Labor's affordability policies could boost government coffers by $10.8bn

By Gerv Tacadena

Australian Labor Party's $6.6bn housing affordability policy could help state and federal governments save up to $10.8bn.

A new industry insight published by McKell Institute said the Australian Labor Party's $6.6bn housing affordability policy could help state and federal governments save up to $10.8bn.

Late last year, Labor proposed a policy that aims to spend $102m over four years to incentivise the construction of around 20,000 homes in its first term if it wins the upcoming election. This is part of the planned development of 250,000 affordable homes over the next decade.

"This small investment in affordable housing not only has significant social but also economic benefits," the report said.

With the policy, investors who take part in building these homes and provide rents that are 20% below the market rates would get 15-year annual subsidies of $8,500 and taxpayer support.

The study said the construction of the 250,000 affordable homes could yield $40bn worth of economic activity — 18,000 direct jobs and 28,000 indirect posts would be created on average for each year of the program. It would also allow governments to save up to $10.8bn.

"Based on this analysis, we project that moving a person from crisis accommodation to the new dwellings reduces government costs, on average, by $11,935.49 annually per person from reduced interaction with services," the study said.

The policy, the study said, would be able to provide an affordable housing rental scheme for Australians, especially to low-income earners and to the increasing number of older Australians living on Newstart.

"A lack of affordable and secure housing not only has a number of negative social impacts but it also makes individuals less financially independent," the study said.

A recent study by Anglicare found that no affordable dwelling is available for Australians living on the Parenting Payment, Disability Pension, Newstart, or Youth Allowance.

In a previous Your Mortgage report, Anglicare Sydney CEO Grant Millard said most home seekers are prone to rental stress given that they have to spend 30% or more of their income to pay rent.

"For those struggling below the poverty line, that doesn't leave much for food, utilities, transport costs and unexpected bills. In some instances, trying to maintain a home can entrench people in financial need, and hinder families from breaking that cycle of disadvantage," he said.

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