Labor’s finance minister Katy Gallagher demanded the Greens back its very limited “Help to Buy” scheme on September 17, accusing them of “playing tricks” and “working with Mr Dutton”.
Greens housing spokesperson Max Chandler-Mather said “it is desperately cruel of Labor to pretend [this bill] will help”.
Labor has budgeted $5 billion, over forward estimates, for a scheme which only aims to provide housing for 10,000 eligible people a year, for four years.
For those lucky few, Labor would supply 30% of the funds needed for an existing home or 40% for those to build a new one. It would then own that percentage of the property.
To be eligible, individuals can earn up to $90,000 a year and couples $120,000. Only dwellings of up to a certain value (differing by location) would be eligible.
The Greens said they are willing to negotiate to help pass Labor’s bill, despite its flaws. However, they want something substantial in return. This could be a significant, immediate investment in public housing or meaningful reform of negative gearing and capital gains tax laws, both of which Labor ruled out.
Labor’s “social housing accelerator”, a concession it offered to the Greens to get its Housing Australia Future Fund (HAFF) passed last year, has already completed projects. (The HAFF itself will have only completed around 5% of the builds from its initial disbursement by next June.)
While the government claims it will not budge, the Sydney Morning Herald reported on September 25 that two unnamed Labor leaders confirmed that “a request for modelling on the potential change to negative gearing has been made and that it could canvass changes to the concessions on capital gains tax”.
Chandler-Mather said on September 26 that “after pretending it was impossible, all of a sudden under pressure from the Greens, millions of renters finally have some hope, as Labor is actively considering changes to negative gearing and CGT”.
“It would be massive if we won these changes,” he said.
There are a number of problems with Labor’s Help to Buy scheme.
First, it is so limited. More than 120,000 people are estimated to be experiencing homelessness at the last census, according to the Australian Bureau of Statistics.
Two thirds of renters are facing “rental stress” (paying more than 30% of their income on rent) and 1.6 million face “mortgage stress” (when a mortgage is more than 30% of income).
According to Chandler-Mather the help-to-buy scheme only caters for the 0.2% of those needing a place to call home.
Against such figures, 10,000 people a year is a drop in the ocean.
Secondly, the scheme will not build new public housing. Instead, Chandler-Mather argues it will push prices of existing properties up by injecting more money into the private housing market.
Thirdly, the income and price caps make it doubtful that people will be practically assisted.
Either way, the government is locking away $5 billion. If the scheme works, it puts a lot of people into mortgage stress. If it doesn’t, $5 billion could have been spent on public housing or something else.
Housing minister Clare O’Neil claims the scheme is designed to make home ownership “accessible to childcare workers, to nurses, to paramedics”.
However, full-time nurses and paramedics will not be eligible because their income would be too high. Those whose income is below the cap will have difficulty getting a mortgage for the share of the house they need to buy.
This is why the Help to Buy scheme is not going to work.
A similar shared equity scheme introduced by the NSW Coalition government in 2022 was abandoned a few years later for similar reasons: only 503 places were taken up from a potential 6000.
The Australia Institute economist Matt Grudnoff told a Senate committee in March “the problem with these kinds of policies is that they simply increase the demand for housing and this increases the price of housing” ultimately making it less affordable.
The only saving grace with Labor’s scheme, according to Grudnoff, is that because it is “so small” it is “unlikely to have a significant impact on overall house prices”.
Gallagher and other Labor MPs’ accusation that the Greens are working hand-in-glove with Coalition is laughable: the latter has a problem with governments having a share in anyone’s property and the Greens want more public and affordable housing.
Labor’s campaign against the Greens smacks of politics. The Senate is supposed to be a house of review and the Greens voted for a procedural motion that delayed a decision so they could continue to try and negotiate.