Morrison to ramp up warnings over home values as Labor seeks to neutralise PM's policy shift

In a tightening race to win this Saturday's election, Mr Morrison moved to gain an edge over Opposition Leader Bill Shorten on housing affordability, making property investment and prices a major theme in the final week of the campaign.

But Mr Shorten moved to neutralise the attack within hours of the campaign launch, endorsing the plan to guarantee a portion of the loans issued to first home buyers so they could acquire a property with a deposit of just 5 per cent.

The controversial scheme provoked criticism for encouraging young homebuyers to increase their debt but it became bipartisan policy by Sunday afternoon, putting taxpayers on the line for the new assistance regardless of which major party wins the election.

The Morrison government is preparing to escalate its attacks on Labor's plan to raise $32 billion over a decade from changes to negative gearing and capital gains tax.

Labor is pointing to a surge in Coalition spending promises in recent days, including a $4 billion promise to build the East West Link in Melbourne, as a sign of bigger budget deficits or smaller surpluses if Mr Morrison holds power.

The government confirmed to The Age and The Sydney Morning Herald that the $4 billion is treated as a contingent liability in the budget, which means it would only become an expense in the unlikely event that the Victorian government accepted the federal proposal.

Another contingent liability, worth $1.2 billion, sets aside funds for a freight link in Perth that has been rejected by the state Labor government.

Amid a costings dispute between the two sides, Labor is preparing to cite the combine liabilities as a weight on Commonwealth finances and a sign that the return to surplus could be slower than Mr Morrison claimed in the April 2 budget.

Mr Morrison used his campaign launch in Melbourne on Sunday to urge voters to consider the "promise of Australia" as a nation that rewarded effort and "honest aspiration" but would be put at risk by Labor's tax plan.

"The election, friends, is about a choice. The choice of who you can trust to keep the promise of Australia, to all Australians as prime minister: myself or Bill Shorten," he said.

"The choice between a government that knows how to manage money, has returned the budget to surplus and will now pay down debt.

"Or Bill Shorten and Labor, whose reckless spending and higher taxes will put all of that risk at the worst possible time."

The government estimates the budget to be in deficit by $4.2 billion this year and in surplus by $7.1 billion next year.

While the government projects a $9.2 billion surplus in the year to June 2023, Labor projects a $21.8 billion surplus as a result of its tax revenue increases.

The centrepiece of the Coalition campaign launch, called the First Home Loan Deposit Scheme, would be available from January 1 for those who have saved at least 5 per cent of the value of the home.

The government would put $500 million into the existing National Housing and Investment Corporation to provide guarantee a portion of the home loans for single applicants earning up to $125,000 or couple with combined incomes of $200,000.

"That would include guaranteeing, to approved applicants, the additional loan amount taken out by the first-home buyer to cover the difference between the lower deposit of, say, 5 per cent and 20 per cent of the value of that property," Mr Morrison said.

The scheme will be capped at 10,000 loans a year and will be subject to limits on the value of the properties, with the corporation setting benchmarks for regional markets and for locations such as Sydney and Melbourne.

This means it would only be available to about one in every 10 of the 100,000 first-home buyers who take out loans each year.

In another sign of the limit on the scheme, the $500 million assigned for the scheme would only cover a small proportion of the loans taken out by first home buyers.

The government did not disclose its assumption for the default rate among first home buyers who took up the assistance. Given an average loan size of $337,000 for these buyers, the 15 per cent covered by the guarantee would amount to approximately $50,000 for each loan across 10,000 applicants each year.

Institute of Public Affairs director John Roskam attacked the idea as an intervention in the market that was out of keeping with Liberal philosophy.

"The Coalition can hardly complain about Labor having the government pay part of the salaries of childcare workers when the Coalition is offering to pay part of the cost of the house of home buyers," Mr Roskam said. "This is just awful."