FIRST HOME OWNERS GRANT

The Hon. D.G.E. HOOD (15:30): Over the years, the new home owners grant has received vast amounts of media: some good and some bad, as you might expect. For the most part, the grant has been widely welcomed from all spectrums, especially those buyers who were looking to enter into the home owners market. The new home owners grant was established in the year 2000 as a means of offsetting the GST requirements of first home buyers. In its current form, the new home owners grant of $7,000 is available to a first home buyer of a new or established dwelling that does not exceed $575,000 in value.

In addition to this grant, the government also offers a new home bonus grant of up to $8,000; that is an additional $8,000. I believe this bonus has encouraged many first home buyers to enter into the market, which is, in my view, unnecessarily expensive and somewhat exclusive. We are facing a situation where first home buyers are really going to struggle to buy a home, and I think that $8,000 the government put forward for people building a new home was a very good policy indeed, and certainly one that Family First strongly supported. It is particularly useful for couples or individuals who only have a single income.

Recently, the government announced that the new home bonus grant will be steadily phased out, in an effort to save an estimated $21.3 million over the next four years. Family First opposes this move. From now until 30 June 2012, the $7,000 will still be available, with the additional $8,000 for new homes; from 1 July 2012, you will be entitled to the $7,000 first home owners grant but you will only receive a $4,000 additional bonus; and then from 1 July 2013, the new home bonus grant will be abolished.

Regardless of the impact of the cessation of the grant, the state government will continue to collect large sums of taxes for the construction and sale of homes and will continue to collect stamp duty. South Australia still has one of the highest stamp duties in the country, yet buyers do not see any real relief under this measure. Additionally, for every dollar spent on building a house, the HIA estimates that an additional $6 to $7 is spent for incidentals relating to that house: carpets, curtains and the like. There is a very clear relationship between home ownership and strengthening the state economy.

It is particularly interesting to look at what the other states are currently doing. Most states have a bonus scheme of some description, particularly for building homes. Queensland, for example, currently pays a new home owner $17,000 and if their house is under the value of $500,000 they do not pay stamp duty at all. Victoria offers up to $26,500 in some instances, being a new home owners grant of $7,000, a bonus of $13,000 and additional $6,500 for construction in a regional area. The capped amount for houses eligible for the grant in most states is $750,000 (it is much less here) and in certain parts of Western Australia the cut-off point is $1 million. The point I make is that we cut off way too low. Furthermore, we will be cutting it off altogether.

Clearly, South Australia is out of step with the other states. This is something that is not to be debated. In the long term this move will hinder those South Australians trying to enter the already very expensive housing market that we have in this country. According to the ABS, both housing finance and building approvals are already significantly lower in South Australia over the 2010-11 period compared with that of the 2009-10 period, which is hardly surprising in the current economic climate.

Our goal at this stage should be to support not only the homebuyer trying to enter the market for the first time, but also the industry, as it creates many spin-off jobs. As I said, every dollar spent on housing translates into something like $6 or $7 in closely related industries. We do not want to see a situation where in an effort to cut costs and save $21 million to make our bottom line look slightly better, we will have priced people out of buying their own home, which will have a devastating impact on the housing industry and the industries that surround it and support it.

I strongly believe that this policy needs to be re-thought and I urge the government to consider that by funding and maintaining this policy it will actually recoup more in tax revenue than it will cost it to abolish it.