Property Investors Benefit Most From Federal Housing Budget Allocation

An extensive analysis has revealed that federal government spending on housing, which notably includes tax breaks for property investors, amounts to approximately $27 billion annually. This discovery aligns with the recent initiative by the federal government to launch the initial phase of funding tenders through the $10 billion Housing Australia Future Fund, aiming to alleviate the pressing housing affordability crisis.

Funding Opportunities for Housing Projects

Monday marked the opening day for funding applications, with community housing providers, local councils, and governments across states and territories poised to seek monetary support from the Housing Australia Future Fund. Housing Minister Julie Collins emphasized the urgency of commencing housing construction projects within the first half of the year, backed by a $2 billion social housing accelerator.

"We are working at every opportunity to get as many homes on the ground as quickly as we can, understanding that this is a difficult task and we can’t turn this around immediately," Collins stated, underlining the government's commitment to expediting the process.

Shift in Government Housing Policy

The Per Capita think tank, after thorough scrutiny, has disclosed that the lion's share of government housing expenditure, when factoring in tax concessions, tends to favor property investors. Considerable changes in government policy over the past three decades have resulted in a pivot from constructing social housing to supplementing rent and stimulating investor activity through fiscal incentives.

The current scenario is such that investor tax concessions have surged from a modest $1.5 billion in 2000 to a staggering estimated $18 billion now. Consequently, the proportion of government housing funds allocated to the highest earners has increased dramatically from 9 percent in 1993 to 43 percent in 2023.

Conversely, the proportion of funding dedicated to the lowest income earners has diminished from 44 percent to 23 percent, as government strategy has shifted towards using Commonwealth Rent Assistance, amounting to an estimated $4.8 billion in the 2022-23 period, as a principal method of support for low-income households in lieu of direct social housing funding.

Broader Government Initiatives for Housing

The Albanese administration's housing strategy encompasses the Housing Australia Future Fund, a newly envisioned national housing and homelessness plan, and the drafting of a national rental accord. While these measures were not included in the $27 billion spending estimate, they signify a renewed governmental focus on influencing housing market dynamics, according to Per Capita executive director Emma Dawson.

Further addressing the housing sector's labor shortages, Collins mentions ongoing discussions to augment the workforce, potentially by recruiting additional tradespeople from overseas. The government's efforts also extend to alleviating the cost of living for low-income families through projects like the recent $206 million joint initiative with the NSW government focused on energy upgrades and solar panel installations for social housing and low-income renters.

"Saving energy means saving money, which is why we’re continuing to deliver cost-of-living relief for families that need it most without adding to inflation," remarked Prime Minister Anthony Albanese, providing insight into the government's comprehensive approach towards more affordable and energy-efficient housing.

housing, investors, government