First-home buyer plans a poor joke

The Australian 12:37pm May 13, 2019

John Durie

The sheer hypocrisy of politicians is a wonder to see, with Prime Minister Scott “Cry Me a River” Morrison’s last-minute $500 million scheme to encourage first-home buyers a case in point.

Two years ago, when he unveiled his $6.2 billion bank tax on budget night, Morrison was asked about the banks’ reaction and he responded: “Cry Me a River.”

He has kicked the bank can down the road consistently ever since, being bettered only by the ALP, which has stupidly and mindlessly agreed to provide the same deposit backing as the Coalition.

On the one hand the politicians are doing their very best to make it harder for the banks to lend money to anyone, let alone first-home buyers.

On the other, in the final days of an election, they think it is a good idea to hand out subsidies.

You have to wonder how this fits in with the lectures on responsible lending and who in the government is going to do the due diligence to enable the guarantees to help first-time home buyers.

The idea may have some superficial appeal to a politician like Morrison, who has run a brilliant campaign on the theme “vote for me because I’m not him (Bill Shorten)”. This is apparently because the government has no other ideas and given the economy is weakening it is looking less smart by the day, but when you spend two minutes thinking about it is a poor joke.

For starters the home loan market is $1.8 trillion, so a $500 million guarantee scheme will impact 0.27 per cent of the market.

If the banks have to be responsible lenders, who in the government will provide responsible guarantees? And if the idea is to take the brakes off bank lending, then lets get the Australian Prudential Regulation Authority involved on a sector-wide basis.

The first-home loan market is not the problem area for banks, which are more concerned about dodgy loans to people who borrowed too much and who now have negative equity because their home values have plummeted.

Morrison’s mickey mouse proposal comes as the Commonwealth Bank joined the other big banks in outlining third quarter numbers, which showed a nine per cent fall in profits excluding the $714 million increase in remediation costs.

Loan impairment expenses are also rising, suggesting increased stress in the economy.

The bottom line is, let’s hear how the politicians plan to kickstart the entire economy, not throwaway lines on so-called first-home buyer support.