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With a ballooning rental crisis, high cost of living, and growing population, the 2023–24 Australian budget delivered today (9 May) at 7:30pm AEST by federal Treasurer Jim Chalmers is likely to focus on measures to address the housing shortage and ramp up structural spending pressures.
Alongside key features that have been hinted such as energy rebates and cost-of-living relief, the federal budget is expected to address key issues around the shortfall in housing that is set to worsen as demand outpaces supply.
The Reserve Bank of Australia’s (RBA) latest forecasts highlighted two key factors impacting the economy in the last three to six months, which were the “faster-than-expected” return of international students and working holiday-makers, alongside high energy costs.
Given a growing population increases, the demand for housing, and high energy costs impact most Australians’ hip pockets, these issues are expected to form the cornerstone of the federal budget.
During a press conference, Mr Chalmers said: “Housing is one of the big priorities of this government.
“In the rental market, the best thing we can do is build more supply, build more stock.”
Build-to-rent tax cuts
Mr Chalmers has also hinted there will be “other announcements” around housing and has flagged tax breaks for build-to-rent projects.
The government has pledged to lower the withholding tax rate from 30 to 15 per cent for build-to-rent housing projects.
“I was really proud to have worked up for the Prime Minister and for the Premiers and Chief Ministers which is some tax breaks to encourage investment in build-to-rent properties and that will help as well,” he said.
It comes as the first jointly funded build-to-rent-to-buy pilot is underway in Canberra, with 22 affordable rental dwellings expected to support vulnerable women.
Under the proposal, the National Housing Finance and Investment Corporation (NHFIC) will provide up to $7.14 million in concessional loans from the NHIF to the project that will be combined with a $4.5 million grant from the ACT government.
The government has also announced a $2 billion boost to the NHFIC’s liability cap from $5.5 billion to $7.5 billion from 1 July 2023, which will enable the NHFIC to support more social and affordable rental homes through lower costs and longer-term finance to community housing providers.
Home Guarantee extension
The government has also expanded its Home Guarantee criteria to include more people including permanent residents, cohabiting friends, and previous home owners.
Eligibility criteria for all elements of the scheme — including the First Home Guarantee, the Regional First Home Buyer Guarantee, and the Family Home Guarantee — will be expanded from 1 July.
The changes include altering the definition of a “couple” from meaning married or de facto relationships to “any two eligible individuals”.
An expansion to incorporate permanent residents into the guarantee schemes and more single guardians to use the Family Guarantee as well as a change that will allow previous owners to join the scheme.
While the criteria has expanded to allow more people to apply, the allocations remained at 35,000 per year for the First Home Guarantees, 10,000 places per year under the Regional First Home Buyer Guarantee, and 5,000 places per year to 30 June 2025 under the Family Home Guarantee.
Housing Australia Future Fund
Indeed, the backbone of the government’s last budget announcement was its National Housing Accord for an additional 1 million new homes over the next five years.
Central to achieving the 1 million housing target has been the government’s signature Housing Australia Future Fund, which will establish a $10 billion fund to build 30,000 new social and affordable homes.
The Housing Australia Future Fund will invest the $10 billion and then spend the earnings, up to $500 million a year, on affordable and social housing projects.
The fund would build 20,000 social housing properties, with 4,000 of those to be allocated for women and children fleeing domestic violence and for older women on low incomes at risk of homelessness.
The piece of legislation awaits parliamentary approval, with the Coalition and Greens rejecting the bill and Jacqui Lambie throwing support.
Mr Chalmers said: “I understand some people want more built and some people want fewer built but to vote against the Housing Australia Future Fund at a time when there’s such extreme pressure on the housing market just beggars belief.”
Potential surplus
Another key area that has garnered attention is the budget deficit or surplus.
During his first budget speech (25 October 2022), Mr Chalmers announced Australia’s deficit is “forecast to be $36.9 billion”, identifying around $22 billion in savings over the next four years.
“When we get these welcome upward revisions in revenue … we have let most of that flow through to the bottom line so that we can get the debt trajectory a bit lower and pay less interest on it,” Mr Chalmers said.
“There’s another $17.8 billion in savings in this budget, there were $22 billion in the first — $40 billion of savings and redirected spending, reprioritising our spending compared to $0 of savings in the last Liberal budget.
“One of the key reasons why we need to get this budget under control is to try and get debt levels under control.”
[Related: Budget 2022-23: What you need to know]
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