Scott Morrison has criticised Labor’s new housing policy, saying the opposition “wants the government to own your home”, despite praising similar schemes in the past.
Ahead of an anticipated interest rate rise on Tuesday, the prime minister has deflected questions about the impact of rising interest rates on mortgage holders, saying Australians have been preparing for a rate hike from the current historically low level of 0.1%.
On Sunday, Labor announced it would support 10,000 homebuyers with a funding injection of up to 40% of a property value in a shared equity scheme that gives the government a stake in the property.
Despite expressing public support for similar schemes being run by state governments and the private sector, Morrison said on Monday that the policy would see the government “effectively becoming an owner of your home”.
“There are questions about this,” Morrison said. “So, what happens if you decide to renovate your home? I mean, what Labor have been very clear about is that they have a share in your home, and so, as your home value increases, they are making money off you.
“As your home price goes up, your home value goes up, they are taking a cut, and so you have to pay the government back on their equity and with the capital appreciation. I mean, they are basically riding on your decision to buy your own home.”
Labor’s policy is based on the Victorian and Western Australian models, which use a valuation by the valuer general to account for any increase arising from renovations that are then deducted from the amount paid back to the government when the house is sold.
The WA Keystart program, which also requires the homeowner to seek approval for any modifications that cost more than $10,000, states that a valuer will assess any improvements made and “take those into account”.
In the Keystart program “some examples of changes that may add value are adding an air conditioner, deadlocks, security screens, a bathroom or kitchen renovation, a patio, reticulation, or adding a shed”.
When he was treasurer in 2017, Morrison said the Victorian government’s shared equity scheme was an “interesting” idea, and as shadow minister for housing in 2008, advocated a similar program with the private sector to “ensure mortgagees continue to have access to this viable option to reduce their mortgage burden, especially during the global financial crisis”.
When asked on Monday about his previous support for shared equity schemes, Morrison said there was a “very different set of issues” at the time arising from a credit squeeze and a lack of liquidity in the market.
“So I was proffering sensible interventions that would enable the private sector to give people more choices,” he said.
“I had no plan for the government to own people’s homes.
“There is a scheme like this in Western Australia. There is a scheme like this in South Australia. The take-up of the schemes is very limited and one of the reasons for that is people want to own their own home,” he said.
Morrison said in 2008 that a shared equity scheme between lenders and banks would reduce mortgage stress for homeowners or reduce the upfront cost of a house purchase.
Ahead of expectations that the Reserve Bank will raise interest rates on Tuesday, Morrison said that he believed Australians were prepared for a rate rise, and challenged a question from a journalist who asked about “hundreds of thousands” of people facing mortgage stress.
“We have got people that have moved from 20% fixed rates to 40% fixed rates, and you know what that tells me? Australians know what is going on. They know there are pressures that are coming from outside of Australia on interest rates,” Morrison said.
“What I do commend the Australian people for – they have in making the choices to move to fixed rates to ensure that they can get ahead of that mortgage and to be paying down and ensuring that they have been building up buffers.
“You can also see on household balance sheets hundreds of billions of dollars … as Australians have been insulating themselves over the course of the pandemic to deal with these shocks that they knew would be coming.”
Campaigning in Brisbane on Tuesday, Albanese said he was confident the party’s housing policy was “good policy”.
“How do we know that, because we know that it works,” he said.
“In Western Australia they’ve had a similar plan now for 30 years. What it’s done is enabled people to get into housing who wouldn’t otherwise get there and it’s also produced a return to the government.
“It is a very, very positive plan which is why it’s been welcomed by the Housing Industry Association, by the Master Builders Association, and it’s why as well I note that in the past Scott Morrison has been positive about it.”
