President's correspondence

At the April Board meeting, the Board recommended that:

• The REIA seek an extension of the First Home Buyers Boost. (The Boost was announced on 14 October 2009 and was scheduled to cease on 30 June 2009);
• The REIA seek Government to increase the First Home Owners Grant to $14,000 and that it is indexed annually to movements in the Median House Price with the June 2009 quarter as the base period, and;
• When the Boost was to be terminated that this be done on a phased basis to minimise the market disruption.

REIA embarked on a comprehensive campaign which included submissions to Ministers, letters to Members, lobbying of Ministers and Shadow Ministers, liaison with the building lobby and targeted media releases. The campaign was aimed at maintaining the status quo for the extension of the Boost.

During the campaign it became apparent, from Minister's advisors and the building lobby itself, that the building lobby was making a case for extending the Boost to new dwellings only. Had that occurred it would have greatly affected the livelihood of the real estate profession.

This action by the building lobby (HIA) broke a commitment to REIA that they would not distinguish between existing and new dwellings; REIA therefore saw it as necessary to revise its approach to this issue.

I led the charge for REIA with a direct mail campaign that asked members of the real estate profession to put their own point of view and evidence forward to the Government on this issue.

This was followed by a series of media releases which highlighted a case for why the FHOG Boost should be extended for both new and existing homes.

The topics of these releases, included:

• Evidence that first home buyers were actively buying existing homes over new homes at a ratio of 9:1 in Queensland; 7:1 in Tasmania, and; 3:1 in Western Australia.
• Survey results from Mortgage Choice which highlighted that 71 per cent of first home buyers had plans to buy an existing home over a new home and 92 per cent of first home buyers were Generation X and Y; those who specified that they were prepared to pay more for an existing home if it meant living closer to the city, rather than purchasing in a new development.

The evidence presented to Government by REIA and members of the real estate profession, combined with a campaign of hard hitting media releases (which provided factual reasons for why the Boost should be extended for both new and existing homes) led to the Government making an accurate and overall assessment of the property market; extending the Boost for both new and existing homes.

As a direct result of the lobbying efforts of the REIA, a financial benefit was provided to all first home buyers, the livelihood of the real estate industry was preserved and above all, it laid the foundations for further developing the relationship that REIA has built with Government in particular Minister Plibersek

The RBA has subsequently reported that around 70% of first home buyers have purchased established homes since the Boost has been in place.

Another issue with the potential to impact the real estate profession greatly is the Henry Taxation Review.

REIA made an initial submission to the Review in October 2008. The submission discussed the inequity, inefficiency and unstable nature of property taxes and suggested that replacing property taxes with other more efficient taxes would provide economic benefits of the same magnitude as major microeconomic reforms over the last few decades. 

The REIA has more recently had input to the submission of the Business Coalition for Tax Reform (BCTR), of which the REIA is a member.

The submission canvasses three "illustrative portfolios" or scenarios for change based on raising growth, raising competitiveness and maximizing state tax reform. Under the three scenarios the degree to which property taxes are reduced varies.

The Review is expected to hand down its report in December this year.

The press speculation surrounding the handing down of the Henry Review started to gain momentum in August 2009 when The Australian printed an article suggesting that CGT was going to be extended to homes over $2 million as part of the Henry Review.  The Government quickly dismissed this speculation whilst I expressed strong opposing views from the real estate sector with media and television appearances and releases

September 2009 saw CGT revisited as the Australian Housing and Urban Research Institute (AHURI) and Brotherhood of St Laurence released their Tax Expenditures & Housing Report, which made the recommendation for CGT to be imposed on the family home.

Again I was forced to ensure that REIA's position on this issue was very clear and publicly said that governments should not penalise home owners by adding Capital Gains Tax (CGT) or Land Tax to solve the problem of a lack of supply.

Dr Henry himself then decided it was time to set the record straight and clarified irrevocably in The Financial Review that CGT will not be imposed on the family home and we have recently received correspondence from the office of the Treasurer stating, "There has been no request from the Government, to the Henry Review to model such proposals.  We are advised that no such modelling is being carried out by the Review and therefore, no recommendation of this sort will be made to us by the panel."

Another issue that has received considerable media coverage for the real estate profession is the issue of under quoting, particularly in the Victoria and New South Wales property market and in auctions sales

The Chairman of the ACCC has been reported as saying "that the real estate profession has been put on notice" and "if we (ACCC) have a suspicion that there is a problem in relation to a particular auction or in relation to a particular agent, we will be able to issue a substantiation notice; that is, a notice to an agent to say please substantiate your claim that this property was for sale at $550,000 when we may have reason to believe in the fact the reserve price was $600,000".

These comments have been made in the context of the additional powers the ACCC will have with the new consumer laws provided to the Board at the September Board meeting.

It became very clear to REIA from these comments that this issue had the potential to escalate nationally.

At this point in time, the office of The Minister for Small Business indicated to the REIA that he was "very interested in this issue".

At the same time, REIV advised the REIA, on a CONFIDENTIAL basis, that the Victorian Office of Consumer Affairs raided over 100 agencies predominately and inspected approximately 1000 files and but found little evidence of under quoting with approximately 90% of files found to be in order.

I felt it was important for REIA to get on the front foot and develop some appropriate responses before the ACCC and the Minister start focusing attention on the sector nationally.

After consultation with the Board and the President of REIV, we agreed that in the first instance, it would be appropriate to conduct a survey of industry practice in relation to auctions and price quoting.

A questionnaire was subsequently sent to the REIs seeking detailed information, covering, amongst other things, pricing quoting practices by agencies and sale price results.

The results of the survey were expected to provide: a snap shot of the extent of the problem of under quoting - by state and market segment; data for approaching the ACCC and the Minister's office, and; assist in developing options, in consultation with the REIs, for the Board's consideration.

The survey was successful in providing what we were looking to achieve and was able to highlight that:

• The issue of under quoting is not endemic across all markets
• It is related to market conditions and is not a perennial problem
• Except for 'price plus advertising for auctions' price outcomes are at acceptable levels from initial price estimates. The banning by either legislation or industry codes of practice will eliminate this problem area.

REIA was pleased to observe that the industry is not in the state of disarray, as was speculated by some media and consumer outlets.  Although we have not seen the last of this issue, we now have a greater understanding of the issue in our industry and where problems with underquoting are likely to occur across Australia.

Of similar importance to our industry is the establishment of a national consumer law. 

Following an inquiry into Australia's Consumer Policy Framework the Productivity Commission in December 2007 recommended, inter alia, a national approach to consumer laws.

The REIA has been supportive of the Commission's recommendation for a national approach to the modernisation of consumer laws and their policy framework and has favoured the progressive establishment of consistent nationwide laws and strong national regulators to deal with consumer and business issues.

The Commonwealth Treasury released a further Discussion Paper in February 2009 "An Australian Consumer Law - Fair Markets, Confident Consumers" and a Consultation Paper "The Australian Consumer Law - Consultation on draft provisions on unfair contract terms" in May 2009.

Identifying some concerns with the Discussion Paper regarding cooling-off periods, REIA requested that the differences between real estate transactions and other commercial arrangements be considered and that they be recognised in the new legislation in the same way that current state legislation recognises these differences by making special provisions for residential agency agreements.

In responding to the Consultation Paper, the REIA indicated that reform of consumer law should be subject to a full and comprehensive analysis as well as a Regulatory Impact Statement prior to any new legislation being adopted.

The Trade Practices Amendment (Australian Consumer Law) Bill 2009 was introduced in the Parliament on 24 June and referred to the Senate Standing Committee on Economics the following day. The Committee is due to report on the Bill by 7 September.

The Bill is the first of two tranches focused on consumer protection. The first targets unfair contracts, in particular terms that cause a significant imbalance in the parties' rights and obligations. If passed, the Bill will also introduce new remedies and powers to the Trade Practices Act 1974 for consumer protection.

 The ACCC has undertaken to review the REIA's existing guidelines against the new legislation as that legislation develops.  The guidelines were developed in consultation with ACCC regarding compliance with the TPA.

Once the Bill is settled the ACCC will provide further guidance on the guidelines with the objective of ensuring that if an agent continues to follow the guidelines they should have nothing to fear from the new legislation.

It is of great importance to maintain our relationship with the ACCC and be able to work with them on issues of this nature.  Also of great importance to our industry is the implementation of a National Award.

At the June 2009 Board meeting it was resolved that if the independent legal advice does not identify any material issues from both an employer and employee perspective, REIA join the Real Estate Employers' Combined Consultative Group, as a joint signatory to the Submission to the Australian Industrial Relations Commission Award Modernisation Process for the Real Estate Industry.

As part of The Real Estate Employers Combined Consultative Group (REECCG), REIA has had considerable involvement in drafting the Award; which was lodged on 10 August 2009.

The exposure Draft was posted on the AIRC website on the 24^th of September and the outcome of Federal Award will be handed down on Friday 4 December 2009.

Of equal importance to our industry, is the establishment of a national licensing system. As part of its broader agenda for regulatory reform, COAG agreed to the development of a National Licensing System to remove overlapping and inconsistent regulation between jurisdictions in the way that they license occupational occupations.

The REIA has supported a national licence for real estate. In a Submission to COAG in October 2008 the REIA (with input from VIC, ACT and QLD) emphasised the need for REIA representation on the national licensing body through a proposed Advisory Committee to provide industry specific input to the National Licensing Board.

An Intergovernmental Agreement was signed at the December 2008 COAG meeting for a National Licensing System (NLS) to cover seven occupational groups including property agents. This allows the development of the NLS to progress.

The Agreement adopted the concept of Interim Advisory Committees which were part of the model that was proposed by the REIA. The role of the Advisory Committees is to provide advice to the national licensing body regarding the development, maintenance and performance of licensing policy.

Through REIA's hard work and lobbying efforts of the COAG Taskforce and the other organisations, invited to nominate for the IAC, has placed REIA in a position where it has gone from being invited to nominate for one position to being able to nominate three people.

All three REIA nominations have now been approved by the Ministerial committee; these people are: Mr Dan Molloy, CEO of REIQ, Mr Jock Kreitals, Manager Policy of REIA, and Ms Sarah Gray of REIV.

The first meeting of the Taskforce has now been held; it is planned that the NLS will commence on 1 July 2012 for the first tranche of occupations which includes property agents.

As dates and deadlines for all of the very important issues that I have mentioned above have arrived and passed, the speed at which the end of the year approaches is gaining momentum.  The past few months have been action packed with some very important events.

In September, I travelled to Hobart for the 2009 Australasian REI Auctioneering Championships where we witnessed some wonderful talent coming up through the ranks. 

Although the Australian competitors were in great form, Phil McGoldrick from New Zealand had just what was needed to be crowned auctioneering champion for 2009.

Meeting with our colleagues from New Zealand was also a highlight of this trip and once again reinforced the relationship between our nations and our ability to work together, share ideas and be influential in developing and raising awareness of our profession and important events such as the 2009 Australasian REI Auctioneering Championships.

More recently I have returned from the NAR convention in San Diego where I was in good company with 60 other Australians led by my fellow directors Mark Sanderson, Pam Bennett, Stan Platis and Rob Druitt as well as Qld CEO Dan Molloy. This was truly a great chance to see a near perfect real estate industry model working. NAR with its 1.25 million members is the world's largest industry representative body and an exciting model that we could do well to look at and use some of the examples it provides for national industry representation in Australia.

At the conference, which attracted over 9000 delegates this year, Australia had the second largest delegation, with 68 visitors, behind Canada (with 600).

The trip was important for putting REIA on real estate's 'world stage' and creating a strong presence at the event.  In short, Australia's industry seems somewhat tiny compared to the monstrous real estate profession in America, however, raising the profile in this international forum is of great importance to our cause.

Raising the profile of the REIA at home, particularly in the Government and media arenas has been one of my key missions in taking over the role as President.

I participated in all three Home Buyer Shows in Brisbane, Melbourne and Sydney as part of an expert panel designed to provide expert advice to those looking to buy a home in the current market. 

As well as being the panel facilitator, I worked closely with the Minister for Housing; The Honourable Tanya Plibersek on joint media interviews to further drive home the issues of key importance relevant to the time when each show was held.

I have developed an ongoing relationship with The Minister in my first nine months as President which has proved to be invaluable; Ms Plibersek joined us on short notice at the REI Australasian

Auctioneering Championships after I made a phone call, inviting her to speak, after being informed the Minister was in Hobart on another assignment.

The Minister has made herself very available for the REIA and I respect and value the relationship that we have developed.

Time and space do not allow me to detail all the issues  that I have been involved in over the past eight months in this brief report, however, some of the other issues that have been of great importance include:

• Paid Parental Leave
• Foreign Investment
• Interest rates
• Component pricing
• Privacy Act
• Money Laundering
• Housing Affordability

The strength of our industry and our ability to further develop a profile for the real estate profession will only be realised through strong strategic direction and teamwork.

I look forward to leading the REIA into 2010 and tackling the hard issues that are on the agenda for next year which include:

• National Data Collection
• First Home Owners Grant
• Industry Awards
• National Property Taxation Framework
• Sustainability
• Energy Efficiency Ratings
• National Licensing and Education
• Built Environment
• Digital technology and Greenfields development
• Standard contracts

Whilst the role of President is extremely busy and time consuming I must say that I have enjoyed the opportunity to represent REIA as President. I am extremely grateful to my fellow directors, firstly for the confidence they showed in electing me and again for re-electing me, but more so for their ongoing support.  The results we have achieved for REIA are a direct reflection of teamwork, communication and engagement, notwithstanding some fairly serious distractions for management and the board over this past year.

I also extend my thanks to all state and territory Real Estate Institute President's and CEO's for their advice and support as well  I must add special thanks to Chris McGregor my deputy and chair of the finance committee and to my REIV colleague Neil Laws for his contribution on many issues. I am sorry to bid you farewell Neil and I look forward to catching up with you from time to time at REIV. I must add a congratulatory note to Adrian Jones who will join the board as representative director of REIV. His experience and wisdom will benefit REIA. Having singled out some people it goes without saying that all directors have assisted and contributed to every matter we faced.

Let me also add my thanks to Neil Fisher and the REIA management team Jock, Rhiannon, Elena, Johann and Frances for their untiring efforts and for listening, counselling and advising me on the do's and don'ts of my role. As Neil often tells me, his job is to make me look good and that takes a big effort. Thanks to you guys!

In closing whilst I believe that the REIA can be proud of our achievements we still face challenges and opportunities at state and national levels with governments of all persuasions continuing to over regulate whilst ignoring important issues. The REIA as your peak body will continue to champion the rights of private property owners whilst serving the best interests of its state and territory Institute members.

Yours sincerely

David Airey

REIA President 2009