Cash starts to flow for cheap new homes

Labor will use the biggest boost to cheap homes in a decade to try to wrest control of the housing agenda as it faces defeat on key policies to alleviate Australia’s shortage of affordable properties.

Prime Minister Anthony Albanese has revealed his government will fund nearly 14,000 new homes through the first cash injection from the $10 billion Housing Australia Future Fund, which invests in the stock market to generate an estimated $500 million a year.

Clare O’Neil was drafted into the housing portfolio to sharpen the government’s agenda in the key policy area.Credit: Alex Ellinghausen

But the Greens have accused Labor of “self-sabotage” on two bills – one helping pay people’s deposits and the other encouraging the building of long-term rentals – with the minor party’s housing spokesman, Max Chandler-Mather, claiming it is unwilling to negotiate with him.

Senior government sources, speaking anonymously to be candid, said Labor would obviously prefer the bills to pass but was resigned to Greens and Coalition opposition.

If the bills were rejected in the Senate, which will debate the help-to-buy scheme this week, Labor would be able to claim at the election that the Greens were blocking solutions and the government needed a second term to fix the problem, the sources said.

The opposition and the Greens have put expensive properties and rents at the centre of their attacks on the Albanese government’s management of living standards. For months, they have pressured Labor to start using the $10 billion fund approved by the parliament a year ago. Labor may expand the $10 billion scheme as it searches for new policies.

The initial outlay will create up to 4200 social houses, built by non-profits for low-income people, and nearly 10,000 affordable homes that are more expensive but still designed for lower and middle-income households.

“I grew up in social housing – I know how important a roof over your head is and the opportunities it creates,” Albanese said in a statement.

Labor has struggled to clearly communicate to voters its plan to improve affordability after years of house price growth outstripping incomes and construction falling to some of the lowest levels in any advanced economy.

Housing Minister Clare O’Neil was drafted into the portfolio in part to turn around Labor’s standing on an issue that is among voters’ top concerns.

She said the announcement proved the Albanese government was interested in building homes after a decades-long decline in government-backed housing stock.

“It shows the Coalition’s utter disregard for housing that in just the first round of this program, Labor is supporting more social and affordable homes than the Coalition did in their entire nine years,” O’Neil said.

Her opposition counterpart Michael Sukkar, whose policies focus on cutting migration and helping people to buy rather than rent, said it had taken two years for the housing fund to make an investment.

“With the number of new homes being built in free fall under Labor, this is too little too late,” he said. Sukkar last week argued Labor’s claim of a $32 billion overall investment in housing was a fraudulent figure because it involved yet-to-be approved spending and rent assistance.

The government said the exact cost of the new homes would depend on contract prices.

Chandler-Mather is demanding a two-year national rent freeze, the phasing out of negative gearing and the capital gains discount and a government-backed property developer in exchange for the Greens’ support for Labor’s bills. Experts have cast doubt on the efficacy of his proposals.

“I am bitterly disappointed that in a parliament where we have an opportunity to negotiate a historic plan to alleviate the housing misery of millions of Australians, Labor is pursuing a pathetic and childish political strategy to try and pick a fight with the Greens,” Chandler-Mather said.

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