You're talking about national tax reform.

Mrs SWAN - That is correct. I notice that in Appendix D to the intergovernmental agreement there is a provision here under 'other matters':

'D4. 'The States and Territories will not introduce or vary any taxes or charges associated with home purchase with the intention of offsetting the benefits of the FHOS for recipients.'

Just as a matter of interest, I am seeking some information with regard to the 200-odd taxes we will be allowing GST to be applied to and whether in fact any one of those is likely to infringe this particular appendix to the agreement. Perhaps I can ask you for an assurance that the provisions relating to GST there will not actually infringe the agreement you have struck with the Commonwealth - you may be able to give me the answer when we move on to that bill when we resume after lunch because I think my colleague wishes to make a contribution as well.

The assistance will be available directly as a one-off payment and I understand that under the agreement if the recipient expressly consents it may be available as an offset against statutory levies and charges or some combination of these. I do not quite know what the Government intends to do there; whether or not that is something they are envisaging doing or whether it is a simple scheme and there will be a direct payment and that will be the end of it.

You also make some mention of setting up a trust arrangement with financial institutions so that the $7 000 can be paid to those financial institutions to be held for the applicant when the applicant can, on point of completion of the contract or the completion of the building, take possession and then use the deposit that is in fact residing, I assume, with the financial institution concerned. I would be a bit interested in just knowing how that will be organised, whether in fact you have actually progressed that to any degree and what the state of play there is at the moment.

I also notice that while the agreement is basically uniform, you clearly state in your second reading speech that all the States and Territories have been able to move a little away from the absolute letter of the law, if you like, so there is some flexibility in the response of the State with its legislation. I would like to ask you how it varies and where it varies, if there are any substantial variations with the other agreements and legislation already set forward, and which States have already brought in their legislation to date. Presumably some already have, some perhaps still have to move it through.

Just one note, I gather that the occupation of the place of residence must be within a reasonable period. You, in your legislation, have attached a period of twelve months and you might be able to tell me whether or not that is a period comparable with other States, whether everybody has settled on twelve months as the appropriate and reasonable period or how they have couched their response with regard to the occupation of the home that is being the subject of this grant. That I think is also a further question that would be helpful.

The national database, too, Minister - you may be able to indicate to me how that is progressing and what is being done in the various jurisdictions to organise that arrangement and what are the possible costs that are likely to be attached to that. What precisely is the agreement that will apply with meeting the administrative costs of running that national database? Is someone in particular taking control of it and, you may in fact have indicated this in some of the papers, you might be able to indicate to me who would be taking control of that database, how it will be managed, what sort of administrative costs are likely to apply? The arrangements that we are making in this State with the staffing to run it, whether it will simply be a part of someone's job - and I assume it probably will be - but you might be able to indicate how that will be managed as well.

I think perhaps at that point I can simply conclude and say that we are certainly supportive of this. This will be particularly helpful, we believe, in adding some confidence to the housing market. Again, it is another important factor that young people who are purchasing their first home have the opportunity to settle on a home here in the State of Tasmania without moving away and it does add a particular emphasis I suppose to say that if you have $7 000 you can access and you happen to see a home here, it may in fact assist some people to settle in a home and weather the storm of some uncertainty in employment and that may be a way of ensuring that the population loss is at least prevented from being aggravated, if you like, but of course our concerns are very general with regard to population loss and, as we have said for a long time, a lot of the problems that we have in the housing market are to do with the fact that too many people leave the island of Tasmania and that has a substantial effect on housing prices and also the state of house building or home building which, as I have mentioned before, has been an elemental policy in Australia for decades, in fact, as a mechanism for driving the economy and getting a quick pick-up in the market and rolling on general consumer spending because that is the effect of it.

Here we have weathered the storm of not having that occur for some long time and, as I have quoted to you, those figures for the dwelling units - the total dwelling units - present a fairly sorry picture when we look at the gradual falling away over the last few years that is a matter of substantial concern not only to the building industry but to the Tasmanian economy and of course it should be to the Tasmanian Government.

We welcome it; I have no doubt that you do. We will continue to debate with you the fact that this of course has been part of the agreement that has been struck by States and Territories with the Commonwealth with regard to the GST payments now replacing general purpose payments to the State. It is clearly an element of it because the Commonwealth -

Mr Hidding - They have to do it, don't they, it's a deal.

Mrs SWAN - Of course. Because the Commonwealth wish to see first home owners benefited in this fashion.

Mr Llewellyn - You've said that three times now.

Mrs SWAN - Indeed, but it is worth reinforcing. On that proposition we entirely support it and look forward to a better market for housing and certainly an increase in housing prices and land prices here in the State -

Mr Hidding - Hear, hear.

Mrs SWAN - because at this moment they are very poor and I think anyone who is in possession of land here in this State is not feeling comfortable with their opportunities for sale in the State at the moment and certainly not feeling comfortable with the likely return that they will get from any such sale. We wish us all well in those terms. I sit down and conclude my speech.

Mr HIDDING (Lyons) - This First Home Owner Grant Bill is going to provide a terrific lift not just to the building industry in this State but also to the real estate industry and it hopefully will have a very good effect on property prices generally. However you would not of course want those property prices to start anticipating the availability of this grant because that will just deteriorate the offer. I think the market is as flat as it is going to get and I cannot see it bouncing too quickly in anticipation. There will be some speculative listings, I would suggest, by real estate agents who may well be out there. As a former real estate agent I would say there would be a lot of people out there already looking for listings to service what they believe is going to be a solid market. I just hope they are not talking the prices up past where genuine valuation is because that just ends up with disappointed vendors.

Of course the value of anything is determined by what people will eventually pay for it and anything other than that is simply a paper valuation. So we will see what will happen to valuations and property prices six months or so into this process when we see the horsepower beginning to generate.

It was amusing to see the Crean versus Crean bunfight that was happening on this matter. You had the Federal opposition spokesman on these matters bagging the heck out of this scheme on the one hand and you had his brother, the Treasurer in Tasmania, lauding and in fact claiming this legislation as his own and the Government's initiative to make $7 000 available to first home owners.

Mr Llewellyn - Well, it is.

Mr HIDDING - That is right. It is a wonderful initiative by you, Minister. We could even rebadge it as a David Llewellyn initiative.

Mr Llewellyn - No.

Mr HIDDING - You could even claim it.

Mr Llewellyn - No, David Crean.

Mr HIDDING - Even the most cynical - well, the least cynical person would not see you as having your fingerprints on this at all and the irony of you having to grit your teeth and provide this because the Federal Government has this in their tax restructure package -

Mr Llewellyn - We think it's good. We're very positive about it.

Mr HIDDING - That is right. You want your fingerprints all over it. Yes, you are very, very positive about it and it is a great idea. This is in fact a David Llewellyn grant to all the first home owners -

Mr Llewellyn - No, David Crean.

Mr HIDDING - of the Lyons electorate. Let there be no more nonsense about that, this is a Federal grant being administered by the States.

Mr Groom - They're not claiming it as an initiative, are they?

Mr HIDDING - They are, this is the David Crean initiative. This is it.

Mr Groom - Every State is doing it because it is required under the arrangements.

Mr HIDDING - The reason of course that the Federal Government felt constrained to construct this package, this arrangement, was because the GST impost on the building industry is probably the biggest impost of any sector. It really is quite a whack where timber currently is not subjected to wholesale sales tax. Most items used in the construction of a home are not subject to wholesale sales taxes so when you put GST on there it is a major wallop and it is one that the Government always knew was going to be a problem and a hassle when John Hewson first spoke of a 15 per cent GST. As you can imagine, 15 per cent on that was an even bigger problem. I do not recall exactly what his process was to get out of that - I should recall because I spent eighteen months on the road selling the package - but it was seen as a major disincentive to the whole GST package.

I have to say the building industries generally have been very responsible in this and they know they are carrying the brunt of the load in the structural tax reform and they quite rightly held out for a good deal. The best deal that they could get was this one and I think it is probably the right way to go because the building industry generally recognises that if you have a strong market in your first home owners then it will carry right through the industry, rather than looking for some other offsets or some other confusing ways to do it, to actually create a good strong market is something that the building industry sought and was given and it is the most responsible way to go. The building industry generally around Australia should be congratulated for their attitude to structural tax reform in this country.

Of course a Tasmanian getting a $7 000 first home grant is much better off than a person, say, in Sydney getting a first home owners grant of $7 000 and this was recognised at the time and, without question, it is I would say 60 per cent to 70 per cent more value than somebody in New South Wales or around Sydney where the cheapest first home that somebody could buy is $140 000-odd and the cheapest first home that people can buy here is around $75 000 to $80 000-odd, so you have 10 per cent of purchase price in Tasmania with a first home owners grant. It is an extraordinarily generous provision and I hope that Tasmanians see it that way and take to this offer in their droves because who is to say how long it will be available, given the fact that it is a restructure package - it is not there forever - and I hope that they recognise that it is a really top deal compared to every other State in Australia.

Mr HIDDING - Mr Deputy Speaker, I do not intend holding the House up. I will just finish my contribution by very much welcoming this initiative of the Federal Government, and the measure that the State Government has been required to bring in to bring it to fruition. To reiterate, $7 000 in a Tasmanian context is a very nice start for a first home owner. The only question I would have - and I ask it with some trepidation because it might show that I have not quite studied the detail far enough - is when I first read the material on this, I understood that a person to be eligible had to demonstrate a savings record of some description. I wondered then - and it is obviously not still in there, if that is how you are looking at me - when I read that, why you would not leave that up to the bank. If a bank is prepared to finance a first mortgage on a property then you would think they would do that without an established savings record, or something. But obviously, from what I can read from the clause notes, that is not an eligibility criterion. You might just address that in your response.

As I say, I welcome the fact also that it is not means tested; it is great to see for a change that this is something that is open to everybody because of course this is more about stimulating a market than a social bonus. It is a direct market stimulation in exchange for an impost as a result of structural taxation changes. So from my point of view on this side of the House I welcome this very much.

Mr Green - You agree it's an impost?

Mr HIDDING - GST - absolutely. If you were here earlier, you would have heard me say that the building industry, I believe, carries probably the major burden in the whole restructure.

Mr Green - I thought you were referring to the people who might take up the option for the $7 000.

Mr HIDDING - No. The building industry wears the brunt of the structural changes, and it is appropriate that the Government offsets that by this package. I hope it works - my goodness, I really do hope it works for everybody involved in the building industry.

Mr LLEWELLYN (Lyons - Minister for Primary Industries, Water and Environment) - Mr Deputy Speaker, I thank the members for their support for the legislation. I really do not want to get back into the argument of where the program came from; obviously it is part of the Commonwealth-State financial relations intergovernmental agreement that was required and it was part of the arrangements that were made. I have to say for Tasmania some of those arrangements are in fact certainly treated by Tasmania as safety-net arrangements, in a sense, to ensure that Tasmania is going to be no worse off with regard -

Mrs Swan - You've got an agreement that says that.

Mr LLEWELLYN - to the GST for a period of time until the natural growth of funds kicks in. That is not for a long period of time, quite frankly, so in a sense one could say that this is the Federal Government hypothecating some of the taxes that would normally be paid to Tasmania, and saying to Tasmania, 'You've got to use that money for a particular purpose'. We are not arguing with the purpose and we are being very positive about it, but that is the reality of what is going on here.

There were a number of questions that were raised. Mrs Swan raised the issue about the eligibility for grants, and gave an example of a person who might purchase land before 1 July 2000. She asked whether or not that would have any effect. The issue here really is in regard only to whether a person owns a residential property, either as an owner-occupier or for investment purposes, that a person would be ineligible. The $7 000 is not given on a particular value of property; it is a one-off grant that is given for the purpose of actually building or purchasing a residential property itself, so the value of the land and building on that property afterwards would have no effect on the application. The application would be in regard to the building of residential premises on that particular site.

Mrs Swan - Are you saying that if you own land before you'd still be eligible - is that right?

Mr LLEWELLYN - Yes, as long as you did not enter into the contract to actually have the house built until after 1 July.

Mrs Swan - That's fine.

Mr LLEWELLYN - Clause D4 provides in the intergovernmental agreement that the States and Territories will not introduce or vary any taxes and charges associated with home purchase with the intention of offsetting the benefit of the First Home Owners Scheme for recipients. The intention of that clause is to prevent the States from increasing, for example, stamp duty on residential conveyances to offset the costs of the scheme and certainly the State has no intention of doing that. The National Tax Reform Commonwealth-State Relations Amendment Bill simply gives the government agencies the authority to recover the amount of GST they are liable to pay on any legislated fees and charges. If the Government did not do that there would be a direct cost to the Government and it is appropriate that we do that in those cases but they cannot be construed as contravening clause (d)(4) of the intergovernmental agreement. The short answer is we will comply with what the Commonwealth requires in that regard.

The other question that was asked was what has happened in regard to this in other jurisdictions. I am advised that in South Australia the First Home Owner Grant Bill has been passed in the lower House and we are not sure what has happened in the upper House.

Mrs Swan - Is that the case everywhere?

Mr LLEWELLYN - In Western Australia it has been introduced and is to be debated in May but it certainly has not passed the upper House. In Victoria it has passed through all stages - upper and lower Houses. In New South Wales it has been through the lower House but not the upper House. In Queensland it has been introduced and is to be debated again in May and in the Northern Territory it has not been introduced but is to be introduced in May and will go through the process then. In the ACT it has been introduced into the Parliament but not debated and will be debated in May.

Regarding the template nature of the legislation or the similarities with other States, I am again advised that in regard to eligibility criteria and transaction criteria and so on associated with the bill they are pretty near identical to other jurisdictions. There is one slight change - and I think this will probably make the member happy - in that some discretion is given by the commissioner to enable odd situations that might develop to be handled easily and flexibly rather than to establish fixed criteria associated with regulations that would impose some stricture on the whole process. I think that was the point you were making yesterday about a provision in the payroll tax bill.

Mrs Swan - It may well have been, Minister. Thank you kindly - flexibility is always helpful.

Mr LLEWELLYN - Yes. In regard to the administrative provisions there are some distinct Tasmanian flavours in that regard but mostly the bill is very similar to that which has been introduced in other jurisdictions. I think that covers all the questions except maybe the last one that the Deputy Leader raised and I cannot remember what it was now, so maybe he could raise it again in Committee.

Mr Hidding - It was a killer question obviously, wasn't it?

Mr DEPUTY SPEAKER - It was obviously something to do with the criteria for $7 000, so let me assist you with your memory.

Mr Hidding - Whether there had to be a savings pattern. When it was first announced they said that there was a savings pattern that had to be established. I reckon they have dropped it because it is really up to the banks.

Mr LLEWELLYN - The answer that was given by yourself on this matter is in fact the position. You do not have to have a savings reputation to actually get the first home owner scheme payment of $7 000. But of course you do have to have a history of savings if you are approaching a bank or financial institution, otherwise they might not lend you the money. That is simply the matter.

Bill read the second time.