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FIRST HOME OWNER GRANT BILL
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2 March 2000
Second Reading
BRUMBY
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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.