The Government confronts a significant housing dilemma, with unprecedented low housing and rental affordability coupled with rising cost-of-living pressures.
New Policies to Alleviate Housing Burden for Low-Income Renters
Low-income renters are the primary beneficiaries of new measures announced in Tuesday's budget.
Commonwealth Rent Assistance: A 10% increase in the maximum payment for renters on government benefits has been announced, building on last year’s 15% rise. This total increase of over $70 per fortnight will aid nearly one million households. Given that typical rents have increased by around $200 per week since 2020, this additional support is crucial for alleviating rental stress among low-income renters.
National Housing and Homelessness Agreement: Federal and State governments will boost funding by $200 million annually to support access to secure and affordable housing, alongside $1.9 million in concessional loans for community housing providers. This funding aims to address the increased wait times and challenges within the social and affordable housing sector.
Expanding Housing Supply
To reduce housing costs for all Australians, the government is focusing on increasing the housing supply.
Housing Support Program: An additional $1 billion, on top of the previously promised $500 million, will be allocated to states and territories for infrastructure essential to new housing developments, such as water, power, sewerage, and roads.
Addressing Skills Shortages: To tackle construction sector skill shortages, the government is investing $88.8 million to fund 20,000 fee-free TAFE places and fast-tracking 1,900 skilled visas. While the construction sector employs over 1.3 million Australians, these initiatives aim to improve the speed and cost of construction by alleviating trade shortages.
Three-Pillared Housing Strategy
The government's broader approach to reducing housing costs consists of three pillars:
Building More Homes: In collaboration with the states through the National Cabinet, funding is provided to support the commitment to build 1.2 million new homes in well-located areas over the next five years.
Direct Support to Vulnerable Renters: This includes higher Commonwealth Rent Assistance payments and other cost-of-living supports. Significant increases in funding for social and affordable housing are also planned, including through the Housing Australia Future Fund, expected to provide $500 million annually. The goal is to build 55,000 new social and affordable homes by 2029, representing a 12% increase in the total number of available homes.
First-Home Buyer Assistance: This pillar is currently lacking, with the Help to Buy scheme—intended to allow government contribution of up to 40% of equity for first-home buyers—stalled in parliament. Without this scheme, the government relies on the previous Home Guarantee Scheme, enabling first-home buyers and single parents to purchase with small deposits and without paying Lenders Mortgage Insurance.
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