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JobKeeper savings could fund new home-buying stimulus

By Charbel Kadib
  • June 02 2020
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Invest

JobKeeper savings could fund new home-buying stimulus

By Charbel Kadib
June 02 2020

The federal government is preparing to introduce new home-buying grants aimed at providing long-term support to the residential property sector as it grapples with the COVID-19 crisis, and it could rely on savings from the overblown JobKeeper package to do so.

house construction

JobKeeper savings could fund new home-buying stimulus

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By Charbel Kadib
  • June 02 2020
  • Share

The federal government is preparing to introduce new home-buying grants aimed at providing long-term support to the residential property sector as it grapples with the COVID-19 crisis, and it could rely on savings from the overblown JobKeeper package to do so.

house construction

The property industry has been calling for fiscal support from the government amid expectations of a prolonged downturn in the housing market.

Managing director of KDL Property Group Kent Leicester said the government could fund a stimulus package with the $60 billion in overstated costs associated with the JobKeeper program.

Last month, it was revealed that after reviewing the forms of approximately 910,055 businesses applying for the federal government’s JobKeeper subsidy, the Treasury and the Australian Taxation Office have identified a “reporting error”, which has grossly overstated uptake of the program.

The government initially reported that approximately 6.5 million Australians would be granted income support from the program, totalling approximately $130 billion.

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However, the review has found that just 3.5 million Australians would be covered under the JobKeeper program, totalling approximately $70 billion.

“The construction industry produces almost 10 per cent of Australia’s gross domestic product and is the third-largest employing industry behind healthcare and retail,” Mr Leicester said.

“There is an opportunity here to support a sector which generates more than a million jobs, many of them very small businesses or sole traders.”

He added: “A plethora of tradespeople are supported by residential housing projects, including carpenters, builders, landscapers, plumbers and electricians, and this extends to all the suppliers of building products and their staff.

“These workers need to be protected from a potential industry downturn.”

Mr Leicester backed Master Builders Australia’s proposal to create a new home grant of $40,000.

“We saw a lot of new home stimulus coming out of the global financial crisis that had a positive impact on the constructor sector and a similar response now would be welcome,” he said.

The Property Council has also put forward such a plan to give prospective buyers a leg-up - with its seven-point plan advising grants of $50,000 be given to new home purchasers

Mr Leicester also urged the government to address the expected drop-off in overseas migration by focusing on measures to attract skilled migrants.

“Australia to this point has not been hit as hard as other countries such as the United States and Britain by the COVID-19 pandemic, and to many people overseas it might seem like one of the most desirable places to live in the world,” he concluded.

Government stimulus expected 

According to reports, the Morrison government is set to announce the new stimulus package this week, which will be designed to drive housing construction by incentivising the purchase of new dwellings through the provision of home-buying grants.

Prime Minister Scott Morrison confirmed that a prospective stimulus package would focus on supporting large infrastructure projects and new housing construction.

“We’ve been looking closely at the residential building sector,” Prime Minister Morrison said.   

“The Treasurer has been doing some great work with the states as well who are interested in working on those issues.”

He added: “[We] are looking at a bit of a drop-off in the current home building that’s going on and that’s not good for tradies and it’s not good for jobs.

“The other thing about those sorts of projects is that you’re going to get more of your local tradies involved in these things,” he said.

Renovations could also be given the green-light for such grants.

 

JobKeeper savings could fund new home-buying stimulus
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