First Home Owners’ Scheme, MPs Resettlement Grant – Interview with Neil Mitchell, 3AW

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First Home Owners’ Scheme, MPs Resettlement Grant – Interview with Neil Mitchell, 3AW


Interview with Neil Mitchell, 3AW

Tuesday, 14 October 2003
11.25 am

SUBJECTS: First Home Owners’ Scheme; MPs Resettlement Grant


(inaudible) with the Federal Treasurer, Peter Costello. Good morning.


Good morning Neil.


Okay, well I have talked with the Premier about the problem with the

First Home Buyers’Grant, $7,000 grants going to babies as young as one,

can you fix it, will you fix it?


Oh, it should never have happened.


Well, whose fault is it?


The Victorian Government. This is, we, I read it in the newspaper today,

it is the first I have heard of it. And I cannot believe that the Victorian

Government legislation has allowed toddlers to get $7,000 grants. It

should never have occurred. Now, I see Mr Brumby is going to amend his

legislation today, but it should never have occurred, it should never

have been allowed under the Victorian Government’s legislation.


Well, does it need Federal legislation as well? Some in the industry

are suggesting to us, the only way to sort it out really is to get all

the States and you involved.


It doesn’t require any federal legislation. The Federal Government doesn’t

have any legislation. The State Governments have legislation that provide

terms and conditions for first home owners. When they pay out grants

they come to the Commonwealth Government and they say, we have paid out

so many grants, we want reimbursement. And they get it. But they are

only, and this is the agreement that we have got, they are only supposed

to be paying out grants to people who are buying or building a home,

and buying or building a home to be used as their principal place of

residence. Now a toddler doesn’t buy or build a home. And a toddler doesn’t

have a principal place of residence. I can’t believe that they have paid

it out.


What, is that the only condition you put on the scheme? Is that the only

Federal condition?


Oh no, we have also got conditions that the States and Territories introduce

legislation to prevent abuse. So they are supposed to have had a requirement

that you are buying the house yourself, it can’t be your parents buying

you are buying the house yourself. I don’t even know how a toddler could

sign a contract. I mean, it is unthinkable to me, to buy a house you

have got to sign a contract Neil. It is unthinkable to me that a toddler

could sign a contract. So, if the person who is buying the house, whose

name is on the contract, and the person who is going to live in it. Now

a toddler can’t live in a house.


Okay. But we have got a situation where both Federal and State are involved.

The loophole has existed in Victoria. Is it happening in other States

as well?


Well, now I am going to contact the other States and see whether any

other State has allowed this situation to happen. I don’t believe they

would have.


It’s not entirely beyond your control though is it? I mean there are

other aspects, for example, and the Premier raised this, he wants it



You see, well let’s just stick on toddlers because you know, I think

what happened in the Herald Sun today, and this is the first I read about

it, was the State Government having paid money to toddlers didn’t put

its hand up and say, we should never have done it, did they? They tried

to move it on to…


Well, no, no, the Premier said it was immoral, it was immoral for people

to be doing this.


So why did his legislation allow it?


Well I guess it is an error. You all make errors don’t you?


Okay, well, if you read the, if you read it carefully, the Victorian

Government didn’t say, it is our fault we made an error. They tried to

suggest that somehow this was caused by the Commonwealth. I just want

to leave your listeners under no misapprehension, the Victorian Government

enacted legislation and paid these grants and the Commonwealth never

knew about it until today. And that is why the Commonwealth will be seeking

the Victorian Government to repay to it all of the money that it has

paid out to these toddlers.


How much is that? We don’t know?


Well, according to the Sun, and it’s all I know about it, it looks to

me as if there’s probably about 5, 8, 12, 17, 27 maybe 30 such grants

have been paid.


Well okay.


The other thing I want to…


…remain in dollars.


…Neil is that the Commonwealth Government doesn’t know who this paid

to. We don’t have a list of who gets it. What happens is that the States

set up the legislation, the States receive the applications, the States

make the payments and after they have made the payments they come to

the Commonwealth Government and they ask for a reimbursement.


Okay. So you are going to ask for the money back? You are going to make

sure the loophole is closed?


Well, we can’t close the loophole, that’s in the Victorian Government



Okay, are you…


We will be asking for the money back. The Victorian Government should

never have paid it.


Will you accept the point from the Victorian Government that they want

to cap such grants to properties, I think it is $500,000? At the moment

you have got million dollar properties getting the grant.


Well look, this is an agreement, this is an agreement between all the

States and the Commonwealth. Every State has signed up to this, including

Victoria incidentally, that everybody who is buying their first home

and living in it, not toddlers, would be eligible for a grant. That can

only be changed with unanimous agreement. But that is a separate issue.


Okay, so we…


We were never in agreement to pay this to toddlers.


Okay. So that doesn’t need unanimous agreement but the reduction of the,

the cap does?


The problem is there was unanimous agreement that you had to be buying

the house and living in it. So there was unanimous agreement that toddlers

would never get it. Right. And Victoria has allowed it to occur. There

was also unanimous agreement that this would un-means tested. That was

allowed. And if that is to change then there would have to be unanimous

agreement to change it.


Would you support a change in that way?


Look, there are two ways of looking at it. One is, it would increase

complexity enormously. Bear this in mind, if you are buying a house for

$500,000 you are actually paying $43,000 in GST. The States are still

making a big profit, they are getting $43,000 or something like that

in GST from those people, plus stamp duty on the land, which is probably

what, would it be $60,000 in Victoria? They are probably getting about

$100,000 in tax from those people. And those people get a $7,000 grant.

That is the other side of the equation that Mr Bracks and Mr Brumby don’t

tell you. I am just going off the top of my head about what the stamp

duty would be on the average, on a $500,000 house. I think it would be,

would it be, $60,000 in Victoria? Well, I don’t know.


I don’t know. We will find out. Look the point about the State Government

repaying the money, this could get ugly, and if they won’t do it, what



Well they should.


Well they should. But this is politics. What if they won’t?


The State Government has come to the Commonwealth and asked us to reimburse

them for grants they have given out to toddlers. And toddlers should

never have got the grants. And they have been reimbursed.


Okay, thank you for speaking with us.


I have just got those figures by the way.




The GST on a house price of $500,000 is $45,000, the stamp duty on a

house price is $25,000. So people will be paying in State Government

taxes of the vicinity of $70,000 on a $500,000 house. Now they get a

$7,000 grant, but they are paying $70,000 in GST and stamp duty to the

State Government.


You are describing the GST as a State tax.


Well, the Victorian Government gets every dollar of GST.


I know the argument. It is interesting that it was introduced by a Federal

Government, that’s all.


Well, if the Victorian Government wants to give the GST back to the Commonwealth,

we will gladly accept it.


Okay. Now, could I just quickly ask you about something else? This resettlement

deal that the Remuneration Tribunal has come up with for Federal politicians

who lose their seat. That’s a bit red hot isn’t it? $16,000 for…


Well, look, this is, can I just say this has been recommended by an independent

tribunal. The Government has not accepted it yet but I wouldn’t assume

that just because it has been recommended it will be accepted.


Well, it’s not too often that the Remuneration Tribunal is knocked back?


Well, as I said, I wouldn’t assume. It has been recommended by an independent

tribunal. The Government hasn’t considered it. And so it is not Government



What’s your view on it?


Well look, I don’t know that it will make much difference frankly. I

don’t think it is such a good idea.


Thank you very much for speaking to us.


Thank you.