Coalition's homebuilder scheme attracts less than 250 applicants and 'no payments have been made'

Fewer than 250 people have applied for the Morrison government’s homebuilder scheme, officials have revealed, despite the hype from an industry association that it was the “most effective stimulus in decades”.

The federal government announced the $688m scheme just over two months ago, offering homeowners up to $25,000 to either build a new home or substantially renovate an existing one in a bid to prop up demand in Australia’s construction sector during the coronavirus-induced economic crisis.

But the government opted against passing new legislation to deliver the scheme, meaning it is relying on agreements with individual states and territories to provide the grants.

Appearing before the Senate’s Covid-19 select committee on Friday, Treasury officials revealed that the government was only aware of 247 formal applications so far. These included 157 in South Australia and 90 in Tasmania.

“And they’re the applications that have been received to date,” Vicki Wilkinson, the head of Treasury’s social policy division, told the committee. “To date no payments have been made.”

The government has previously predicted that the scheme will support about 20,000 new builds and 7,000 substantial renovations. It has previously said tens of thousands of people had registered their interest, but these are not formal applications.

Officials on Friday played down the sluggish start to the program, saying the majority of states and territories had only begun accepting applications throughout the course of July, whereas New South Wales and Victoria had started to do so in just the past week.

Wilkinson said there was no pre-approval process and the work needed to be well underway for the payments to be delivered.

“The application is received, work must commence within three months of the contract being signed and then the payment occurs at different milestones depending on the type of build or the renovation,” she said.

But Labor’s housing spokesperson, Jason Clare, denounced the homebuilder scheme as “homeblunder”. Writing on Twitter, he said the new figures showed the Morrison government was “great at slogans – but hopeless at delivery”.

The leader of the Greens, Adam Bandt, said the “absurd granite benchtops grant scheme” was “doomed from the start”. Bandt wrote on Twitter that Australia should be building 500,000 public and community homes instead.

The criticism came a day after the housing minister, Michael Sukkar, seized on data showing strong growth in new home sales to declare homebuilder was “keeping tradies in jobs and helping more Australians into a new home”.

This week, the Australian newspaper also quoted the Master Builders Association chief executive, Denita Wawn, as saying: “Just today I [have] been told by industry veterans who head some of the largest home building businesses in the country that this is the most effective government stimulus that they have seen in decades in the industry.”

Luke Yeaman, the deputy secretary of Treasury’s macroeconomic group, said on Friday he had been surprised by the strength of some of the home sales figures that had recently come through.

He said housing market activity tended to swing from year to year, and even before Covid-19 there were “cyclical factors” that pointed to a drop from recent peaks.

“On top of that the Covid pandemic has clearly taken a further hit out of activity in that year and then homebuilder provides, if you like, a partial offset to that cyclical effect,” Yeaman told the committee.

Treasury said new builds accounted for 79 out of the 90 applications in Tasmania and 129 of the 157 applications in South Australia. Officials expected more data to arrive in coming weeks.

Under the homebuilder scheme, the contract for construction must be signed between 4 June 2020 and 31 December 2020. The building work must then commence within three months of the contract date. However, this latter requirement has been relaxed for Victoria given the additional lockdown measures.

The scheme has caused unease on the Coalition backbench, with some MPs saying they were nervous about the amounts being spent on stimulus or that the $150,000 minimum spend for renovations would put the subsidy beyond the reach of homeowners outside the capital cities.