During the election campaign, the economic proposals from both Labor and the Coalition have faced significant criticism, with seasoned commentator John Kehoe describing them as "dismal". Kehoe, the economics editor at the Australian Financial Review, expressed his concerns on Today, referring to the "ridiculous housing policies" introduced by both parties that could potentially elevate property prices and debt levels. He remarked that this election marks the bleakest economic discourse he has witnessed in his four-decade career.
The Coalition’s strategy to address the housing crisis includes offering substantial tax breaks for first-home buyers, potentially saving them $11,000 annually, which could total $55,000 over five years. They have earmarked $1.2 billion for this initiative, though some economists warn that the actual cost might soar to four to eight times that amount.
On the other hand, Labor is also prepared to invest heavily in improving housing affordability, pledging $10 billion to construct 100,000 new homes over the next eight years. Additionally, their plan includes providing free lenders mortgage insurance to first-home buyers, a requirement for one-third of mortgage applicants. However, if this scheme leads to defaults, the financial burden would fall on Australian taxpayers.
Kehoe cautioned that while Labour and the Coalition unveil these ambitious housing initiatives, neither party demonstrates the economic acumen once characteristic of former leaders like Bob Hawke, Paul Keating, and John Howard, who were not afraid to make tough decisions. Instead, he perceives a trend towards short-sighted, superficial solutions rather than long-term strategies.