Help to Buy shared home equity scheme turns into budget farce

Anthony Albanese’s flagship housing affordability election pledge – the “Help to Buy” shared home equity scheme – has yet to get off the ground and is about to blow its budget.

Anthony Albanese’s flagship housing affordability election pledge – the “Help to Buy” shared home equity scheme – is running late and about to blow its budget.

The government cannot even promise that the scheme – due to start on January 1 and promised to help 10,000 property buyers annually – will begin this financial year.

When Mr Albanese unveiled “Help to Buy” ahead of last year’s election, he did not specify exactly when it would begin.

However, News Corp Australia has learnt the ALP nominated a start date of ­January 1, 2023, in information given to the Parliamentary Budget Office (PBO) ahead of the campaign, so the agency could provide an estimated cost to the party for the announcement of the policy.

Currently there does not appear to be any timetable for commencing the scheme.

Another of Prime Minister Anthony Albanese’s key election promises is starting to fall over. Picture: Getty Images

News Corp Australia asked the government if it could commit to having Help to Buy up and running by July 1, but the question was not answered.

Help to Buy was the centrepiece of Labor’s ­campaign launch last year, making the failure to deliver it on time all the more significant for the Albanese government.

It comes as the government has already had to abandon his pre-poll promise to reduce power bills by $275 a year.

Failure to deliver these key policies is now the backdrop as elements of the ALP prepare to resume making the case for winding back – or dumping – another key source of hip-pocket relief, the Stage 3 income tax cuts.

New homes could attract an ­equity contribution of up to 40 per cent of the purchase price if the scheme gets off the ground. Picture: David Swift

Those legislated cuts would provide about $17bn in savings to taxpayers in 2024-25, but government figures want to kill them off, arguing they are too heavily weighted towards higher earners.

It comes as the government finds itself in an economic mire. Inflation is at a 32-year high, interest rates are expected to reach the highest level in a decade in February, median rents jumped 10.2 per cent last year and construction costs have increased by 12 per cent.

While progress on Help to Buy has been slow, its potential future cost appears to be climbing fast.

The PBO estimated the scheme’s burden on the budget “headline cash ­balance” out to 2025-26 to be $7.61bn. This included the total “public debt interest” expense of funding the real estate co-investments.

Michael Sukkar says the government has ‘no plan’. Picture: Gary Ramage

News Corp Australia understands the PBO’s initial estimate was calculated using an average borrowing cost of 2.2 per cent. However, by the time of Labor’s first budget in October, average government borrowing costs had shot up to 3.8 per cent.

Prior to publication, News Corp Australia repeatedly asked the government to provide updated figures for Help to Buy’s consequences for the headline cash balance.

As proposed, the scheme would provide an ­equity contribution of up to 40 per cent of the purchase price of a new home and up to 30 per cent for an existing property. Homebuyers would need to have a deposit of 2 per cent and qualify for a mortgage.

A spokeswoman for federal Housing Minister Julie Collins said: “The Albanese government is committed to delivering our ambitious housing reform agenda … including the Help to Buy scheme”.

Federal Opposition housing spokesman Michael Sukkar said “we are seeing a minister that has gone missing and a government with no plan”.