TONY EASTLEY:
With unemployment queues set to get longer, the Federal Government has announced a plan it says will help people hold onto their homes when they fall onto hard times.
From November, people with mortgages of up to half a million dollars will, by law, be able to ask for assistance such as loan extensions or a repayment holiday from their banks.
Currently the support is only available on mortgages of just over $300,000.
The measure has been broadly welcomed.. but the Opposition says the Government should be doing more to help people keep their jobs.
From Canberra, Emma Griffiths reports.
EMMA GRIFFITHS:
The move lifts the threshold on hardship arrangements for mortgages.
At the moment the limit sits at a $312,000 mortgage, but from the 1st of November that will rise to $500,000.
The Superannuation and Corporate Law Minister, Nick Sherry says many more people will be able to take hold of that helping hand.
NICK SHERRY:
If, for example, an individual had lost their job, and were out of work for six months or a year, whatever the length of time, it would be possible, depending on the attitude of the lender, it could be suspension of principal or interest for that period when you're unemployed.
EMMA GRIFFITHS:
The consumer advocacy group Choice has welcomed the higher threshold, in that it reflects higher home prices and mortgage amounts, especially in the capital cities.
But Choice spokesman Gordon Renouf says broader social policies, like increased unemployment benefits need to come into play too.
GORDON RENOUF:
We're certainly going to have a problem with people being put in difficulty with unemployment of course, and of course they will welcome an option where they can possibly keep their home.
But it's not going to be able to meet everybody's needs, and we will need other solutions for people. It obviously saves the taxpayer money to keep people in their homes, because all sorts of social supports are often required due to the pressures put on families.
So it's a very important issue, and this is a good initiative, but it won't be the total solution that we need.
EMMA GRIFFITHS:
The Opposition wants to know what the Government's doing to save jobs.
Spokesman, Chris Pearce:
CHRIS PEARCE:
This measure is only good once you're in financial hardship as a result of losing your job. I think that's a good thing. If things can help people when they're in hardship I think that's a good thing.
But the Government should also be introducing legislation that actually creates jobs, and that's what they've not been doing.
EMMA GRIFFITHS:
What sort of legislation do you mean?
CHRIS PEARCE:
Well, as you know the Prime Minister has said that many of his stimulus packages over recent months would create jobs - and that's clearly not the case.
EMMA GRIFFITHS:
The Government has consistently argued that the economic situation would be far worse without its $52 billion stimulus packages.
And Senator Nick Sherry says this move will protect Australians from an American-style sub-prime mortgage crisis.
NICK SHERRY:
These changes in the law and other changes I'll be announcing today are in part to avoid the mess that they got into in the United States. This whole global financial economic crisis has been a consequence of irresponsible lending in the United States.
And one of our motivations is to ensure we, through these new laws, have responsible lending in Australia.
TONY EASTLEY:
Senator Nick Sherry ending that report from Emma Griffiths.