How young Aussies face an $85k bill - each! - because of Albo's economic plans that were meant to help: PETER VAN ONSELEN

By PETER VAN ONSELEN, POLITICAL EDITOR, AUSTRALIA Published: 05:25, 4 August 2026 | Updated: 05:25, 4 August 2026 Labor built a first home buyer scheme that only looked safe while property prices kept rising. Now that the market is turning - in no small part because of Labor's policies - the brutal reality is that the government has trapped the very buyers it claimed to help. First, with its five per cent deposit scheme, it loaded young Australians up with 95 per cent debt, which was financially irresponsible all on its own.  Then, it pursued inflationary spending that helped force interest rates higher, after the Treasurer promised that inflation was back under control.  Finally, Labor broke its word on negative gearing and capital gains taxes, in a bid to deliberately suppress property price growth, if not send prices backwards. Buyers are now being crushed in a vice of Labor's own making: the cost of servicing their enormous mortgage is rising while the value of their home is falling. Sold as an act of generational generosity, the expanded five per cent deposit scheme allowed buyers to bypass the waiting game of building a 20 per cent deposit. But the Commonwealth didn't contribute a cent. It simply guaranteed part of the bank's risk, protecting the lender, not the buyer.  Which puts taxpayers on the hook if buyers end up defaulting on their mortgage payments. Labor took the Coalition's narrow and targeted 2020 scheme and stripped away the financial safeguards. Last October, it abolished income limits, removed the cap on places and radically increased the property price ceilings, backing Sydney purchases costing as much as $1.5 million. It was an open ended invitation to buy with wafer thin equity. So, did anyone do the maths? Labor's economic policies have a sting in the tail in them for the young Australians they meant to help. Above, Treasurer Jim Chalmers Between October and March, nearly 35,000 buyers used the scheme. Those entering with the minimum deposit strapped every dollar of their own money to $19 of debt. Predictably, pouring additional borrowing power into the bottom of a supply constrained market helped inflate it.  Then came the squeeze. The Reserve Bank has increased the cash rate by 75 basis points this year.  The RBA is independent, but Labor's fiscal recklessness helped force its hand. By expanding public demand in a capacity constrained economy, Labor made monetary policy work harder. Those 75 basis points adds roughly $3,800 a year to the repayments on a new $650,000 mortgage, which was the average size of the mortgage in the scheme. Having goaded young buyers into the market with microscopic deposits, Labor broke its election commitments on housing tax concessions.  The Budget changes were explicitly designed to cool investor demand, suppress price growth and make property values lower than they otherwise would have been. Labor wants applause for helping buyers enter the market and more applause still for pushing prices down, conveniently ignoring the people trapped between those two policy decisions. For anyone forced to sell, the consequences are catastrophic. The government's glib defence is that negative equity only matters if someone sells. But negative equity strips away the freedom to navigate life's emergencies Take a buyer purchasing a $650,000 property (the average within the scheme) with a 5 per cent deposit of $32,500. If the property falls just 5 per cent, their entire deposit is vaporised. Because selling isn't free, agents, marketing, conveyancing and mortgage discharge costs can easily consume between $15,000 and $20,000. A decline of just 2 or 3 per cent can therefore leave a buyer with zero usable equity. If the market falls by 10 per cent, the arithmetic becomes much worse. The home is now worth $585,000, while the mortgage may still be around $613,000.  After selling costs, the owner clears perhaps $565,000. They would need to find another $48,000 in cash just to repay the bank. If they can't, taxpayers have to. And that's after the new home buyer has already lost their original $32,500 deposit and made months of increasingly expensive mortgage and interest repayments.  The total economic loss pushes up to around $85,000 before even factoring in the interest or stamp duty costs. Buying a cheaper replacement property triggers another round of stamp duty, because their first home buyer concession has already been used. And renting the property out as a means of financial survival can cause the government guarantee to be withdrawn, because the scheme requires the home to remain owner occupied. So that's not a realistic option. Negative equity may also leave the new buyer unable to refinance, trapping them with whatever interest rate their existing lender chooses to offer.  They become Albo's mortgage prisoners. The government's glib defence is that negative equity only matters if someone sells. Aside from the damage done by rising interest rates, relationships break down, jobs disappear, some people's work requires them to relocate. Or worse still, illness might strike. Negative equity strips away the freedom to navigate life's emergencies. There is nothing inherently wrong with helping buyers who can sustainably afford a mortgage. But a responsible government doesn't load citizens up with 95 per cent debt, inflate the market they are entering, drive their mortgage rates higher through reckless spending, then rewrite the tax laws after promising not to, before dismissing fears about subsequent price falls pushing first home buyers into negative equity.