ACOSS slams Libs/Labs FHB deposit subsidy

By Leith van Onselen

The Australian Council of Social Service (ACOSS) has done a good demolition job of the lunatic first home buyer (FHB) deposit scheme, which was announced over the weekend and has been matched by Labor. From The Guardian:

Acoss CEO Cassandra Goldie said:

“The bipartisan first homebuyers’ package will help some first homebuyers but it’s not the answer to the entrenched housing affordability crisis.

“Acoss has concerns about its possible impact on the cost of housing, the risk of negative equity for some people, and the risk of encouraging some people into housing debt they can’t sustain. We’ve had many policies to subsidise first-home purchase from both sides of politics over the years. While they benefit some, they often disadvantage others by lifting home prices.

“We need to seriously tackle the underlying drivers of Australia’s chronic housing affordability crisis, like negative gearing and capital gains tax concessions. Our housing tax concessions have driven housing prices through the roof, rewarding speculative private property investors at the expense of people trying to secure a home. Curbing negative gearing will help ease the boom/bust cycle in housing and make housing more affordable for all.

“People struggling to afford to rent urgently need commitments from both parties to lift Newstart and rent assistance, strengthen social housing, and boost private investment in affordable housing generally.

As we noted earlier, Scott Morrison point blank admitted that this policy was written by the property sector.

And when asked this morning if he believed the FHB deposit guarantee would lead to house prices increasing, Morrison said “I don’t want them to go down”.

Just another example of how the Property Council, where Morrison worked as National Manager of Research and Policy from the age of 21 to 26, is pulling the Coalition’s strings.

[email protected]

Unconventional Economist


  1. Goldie continues to fiddle while Rome burns. If she thinks NG/CGT is causing the problem, she is in for a big shock in 18 months time where affordability has changed at all.

    Also, she is being inconsistent in saying she wants more private investment in affordable housing while at the same time asking for changes that make that private investment more difficult.

    • I’m sorry, Stu. …but the fiscal cavalry was always coming.

      Was just a bit slow getting off the mark. Now moving along solidly, like a line of cataphracts.

      • Agreed, it was always coming – my wife will be livid when I tell here, LOL, and the rants shall begin….!

        There’ll be some epic infrastructure spending after the election, from either Lib or Lab, too, which should juice inflation a little (though probably not “enough”, whatever that is…) – there question is, how to get on said gravy train?

        Cynical I know….but if one cannot beat the gravy train bound to Cliff’s Edge, then one might as well find a way to lighten its load on the way, yes? Sigh….now to start calling my infrastructure contacts again, and discuss future work 😛

  2. bobby bouygues

    Anyone got a theory why Genworth hasn’t dropped further? Thought they would get hammered on this news – maybe a sign that industry doesn’t take it seriously? I.e. it will be like other FHB saver schemes – barely used. In theory it helps avoid LMI, no?

    • You’ve got it backwards.

      This is good news for genworth.

      Government pushing (&guaranteeing) buyers into the market means any distressed borrowers (weak hands) have new morons (strong, government reinforced, hands) to sell to.

      That means genwoeth doesn’t need to pay out on all the LMI it has written.

      The trade off is smaller future volumes.

      • proofreadersMEMBER

        However, could the new insane scheme become the birth of “jingle mail” in Straya?

      • How do you mean, PR?

        FHBs who don’t “win” throw their hands up, walk away from the 5% they paid and drop the rest on the gov?

        Could happen, but that’s 4+ years away.

    • invisiblehans

      I think this is bad for Genworth.
      The policy makes government support for the banks risky but “deserving” customers explicit.
      If risky but “undeserving” bank customers (sub-prime, no doc etc.) go broke, it gives the gov a chance to draw a line and say it will not back stop that ‘dodgy’ lending, letting second tier lenders fail while giving the big four just enough support to stay afloat.
      With such a policy in place, might as well tighten capital requirements for mortgage insurers progressively too. So potentially a mechanism to unwind the Genworth ticking bomb over time.

  3. It will depend on whether the government will go after the borrower for the difference in a negative equity fire sale situation. Remember that LMI is to protect the bank not the borrower. So as a borrower if you default and your property is sold for less than the loan outstanding, then the mortgage insurer pays the bank the difference. However the borrower then owes that amount to the insurer, so they can come after the borrower for it. So if government becomes the insurer who is owed the money, then the government can come after you. Scomo after all does say it’s not free money.

    • If the Govt’s involved it’s always free money. Student debt, mortgage guarantees, whatever, it’ll all written off eventually — at least, that which gets defaulted on. When it isn’t your money, you don’t ultimately care. Just print up some more!

  4. ACOSS prefers UBI – which can be used to rent housing from the market.

    We don’t oppose universal payments on principle

    The principle that everyone should have access to at least a decent basic income is a good starting point for reform.

    If it is set at an adequate level, than it would be a terrific thing for the quality of life for a number of very low income people.

  5. This happens when mucking around the only solution to housing crisis in Australia, which is a ‘fair value ‘ according to wages (house crash is needed for that to happen). Anything else we see around it is just kicking the can further down the road…..$900,000 houses in a country the average wage is $80,000 is a joke.

    Keep taking antibiotics for cancer won’t cut it . Remove the cancer first and start over.

    This is socialism for the banks in disguise

    • And the median wage is much much less than that. so in reality we are talking 12+ times the median wage in the worst Sydney suburbs or perhaps 20x for the whole Sydney median, but as half the population is on less than the median this easily pushes it up to 16x typical wages for the cheapest suburbs. Considering that people on less than median wages could buy a house in historical terms then today’s situation is far worse than is often reported when the average wage figure is bandied about. (not that, that is already disgusting)
      Im sure this is the people the magic 5% deposit scheme/scam is aimed at.

  6. I guess Bill can easily point to this as a reason for not following through if we wins the election, similarly any cross-benchers whose support is needed to pass legislation.

  7. rob barrattMEMBER

    Who gives a monkeys about unaffordable housing? All that matters is that house prices don’t fall. Of course Labor will shortly be making noises about delaying the abolition of NG. It’s all in the timing. Remember, you don’t get to go on tax payer-funded rorts to Europe if you’re not in power. Come on folks – get a grip…..