The research found the money ultimately benefitted existing homeowners.Credit:Flavio Brancaleone
“It ultimately goes to first home vendors. That’s who it really assists and governments really don’t get anything to show for it.
“It’s people who already have housing wealth who ultimately benefit from the first home buyer assistance schemes we have and the refusal to do anything else to restrain speculation in housing.”
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To give some sense of the scale of the money spent,the report said the $20.5 billion could have funded 60,000 social housing dwellings,or alternatively,137,000 shared-equity dwellings.
Grattan Institute’s economic policy program director Brendan Coates said if the money was spent that way instead it would have increased social housing stock in a much more meaningful way.
“That would be close enough to made sure that would have been a 15 per cent increase in social housing stock over a decade,that would have been enough to keep[up with] population growth. It’s a lot of money,” Coates said,adding that it could have also increased Commonwealth Rent Assistance by at least 40 per cent.
“[First home buyer grants] do lead to higher prices where the main beneficiaries are the vendors and $20 billion is a lot of money that could have been used to try to either more meaningfully help people to keep a roof over their head,” he said.
“The policies that would make a difference would involve big trade-offs because you’ve either got more homes or scaled back tax concessions and even the act of removing these tax concessions will help in lowering prices.”
Peter Tulip,chief economist at centre-right think tank Centre for Independent Studies,said there was no doubt the policies were effective but they raised equity issues.
Grants to home buyers have not increased home ownership,research found.
“While you’re unquestionably helping the favoured recipients,you’re making housing affordability worse for everybody else,” Tulip said.
“We could be building a lot more housing and if we did,prices of housing would fall for everyone.”
He said that money could have been better spent incentivising state governments to reform planning laws and providing more infrastructure to support the construction of more housing.
Eliza Littleton,research economist at independent think tank the Australia Institute,said Australian governments needed to use that money to tackle housing affordability by building more housing that would dampen investor demand.
“If governments are serious about tackling housing affordability,they should be spending more public money on expanding the stock of social and affordable housing in Australia. Helping secure a roof over the head of vulnerable Australians is money well spent,” she said.