Major parties are pressing ahead with their revamped housing policies despite concerns from economists billions of dollars will be wasted in a vote-buying exercise.
Labor will allow people to secure a mortgage with only a five per cent deposit with the government going guarantor while pledging 100,000 new homes solely for first homebuyers under a $10 billion plan.
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,” Mr Albanese told reporters.
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 miniscule amount of defaults on these debts,” he told ABC TV.
With housing a critical issue on voters’ minds in the run up to the May 3 polling day, 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 homebuyers.
That could save the average first homebuyer $10,000 a year.
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.
Likely to cost taxpayers $1.25 billion in forgone revenue across four years, it was not money well spent, Grattan Institute chief executive Aruna Sathanapally said.
Opposition Leader Peter Dutton side-stepped economists’ concerns 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.
But Mr Albanese 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 Mr Dutton and the coalition has continued to slip, according to the latest Newspoll, which also showed most voters predicted a minority Labor government.
Although 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.
Dr Chalmers was critical of Mr 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.
The opposition leader will be in his home town of Brisbane, where the coalition is vying 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 called for immediate action on affordable housing, according to Monash University research, will have more influence and outnumber older voters for the first time.
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