First home buyers and the residential building industry have been hit hard in the 2014 Budget – along with many others groups – and opinion is mixed across the country as to whether it needed to be so austere.
First home saver accounts, introduced in 2008, are to be abolished under the Budget, with the government citing lower-than-forecast take-up rates. New accounts opened from now will not be eligible for concessions.
The government also announced co-contributions will stop from 1 July, as will tax concessions and asset and income test exemptions for government benefits associated with these accounts. The saving to the Budget is estimated to be $113.3 million.
Real Estate Institute of Australia president Peter Bushby said first home buyers have lost yet another incentive.
“We would like to have seen the scheme reviewed and improved rather than thrown on the scrap heap because of an initial low uptake.”
Only 46,000 of the accounts were ever opened, with a total balance of $521.5 million.
“With home ownership in Australia declining an first home buyers finding it increasingly difficult to enter the housing market, this will not help the situation,” said Bushby.
However, the Government has indicated the national Rental Affordability Scheme should be reviewed, an action REIA supports.
“We’re pleased to see no change to negative gearing in its current form for the purpose of property investment,” Bushby said.
The Housing Industry Association said while the Budget is framed in the context of addressing the budget deficit, this is at the expense of a number of worthwhile programmes.
“The residential building sector has only just begun to play a pivotal role in driving the economy as the nation transitions away from mining led growth. The recovery in new home building has been highly dependent on demand generated from the household sector. Maintaining and improving consumer sentiment remains a priority,” said HIA industry, policy and media CEO Graham Wolfe.
However, Finance Brokers Association of Australia head Peter White gave the Budget the “thumbs up” said it is the budget the country needed to repay debt.
"A $657 billion debt with an interest bill that would make your heart stop isn't easy to get rid of,” he said.
"Although there are areas of the budget which are not the most desired, this is the government’s plan to pay off their debt, like all of us have to pay off ours.”
While White is concerned about the impact some measures will have on household budgets and the ability to meet mortgage repayments, the budget must be considered with a balanced view, he said.
"There are many areas where money should be spent and increased costs should not apply, but, until the books are balancing out, the belts need to be tightened.”
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