Senate Economics Legislation Committee [Part 2], , 4:25:35 to 4:36:34
Debate over the performance of the 5% deposit scheme, addressing RBA simulations of negative equity, the eligibility of permanent residents, and income levels of participants.
Topics: Government spending, Infrastructure
Speakers: Dr Nerida Hunter, Senator Andrew Bragg, Ben Rimmer, Senator Tim Ayres, Unknown Speaker, Senator Lisa Darmanin
relation to this SMSF ban?
>> Senator, the uh the management of the SMSF ban was uh in a different part of Treasury. It was in the revenue group. Uh a housing group was um peripherally involved in that.
>> That's fine. Um how many so how many guarantees have been issued in the last year? Is it about 100,000?
Uh, we can get that. I
>> think that's a housing Australia >> So, the Reserve Bank today, while you're doing that, I'll just give you some context. The Reserve Bank today suggested there'd be about 5,000 Australians in negative equity um in this scheme, likely in this scheme. Um, how does that accord with your figures? How many people do you think are in
>> Senator, I'm not sure I would characterize the Reserve Bank as having given the evidence that you've just >> I have I have the transcript in front of you.
>> We have to check it. You have to we have to check the hands out then.
>> Yeah. I mean, you did discuss the number of 5,000 with them, but I'm not sure that they said that the number was 5,000.
In fact, they said that the figure comes from a simulation, not from a real sample of 5% deposit scheme participants. >> What they said,
>> they said it was quite a reasonable assessment.
>> They said that it was from a simulation.
>> Yeah,
>> it's an incredibly robust program.
>> So, how many negative equity?
Senator, there there will be a a number of uh 5% deposit scheme guarantees that have loan to valuation ratios greater than 100%. Um uh I think the Reserve Bank said in the financial stability report that in the market as a whole the figure is about 1%. >> Um uh clearly uh if you start at 95 uh% you are um at higher risk of being in
that situation. So how many you know
>> uh Senator the I think it is important just to go back a step a large number of 5% deposit scheme guarantees actually start at lower than 90% loan to valuation ratios. So they're uh they're in a better position. Uh it's also the case that um 5% deposit scam mortgages reduce in their um LTV quite quickly. Uh so when you take all of those things into account and you look at the 99.7% uh kind of up in front of uh expected loan performance kind of outcome uh it's the scheme is performing very well.
>> So how many you you know >> how many well I mean well Senator Bragg I'll answer the question. You know that you know that you're asking a question that by definition >> can cannot be answered. But we do know >> what we do know. Well, because you would have to value every sing you you would have to you would have to running an insurance company. >> I know you don't want to hear this. You would have to value correctly every single person's home, which you can only do by selling it. >> Which you can only do by selling it. Like it's an it's utter garbage. uh the the the proposition that you are trying to have a look at the fatality data >> 0.01% >> of these claims have ever been paid out. Now I know that you disrespect young Australians who take 5% and get the support of the government to buy >> we introduced this game actually much rather you'd much rather uh that people were forced to do it with the with the old bank of mom and dad which which most people don't have access to. uh you don't like it's the kind of it's the kind of snobbery that characterizes it's the kind of snobbery that characterizes your position speeches. It is an argument that cannot be made out. >> Uh all of the evidence shows that that people who who take the 5% deposit like
asking that
>> and and there is very strong evidence to
show this. Well, let me ask you then. Who >> who who started this scheme then?
>> Well, well, this scheme's been expanded by this government.
>> Who started it?
>> Well, like many things, there's a there's a residue of the scheme that's come through from previous government. We've expanded it and made it much bigger. >> Much bigger.
>> We've got very limited time. If we waste
>> of time,
>> narrow our questions to the the ones we really need. I'm going to need to go back to Senator McGrath.
>> Yeah. Three. They don't I don't I think I'm just going to finish my line. So I don't think they don't think they know the answer.
>> You got the answer. You just don't like it.
>> Well, is the answer.
>> Senator, we've given the evidence we've given there. There's only been 15 guarantees called in in the operation of the scheme. Uh so you know the scheme is performing very well.
>> So how many of how many of these guarantees have gone to uh nonitizens in
I think in in the sorry Dr. Nera Hunter first assistant secretary uh housing access and delivery division >> are we able to provide you with different time frames in the last year? Um so I can provide you with share of guarantees issued by residency status as of 31 August 2026. >> so we have um well so since permanent residents became eligible in the scheme that might be the more relevant uh measure. So that was on 1 July 2023. So 73% of guarantees that's 108,832.
>> Yep. Since October last year.
>> No that's since 1 July 2023. >> Okay. So this is when permanent residents entered became eligible for the scheme.
>> So h how many 106,000 since 23?
>> Yep. No. 108,832 of guarantees have been issued to Australian citizens. 7% which is 9,712 of guarantees have been issued to an Australian citizen purchasing jointly with a permanent resident. >> Yeah. and 20% which is 30,517 of guarantees had been issued to permanent residents.
>> Permanent res. Okay. Since 23
>> since 1 July 2023.
>> Okay. Um do you have any data on the scheme post 1 October when the government abolished the means testing?
>> Yes.
>> 1 October um 20 25. Just checking last time you gave evidence I think you said there it was 50,000 permanent residents uh had accessed the scheme you're saying it's now 30,000 has that been revised
>> so I was talking about the number of guarantees since 1 July 2023 >> so I have data as uh a share of guarantee I have guarantee data
>> yeah so it was 53,000 last 51,000 last time people you don't have the people data this time is that what you say
>> I have the guarantees which I think like our view is that it is the most kind of accurate representation of the scheme people apply for a guarantee they can do it singly or they can do it joint at the household level um and so we do refer mostly to um the number of guarantees that are issued
>> I think on your own website you talk okay but anyway let's just the interest of time, you're saying 30,000 guarantees since 2023.
>> I'm saying that 20% of all guarantees >> since 1 July 2023, which is the date when permanent residents became eligible. >> Have been issued to permanent residents. >> There was a further >> Okay. 7% which was 9,712 guarantees that have been issued to an Australian citizen who have purchased jointly with a permanent resident.
>> That that makes sense. >> Two minutes to brag. >> Okay. Right. Um what about do you have information since 1 October 2025 after the means testing was abolished?
Do you have a particular data set that
you >> So what about people earning more than $200,000? >> Uh or maybe I should ask it in your way. how many guarantees have been issued to people or couples earning more than 200
>> I can take you through some of that data. >> Thanks. So the first um the total number of guarantees since 1 October 2025 when the scheme expanded uh is 59,953. So that's the total.
>> Yeah.
>> The majority of those guarantees are issued to people with income of less than 200,000. Um and this includes single households and joint borrowers. um guarantees or around 2% of single borrowers have had an income above 250,000.
>> Yeah.
>> Um and I note that this is income that is servicing debt um solely that is without a secondary income. >> There are 36,238 guarantees for joint borrowers since expansion. So the majority of guarantees are joint borrowers. >> Yeah. of these 3,492 have a household income above 250,000. So I do note that for these households there are two incomes that are contributing to that income level.
>> What about have any gone to more than um 400,000 a year?
>> I don't have that data with me.
>> Okay. So you break above and below
200,000 is it? My uh my highest income band is above 250,000.
>> 250,000. Okay. So you you don't know anything above that.
>> So that data would be held by Housing Australia. So we could take that question on notice.
>> So can you provide on on notice um it in bands up to I guess a million dollars I suppose in bands of 200,000.
>> We can take that on notice.
>> Okay. You got I'm going to have to rotate the call after this question, Senator Brad, because your colleague has just five minutes worth to think.
>> He does. Who has questions?