A better way to buy a home

Caloundra state election

Mathew Hill Independent candidate Caloundra

Right now, if someone meets certain criteria , they can get up to $40,000 in Taxpayer funded benefits to help with the purchase of a new home.Sounds great, right?
Well no, not really; and there are a couple of very good reasons why. Firstly, any money that the government “gives” away right now is effectively borrowed.

Government Deficit

When any government is running a deficit, things like first homers grants are paid for by that deficit spending, to try and say otherwise is at best an accounting trick, at worst dishonest.Any money borrowed has to be paid back, with interest, and money borrowed by Australian governments comes overwhelmingly from overseas, meaning that that interest leaves here and is lost to the Australian economy FOREVER. Secondly, history shows that the price of new houses usually goes up in direct proportion to the size of the subsidies, at least partially defeating the original purpose, contributing to housing cost inflation AND worsening government (meaning our) debt.

Our debt

Remember, that that money is borrowed in the first place, and the interest payable is money not spent on things like schools, hospitals, or, heaven forbid, paying off existing debt.
Another reason is that people who either don’t qualify for the scheme, or already own, or are already paying their home off are effectively subsidising the folk who do qualify.You might make an argument for some level of subsidy to help people into their first home, but it is impossible to make a socially just or economically rational case as to why people who rent, for whatever reason, or live in social housing should subsidise people who have the wherewithal to buy property.

Better Solution

A better solution would be to allow people to take their legally mandated employer superannuation, with a personal contribution of 2% of gross income, and have that money put into a mortgage  offset account for the life of the loan.When the loan is paid out, all of that money held in the offset account would simply be rolled back into the persons superannuation account for that persons retirement.The advantages are several. Firstly, people would own their homes sooner, and save huge amounts in interest payments. Secondly, in these times of low inflation, the real value of the super account would be largely protected by the 2% of income contributions.

Banks

Banks in this country, by and large, source the money they lend out from overseas-With my idea, principal and interest stay in Australia.In both the short and long term this helps our economy by keeping OUR money here.In addition, if people can use their super in this way, it would be possible for lenders to lower the minimum deposit requirements because people would have greater equity in their homes quicker, as well as making it easier for people to borrow in the first place.
We would still get an economic bump from new homes being built, without the penalties associated with the current schemes.
I know that superannuation is a federal government matter, but the grants I am referring to are offers by both state and commonwealth governments, and both suffer the same drawbacks.
The problems and challenges we face in Australia can’t, and shouldn’t be parcelled off, politicians need to work across lines on a map and party borders if real solutions are going to be found.Why not start here?