Pauline Hanson's One Nation party has unveiled a proposal for a government-funded 'people's bank' that would offer 30-year fixed-rate home loans at 5% interest. Senator Malcolm Roberts stated the bank would operate through Australia Post outlets and require a 5% deposit, which could be sourced from superannuation savings or a first home buyer grant.
This initiative would aim to undercut commercial lenders, as the average rate for new owner-occupier loans was 6.2% in May, according to the Reserve Bank of Australia. One Nation suggests funding the scheme by abolishing the government's $11.5 billion Housing Australia Future Fund.
Economists have voiced significant concerns, warning that the policy could destabilize the housing market, lead to increased prices, and expose taxpayers to substantial losses during economic downturns. Professor Richard Holden, chief economist at the University of New South Wales, described the plan as a 'very, very bad idea,' estimating the federal government might need to allocate hundreds of billions of dollars to fund the scheme due to anticipated high demand. He also questioned the government's ability to manage commercial enterprises effectively, contrasting it with the long-standing success of major banks in assessing credit and managing borrowers. Holden suggested that if the government offers loans at significantly below-market rates, it could attract a disproportionate number of borrowers, potentially representing half or more of all mortgage lending.
Challenger chief economist Jonathan Kearns echoed these concerns, calling the policy 'exceptionally risky.' He highlighted the potential for significant taxpayer losses, especially given Australia's history of housing price declines, which can range from 5% to 10%. Kearns argued that the policy would transfer all such risks to the government's balance sheet, not just for at-risk borrowers but for all loan recipients.
One Nation leader Pauline Hanson rejected the economists' cost projections, dismissing reports suggesting the scheme could cost hundreds of billions of dollars as 'made up.' She asserted on X that the plan would not exceed the $11.5 billion already earmarked for reallocation from the budget. Hanson stated that Senator Roberts had fully explained the proposal and that the allocated funds represented a budget reallocation rather than new spending.
However, One Nation's Treasury spokesman, Barnaby Joyce, previously described the proposal as a 'discussion piece' rather than official policy, indicating a need for further deliberation before adoption.
In addition to the mortgage plan, One Nation has also proposed reviewing government charges on new homes and implementing a five-year moratorium on goods and services tax (GST) on building materials to reduce construction costs. This is not the first time Hanson has proposed a 'people's bank,' having introduced a similar concept before the 1998 Queensland election aimed at providing low-interest loans to farmers and small businesses.