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Wednesday, 2 November 2011
Page: 8078

Treasury

(Question No. 1224)

Senator Ludlam asked the Minister representing the Treasurer, upon notice, on 21 September 2011:

With reference to the answers to question no BET 267 and BET 268 taken on notice during the 2011-12 Budget estimates hearings of the Economics Legislation Committee in June 2011:

(1) Has the department ever analysed the effect on house prices or the inflationary impact of the First Home Owner Scheme using informal modelling.

(2) Has the department ever provided any briefings, research or modelling on the effect of the First Home Owner Grant Scheme or the First Home Owners Boost Scheme.

(3) On what basis was the comment made that the first home owners grant 'had a small influence on house prices' in the Australian Financial Review article 'First home grant doubt' on 25 August 2011.

(4) How does the Treasurer define 'a small influence' and can he quantify that statement.

(5) To what extent has the 'small influence' neutralised the assistance the grant provides to home buyers, that is, has it translated to an increase in house prices similar to or greater than the grant itself.

(6) Has the department provided any advice to the Government about the impact of housing demand subsidies more generally.

(7) Can details be provided on whether a Council of Australian Governments agreement currently exists for states and territories to investigate the effectiveness of first home owner schemes; if so, when are these reports due and will this information be public.

Senator Wong: The Treasurer has provided the following answer to the honourable senator's question:

The First Home Owners Scheme was brought in on 1 July 2000 to assist First Home Buyers in purchasing their first home.

In 2004 the Productivity Commission report on “First Home Ownership” noted that “the FHOS has been at most a minor contributor to the recent surge in prices” since the grant was introduced. The report also notes that “Over the long term, as supply has time to respond to demand pressures, the grant is likely to have even less impact on house prices.”

Given the marginal impact on house prices as noted by the Productivity Commission, the First Home Owners Boost provides a welcome funding boost for those entering the first home market.

COAG has implemented a Housing Supply and Affordability Reform (HSAR) Agenda looking into a range of issues impacting on the supply and affordability of housing, including the First Home Owners Scheme. It is expected that the findings of this examination will form part of the HSAR Working Party's report to the Council of Australian Governments in late 2011.