1 week Ago By Peter Hartcher
The good news is that both of Australia’s major political parties are competing to fix one of the country’s greatest failures – we occupy an entire continent yet can’t house our younger generation. Both announced new policies on Sunday aimed at first home buyers. Each has good elements and bad, but it’s now a serious contest to solve a real problem.
At the core, it’s about restoring hope. It’s Australian democracy in one of its better moments. The 2025 campaign will hide policy lethargy behind personal animosity.
Credit: Marija Ercegovac Anthony Albanese detoured from his favourite campaign activities – modelling Medicare cards and demonising Dutton – long enough to cite Labor postwar hero Ben Chifley saying that housing is “not only the need but the right of every citizen”. And Peter Dutton paused his chosen themes – fetishising fossil fuels and abusing Albanese – to claim that he “will be a prime minister who restores the dream of homeownership”. It’s an example of how political competition within a system of compulsory voting drives a convergence towards the political centre.
It’s taken a long time for Australia to get serious. The problem was evident a couple of decades ago. But existing homeowners and property investors were so busy congratulating themselves on being investment geniuses that there was scant public pressure for real change.
Of course, we weren’t geniuses. We were just exploiting a policy failure – a housing shortage. Riding a generational betrayal for personal gain and thinking ourselves so very clever.
The political fixes in the interim were worse than useless. First home buyer grants simply increased the amount of cash chasing the same stock of homes. It’s taken too long to get serious.
So repair will take too long. Nothing that Anthony Albanese or Peter Dutton announced at the weekend will make an appreciable difference for a few years. That’s the bad news.
But, ultimately, either approach should make a difference. The most helpful element of the new Albanese policy is the proposal to invest $10 billion over eight years to build 100,000 homes specifically designated for first home buyers. No investors allowed.
Less helpful is the expansion of the existing First Home Guarantee program . This allows first home buyers to bid for a home with a deposit of just 5 per cent, with the Commonwealth guaranteeing up to another 15 per cent. This would obviate the need to buy lenders mortgage insurance, a saving of some $20,000 for the average first home buyer.
Peter Dutton and Anthony Albanese both announced housing policies at their campaign launches on Sunday. Credit: James Brickwood, Alex Ellinghausen The existing scheme is restricted to 35,000 people this year, but Albanese’s pitch would throw it open to all first home buyers under specified home price ceilings. This will be much appreciated by first home buyers.
The problem? It brings more buyers into the market without laying a single extra brick. So it’ll only push prices higher in the lower price ranges. Will this be offset by the extra 100,000 new homes to be built? Only in a world of perfect timing and policy co-ordination, a world yet to be conjured into existence.
It’s important to note that Albanese’s Sunday announcement is an addition to Labor’s various existing programs, including the Housing Australia Future Fund. Overall, cumulatively, the net effect should be helpful to build more homes and get more first home buyers into them. Eventually.
And Dutton’s plan? He’s proposing a big, new incentive for first home buyers – they’ll be able to deduct from their taxes the interest they pay on their mortgages for the first five years. It’d be a helpful initial boost worth some thousands within the policy parameters. Importantly, its means tested.
But, again, it wouldn’t lay a single extra brick. It’d be more money chasing the same number of homes, while costing the revenue some $1.25 billion over four years.
So it’d be just another junk policy except for its redeeming virtue – it would apply only to newly built homes. So it would be an incentive to build more. It’s designed to dovetail, Dutton said, with his policy to cut the number of immigrants.
Neither party’s policy is perfect; either would be some sort of corrective to a serious and sustained market and policy failure. In a campaign full of sound and fury, it’s a moment of constructive policy competition. Cut through the noise of federal politics with news, views and expert analysis.
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