Last Thursday, 1 March 2018, the House of Representatives passed the National Housing Finance and Investment Corporation Bill 2018 (Cth) (the “Bill”). This Bill, introduced alongside the National Housing Finance and Investment Corporation (Consequential Amendments and Transitional Provisions) Bill 2018, proposes to establish the National Housing Finance and Investment Corporation (NHFIC), a Commonwealth corporate entity with the goal of improving housing outcomes for Australians.
Mr Sukkar, MP, stated in the second reading speech to the House of Representatives:
“This bill establishes the National Housing Finance and Investment Corporation (the NHFIC), a new independent corporate Commonwealth entity which will improve housing outcomes for Australians, particularly vulnerable Australians who need social and affordable housing.
The finance corporation, which is modelled on successful initiatives in the United Kingdom, will strengthen efforts to increase the supply of housing by encouraging investment in housing, particularly in social and affordable housing. It will contribute to developing the scale, efficiency and effectiveness of the community housing sector and, importantly, will provide loans, grants and investments that complement, leverage and support Commonwealth, state and territory activities relating to housing.
Housing is critical to the social and economic wellbeing of Australians and the economy as a whole. It can impact on employment, education and health outcomes, and it is a significant driver of investment, productivity and economic growth. It's also the main savings vehicle for the majority of Australians.
While housing is primarily a state responsibility, the Commonwealth government nonetheless has an important role to play when it comes to addressing housing affordability and securing better outcomes for Australians, particularly the most vulnerable.”
One of the greatest challenges for people living in Australia is competing in the housing market, particularly in major metropolitan areas. This challenge is the result of the swell in demand for housing which in turn has increased housing prices where supply has not been able to keep up with the needs of the growing population. The response of the Australia Government to this challenge was highlighted in the explanatory memorandum, pp 7-8:
“On 7 January 2016, the Australian Government announced the establishment of an Affordable Housing Working Group (‘the Working Group’) following a request from Treasurers at the CFFR meeting in October 2015 for further work on housing affordability.
The Working Group focused primarily on investigating ways to boost the supply of affordable rental housing through innovative financing models. The Working Group comprised members of the Commonwealth Treasury and Department of Social Services as well as members from the New South Wales, Victorian and Western Australian governments.
The Working Group’s report, Innovative Financing Models to Improve the Supply of Affordable Housing, recommended the establishment of a bond aggregator taskforce to design a proof of concept for a bond aggregator model to provide for greater private and institutional investment in affordable housing. The Treasurers at the CFFR meeting agreed to the recommendations of the report, including the establishment of an expert taskforce to design a proof of concept for an affordable bond aggregator to report their findings to Heads of Treasuries by mid-2017.
In the 2017-18 Budget, the Australian Government announced the establishment of the NHFIC to operate a bond aggregator and the NHIF. The Government released a Consultation Paper on the establishment of the NHFIC in September 2017 and feedback from that process has been incorporated into the Bill.
This Bill gives effect to elements of the Government’s Reducing Pressure on Housing Affordability plan announced at the 2017-2018 Budget to establish the NHFIC. The NHFIC is a new independent corporate Commonwealth entity dedicated to improving housing outcomes, with broad functions to enable it to administer the NHIF and Bond Aggregator.”
As part of the 2017-2018 Budget, a comprehensive housing affordability plan was announced by the Australian Government. This plan includes providing $1 billion through the National Housing Infrastructure Facility (NHIF) which will be put in place with the purpose of financing critical infrastructure to assist in increasing the supply of affordable housing.
The Bill was released as an exposure draft, open for consultation from 12 January 2018 to 22 January 2018, and then introduced into the House of Representatives on 15 February 2018.
The Bill proposes to create the legislative mechanism for formulating the NHFIC (Part 2) and to improve housing outcomes for Australians, by (section 3):
The next stage in the Government’s national housing finance initiative is the development of an Investment Mandate, currently in draft stages with consultations closing on 9 March 2018. The draft investment mandate, to be given effect under the Bill, proposes to provide details of the NHFIC’s activities. As per the consultation page on the Australian Treasury website, key aspects of the Investment Mandate are:
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National Housing Finance and Investment Corporation Bill 2018 and explanatory material available on TimeBase's LawOne service.
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