Plan to extend First Home Owners Grant
14 September 2001
The Federal Government is planning
more help for home buyers and the housing industry in an effort to maintain the domestic
economic recovery in the face of growing global uncertainty.
Senior government advisers have indicated that the
$14,000 grant for first-time buyers of new homes will be extended, and ministers in recent
days have highlighted the importance of the labour-intensive housing sector in maintaining
economic momentum.
The Minister for Employment, Mr Tony Abbott, emphasised
the role of the housing recovery after figures showed a sharp rise in full-time jobs in
August. Construction, he said, was "a sector where full-time employment
predominates".
Australian Bureau of Statistics employment figures for
August showed a rise of 77,200 jobs, reversing the previous month's record slump in
full-time employment and cutting the unemployment rate to 6.8 per cent.
Housing is a driver of economic growth in Australia, and
it is in the middle of an upswing. Figures on housing, also released yesterday, showed a
10 per cent rise in dwelling commencements in the June quarter, after four successive
quarterly declines in response to the introduction of the GST last July.
The Treasurer, Mr Peter Costello, said on Wednesday that
the 0.9 per cent economic growth rate for the June quarter was partly underpinned by the
emerging housing recovery, which was supported by the Government's first-home owners
grant.
"We want to keep domestic conditions expansionary in
the way they are in the housing sector," he said.
The scheme offers a $14,000 grant for buyers of new
homes, at a cost of $150 million over 10 months. Industry has been pushing for an
extension of the grant for first-time buyers of new homes at $10,000 and a lower amount
for buyers of existing homes. It is understood the Government has accepted the need to
continue the new-home incentive at a higher level beyond December 31.
The August jobs turnaround is also supported by continued
strong retail spending and the recent turnaround in housing.
The underlying trend in the job market, after excluding
volatile swings, shows the market is picking up. Over the past six months employment
growth has averaged 16,000 a month, compared with average job losses of 7,000 in the
previous six-month period.
The turnaround could prevent the unemployment rate from
breaching the 7 per cent mark, analysts say.
But the August result reinforced doubts about the
reliability of the Bureau of Statistics' labour force survey, which has become
increasingly volatile over the past year.
The recent strength in the economy puts Australia in a
better position to withstand the possible fallout from an Ansett Airlines collapse, in
which 16,000 jobs are at risk, and the impact of a prolonged downturn in the export
market.
The Department of Employment's leading indicator of
employment also reinforced the recovery scenario, posting a second rise in July that
pointed to stronger jobs growth next year.
"While it is too early to declare that the indicator
has turned, the employment outlook for 2002 is improving," the department said.
The August jobs survey showed a rise of 77,300 jobs in
seasonally adjusted terms, driven mainly by an increase of 72,600 full-time jobs. This
reversed June's record decline of 79,000 full-time jobs.
In August the unemployment rate fell 0.1 to 6.8 per cent,
but in mainland Australia it ranged from a low of 6 per cent in NSW to 8.2 per cent in
Queensland. The participation rate - the proportion of the working-age population in a job
or looking for one - rose 0.4 percentage points to 64 per cent.
The August result, however, could have been boosted by
the ABS, which employed 40,000 people on a casual basis to conduct the 2001 Census.
Reproduced from The Australian Financial Review, 14
September 2001
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