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One group overlooked in Labor’s budget

Written by on May 14, 2024

Labor has poured billions of new dollars into the housing sector, but first home buyers hoping for a leg up into the market have been let down and are walking away as one of the biggest losers in the budget.

Treasurer Jim Chalmers on Tuesday said the government was “turbocharging the construction of new homes across the country”, which would in turn create more affordable housing.

But, would-be first home buyers already struggling against rapidly rising housing affordability haven’t been given any earmarked funding to help them.

Housing spokesman for the Greens, Max Chandler-Mather, said it added insult to injury to see tax breaks given to investors while first homebuyers were left in the cold.

“Millions of renters and first home buyers are living in housing hell, giving up on ever being able to buy a home, and Labor has offered them nothing,” he told NCA NewsWire.

“Not only is there nothing in the budget for first home buyers, but it will see $175 billion dished out in tax handouts to property investors over the next four years.”

Mr Chandler-Mather said continuing with measures like negative gearing and the capital gains discount “put money in the pockets of property investors who go to auctions and bid up the price of housing, screwing over renters and first home buyers.

“The two best things Labor could have done for first home buyers is freeze rents to make it easier to save for a deposit, and phase out the massive tax handouts for property investors that are denying millions of renters the chance to buy a home.”

But experts say there’s probably a reason why Dr Chalmers explicitly neglected first home buyers.

Professional Lionel Frost from Monash University said in the past, initiatives such as first home buyer grants had tended to “increase demand for housing” which he noted could drive up house prices further.

“The biggest issue regarding housing is rising interest rates, and the challenge to get that down is dependent on inflation being reduced,” he said.

“My sense is the government is trying to ease cost-of-living pressures in a direct way.

“I suspect he is being very careful to not put upward pressure on interest rates and inflation.”

The budget more broadly contains $6.2bn in new investment for housing supply, as part of the government’s “Homes for Australia Plan” to build 1.2m new well-located homes over the coming five years.

One billion dollars will be given to states and territories to build the roads and infrastructure needed to build new homes.

Dr Chalmers said the new money would clear infrastructure bottlenecks and bolster supply, which in turn would mean “more affordable homes”.

“And a better deal for buyers, builders and renters alike,” he said.

“This budget includes another $1bn to help states and territories build more housing sooner.”

An additional $1.9bn will be spent on increasing the Commonwealth Rent Assistance, while another $1.9bn will be given to community housing providers and other charities to help build 40,000 social and affordable homes.

The government has also announced it would train more tradies to “build the homes Australia needs” with 20,000 fee-free TAFE and pre-apprenticeship places for places in the housing and construction industry.

Housing Minister Julie Collins said the newest suite of housing measures would “build more homes more quickly”.

“We know that building homes is hard work, it won’t happen overnight,” she said.

“But increasing supply is the best and most lasting fix to Australia’s housing shortage.”

The budget also assumes the first $500m cut of the $10bn Housing Australia Future Fund would be delivered in 2024-25.

The Greens say they are disappointed Labor was more focused on delivering a $9.3bn budget surplus this financial year instead of spending money needed to better support renters and mortgage holders.

They criticised the paltry rent assistance and said the surplus would have been better spent on funding a rent freeze.

“An extra $1.30 a day for a quarter of renters will do nothing when average rents are set to go up by $46 a week. Labor’s budget allows unlimited rent rises and refuses to put in place a rent freeze,” Greens leader Adam Bandt said.

“In the worst housing and rental crisis in generations, there’s no funding for a rent freeze and no big public housing build, but there’s $174.5b in tax handouts for the wealthy and property investors.