FOR PRESS: PM. NO. 101/ 1972
HOME PAYMENZ~ ASSISTANCE
Statement by the Prime Minister, the Rt. Hon. William
Mcl~ ahon. C. H., M. P.
The Government has given the closest consideration
to the scheme for tax deductions on housing loans interest, which
the Labor Party has announced and rejected it as unworkable. It
is against the interests of young married people.
Administratively, it is complicated and, if tried,
would have to be abandoned.
The Labor Party's claims that the scheme is superior to
the Government's proposals are false.
The Government's scheme gives the better benefit to a
majority of home owners, particularly those with incomes not
above average earnings who represent more than 70 per cent of home
owners. We offer a straight.-out subsidy a cheque from the
Government for up to $ 250 the first year to help meet interest on
housing loans. It reduces by $ 250 a year in each succeeding year
and is not taxable.
Those eligible must be 35 years or under, building or
buying their own home and living in it.
The grant will also be paid in full to married couples
where only one is under 36 but both are liable for interest and
jointly own the house. It will be paid to the eligible partner.
It is better because it gives a greater benefit to more
young married people in the first three years, which is when they
need it most. U~ nder the Labor scheme, the family man with children
is nenalised. Th~ e larger the family, the greater the penalty. I
give you a few examples. ./ 2
Under the Labor scheme, a man earning $ 4,000 a year would
be paying $ 800 interest on an average loan.
If unmarried or without dependants, his tax reduction
would be $ 205. If he had a wife and three children, all he would get
would be $ 155. If on $ 5,000, he would pay $ 1,000 in interest and get a
tax reduction of $ 279 if he was without dependants.
If he had a wife only, he would get $ 263. If he had a
wife and two children, he would get $ 237 and if he had a wife and
three children, $ 1225 a figure below the Government's first year
grant. This makes it crystal clear that the married man with
a family is the one penalised.
One other point of important difference is the fact that
under the Governmc-nt* s scheme, young married people will know
precisely what their benefit would be.
Under the Labor scheme, it would go in their tax return
as a deduction and they would not know clearly and quickly what
benefit they were getting.
The Labor scheme will give a big concession to a single
taxpayer who may or may not intend to marry.
fir Whitlam said quite clearly in his Policy Speech that
" all taxpayers whose actual income i~ s $, 4,000 or below will be
eH" Et-' tlcd to deduct 100 per cent of their interest rate payments" s.
This makes the single taxpayer eligible along with young
married people. It gives him a golden opportunity to speculate in home
building and buying at the expense of the Government.
It should be remembered also that on August 9 this year,
the ALP's spokesman on housing ( Mr Uren) said he did not accept that
interest on housing loans should be tax deductible as this
assisted the wealthy rather than the poor.
How right he is. That is precisely what the Labor
stq-iemc would do.
Labor claims that its total benefit on a 25 year loan
would be $ 4,000. But the fact is that a majority of home owners are paying
off their loans in 10 to 12 years because of rising in~ comes.
The claim that Labor's cash benefit over a 10 year period
would be twice that of the Government's scheme is also false. / 3
Labor is quoting figures which are not related to housing
loan activity as it exists nor does the Labor scheme concentrate
its maximum benefit in the early stages of repayments when the need
is greatest. Furthermore, the Government scheme is not dependant on
the movement in incomes of home purchasers or of changes in tax
rates. It has substance throughout whereas the Labor scheme is
full of shadows.
CANBERRA, 19 November, 1972