- Treasury has revealed that several weeks into the HomeBuilder scheme, just 247 applications have been received.
- The government forecasts 27,000 Australians will eventually build or renovate their homes using the grants.
- While some states have not yet submitted data, it may suggest the scheme’s criteria remains too exclusive.
- Visit Business Insider Australia’s homepage for more stories.
If the federal government was expecting a flood of interest in its HomeBuilder scheme, it probably isn’t a fan of the latest figures.
Back in June, Scott Morrison unveiled the $680 million policy, which would hand out $25,000 grants to eligible Australians looking to build or renovate their homes.
It was in effect a major stimulus measure intentioned to drive up demand for construction, create work for tradies and kickstart the economy at a time Australia needed it most.
Several weeks since states began accepting applications, however, and it appears the policy may have missed the mark somewhat.
On Friday, Treasury revealed to the COVID-19 select committee that uptake had been less than spectacular.
“As of 7 August, South Australia had received 157 applications, Tasmania had received, by the 4 August, 90 applications, and those are [all] the applications that have been received to date,” Jenny Wilkinson, Treasury’s fiscal group deputy secretary, told the committee.
“To date, no payments have been made…because the criteria for payment hasn’t occurred.”
They’re hardly the kind of numbers that are going to pull Australia out of recession, that’s for sure. In fact, even if all 247 applications do receive their grants, it’s less than 1% of the total expected to roll in.
To be fair, most states only opened the program in the last three weeks, with the ACT yet to cut the ribbon. States outside of South Australia and Tasmania haven’t even provided numbers yet, so it’s also possible there are a few hundred more budding projects that haven’t been reported yet.
But the early indicators do highlight a few key problems that have haunted the scheme from the get-go and that to date haven’t been addressed.
Firstly, the criteria is incredibly restrictive. Not only does it cap the incomes of eligible applicants, but it also requires a fairly significant outlay at a time when unemployment is rising steadily.
“There aren’t too many battlers out there who have a lazy $150,000 who will see this announcement today and say, ‘I’m going to go between now and December 31 and sign a contract for a project which is worth more than $150,000’,” Federal Opposition leader Anthony Albanese observed.
The scheme did, however, have its sights set on the right target. Residential construction activity has been falling, with 40,000 fewer homes expected to be built in the next 12 months compared to last. While that has implications for the construction sector and the economy, it also could have worrying consequences for the property market as well.
Reserve Bank Deputy Governor Guy Debelle last year warned that at the current pace, there was another housing shortage approaching which could again drive property prices higher at an undesirable clip. However, with migration being frozen for the foreseeable future, this shortfall may yet be mitigated.
Another part of that reluctance may simply come down to how the process works, with the $25,000 grants not actually being handed out before construction has progressed.
In other words, no Australian can be given a guarantee they’re going to get the money until they have signed contracts and have done enough building or renovating. Instead, they simply must accept that the money will be forthcoming and lock themselves in for an expensive build or renovation in the meantime.
Given a key objective of the policy is to ensure confidence, it hardly seems like it’s offering very much.
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