Senator LUDLAM (8:34 PM) —There is a phrase that Senator Milne used a short while ago in her comments, which is ‘missed opportunity’. I just rise briefly tonight to speak on the First Home Owner Grant component of the package, which has been described as a fairly blunt and problematic instrument. As it presently operates, we do not believe that it is the ideal destination for another $1½ billion worth of public funds. The First Home Owner Grant for existing homes increases demand in a market that is already experiencing a critical shortage of supply. It has been described as inflationary, and it is pushing house prices even further beyond the reach of many Australians. It is also of fairly limited use as an economic stimulus when it is spent on existing housing stock, because it does not drive greater construction or do anything to relieve the supply shortages. It does not improve employment in the same way as it would if it were spent on new homes.

The government paid to some heed to that reality by providing for a greater increase in the First Home Owner Grant for new homes than existing homes, but that does not explain why the First Home Owner Grant for existing homes is being increased at all. This two-tiered approach to the grant, with more money available to purchasers of new homes, will bring its own set of problems, and these were drawn out by Senator Rachel Siewert’s additional comments in the report of the inquiry into housing affordability last year. Essentially, it will encourage homebuyers with limited means to purchase cheaper new homes on the fringes of cities where people struggle with limited access to services and employment and much higher transport costs, and it will unfairly privilege wealthier first home buyers who can afford to contemplate purchasing a new home in a more central location with access to better services.

That leads to the key issue with the First Home Owner Grant: it is not means tested. With so many people homeless and with so many low-income households struggling to meet the cost of rental accommodation with no hope of contemplating purchasing a home, it is very difficult to think of justification for spending limited public resources helping people who do not need it. This issue was raised earlier this year with the first home saver accounts, on which the government also refused to support Greens amendments as to means testing. I simply do not understand, given the scarce resources in the Commonwealth housing budget in particular, why we would be targeting resources to people who do not actually need assistance. The First Home Owner Grant should be means tested. It should be single tiered. It should be designed to assist people to purchase affordable, centrally located first homes under circumstances where they would not be able to achieve that outcome unaided. The Greens are not in complete opposition to the First Home Owner Grant. We just believe that it should be properly targeted to make use of our scarce resources. The money thus saved by not spending money through this grant on people who do not actually need it could be used to boost the economy in other ways, principally, we would suggest, by spending it on housing solutions for people who are really doing it tough, such as the homeless.

Another worthy alternative, as Senator Milne indicated earlier, would be directing the money to upgrade the energy efficiency of Australia’s housing stock, which would lower living costs, create employment, stimulate the economy and reduce carbon emissions, all at the same time. Instead we have a blunt, untargeted increase in the First Home Owner Grant to people who do not necessarily need it in the first place, which we believe will prove inflationary. So I go back to Senator Milne’s earlier phrase which we could perhaps apply to this stimulus package overall: ‘a missed opportunity’.