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The Coalition denounced the government’s expanded first home buyer scheme hours after its announcement Tuesday, warning the policy will inflate housing prices and benefit wealthy families while doing nothing to address supply shortages.
Shadow Assistant Minister for Competition and Treasury Dave Sharma said Prime Minister Anthony Albanese admitted the expanded 5% deposit program will make housing more expensive, undermining the government’s affordability objectives.
“We just had the Prime Minister this morning admit that Labor’s housing policy is going to make housing more expensive,” Sharma said in an interview with Sky News. “And I don’t think anyone thinks, especially people who are aspiring to buy a home, the policy of the government to make housing more expensive is a good idea.”
Sharma said removing income and property price caps from the mortgage insurance scheme means it will now be available to wealthy buyers, including what he called “the children of billionaires.”
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“This availability of mortgage insurance is no longer means tested,” Sharma said. “All it is going to do is push housing prices up and do nothing to address supply. That is the recipe for a terrible housing policy and worst home affordability.”
The government announced Tuesday it would immediately remove all caps on the scheme, allowing every first-time buyer to access mortgages with 5% deposits backed by government insurance. Housing Minister Clare O’Neil said the policy would reduce deposit saving time from 11 years to two or three years in Sydney.
Treasury modelling suggests the expanded program will increase property prices by approximately 0.5% over six years, with 185,000 Australians already having used the scheme under its previous capped structure.
Sharma challenged the government’s broader housing record, saying the Housing Australia Future Fund has delivered minimal results despite being the administration’s signature housing policy.
“The government’s signature housing policy, the Housing Australia Future Fund, has delivered the equivalent of single digit homes in the Sydney market,” Sharma said. “They haven’t spent nearly any of the money that has been appropriated to them. They are very cagey about the figures.”
He said the government has been in office for three and a half years since inheriting a housing affordability crisis, with the mortgage insurance expansion representing its only concrete policy response.
“Their only policy, this is the expansion of mortgage insurance, is pushing housing prices up,” Sharma said. “The government’s got to do better than that.”
When asked whether opposing the scheme risks alienating young voters who supported Labor at the last election, Sharma said young people want policies that make housing genuinely more affordable rather than more expensive.
“Young voters want to know that the government’s housing policy is going to make housing more affordable,” he said. “This is what economists have been warning.”
Sharma also addressed the Reserve Bank’s decision Tuesday to hold interest rates at 3.60%, suggesting further rate cuts this year appear unlikely based on Governor Michelle Bullock’s cautious language.
“The language from the RBA Governor, Michelle Bullock yesterday, was very cautious,” Sharma said. “She noted that, you know, inflationary pressures were on the rise.”
He pointed to recently released budget figures for the 2024-25 fiscal year showing government spending increased 8% last year, with government spending as a share of the economy reaching its highest level in 40 years.
“That is adding inflationary pressure to the economy,” Sharma said. “If you’ve got government spending growing at four or five times the rate of the economy, that is putting huge inflationary pressure on suppliers, on labor, on everything else.”
Sharma said the Reserve Bank’s statement signals rates will likely remain on hold, with some experts predicting the next movement could be upward rather than downward.
“I think if you read the tea leaves yesterday, they’re saying, you know, it’s quite likely that rates will be staying on hold and some experts are even predicting that the next move in rates will be up and that we’re at the end of the current easing cycle,” he said. “That is bad news once again for people looking to get in the housing market.”
The Reserve Bank has cut rates three times in 2025 after holding them elevated throughout 2024 to combat inflation that peaked in 2022. Bullock said Tuesday that recent data suggest upward pressure on prices beyond what the bank expected in August, though both headline and trimmed mean inflation remain within the 2-3% target range.
Sharma, a former Australian ambassador to Israel, also addressed the U.S.-led Gaza peace plan announced Monday by President Donald Trump and Israeli Prime Minister Benjamin Netanyahu.
He said Arab leaders have welcomed the framework and called on Australia to pressure Hamas and its regional backers to accept the agreement.
“Countries like Australia firstly should be calling on Hamas and calling on the backers of Hamas Turkey Qatar Egypt and others in the Arab world to accept this deal as the best prospect for ending the conflict but also the best prospect for laying the groundwork for a more peaceful, more secure, more hopeful future for the Palestinian civilian population,” Sharma said.
He acknowledged Netanyahu faces challenges selling the plan to his coalition partners but said the focus should be on ending the conflict.
“Hamas is a variable in this, but I think importantly, President Trump said, there’s this deal on the table, and if you don’t accept this deal, well, look, the war’s going to continue until you’re forced by force of arms to give up your leadership ambitions,” Sharma said.
The former ambassador acknowledged Hamas has shown no regard for Palestinian civilians throughout the conflict and may be reluctant to accept terms requiring the group to disarm.
“Hamas is being asked to basically sign their own extinction warrant,” Sharma said. “But I would say that, you know, the agreement puts in place an amnesty for Hamas leaders that give themselves up, safe passage to a third country.”
He said safe passage and amnesty provisions have motivated individuals to relinquish terrorist campaigns in other conflicts, even when organizations as a whole resist.
“We’ve seen with the collapse of regimes or governments or terrorist groups around the world that often, you know, safe passage, amnesty and the prospect of an end to the fighting can often be enough to motivate individuals, even if it’s not the organisation as a whole, to basically relinquish their terrorist campaign,” Sharma said.
He noted Hamas has suffered significant military losses, including senior commanders, and expressed hope that concern for civilians could influence the group’s decision.
“Hamas has obviously been subject to a lot of military pressure. They’ve lost a lot of senior military leaders,” Sharma said. “I hope, you know, reason and some concern for their fellow humans can prevail for once.”
The Coalition’s opposition to the expanded home buyer scheme marks the latest clash over housing policy between the government and opposition. Albanese criticized the Coalition Tuesday for opposing the Housing Australia Future Fund, build-to-rent schemes and the deposit program while failing to appoint a housing minister during their decade in government.
“They oppose every single measure that is put forward on housing,” Albanese said. “They did that when they were in government, they did nothing. And now, in opposition, they have blocked legislation along with the Greens political party in the Senate during the first term.”
The government maintains its $43 billion Homes for Australia program targets 1.2 million new dwellings through a combination of supply increases and demand-side assistance. Officials have allocated $3 billion in incentives for state and territory governments to accelerate housing delivery.
Sharma acknowledged that increasing housing supply will take time but criticized the pace of government action, saying the Housing Australia Future Fund has spent minimal appropriated funds while promising future construction.
“They are very cagey about the figures. They’re promising more homes in the future, but their contribution to the housing supply at the moment is, you know, basically negligible,” he said.
Reserve Bank Governor Bullock said Tuesday she is not confident government housing initiatives will deliver meaningful supply impacts within two years, noting construction timelines create natural delays in addressing affordability challenges.
The political divide over housing policy comes as Australian property markets continue experiencing elevated prices despite three interest rate cuts this year. Sydney remains one of the world’s least affordable housing markets, with median prices requiring multiple years of household income to purchase even with government assistance programs.
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