Families with a combined taxable income of less than $200,000 are the big winners under Scott Morrison’s new homebuyers’ scheme which will ban millionaires from claiming the “free” cash.
News.com.au has confirmed that a means test will be applied to the new stimulus grants which are set to be announced as early as Thursday.
But the Morrison Government has scotched speculation of GST refunds of up to $50,000 for new home builds. The combined grants to homeowners which builds on existing grants is “in the ballpark” of $25,000.
Stung by accusations that the Morrison Government plans to hand out “free money’’ to the rich, government sources stressed that the scheme will be aimed at low to middle income earners to help them enter the property market.
The Prime Minister and Treasurer were finalising the plan at a meeting of the budget razor gang of cabinet on Tuesday but government sources suggested existing income tests for the first home deposit scheme were a good guide.
These income tests require singles to prove they earn less than $125,000 to qualify for the scheme.
Couples can have a combined income of $200,000 to qualify for the first home deposit scheme that was announced during the 2019 election.
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Bank lenders are responsible for checking applicants income over the previous financial year.
The Prime Minister has not ruled out including major renovations in the scheme but stressed it was “big projects” that employed tradies and supported jobs was the focus of the scheme, not DIY projects at home.
The new scheme will also be designed to help bushfire victims who lost their homes as fires raged across the country over summer rebuild their lives and homes including “bushfire-proofing” their properties.
Millionaires will not be able to claim grants to renovate their homes or build new luxury properties under the proposed scheme which will be temporary to support tradies’ jobs during the coronavirus pandemic.
However, the first home buyers scheme for new houses is likely to be temporarily extended to families that have previously owned property if they meet the income test and eligibility rules.
“House building, residential construction, is going to be one of those gaps we need to address,” Mr Morrison said on Monday.
“We’ll have more to say about this once the details are finalised, but it is about creating jobs and supporting jobs in our residential construction sector.
“The tradies and all the others, the apprentices and others who work in that home-building sector, are a sector we know are going to feel a lot of pain unless we can keep a continuity in the business with house construction.”
As the Morrison Government put the finishing touches on the scheme, there was some good news on the economy with the Reserve Bank declaring the downturn could be less catastrophic than previously thought.
The RBA announced it would keep official interest rates steady at 0.25 per cent on Tuesday.
In a statement, the RBA governor Phil Lowe said there were promising signs that the fallout from the coronavirus in Australia would not be as catastrophic as originally feared.
“The Australian economy is going through a very difficult period and is experiencing the biggest economic contraction since the 1930s,’’ he said.
“Notwithstanding these developments, it is possible that the depth of the downturn will be less than earlier expected. The rate of new infections has declined significantly and some restrictions have been eased earlier than was previously thought likely. And there are signs that hours worked stabilised in early May, after the earlier very sharp decline.”
“The Board is committed to do what it can to support jobs, incomes and businesses and to make sure that Australia is well placed for the recovery.”
Despite that good news, there was also confirmation that many more Australians have ended up on unemployment benefits as a result of the COVID-19 lockdowns.
While Treasury has originally predicted JobSeeker numbers would peak at 1.7 million in September, a Senate inquiry heard that expectation was close to being reached now, after fewer workers than expected were signed up for the JobKeeper wage subsidy scheme.