It seems the Coalition really want a Double Dissolution over home ownership intransigence !
As I write this, there is a Senate debate on one of the government’s housing schemes, of which there are several, all designed to increase the supply of housing at affordable levels across the country. This one is known as the ‘Help to Buy’ scheme designed to help those who want to enter the housing market but are having trouble raising the required deposit.
Under this scheme you can buy a house, unit or townhouse by contributing a minimum 2% deposit, with the government providing an equity contribution of up to 40% for new homes, or 30% for existing homes.
The remainder of the property’s value would be financed through a conventional home loan through a bank or building society. There is no interest on the government’s shared equity and no repayments, the government will only recoup its initial investment – plus a share of any capital gains if the property has increased in value – when it is sold or changes hands. In other respects the government’s shared equity is not repayable but you always have the option of buying back the government’s equity at any time. Schemes such as this have operated successfully in parts of Europe and the UK
Suppose, for instance, you are buying a home worth $600,000 (the scheme has various value limitations depending on where you are), you put up 2% or $12,000 as a deposit, the government puts up 30% or $180,000 and your home loan would then only need to cover the remaining 68% of your property’s value, or in this case $408,000.
This ‘Help to Buy’ Scheme is expected to commence sometime in 2024 if it passes the Senate. There are up to 10,000 places for this financial year, with a total of 40,000 spots allocated over the next four years. The Help to Buy scheme will require legislation in all states and territories so the roll out timetable and specific scheme rules may vary depending where you are in the country.
By the end of the day we will know whether the Senate are inclined to pass this modest piece of legislation – the Liberal National coalition have already said that they would block passage of the Bill before they even saw it but that’s their MO, isn’t it ? The government need the Greens and the cross bench senators to get this legislation through but ‘Mad Max’ Chandler-Mather – the Greens spokesperson – has other ideas and he is demanding that the government legislate a rent freeze and a cap on rent increases and that Negative Gearing and the Associated capital gains tax concessions be eliminated.
Personally, I can’t see the government coming at a rent freeze as, inevitably, this will act as a disincentive for investors to put money into the housing market and, for good or ill, over eighty per cent of our rental housing stock is owned by private investors.
The question of reining in Negative Gearing is an interesting gambit by the Greens as it was until recently a Labor policy only to allow negative gearing concessions on new-builds rather than on existing homes where much of the churning has been occurring. So, there may be room for a compromise here.
For there to be no compromise on this issue would be a failure in our system of governance and progressive legislation but then, maybe that’s what the opposition forces want to see, after all this legislation was originally passed by the lower House in February and has been languishing in the Senate since.
OK, this policy is not a panacea for home ownership in Australia but is it worth dying in a ditch to oppose it as the coalition and Greens seem to want to do ?
We shall see !
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10 comments
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Bert
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Andrew Smith
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Terry Mills
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leefe
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Terry Mills
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Pete
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Terry Mills
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leefe
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Terry Mills
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Terry Mills
Return to home pageLooks a lot like the born to rule attitude of the liberal of the 1970’s.
Good government needs good opposition which works to improve legislation, but this mob oppose because they have no policies, no ideas.
Agents of chaos, whatever it takes….
Well, progress of this legislation was, as anticipated, blocked by the Liberals/Nationals/One Nation and the Greens. Oddly, the coalition would prefer Superannuation to be opened up for use as home loan deposits and the Greens just want to fight the whole issue of home affordability at the next election rather than address it now.
I am told that a DD is most unlikely in this term due to the timing, the federal election in 2025, summer holidays, footy carnivals etc.
A rent freeze will not reduce the existing supply of rental homes; it may reduce the turnover by speculators. I see no reason why reasonable rent controls – which exist even in many parts of USAnia – can not be imposed here.
leefe what I was trying to say was that rental freezes/caps will influence investors to steer away from investing in houses to rent. They will look for other investments opportunities where they are not subject to government control on their investment returns.
Most economists agree that the best way to reduce rents is to increase supply of rental properties and allow market forces to correct the current imbalance (i.e. lack of supply).
It’s a contest, which party has the more hair-brain schemes?
When govt puts up 30% of the cost of a home it does so by going into more national debt.
Question is, do they have any intention of ever repaying?
The whole get rich scheme that is the Oz housing ponzi is about to get a makeover according to independent researcher Kate Mason in her substack “Energy ratings for existing homes” –
https://kate739.substack.com/p/threats-to-private-home-ownership
“As part of the government’s Net Zero obligations existing houses will need to be upgraded. Currently, new homes need to have a 7/10 star energy rating. Through the changes being implemented, existing homes will need to be upgraded to a 5/10 star rating. The majority of Australian homes are estimated to be at a 1.6/10 energy rating.”
Then there is the scam called ‘managed retreat’, forced sales of properties the govt claims is subject to possible climate disaster. There might be a big bushfire in the next 100 years, therefore you have to move, your whole rural town/suburb has to move. You can stay but you will be uninsurable, so, get moving you ‘free man and free woman’. We your bossman.
Private home ownership will continue to exist for some but I can see ownership dropping to 10 percent of the population over the next 2 decades, mainly due to costs associated with inflation (rates, insurance) and moreso green upgrades.
Australia, the great democratic experiment, the country where freedom went walkabout because the complacent settlers fell asleep.
Quite incredibly (to me at least) the coalition and the Greens yesterday voted against having a vote on the legislation – a vote not to have a vote.
So, the Greens have once again managed to stall the government’s housing agenda and will move for a two-month delay to a Senate vote on the Help to Buy bill.
It seems fairly obvious that the Greens want to take housing to the next election and in the meantime don’t want to pass any legislation that could take the wind out of their sails. So the prospect of ten thousand (ultimately forty thousand) first home buyers will have to wait for the opportunity of entering this shared equity scheme.
Terrence: A shitload of economists also think that “trickle down” and neoliberal fiscal policies actualy work.
The Senate sat for four days this week and failed to pass any of the government’s legislative program – the coalition are delighted with this outcome !
Housing is no longer a priority for the coalition or the Greens, they voted not to have a vote on the ‘Help to Buy’ Bill.
The Senate will next sit on the 18 November but that doesn’t mean that the intransigence will stop.
The Senate has now concluded its sitting and won’t sit again until 18 November. The Greens managed to block a vote on this Housing shared equity scheme : the Greens say that this scheme would only initially assist 40,000 Australian families into their first homes so it’s “small beer” and doesn’t really matter so it’s better to do nothing. The greens now say that in the next two months they will seek to “negotiate” with the government which seems to be saying it’s their way or nothing.
The coalition are delighted that the government’s legislative program has been disrupted , at least for the time being.
We get the politicians that we deserve !