Parties’ defend housing splurge amid ‘borrow and burn’ fears
The major parties are pressing ahead with revamped housing policies despite concerns from economists that billions of dollars will be wasted in a vote-buying exercise.
Under an election pitch revealed on Sunday, Labor will allow people to secure a mortgage with only a 5 per cent deposit with the government going guarantor.
It also pledged to build 100,000 new homes solely for first-home buyers under a $10 billion plan unveiled at its campaign launch in Perth.
Prime Minister Anthony Albanese started Monday at a housing development project in Adelaide to spruik his policies alongside top ministers and South Australian Premier Peter Malinauskas.
“These two policies will make a significant difference to increasing supply but also importantly, to getting first-home buyers and particularly young Australians into their first home,” Albanese said.
Treasurer Jim Chalmers denied Labor’s deposit policy would encourage people to borrow more and risk defaults on their loans, leaving taxpayers potentially on the hook.
“We know from the existing program that there has been an absolutely minuscule amount of defaults on these debts,” he told ABC TV.
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With housing a critical issue in the run-up to the May 3 election, the Coalition announced it would allow interest payments on the first $650,000 of a mortgage for new houses to be tax deductible for first-home buyers.
That could save the average first-home buyer $10,000 a year.
But the plan has found few friends among economists, who say it would disproportionately benefit high-income earners, push house prices up by increasing demand, and blow a hole in the federal budget.
Grattan Institute chief executive Aruna Sathanapally said the policy was likely to cost taxpayers $1.25 billion in forgone revenue across four years and was not money well spent.
Opposition Leader Peter Dutton side-stepped economists’ concerns that his tax deductibility policy would only drive up prices and disproportionately benefit higher income earners, arguing it would help boost housing supply.
“It’s going to encourage construction, which is really important,” he told Seven’s Sunrise program.
Dutton also defended the policy against criticism from host Natalie Barr that it would fuel demand for houses, but do nothing to increase supply.
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“We’ve been working on this policy for a long time and we’ve looked at, you know, if you push here and poke out there, all of the different interactions,” he said.
“This is the best opportunity for young Australians to achieve home ownership. The Labor Party wants people to be renters for life. I want people to get into housing as quickly as possible. I want to be the prime minister for home ownership and housing accessibility.”
Albanese also criticised the policy, saying it meant renters would be “subsidising the mortgages of homeowners across Australia” as they struggled to get into the market.
Support for Dutton and the Coalition has continued to slip, according to the latest Newspoll, which also showed most voters predicted a minority Labor government.
The poll was taken ahead of both campaigns being officially launched on Sunday, where billions of dollars in pre-election sweeteners were unveiled.
Labor will introduce a $1000 instant tax deduction, saving people up to $320 a year and reducing the hassle of producing receipts, while the Coalition promises a one-off tax offset of up to $1200.
Coalition campaign spokesman James Paterson criticised Labor’s tax cut of up to $268 in 2026/27 and $536 each financial year after, while defending the coalition’s sweetener.
He said the one-off tax offset was timely, targeted and meaningful.
“It’s not baked into the budget forever, costing billions and billions and billions over many years but it’s going to give people much more when they actually need it,” he said.
Chalmers was critical of Dutton’s policies, saying they were going to “borrow and burn another $10 billion and still provide no ongoing cost-of-living help for people who are doing it tough”.
“Then he’ll claw that back with permanently higher income taxes, lower wages and secret cuts to pay for his nuclear reactors,” he said in reference to the Liberals’ pledge to repeal Labor’s tax cut.
Dutton was in his home town of Brisbane on Monday. The Coalition hopes to win inner-city seats back from the Greens, who are fighting strongly on housing and pro-renting measures.
Shifting demographics mean young voters, most of whom want immediate action on affordable housing, according to Monash University research, will have more influence and outnumber older voters for the first time.
