Building Plan Could Fall Over

Written by
6 June 2020
Originally appeared in The Herald Sun

The HomeBuilder scheme announced by Prime Minister Scott Morrison has a worthy objective but we have to be careful it doesn’t become a hand-out to the big banks and they don’t forget that red tape is the biggest roadblock for Australia’s construction sector.

The scheme HomeBuilder provides eligible owner-occupiers with a grant of $25,000 to build a new home or substantially renovate an existing home. The government claims HomeBuilder will assist the residential construction market by encouraging the start of new home builds and renovations.

But as is the case with all government policy, it is important to check the fine print. No individual earning over $125,000 or couple earning over $200,000 can access this scheme. And the minimum cost of the renovation to be eligible for the $25,000 grant is a whopping $150,000.

It would be surprising if any individual on under $125,000 a year or couple earning under $200,000 has more than their entire annual salary lying around to spend on a home renovation to even be eligible.

To access this scheme, the practical consequence for many Australians could be, in order to access the payment of $25,000, they will increase their mortgage and pay more than the grant amount in interest.

While deliberately targeted at middle Australia, by design it may only saddle them with more debt to build a granny flat.

These rules are symbolic of the red tape that actually slows down Australia’s home renovations and housing construction sector.

A superior “job creation” scheme would be cutting red and green tape that tangles basic home renovations and developments of new homes and apartments.

NIMBY councils in our major cities have not only blocked all sensible high-density development in the inner city where public transport infrastructure is readily available, but also opposed unlocking land in green wedges in our cities.

Permits for basic renovations can get tied up in council approval processes for years sometimes.

This red tape is compounded by direct costs governments place on landowners through taxation, planning red tape and stamp duty.

Scott Morrison should commit to slash construction red tape; he could use the new National Cabinet process to get the states to the table on the issue of planning red tape and stamp duty.

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Evan Mulholland

Evan Mulholland is the Director of Communications at the Institute of Public Affairs

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