Mr BAYLEY – I want to go back to debt. Last year’s annual report showed that there was borrowings with TASCORP of a bit over $60 million. The budget papers have got it rising to $230 million and in just a few years it’s going to be a pretty staggering $720 million. That will cost Homes Tas $40 million just to service interest payments when we go out there. You mentioned earlier the Homes Tas borrowing limit of $266 million. Has that been raised?
Mr ELLIS – I suppose the first thing to note is that we’re borrowing for good assets. Everyday Tasmanians would understand –
Mr BAYLEY – Because you’re not funding them?
Mr ELLIS – What are you talking about?
Mr BAYLEY – You could always fund them from consolidated revenue and put more money into –
Mr ELLIS – Or we could unlock a new model that enables us to leverage additional funding above and beyond that, and that’s exactly why we set up the Homes Tasmania model because it enables us to borrow for good debt. I think Tasmanians out there with a mortgage would understand that is a worthwhile investment because real property grows in value over time.
For example, our MyHome program enables us to take an equity stake so that we can unlock a first home-buyer’s dream with only a 2 per cent deposit. That means that we’re able to continue to grow that person’s opportunity, but we’re also able to continue to grow equity in the share we’ve purchased. Unlocking that kind of opportunity is actually a really key part of why we’ve delivered the Homes Tasmania model, where they’re able to borrow. We’ve spoken already about this Budget allocating, or allowing for the borrowings of up to $454 million by 30 June 2028, on top of the $266 million in borrowing. All of those are a good thing because it goes for intergenerational –
Mr BAYLEY – That means the limit has been lifted?
Mr ELLIS – We need to work through like a technical process in terms of lifting those limits with the Treasurer. That is standard administrative thing when it comes to TASCORP. I’ll pass over to the team to give you a bit of a sense of what that administration looks like.
Ms MORGAN-THOMAS – The debt is not secured against the asset. I think that’s a really key point. The debt is secured by a Treasurer’s Guarantee. In order for us to raise additional funds through TASCORP, we need the agreement of the Treasurer. We also need the Treasurer to agree to guarantee it, and then we have a to‑and-fro with TASCORP because TASCORP has to be satisfied with the deal as well. You’ve really got a tripartite arrangement there, including the minister, of making a joint decision.
Mr BAYLEY – So, it’s factored in, it is in the Budget, but it’s not yet agreed with the Treasurer. Is that how it works?
Ms MORGAN-THOMAS – It’s agreed in the budget level but then each time you do a transaction, it’s like a mini mortgage‑type arrangement.
Mr BAYLEY – Everyone else, given your analogy, minister, ultimately seeks to pay down their debt and end up with none. Has Homes Tas got a strategy to pay down the debt? Is that a goal you are seeking to achieve?
Mr ELLIS – We spoke before about those revenue opportunities that come in, whether it’s the sale of land that we borrow to develop, the sale of an affordable home that’s purchased through the MyHome program that then, say, if there’s capital gains that realised through that, that then returns to Homes Tasmania as well. So, there’s a range of different opportunities in terms of bringing more revenue into Homes Tasmania.
Mr BAYLEY – But it’s not reducing the debt, not in the forward Estimates anyway.
Mr ELLIS – Look, the forward Estimates were expected to grow and that’s the thing, when you’re say, newly into the housing market or you’re newly into establishing a statutory authority that has greater powers to borrow. We want to actually unlock the opportunities to build more homes because we recognise acute supply at the moment, so if we’re going to reach our target of 10,000 social and affordable homes by 2032, our state needs to act and that’s important.
CHAIR – Last one and then we’ll go to Ms Johnston.
Mr BAYLEY – The federal debt of $158 million, which was relieved in 2019, was seen as debilitating, that’s why it was relieved, ultimately.
Mr ELLIS – Because it was under the old model.
Mr BAYLEY – Sure. You’re compelled to report, it’s a $15 million saving as I understand it, and the agreement was that you report on how that $15 million is spent in the Budget. I couldn’t see it in the Budget this year. Is there is there a report in this year’s Budget as to how that $15 million is being spent?
Mr ELLIS – I suppose first, importantly, that’s under the old model and part of the reason why we’ve established this new model is to actually unlock some of those borrowings. Now, if people want to retire your debt, if people want to pay for your mortgage for you, then we’ll gratefully receive that, but we also need to ensure that we’re actually building the capability for the organisation to borrow. As for the specifics, I’m not sure if we have something to hand on that, but I am happy to take it on notice.
Ms MORGAN-THOMAS – Thank you. We do know – so the Budget includes 13.6 million to be redirected from the CSHA debt and for that we – that’s earmarked for 20 new social housing and 30 new affordable housing to be completed in 2024‑25.
Mr BAYLEY – Forgive me, is that in the Budget?
Ms MORGAN-THOMAS – It’s in the Budget –
Mr BAYLEY – Could you table an explanation?
Mr ELLIS – Page 131, footnote 3:
The item includes funding made available under the former Commonwealth state housing agreement debt waiver agreement, which will be primarily used in support of capital projects including the Community Housing Growth program.
Mr BAYLEY – Are you able to table specifically what that will be invested in, those projects you just mentioned?
Ms MORGAN-THOMAS – Do you mean the addresses of those –
Mr BAYLEY – The number of units and the type of units.
Ms MORGAN-THOMAS – It’s what I just said, 20 new social housing and 13 new affordable housing.
