Federal Budget: housing’s silver bullet or a lost opportunity?

Society’s most vulnerable are among the biggest beneficiaries in the Federal Government’s Tuesday budget, with an $11.3 billion housing package primarily targeting social and affordable housing supply.

Prime Minister Anthony Albanese’s government announced on Tuesday (14 May) that his government will inject billions of dollars of additional funding to combat homelessness and assist those fleeing domestic violence with more crisis accommodation.

The bulk of the funding, $9.3 billion, will be directed to establishing the new five-year National Agreement on Social Housing and Homelessness, with support to be administered by state and territory governments.

Representing a doubling of the federal homelessness funding to $400 million a year, the states and territories will be cumulatively required to match the increased commonwealth spend dollar-for-dollar, ramping up crisis support and social housing supply.

Another $1 billion will be provided to the states and territories to build roads, sewers, energy and water supplies and other community infrastructure to speed up and support the home-building process.

Housing Minister Julie Collins said the new money would ease pressure on Australians “doing it tough”.

“This will deliver more homes for home buyers, more homes for renters and more homes for Australians who need them,” Ms Collins said.

The measures elicited a mixed reception from the Real Estate Institute of Australia (REIA), with the president, Leanne Pilkington, saying renters would find little solace in the government’s spending allocation.

“It is absurd that Commonwealth Rental Assistance (CRA) continues to remain well below market rentals in an historic underspend.

“It is the one thing that can be deployed by the Federal Government to support Australians that need help with cost-of-living and rental prices now.”

Formally presenting the Budget, Treasurer Jim Chalmers on Tuesday announced the CRA would see the maximum rate would grow by a further 10 per cent for those receiving the benefit.

After a 15 per cent CRA increase was included in the 2023-24 budget, Mr Chalmers made the point that it was “the first back‑to‑back increase to Commonwealth Rent Assistance in more than 30 years”.

The current maximum payment for a single person receiving rent assistance is $188.20 a fortnight, and $125.47 for a single person in a share house.

That means the payment would increase by about $19 a fortnight for a single person before accounting for indexation.

Ms Pilkington said the funding for the vulnerable was welcomed but said the Budget measures would do little to ease a housing crisis precipitated by a lack of supply.

“It is unlikely the current Homes for Australians package will shift the dial on bringing more homes to market more quickly.”

“This is particularly the case with the Treasurer dialling down expectations around the 1.2 million homes target in the week leading up to Federal Budget 2024.”

The refusal to tinker with negative gearing was seen as a plus but stamp duty reform represented a lost opportunity.

“It is unfathomable that once more the National Cabinet and the Federal Treasurer continue to ignore the biggest opportunity to unlock supply within the existing housing inventory.

“These are homes built now that aren’t reliant on pressures within the building and construction sector.

“Stamp duty reform would – at a minimum – bring around 4 per cent of existing homes to market – around 430,000 homes.”

More student accommodation

In a move welcomed by the Property Council of Australia, universities will be required to increase the supply of purpose-built student accommodation.

“These projects are the fastest way to add housing choice for young people and take pressure off the broader rental market,” Mike Zorbas, Chief Executive, Property Council, said.

The Student Accommodation Council, a Division of the Property Council which comprises the sector’s largest providers of student accommodation, also welcomed the focus on housing Australian students.

Student Accommodation Council Executive Director Torie Brown said the sector was looking forward to working with the government and Australia’s reputable tertiary education sector on implementing the new regulation.

“Today’s historic announcement recognises that the key to maintaining a sustainable and prosperous university sector, is our ability to house students in accommodation that suits their needs, is safe and conveniently located,” Ms Brown said.

“And we know the fastest way for universities to add the student accommodation they need is to partner with the private sector,” she said.

Political critics condemn policies as ineffective

Recently, the National Housing Supply and Affordability Council (NHSAC) forecast that the government will fall short of its target of 1.2 million new homes being built by nearly 300,000 dwellings.

Nationally rental vacancies have collapsed to 0.7 per cent, a record low, Domain data has shown, with the issue even worse in some cities.

Opposition political parties were quick to deride the government’s measures as old commitments dressed up in new announcements that would do little to improve new home builds or lower rents.

Shadow Housing Minister Michael Sukkar said the funding billions were “just business-as-usual spending”, while The Greens were insistent that the extra $1 billion for crisis accommodation had already been announced.

“They have taken the same amount of money that the Coalition spent over the last five years and have said over the next five years they're going to do the same and pretend like it's something new,” Greens MP Max Chandler-Mather said.

The government has said its inflation forecasts draw on more recent data emerging from the budget than those issued by the Reserve Bank of Australia and offer a more hopeful picture where inflation falls below 3 per cent by Christmas.

Labor claims energy bill relief, child care subsidies, and a boost to rent assistance have wiped 0.5 percentage points off inflation and that new budgetary initiatives would do more to stop price rises and allow for interest rate cuts.

It is yet to be seen what impact the stage 3 tax cuts will have on inflation.

Workers in every tax bracket will pay less income tax from 1 July. The reforms reduce the 19 per cent tax rate to 16 per cent, reduce the 32.5 per cent tax rate to 30 per cent, raise the threshold at which the 37 per cent tax rate applies from $120,000 to $135,000 and raise the threshold at which the highest rate of 45 per cent applies from $180,000 to $190,000.