Home savings scheme approved
4 February 2008
Federal cabinet has approved the first home owners scheme offered during the election campaign by Prime Minister Kevin Rudd to help low income earners save for their mortgage loan with a tax effective savings account.
Treasurer Wayne Swan said, "This is a modest long-term measure to assist more young Australians to achieve their dream of home ownership,"
"Young Australians saving for their first home will attract a government contribution equivalent to 15 per cent discount on their marginal tax rate."
The scheme designed to help low income earners will start in the second half of this year with a minimum 15 per cent government contribution on after-tax contributions of up to $5,000.
"This initiative will help boost national savings with the accounts anticipated to hold around $4 billion on savings after four years,"
"There have been refinements to this scheme that have improved it, particularly for low income earners," he said.
"Also in terms of simplicity - because what we wanted to do was to have a scheme that was simple, that was easily understood - and given the benefit of all their experience in administrating the scheme is now simpler, it puts a lesser burden on employers and delivers the money to those people who deserve it, and it does it promptly."
Mr Swan added that the Rudd Government understood the challenge of housding affordability and the current inflation problem, which is set to see the Reserve Bank of Australia hike interest rates one again.
"There are a lot of people out there who are doing it very tough and we understand that," he said.
"I believe that the great bulk of people who are in housing stress out there, are in housing stress because of the affordability crisis in housing, not necessarily because of some personal fault of their own."
"I for one know a lot of people in this situation, and when you have had six interest rate rises in three years ... there are a lot of people who are in mortgage stress."
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