Hansard debates

                          FIRST HOME OWNER GRANT BILL
                                 Second reading

  Mr BRUMBY (Minister for Finance) -- I move:
That this bill be now read a second time.
The purpose of this bill is to assist first home owners by providing them with a
grant of $7000 where they enter into a contract to purchase or build their first
home on or after 1 July this year.

As part  of the Intergovernmental Agreement on the Reform  of Commonwealth-State
Financial Relations, the  states  and territories  agreed  to assist first  home
buyers,  through the funding  and administration of  a  new, uniform first  home
owner  grant to  offset the  impact of  the  GST on  home purchases.  The scheme
provides significant benefits to first  home buyers and aims to ensure that home
affordability for  this  group is maintained  at existing levels.  The framework
principles on which the scheme is based were set out  in  the  intergovernmental
agreement.  The  government is committed  to honouring this  agreement to ensure
full receipt of the GST revenue.
Each state and territory will implement separate, but consistent, legislation to
give effect to the scheme.  Eligibility criteria for the grant have been jointly
developed  by  all jurisdictions in  line with the  principles  contained in the
intergovernmental agreement,  including  the fact that eligibility for the grant
will not be subject to any form of means test.

In  Victoria  the scheme will be administered by the State Revenue Office (SRO),
which also administers a means-tested stamp  duty benefits exemption  scheme for
pensioners  and low-income earners with dependents.  Under the intergovernmental
agreement states  and territories agreed  that they would not  introduce or vary
any taxes or  charges  associated with  home  purchases  with the  intention  of
reducing the benefits for grant recipients. Accordingly, the current scheme will
continue to operate in conjunction  with  the first home owner grant. To improve
service to applicants, the SRO proposes to enter into  agreements with financial
institutions to assist in the administration of the scheme.
The Victorian government expects to provide substantial grant assistance through
the scheme. In  the first year an estimated  $193 million will be  paid to first
home owners.
This bill therefore establishes the first home owner grant scheme.

It details the  entitlement and eligibility  criteria,  the process  for  making
applications  and payment of the grant, objection and appeals provisions and the
administration and other provisions necessary for the effective operation of the
scheme.
The scheme will provide a once-only grant of $7000 to eligible persons buying or
constructing their first home in  Victoria. Applicants will be  eligible if they
have purchased a home, where the contract to purchase or  build has been entered
into  on  or  after  1 July  2000  or,  in the  case  of  owner  builders, where
construction commences on or after 1 July 2000.
I now turn to the specifics of the bill.
Clause 4 provides that the home must  be a fixed dwelling which can be used as a
place of residence.

The home may be a house, home unit, flat  or other type of self-contained  fixed
dwelling that meets local planning standards.
To qualify  for the  grant, an  applicant must have title -- or other acceptable
security  of tenure  -- to  the land  on which  the dwelling  is  situated.  The
applicant will, therefore, be required to have a relevant  interest  in the land
on  which  the dwelling  is  located.  Clause 5  contains  details of acceptable
relevant interests.

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Clauses 8 to 12 set out the applicant eligibility criteria as follows:
        The applicant must be a natural  person. The grant will not be available
        to home purchases by trusts or companies;
        the applicant must be  an Australian citizen  or permanent resident. The
        exception will be that  where there are joint  applicants, at least  one
        must fulfil this criterion;
        the  applicant -- or the  applicant's spouse -- must not have previously
        received a grant under this scheme;
        the applicant or the applicant's spouse must not have  previously held a
        relevant interest in residential property prior to 1 July 2000.

        This  includes  ownership  of  an  investment  property, even though the
        applicant may not have lived in the property; and
        generally the applicant must occupy the home within 12  months. The bill
        provides  limited exemption from  this criterion where  not  all of  the
        joint applicants  are able to  fulfil  the residence criterion,  and for
        extenuating circumstances.
Clause 13  of the bill  details what constitutes an  eligible transaction, which
determines both  the point  at which  an applicant is eligible to apply for  the
grant and the point of eligibility for payment. The commencement and  completion
dates of eligible transactions cover the period between the date of contract for
the  purchase of  a home,  or  commencement  of  building  work  in the  case of
owner-builders, and the date  of  possession  in  the case of existing homes, or
occupation in the case of newly constructed homes.

This  clause also removes eligibility if a purchaser unfairly attempts to obtain
the grant  by  entering into an option  to  purchase a home and  moves  into the
residence under a lease or right of occupation prior to the commencement of this
legislation.
Clause 14  provides  that  an  application  for  a  grant  must be  made to  the
Commissioner  of  State  Revenue. The application may only be made in the period
between  the commencement date  of the relevant  transaction  and twelve  months
after its  completion.  The commissioner  will  have discretion to  extend  this
period in extenuating circumstances.
Clause 15 requires that all persons  who will  have a  relevant interest  in the
home must be applicants. Clause 16 allows  a  guardian  to  make  application on
behalf of a person under a legal disability.

Clause  18 provides that the full $7000 assistance grant will be paid  where the
consideration paid for the home is $7000 or greater. Where the consideration for
a property purchased or constructed  is  less  than $7000, the applicant will be
entitled to a grant equal to the value of the consideration.
Clause 19  provides for  payment  of the  grant to  the applicant,  or at  their
direction, to a third party. The grant will be paid at the time of settlement or
after  the completion of the eligible transaction. The applicant may request the
commissioner to offset part or all of the amount of the grant towards stamp duty
associated with the purchase of the property.
Payment of the grant will be made on the basis of the first home owner occupying
the home within 12  months.  Where  this  does  not subsequently occur, the bill
provides for repayment of the grant.

Clauses 26 to 34 of the bill  detail the objections and appeal processes and the
obligations  on  the  applicant, the commissioner and the reviewing authorities.
These provisions  are similar to  those contained in the Taxation Administration
Act 1997 relating to taxpayer objections and appeals.
Part 3 of the bill provides the authority for the commissioner to administer the
act and to  delegate  his  functions  or  powers to revenue officials. Clause 38
provides  that  the  commissioner  may  enter  into  agreements  with  financial
institutions  or other persons  in  carrying out  administrative  aspects of the
grant.  This  would  streamline  the administration  of  the scheme  and  assist
applicants by offering convenient outlets to access the grant.
The administration agreement between the commissioner and financial institutions
will detail  the conditions with  which  financial institutions  must  comply in
undertaking their responsibilities.

Negotiations are currently  under way with financial institutions in relation to
their involvement in the administration of the scheme.
Clause 50 contains  privacy  provisions  to ensure that confidential information
relating to the  administration  of the  act  is not disclosed  to  unauthorised
persons.
With  that  background and as  part  of the  Intergovernmental  Agreement on the
Reform of  Commonwealth-State Financial Relations,  as  agreed to by  the former
government, I commend the bill to the house.
Debate adjourned on motion of Ms ASHER (Brighton).
Debate adjourned until Thursday, 16 March.