The Government Promised a Better Financial Future for Australians. How’s That Working Out?

Here Are 10 Ideas to Cut Costs and Ease the Pain of Rising Mortgage Prices

When the federal government pledged to secure “a better financial future” for Australians, many homeowners and prospective buyers interpreted it as a commitment to affordable living — especially in a period of surging property prices, interest rate volatility, and cost-of-living pressures. Instead, for millions, the reality has been relentless financial strain: mortgages that stretch budgets to the brink, grocery bills that never stop rising, and a sense that everyday living costs are outpacing income growth.

Today, the harsh truth is this: rising mortgage costs are squeezing household budgets more than at any time in recent memory, and broad swathes of the population are asking whether policy has kept pace with economic reality. With inflation stubbornly above target for extended periods and the Reserve Bank of Australia adjusting rates to manage price pressures, many Australians now find themselves trapped between servicing debt and meeting basic living expenses.

But while macroeconomic forces play a role, policy choices matter. There are actionable, practical measures — some ordinary, some bold — that can help ease the burden on households without destabilising the economy. Below are 10 evidence-based ideas aimed at cutting costs or directly assisting Australians feeling the pinch of rising mortgage payments. Some are immediate, others structural; all merit serious debate.

1. Targeted Mortgage Relief Credits

Rather than broad tax cuts that disproportionately benefit higher earners, the government could introduce mortgage relief credits for primary residences up to a certain value threshold. These credits would function as a direct reduction in taxable income tied to mortgage interest paid — a lifeline for middle and lower-income borrowers.

• Benefit: Directly reduces net cost of mortgage servicing.

• Challenge: Must be income-tested to avoid subsidising high-net-worth individuals.

2. Expand First-Home Buyer Grants with Shared Equity Options

While existing first-home buyer grants provide up-front assistance, combining them with government shared-equity schemes — where government takes an ownership stake in exchange for lowering purchase price — would reduce loan sizes and monthly repayments.

• Benefit: Reduces initial debt load and monthly costs.

• Risk: Government must manage shared equity positions to avoid market distortions.

3. Index Key Tax Thresholds to Inflation

Australia’s tax brackets and transfer thresholds should be automatically adjusted annually for inflation. Without this, “bracket creep” pulls more Australians into higher tax brackets even when real income hasn’t increased.

• Benefit: Preserves disposable income and reduces effective tax pressure.

• Cost: Loss in revenue offset by reduced strain on services as incomes maintain purchasing power.

4. Reform Negative Gearing and Capital Gains in Targeted Ways

Rather than scrapping negative gearing entirely, the government could:

• Restrict it to newly constructed properties.

• Reduce capital gains tax discounts for high-income investors.

This would cool investor competition in key markets, enabling first-home buyers to compete more effectively.

• Benefit: Helps balance housing supply and demand.

• Consideration: Phased implementation to avoid abrupt market disruptions.

5. Lower Regulatory Barriers to Housing Supply

One key driver of housing cost escalation is supply constraint. Simplifying planning approvals, streamlining zoning reform, and incentivising high-density living near transport corridors would increase supply faster.

• Benefit: Downward pressure on home prices over time.

• Implementation: Federal and state governments must coordinate.

6. Stabilise Energy and Utility Costs

Rising utility bills add indirect pressure on mortgage affordability. The government should extend and expand schemes that cap or subsidise energy costs for vulnerable households.

• Benefit: Reduces overall cost of living, leaving more room in household budgets.

• Budget Impact: Can be targeted to lower-income brackets for efficiency.

7. Expand Community Lending and Microfinance Options

Encouraging community banks and non-profit lenders to offer lower-cost home loans with government backstops would increase competition and potentially lower interest costs for qualifying borrowers.

• Benefit: Provides alternatives to the Big Four banks.

• Risk: Must ensure rigorous underwriting standards.

8. Reform Land Tax and Stamp Duty Structures

Stamp duty — a once-off tax on property transfer — can discourage mobility and adds significant upfront cost. Replacing it with a broader-based annual land tax would:

• Reduce entry cost for buyers.

• Improve labour mobility as homeowners can move without punitive taxes.

• Benefit: More efficient, transparent taxation.

• Transition: Requires compensation frameworks to avoid sudden losses for state revenues.

9. Boost Financial Literacy with Compulsory Mortgage Education

Understanding loan structures, interest rate risk, fixed vs variable options, and refinancing strategies can materially affect financial health.

• Proposal: Mandatory financial education modules as part of school curricula and homeownership programs.

• Outcome: Better consumer decisions and reduced vulnerability to interest rate shocks.

10. Strengthen Temporary Income Support Mechanisms

For households genuinely struggling — especially those narrowly missing hardship thresholds — enhanced short-term support (e.g., mortgage holidays, unemployment top-ups) can prevent defaults without long-term fiscal costs.

• Benefit: Reduces social costs of defaults and foreclosures.

• Design: Clearly time-limited and means-tested to target real need.

Is the Policy Direction Working?

Many of the government’s existing interventions — such as targeted cash payouts, inflation-linked welfare increases, and industry self-regulation — have stopped short of addressing structural drivers of high housing costs. Economic growth remains a priority, but for most Australians, stagnant wage growth plus rising living costs have meant that the promise of a better financial future feels increasingly distant.

What’s clear is this:

• Short-term relief matters. Weekly budgets are under stress right now.

• Long-term structural reform matters even more. Housing supply, tax incentives, and sustainable lending frameworks shape affordability for decades.

Conclusion

Rising mortgage costs are not just an economic statistic — they’re a lived reality for millions of Australians juggling bills, groceries, transport, and the dream of secure homeownership. The government’s pronouncements about financial wellbeing must be backed by practical, targeted policies that ease cost pressures without destabilising the broader economy.

These 10 ideas — from mortgage credits to land tax reform — range from politically pragmatic to structurally ambitious, but all aim to put money back into Australians’ pockets and make housing more affordable.

The question now is not whether reform is needed. It’s whether policymakers have the political will to enact it.