The housing affordability crisis has been front and centre of this campaign, and where the two main parties are concerned,  it’s come down to the battle for the votes of first time home owners. Each party is promising to help save for that much needed deposit, the question is how?


Announcements that the ALP have made since the campaign kicked off: 

1) Labor’s plan to build more homes for homeless Australians announced November 5, 2007.
If the homeless pay any attention to politics, then Labor probably has their vote. Opposition leader Kevin Rudd says he will invest $150 million to halve the number of homeless people turned away from shelters over five years, if he is elected.

The party wants to establish up to 600 new houses and units across the country for families and individuals who are homeless, in a plan named A Place To Call Home.

Labor is also planning to “close the gap within a decade” to ensure all homeless people receive shelter.
To remove the need for homeless families to uproot and move from crisis to medium or long term housing, they will move straight into supported housing for the first 12 months.

They will able to remain in the home after the first year, after it is transferred to the general public housing pool and their tenancy extended.

Mr Rudd will ask state and territory governments to make land available for the new housing. The Opposition has announced it will make surplus land available.

2) Labor’s Low Tax First Home Saver Accounts announced November 4, 2007. The party says it will help aspiring first home buyers save a larger deposit by establishing new low tax First Home Saver Accounts.
Over the first three years, the Opposition estimates the superannuation-style low tax accounts will help around half a million first home buyers save a bigger deposit. The accounts are anticipated to be worth about $3.5 billion in the same period.

The plan will allow a couple to put together a deposit of around $64,000 over five years, if each of them is earning an average wage and saves 10 per cent of their income.

Labor says this deposit is around $14,500 more than what the hypothetical couple could save in an ordinary deposit account. Savings with the First Home Saver Account will receive preferential tax treatment, compared to ordinary savings accounts.

  •  Savers will be eligible for a low tax rate of 15 per cent on the first $5000 of income they deposit in their account each year, rather than the ordinary tax rate they would pay.
  •  Interest earned will be taxed at 15 per cent or less.

Labor held a National Affordability Summit in Canberra in late July, where the establishment of a National Housing Supply Research Council was announced. The Council was commissioned to publish a State of Supply Report to analyse the adequacy of future housing and land supply. The ALP released three elements of its housing affordability policy before the campaign:

3) Federal Labor’s Housing Affordability Fund announced 30 July, 2007 

  • Local governments are invited to propose innovative housing development plans that “cut the red tape” and reduce the upfront financial burden of infrastructure costs on new home buyers
  • The merit-based grant process aims to save new homebuyers up to $20,000 on a home purchase, and boost supply of housing

4) Federal Labor’s National Rental Affordability Scheme announced 13 August, 2007

  • Costs $603 million over its first five years, and offers institutional investors annual tax incentives and financial support
  • Every year for up to ten years, a $6000 Rental Tax Incentive will be given to investors who construct new affordable rental accommodation for low and middle income households for 20% below the market rate of equivalent properties in the area
  • and at least $2000 Rental Tax Incentive in direct or in kind financial support from State Governments for investors who access the tax incentives

5) Federal Labor’s Plan To Unlock Commonwealth Land announced 16 October, 2007

  • Labor will expedite the release of the $6 billion worth of surplus Commonwealth land for the building of new housing and infrastructure by revamping the Commonwealth Property Disposals Policy.
  • The goal of the plan is to improve community infrastructure and make housing more affordable.
  • Kevin Rudd has already flagged the Ingleburn Army Camp — a 322 hectare tract of land in South Western Sydney – for the development of housing for some 22,000 people.

Other initiatives Labor is considering include:

  • Reduce the cost of building on zoned blocks in new housing developments by creating an infrastructure pool that state, territory and local government could apply to, in order to reduce the cost of services to these blocks (currently the purchaser pays for these services).
  • Cracking down on predatory and inappropriate lending.


November 12

At his official campaign lauch, Howard says the government will introduce tax-free home savings accounts for first home buyers. Up to $1,000 a year can be deposited into each individual account and will be tax-deductible. Earnings and interest from the accounts will be tax-free. Subject to economic conditions, the Coalition may make contributions to these tax-free accounts from budget surpluses.

Parents and grandparents will also be able to set up tax-free home savings accounts for their children and grandchildren. The types of contributions they will be able to make are:

  • Annual maximum contribution for under-18s: $1,000, tax-deductible, into the accounts.
  • Annual maximum contribution for 18-40 year olds: $10,000 per year, of which the first $1,000 will be tax-free.
  • At the moment, people buying or building homes may be subject to state and local government taxes which go towards community infrastructure. The Coalition will give:
  • $500 million over three years, on a 50/50 cost share basis with local and state governments, to build this infrastructure instead. It will be used for building facilities like libraries, community halls and sports grounds.

November 8
Prime Minister John Howard said he was ‘sorry’ for the interest rate rise after the Reserve Bank of Australia put up official rates to 6.75 per cent. “Of course I’m sorry that people have to pay more on their mortgages, of course I am,” he said, The Age reports.

November 7
“Home loan interest rates are lower under the Coalition,” says a graph released by the government. The chart shows that the average rate under the Labor government was 12.75 per cent from 1983-1996, compared to 7.26 per cent under the Coalition since then.

November 6
The Nationals launch an internet site featuring a mortgage calculator. Homeowners can type in their loan amount and find out if they could afford to keep paying it with an interest rate change. “Can you afford to pay your loan under a Rudd Labor Government?” the site asks.

October 17
Finance minister Nick Minchin criticizes Labor’s plan to devote $6 billion of Commonwealth land to housing and infrastructure development to help the affordability crisis.
Mr Minchin says Labor’s housing policy states additional land release “ …clearly will not make a dent in the housing affordability crisis.”

He also says a Labor’s housing spokeswoman Tanya Plibersek said that, “Selling off bits of Commonwealth land is not a significant contribution to a full-blown affordability crisis” in September.

The minister says Mr Rudd should call on his “…Labor mates in State Governments across Australia to make more land available and reduce the onerous burden of State taxes and charges.”

On the day of Labor’s announcement of its plan to release the surplus Commonwealth land, John Howard was quick to claim“the whole idea of having an audit of land was Mr Costello’s idea.” Peter Costello announced the audit in July, claiming it would “identify land which could be released for new housing. It is essential to identify the land which is available for housing so that our growing population can expand without putting untoward upward pressure on the price of existing housing stock. No audit of this size or scope has been attempted before.” The Government is yet to release the findings of the audit, but says it may announce the locations of some of the blocks of land it plans to release before the election.

  • The Treasurer added that “The Commonwealth has been engaging with State Governments to cut stamp duty for years and will hold States to dismantling the taxes that State governments agreed to abolish in 2000 as part of the GST deal.”
  • The First Home Owners’ grant — one $7000 payment — has been in operation since 2000.
  • Prime Minster John Howard, 10 July, 2007: “As far as housing affordability is concerned the best thing that we can do as a government in relation to housing affordability is to keep interest rates as low possible.”
  • The Treasurer, 25 July: “…[I]f we work together (with State governments) to identify new land around Australia which can be released, cut the time of planning approvals and get it onto the market, together with cuts in stamp duty together with a Building Commission which can cut construction costs, these are the most practical possible things that you can do to reduce the price of homes to first home buyers.”

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