New residential construction has emerged as the primary focus of an overhaul of the first home owner housing grant in the Northern Territory as the government seeks budget savings measures which deliver greater policy gains relative to taxpayer dollar outlays.

Announcing the changes last week in the lead up to the Territory budget unveiled on Tuesday, Northern Territory Treasurer Dave Tollner said that from the start of next year, the current First Home Owner Grants (FHOG) of up to $12,000 in Darwin, Palmerston and Litchfield and $25,000 elsewhere would no longer be available for existing home purchases and would apply to the purchase or construction of new homes only.

Furthermore, effective immediately, the property value limit with regard to which the grant applies will be scrapped and the amount available for the purchase of new houses outside the three aforementioned towns will be lifted to $26,000.

The budget also includes spending of around $27 million on land release programs as well as $6.7 million to support a head-lease scheme which is part of a program through which the government hopes to build 2,000 affordable homes over the next three years.

But there was plenty of bad news, with net debt set to soar above more than $4 billion next year and reach more than two thirds of overall revenue as a $723 million deficit adds to the Territory’s debt load whilst infrastructure spending ($1.14 billion – including $377 million on roads) will drop by $11 million.

Whilst the tightening of the FHOG primarily reflects fiscal considerations, similar measures in other states have generally been supported by construction industry lobby groups, who say such measures provide an incentive for the purchase of new housing as opposed to existing property and therefore deliver greater industry and economic benefit whilst spending fewer taxpayer dollars.

Tollner agrees, saying any use of grant money to purchase existing property merely leads to higher prices and does little to improve affordability.

“By targeting the first home owners grant towards the purchase of newly built homes, the grant is more likely to contribute to growth in housing supply and employment in the construction sector,” Tollner said.

But the plan has been slammed by Opposition Leader Delia Lawrie, who said the removal of the grant for existing home purchases will make it harder for prospective home owners to enter the existing housing market and accused the ruling CLP of being the ‘highest taxing government in the Territory’s history’.

“Local families and businesses were looking for relief now but instead in a cruel blow they get hollow promises of land release not even off the drawing board and a removal of the First Home Owners grant used to get Territorians into the existing housing market,” Lawrie said.

“The problem with the CLP is that they are still coasting off the back of Labor projects – from roads infrastructure to the significant private projects – without delivering new stimulus for jobs and business growth which continues the two-speed economy.”