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Voting with your wallet - which party will put you in the best financial position?

Voting with your wallet - which party will put you in the best financial position?

A federal election has been called for 21 May 2022. While a diverse array of social and political issues at home and abroad may be on the minds of many voters, so are everyday concerns such as the cost of living, getting and keeping a job, and earning enough income to feed and house a family. 

Here’s a brief rundown of where the two major political parties stand on some of the issues relating to personal finance:

Helping first home buyers

Liberal

UPDATE: The Coalition has announced that if re-elected it would introduce a scheme to allow first home buyers to access up to 40 per cent of their superannuation to help them purchase their first owner occupied property.

Capped at $50,000 per person (so couples could potentially access up to $100,000), the policy would come into effect from 1 July 2023.

If the property is later sold, the money withdrawn from super would need to be returned, including a share of capital gains.

A re-elected Liberal government has plans to:

  • Help more first home buyers get over the deposit hurdle by raising the number of low-deposit guarantees for first home buyers to 35,000 each financial year.
  • Deliver increased property price caps for the Home Guarantee Scheme, to ensure Australians can continue to have choice when purchasing their home.
  • Increase the supply of new homes in regional areas by incentivising the purchase of new-build homes – providing 10,000 low deposit guarantees each financial year for those moving to, or within, regional areas. This includes non-first home buyers and permanent residents.
  • Expand home ownership opportunities for single parent families by increasing the number of low-deposit guarantees for single parent families to buy a home (with a deposit of as little as 2 per cent) to 5,000 each financial year.
  • Support greater investment into affordable housing with an additional $2 billion in low-cost financing for social and affordable dwellings. This brings total low-cost financing to $5.5 billion, supporting around 27,500 dwellings.

Labor

Labor’s Help to Buy program is a shared equity scheme where a Labor government would assist up to 10,000 Australians per year earning less than $90,000 p/a ($120,000 for couples) purchase a property. These buyers (who don’t have to be first home buyers, but can’t already own property) would only need a deposit of 2 per cent, and would pay no LMI, though maximum price caps would apply for the location of the property. 

The government would then chip in up to 30 per cent of the purchase price for existing properties and up to 40 per cent for new builds. Homebuyers would not need to pay rent on this portion owned by the government, but the homeowner would be able to buy out the government’s portion over time, when they are financially able to do so, or if they later sell the property.

According to Labor calculations, a homebuyer in Sydney buying at the maximum price cap of $950,000 with 40 per cent equity could save more than $1600 per month on mortgage repayments, while a homebuyer in regional Queensland buying at the maximum price cap of $500,000 with 40 per cent equity could save more than $850 per month. Both calculations assume a assumes a 25-basis-point increase on the current base variable mortgage rate of 3.45%, monthly principal and interest over 30 years. 

Other related Labor housing policies include: 

  • Establishing a Regional First Home Buyer Support Scheme to help 10,000 first home buyers a year in regional Australia to buy a home
  • Establishing a $10 billion Housing Australia Future Fund, to build 20,000 social housing properties (4000 of which will be allocated for vulnerable women and children) and 10,000 affordable homes for the frontline workers
  • Restoring funding for homelands and improving remote housing
  • Establishing a National Housing Supply and Affordability Council
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Tax relief

Liberal

At the 2022/23 federal budget, the Liberal government committed to a one-off cost-of-living tax offset of $420. Combined with the low and middle income tax offset (LMITO), eligible low- and middle-income earners are set to receive up to $1,500 for a single income household, or up to $3,000 for a dual income household.

This tax relief is part of a major reform to the tax system that is set to see around 95% of taxpayers facing a marginal rate of no more than 30 cents in the dollar in 2024-25, leaving them with more of their own money in their pockets.

The government has also reduced the tax rate for businesses, increased the tax offset for small businesses, and expanded the Instant Asset Write Off program.

Labor

Labor has announced that it intends to deliver tax relief through legislated tax cuts to benefit everyone with incomes above $45,000, and to also increase the low-and-middle income tax offset by $420 this year.

Additionally, Labor leader Anthony Albanese said in an interview that “the only tax that we're considering is on multinationals, that's consistent with the international negotiations that have taken place in order to make sure that you can't have this shift of profit so as to minimise taxes, globally.”

Cheaper energy

Liberal

Some of the Liberal government’s policies to help reduce power prices include:

  • Continuing to hold energy retailers to account and banning sneaky late penalty payments.
  • Big stick legislation requiring big energy companies to put their customers first and pass on savings.
  • Investing in new energy generation and targeted transmission lines.
  • Ensuring domestic gas supplies, including the Beetaloo Basin.

The Liberal government also plans to invest more than $22 billion in low emissions technologies this decade, driving over $88 billion of total investment to reduce emissions while growing the economy and creating jobs across Australia. 

Labor

Labor’s energy policies include Rewiring the Nation and Powering Australia.          

Labor’s Rewiring the Nation will invest $20 billion to rebuild and modernise the grid, to drive down power prices, give our economy a boost of up to $40 billion and create thousands of new jobs – particularly in regional areas. The policy is also set to revitalise traditional industries like steel and aluminium and allow growth in new sectors like hydrogen and battery production.

Labor’s Powering Australia plan is set to overhaul the infrastructure of the nation’s energy industry; creating 604,000 jobs (with 5 out of 6 of these to be created in the regions) and reducing emissions by boosting renewable energy.

Additionally, this may help to cut power bills for families and businesses by $275 a year for homes by 2025, compared to today.

Related policies include rolling out 85 solar banks around Australia to ensure more households can benefit from rooftop solar, and installing 400 community batteries across the country. Each battery is typically the size of a 4WD vehicle, and provides around 500kWH of storage that can support up to 250 local households where installing your own battery for rooftop solar isn’t affordable or practical. This should help to cut power bills, reduce emissions and reduce pressure on the grid.

Childcare

Liberal

This financial year, the Government is providing $11 billion in Child Care Subsidy, which makes child care more accessible and affordable.

To complement the Child Care Subsidy the Liberal government has:

  • Increased the Subsidy by 30% for second and subsequent children in a family aged five or under in child care, up to a maximum rate of 95%.
  • Removed the annual Subsidy cap of $10,655 for families earning over $190,015.

These changes mean 250,000 families will be on average $2260 a year better off in 2022-23; around 50% of eligible families will receive the maximum 95% subsidy for their second or third child in care; and around 40,000 mums or dads will be able to work an extra day per week.

Labor

Labor’s plan for cheaper child care may involve: 

  • Lifting the maximum child care subsidy rate to 90 per cent for families for the first child in care;
  • Increasing child care subsidy rates for every family with one child in care earning less than $530,000 in household income;
  • Keeping higher child care subsidy rates for the second and additional children in care, and;
  • Extending the increased subsidy to outside school hours care. 

According to Labor, 96 per cent of Australian families will be better off under Labor’s child care reforms – 1.26 million families. 

As part of Labor’s Early Years strategy, Labor will also:

  • Get the ACCC to design a price regulation mechanism to drive out of pocket costs down for good;
  • Get the Productivity Commission to conduct a comprehensive review of the sector with the aim of implementing a universal 90 per cent subsidy for all families, and;
  • Improve transparency in the child care sector by forcing large providers to publicly report revenue and profit, provide real time fee data and quality ratings to families, and ban non-educational enrolment inducements.

Jobs, apprenticeships and skills

Liberal

The Liberal government’s plans for more Australian jobs include: 

  • Create another 1.3 million jobs over the next five years.
  • Back small businesses with tax incentives to embrace the digital economy and upskill and train their employees.
  • Ensure Australians have the skills they need through an additional $3.7 billion to support 800,000 new training positions.
  • Provide $2.8 billion in additional incentives to train the next generation of apprentices and trainees.
  • Help disadvantaged younger Australians into work through the ReBoot program to build life and employment skills.
  • Invest $482 million to improve women’s economic security and build on record female participation in the labour force, including through enhancing paid parental leave and incentives for women to take up non-traditional trade apprenticeships.
  • Deliver a record $120 billion 10-year infrastructure investment pipeline.
  • Invest $7.1 billion for key regions across Australia as part of our Energy Security and Regional Development Plan to transform them into next generation export hubs.
  • Establish a $2.0 billion Regional Accelerator Program to drive growth and productivity in regional areas.
  • Invest $2.2 billion to support university innovation and industry collaboration.
  • Ensure reliable and affordable energy, by investing $22 billion in renewables and low-emissions energy technology to power our economy.
  • Transform Australia’s manufacturing sector through its $2.5 billion Modern Manufacturing Strategy.
  • Position Australia as a top 10 data and digital economy by 2030 through our Digital Economy Strategy.
  • Expand export opportunities through market-opening trade deals.

Labor

As part of its plan to Secure Australian Jobs, Labor intends to offer:

  • Fee free TAFE: 465,000 fee-free TAFE places for Australian students studying in industries with a skills shortage, including 45,000 new places.
  • A stronger university system: up to 20,000 extra university places over 2022 and 2023, making it easier for Australians to find a spot at university and get a job.
  • Australian Skills Guarantee: Labor will train thousands of workers by ensuring one in ten workers on major government projects is an apprentice, trainee or cadet.
  • Jobs and Skills Australia: Labor will establish Jobs and Skills Australia as a national partnership to drive VET education and strengthen workforce planning by working together with employers, unions and the training and education sector.
  • Better wages for Australian workers
  • Same job, same pay
  • Putting security back into work: Labor will enshrine secure work (with sick leave and holiday pay) as an objective of the Fair Work Act. This means the Fair Work Commission will have to put job security at the heart of its decision-making.
  • Making wage theft illegal
  • Closing the gender pay gap

Cheaper electric vehicles (EVs)

Liberal

The five main objectives of the Liberal government’s Future Fuels and Vehicles Strategy (FFVS) are:

  • To roll out electric vehicle charging and hydrogen refuelling infrastructure where it is needed
  • Put early focus on commercial fleets
  • Improve information for motorists and fleets
  • Integrate battery electric vehicles into the electricity grid
  • Support Australian innovation and manufacturing

Labor

Labor’s Electric Car Discount policy is intended to make electric cars more affordable, and to reduce emissions. 

As part of this policy, from 1 July 2022 EVs below the luxury car tax threshold for fuel efficient vehicles ($77,565 in 2020-21) will be exempt from import tariffs and fringe benefits taxes, to encourage car manufacturers to import and supply more affordable electric models in Australia.

Additionally Labor intends to develop a National Electric Vehicle Strategy to increase electric car sales and infrastructure and to encourage Australian manufacturing of electric car components (especially batteries) and possibly cars themselves.

Closing the gender pay gap

Liberal

According to the Liberal party, the gender pay gap between men and women sits at 13.8% in April 2022.

The Liberal party’s five key priorities for supporting Australian women are:

  • Repairing and rebuilding women’s workforce participation and further closing the gender pay gap.
  • Greater choice and flexibility for families to manage work and care.
  • Supporting women as leaders and positive role models.
  • Responding to the diverse needs of women.
  • Supporting women to be safe at work and home.

The 2022-23 $2.1 billion Women’s Budget Statement includes $1.3 billion to drive change for women’s safety, and additional funding to increase women’s workforce participation, support women in leadership, and improve health outcomes for women and girls in Australia.

The Liberal Government has also removed the $450 per month minimum threshold for the superannuation guarantee - improving the economic security in retirement of around 200,000 women.

Labor

According to the Labor party, if you factor in total earnings – like bonuses and overtime – Australia’s gender pay gap grows from 13.8% to 16%, with it going as high as 20% in some states.

Australian women working for companies that report to the Workplace Gender Equality Agency (WGEA), earn, on average, $25,534 less than men every year and face a 20% gap in total wages (including bonuses and overtime). 

To help close the gender pay gap, Labor intends to:

  • Legislate so companies with more than 250 employees will have to report their gender pay gap publicly.
  • Prohibit pay secrecy clauses and give employees the right to disclose their pay, if they want to.
  • Take action to address the gender pay gap in the Australian Public Service.
  • Strengthen the ability and capacity of the Fair Work Commission to order pay increases for workers in low paid, female dominated industries.

Who should you vote for?

Just like choosing a home loan, car loan, or a credit card, it’s important to compare your options and consider your personal and financial needs before casting a vote at the ballot box. While economic policies that could affect the cost of living are important, your decision may also be affected by each party’s stance on other social, local, national or international issues.  

Remember to also look at the minor parties and independent candidates in your area, as in Australia, you can’t ‘waste your vote’. Vote with your head and your heart for the party and/or candidate that supports the policies that you think are best for you, your loved ones, and the nation.

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This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

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