National Housing Finance and Investment Corporation Amendment Bill 2019 [2019] AUSStaCSBSD 96 (18 September 2019)

• National Housing Finance and Investment Corporation Amendment Bill 2019
• Significant matters in non-disallowable delegated legislation 31

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National Housing Finance and Investment Corporation Amendment Bill 2019

Purpose	This bill seeks to amend the National Housing Finance and Investment Corporation Act 2018 to establish the framework for the First Home Loan Deposit Scheme to assist eligible first home buyers to access the housing market
Portfolio	Treasury
Introduced	House of Representatives on 12 September 2019

Significant matters in non-disallowable delegated legislation ^[31]

1.44 This bill seeks to amend the National Housing Finance and Investment Corporation Act 2018 (the NHFIC Act) to establish the framework for a new First Home Loan Deposit Scheme. It does this by expanding the NHFIC's functions to enable it to 'issue guarantees to improve housing outcomes'.^[32] Under the proposed Scheme the NHFIC would provide guarantees to lenders for eligible first home buyers.

1.45 The explanatory memorandum states that the government 'will provide further direction to the NHFIC about the operation of the First Home Loan Deposit Scheme in amendments to the Investment Mandate'.^[33] The government would be empowered to make the further direction as a result of the amendments to section 13 of the NHFIC Act proposed by items 7 to 9 of Schedule 1 to the bill. These items expand the existing matters that may be covered by the Investment Mandate to include 'decision-making criteria for issuing guarantees'. The committee notes that directions constituting the Investment Mandate are not subject to disallowance, and that there is no further detail on the face of the bill as to how the new First Home Loan Deposit Scheme is to operate.

1.46 The explanatory memorandum and the minister's second reading speech set out details of the proposed Scheme that will be provided for in the Investment Mandate. These details include:

• that the guarantees provided by the NHFIC on eligible loans will be equal to the difference between the deposit (of at least 5 per cent) and 20 per cent of the property purchase price;

• an annual cap of 10,000 guarantees issued;

• eligibility requirements for applicants, including that the applicant must:

- be a first home buyer,

- be an Australian citizen purchasing property in Australia, and

- satisfy an income test (taxable incomes up to $125,000 per annum for singles and up to $200,000 per annum for couples in the previous year); and

• eligibility requirements for loans, where a loan is eligible if:

- the residential property will be owner-occupied; and

- the purchase price of the property is less than the price cap that applies in the area where the property is located (these regional price caps will be set with a view to ensuring equitable access to the Scheme across Australia).^[34]

1.47 The committee's view is that significant matters, such as the core details of a proposed home loan guarantee scheme, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. The committee is particularly concerned that all of these details of the proposed First Home Loan Deposit Scheme are being left to non-disallowable delegated legislation and will therefore not be subject to effective parliamentary oversight.

1.48 The committee expects that any exemption of delegated legislation from the usual disallowance process should be fully justified in the explanatory memorandum. In this instance, the explanatory memorandum states that the approach taken in the bill 'is consistent with that which applies to the NHFIC’s existing functions and provides flexibility to adjust the First Home Loan Deposit Scheme as market conditions change'.^[35] The committee's consistent view is that the need for flexibility alone, and the fact that a certain approach continues current arrangements, does not, of itself, provide an adequate justification for delegated legislation not being subject to the usual parliamentary disallowance process.

1.49 The committee's view is that significant matters, such as the core elements of the proposed First Home Loan Deposit Scheme, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. In this instance, the committee's scrutiny concerns are heightened by the fact the delegated legislation setting out the core elements of the proposed Scheme will not be subject to the usual parliamentary disallowance process. The committee therefore requests the Assistant Treasurer's detailed advice as to:

• why it is considered necessary and appropriate to leave nearly all of the elements of the proposed First Home Loan Deposit Scheme to non-disallowable delegated legislation; and

• whether it would be appropriate for the bill to be amended to set out at least the core elements of the proposed new First Home Loan Deposit Scheme on the face of the primary legislation, or to at least to provide that directions given to the NHFIC relying on the new matters inserted by items 7 to 9 of Schedule 1 to the bill be subject to the usual parliamentary disallowance process.

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[31] Schedule 1, items 7–9, proposed subparagraph 13(b)(iia), proposed paragraphs 13(c) and (d). The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv).

[32] Schedule 1, item 4, proposed paragraph 8(1)(ca).

[33] Explanatory memorandum, p. 8.

[34] Explanatory memorandum, pp 8–9; The Hon. Michael Sukkar MP, Assistant Treasurer and Minister for Housing, House of Representatives Hansard, 12 September 2019, pp 6–7.

[35] Explanatory memorandum, p. 8.