The federal government’s 2017 Budget has offered little to prevent the rise of housing prices across Australia.
Despite the price-to-income ratio of house prices doubling over the past 20 years, and both Sydney and Melbourne recently being named in the top five least affordable cities in the world, only a few minor policies were proposed to solve the issue.
One policy was the ‘First Home Super Saver Scheme’, which allows voluntary superannuation contributions of up to $15,000 per annum – or $30,000 if you are a couple – to be withdrawn from your savings and used as a deposit on your first house. This will be taxed at 30 per cent lower than marginal tax rates.
Some have criticised the move, saying that it costs too much and is ineffective.
UNSW Economics Professor Richard Holden wrote for The Conversation: ‘This will cost the government A$250 million over four years and do absolutely nothing to help first home owners. We have seen this movie before, with 50 years of first home owner grants in one form or another. All that happens is that this subsidy goes into the price of existing housing. Sellers benefit, buyers get no joy.’
Another minor policy found in the Budget enables people over 65 to downsize, by allowing $300,000 of a sale of their main residence to go towards their superannuation.
An extra $63.1 million over four years is going towards the National Housing Finance and Investment Corporation, which aims to provide cheaper financing for community housing providers.
There has also been a strong hit-back against foreign owners of Australian property. Foreign owners will not longer be exempted from capital gains tax for their primary residences, and there will be a tax on foreign owners who leave their properties vacant, which will raise the government $16.3 million.
Both the Labor party and the Greens have hit back against the measures. The leader of the Greens, Richard Di Natale, argued that this was part of a broader trend of the Coalition neglecting younger voters.
‘If you’re under the age of 35, you’ve been screwed over in this budget – whether it’s the gouging of higher education, the lack of action on climate change or the refusal to tackle housing affordability.
‘We know what we need to do to make it possible for young people to buy a home in our capital cities – get rid of negative gearing and the capital gains tax discount. Unfortunately, this budget proves that the Government is too beholden to its billionaire mates to do anything more than nibble around the edges.
‘These fresh tax breaks to first-home buyers and baby boomers are going to further overheat the market and make housing less affordable, not more. The Government and the ALP need to stop taking donations that make it impossible for them to write policies that are in your interest, not the interests of wealthy developers,’ he said.
In his Budget reply speech, the opposition leader, Bill Shorten, also rebuked the government’s efforts.
‘A Labor Budget would level the playing field for affordable housing, not protect tax-breaks for property investors. Mr Speaker, the government would love Australians to believe they’re doing something on housing.
‘But they’re not reforming negative gearing and capital gains – we are. They’re not undoing the tax breaks which give every investor a head-start at every auction – we are. They’re not serious about tackling the crisis in housing affordability – we are,’ Shorten told Parliament on Thursday.