Federal budget 2021: Boost for first home buyers

Treasurer Josh Frydenberg. Picture: Dion Georgopoulos
Treasurer Josh Frydenberg. Picture: Dion Georgopoulos

Federal Treasurer Josh Frydenberg has warned Australians should take nothing for granted as the economic recovery from COVID-19 gathers pace, with next week's budget to prioritise growth over budget repair with a series of targeted spending measures.

And in an interview with ACM, publishers of this newspaper, the Treasurer has announced a housing package to get more Australians, particularly first home buyers, into the housing market while thanking Canberra's "brilliant" and "dedicated" public servants for steering the nation and "carrying a heavy load" as they responded to the pandemic.

Mr Frydenberg's pandemic budget will contain significant targeted spending on job creation, aged care, mental health, infrastructure and a package focused on women's economic and physical security - a direct result of a series of shocking allegations about the treatment of women in politics in recent months and criticism last year's budget did not do enough for women.

In a bid to woo back female voters unhappy with the government's handling of sexual assault allegations and bad behaviour, there's a $1.7 billion childcare package in addition to the women's economic and personal safety.

With both the economy and employment recovering, historically-low interest rates and high consumer confidence, property prices are continuing to soar and while banks are keen to lend, first home buyers are being priced out of the market.

To combat this, Mr Frydenberg revealed another 10,000 places will be added to the First Home Loan Deposit Scheme on budget night. This incentive allows first home buyers to build a new, or buy a newly built, home with a deposit as little as 5 per cent.

As well, the government is increasing the maximum amount of superannuation contributions that can be released under the First Home Super Saver Scheme to be used to save for a first home deposit. It is rising from $30,000 to $50,000.

"It is about giving people the opportunity to get into the market," the Treasurer said.

Mr Frydenberg has been also speaking to the Reserve Bank and regulators about taking the heat from the hot property market.

"They are watching it closely. But to date, the new loan commitments have been largely owner occupiers. And as I say, first time buyers are coming to the market in greater numbers," Mr Fydenberg said.

"Monetary policy is constrained. Globally, the virus is seeing more than 800,000 cases a day. Here in Australia we saw a state-wide lockdown in Western Australia only recently.

"And so while Australia is recovering strongly we are very much still in the midst of a global pandemic.

"So this budget is all about securing our economic recovery. We can't take for granted the gains that we've made. To the contrary, we have got to consolidate those gains."

The rhetoric around debt and deficit has changed. Unprecedented levels of spending has been needed to keep the economy afloat, and now more, targeted, spending is on the way.

The coming budget has been labelled a "Labor budget," but Mr Frydenberg insists he is staying true to Liberal values.

"Liberals have been focused on creating more jobs," he said. "And that is what has motivated us through this crisis to prevent the scouring of the labour market.

"The Coalition's values are very much reflected in this budget; Lower taxes, support for the private sector, stronger regions, supporting families and encouraging homeownership."

The Treasurer made clear this is not the time for austerity, with spending cuts and budget consolidation to come after Australia has recovered from this crisis, with the prospect of an election in the next 12 months - and possibly before the end of the year - likely weighing on the Treasurer's mind, too.

And with the vaccine rollout far from complete, the potential for a third wave of COVID-19 in Australia is always at the back of Mr Frydenberg's mind always. It is a medical and economic emergency that nobody wants again.

"Well, the public have been magnificent over the course of the last year," he said.

"Australia's economic recovery has been due to their incredible sacrifice and commitment. And there is still a long way to go. And I think we can all be very proud of what Australia has achieved."

The Treasurer wants to drive unemployment down further. Employment has recovered to pre-Covid levels to show an unemployment rate for March of 5.6 per cent seasonally adjusted, but he has indicated he "would like a four in front of it."

"With a stronger economy, we create a stronger budget position," he said.

"With more people getting into employment, you get a lower welfare bill and you have a higher tax take. With a stronger budget position and stronger economy you can guarantee essential services, and you will see that significant new spending on aged care and mental health.

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"We have a real opportunity now to drive the unemployment rate lower to where it was pre-pandemic, and even lower still. And I explained that in our fiscal strategy, we can manage our debt levels. And it is Treasury's expectation that nominal GDP will be growing faster than normal interest rates."

As the Treasurer prepares to deliver the budget on Tuesday night, he marked his appreciation for the public service which has been at the front line of developing and implementing policy through various crises from bushfires, floods to the ongoing pandemic.

"We've seen the public service perform brilliantly through this crisis. At all levels," Mr Frydenberg.

"Treasury had been called upon, over the course of the last year, to carry out a very heavy load over the last year. The frequency of decision making and the scale and size of decision making is virtually unprecedented as to what we're seeing in this pandemic.

"And I've only got the utmost respect and admiration for the professionalism, and for the capacity. And for the dedication of the public service."

The federal Treasurer hands down the budget on May 11.

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This story 'Giving people the opportunity': Budget boost for first home buyers first appeared on The Canberra Times.

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