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Labor bid to boost home ownership

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  • Labor bid to boost home ownership

    Labor bid to boost home ownership

    * Samantha Maiden, Political correspondent
    * June 28, 2007

    TAX breaks could be offered to encourage investment in new housing for middle and low-income families under a Labor plan to boost ownership and affordability.

    Signalling housing affordability as a major election issue, the ALP has confirmed it is considering a range of options to help homebuyers, including tax breaks for investors, negative-gearing incentives and shared equity loans to help first homebuyers.

    John Howard remains under pressure from backbench MPs to offer new solutions to the housing affordability crisis but has ruled out doubling the $7000 first home buyers' grant on the grounds it would only increase prices.

    Although a pledge to keep interest rates low will remain the centrepiece of Labor's strategy, party strategists are also considering new measures to target the creation of new housing stock in the suburbs.

    Opposition housing spokeswoman Tanya Plibersek said yesterday there was no "silver bullet" solution to housing affordability but new measures to encourage investors to build more affordable homes for first homebuyers and renters was crucial.

    She backed programs designed to offer an incentive scheme that targeted investment in affordable housing as a "sensible model".

    "The commonwealth could look at tax breaks or direct grants," she said. "The state government could look at land tax. At the moment, what happens is a lot of new investment in rental accommodation goes into high-value properties because obviously they provide a better return to the investor.

    "In the United States, they have an affordable housing tax credit. So if you are investing in affordable housing, you pay less tax on your other business. Or you could have a better rate of negative gearing."

    However, Ms Plibersek stressed negative gearing for existing investors would not be altered by a Labor government under any proposals to expand investment in affordable housing.

    "You would be particularly looking for institutional investors," she said. "We've got one of the biggest pools of funds under management in the world because of compulsory superannuation and virtually none of it gets invested in affordable accommodation.

    "In fact, our investment goes into affordable accommodation overseas because other countries have better incentives and returns for institutional investors in this area."

    A coalition of housing and community groups at yesterday's National Affordable Housing Summit in Sydney called for a new national affordable rental incentive to boost investment by super funds in low-rent housing.

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx