Kevin Rudd’s first home saver accounts scheme has been scrapped by Joe Hockey’s federal budget.
The Rudd government initiative provided tax breaks and co-contributions to people saving up a deposit for a home.
Mr Hockey abolished the scheme, citing their low popularity and their failure to make meaningful inroads into housing affordability.
There were around 46,000 of the accounts open with a balance of around $521 million.
“Any new accounts opened from budget night will not be entitled to the existing government contribution or any tax or social security concessions,” Mr Hockey said.
Banks have long said the scheme was unpopular with their customers. The scheme gave saving accounts for a home a concessional tax rate of 15 per cent on interest earned and the government also made a 17 per cent co-contribution on the first $6000 contributed each year.
There were however certain conditions for the benefits that were putting customers off. Mainly that the money had to be saved for at least four years and that customers had to contribute at least $1000 a year.
The move to scrap the accounts will save Mr Hockey’s budget $134 million over the next 4 years.