MSM wakes up to housing political time bomb

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By Leith van Onselen

The Australian’s David Crowe has penned a great piece today on how housing has become a simmering time bomb that could sink the Coalition Government:

It is more than a decade since Howard and his colleagues vowed to increase the supply of housing, but only now are some of those homes coming on to the market.

This is a warning to Malcolm Turnbull and Scott Morrison as they raise expectations on housing affordability. This week has been a classic example of a government talking about a problem without coming up with a solution…

The evidence is clear: land supply is part of the affordability problem but can never be the answer on its own. Political ambitions of the past have not delivered enough…

This is a social time bomb. Without their own home, more Australians will grow old with the pension system stacked against them.

Why should wealthier retirees have their homes exempt from the pension assets test when others have to pay the rent out of their pension?

The more people are shut out of the housing market, the greater the pressure for change.

Morrison’s reforms to pensions and superannuation will look like the entree before an unpalatable main meal.

Bill Shorten and Chris Bowen are tapping into this frustration with their plan to clamp down on negative gearing. The Greens are doing the same.

The rise of Pauline Hanson also hints at the explosive power of this problem, as voters link their cost of living pressures with immigration and population growth.

For the past three years I have watched on as the issue of housing affordability took front position in New Zealand, only to wonder why it has received so little attention from Australia’s politicians.

Clearly, things are starting to change, and Australia’s politicians are beginning to realise that they cannot shaft an entire generation of younger Australians and expect no political fallout.

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If our leaders were smart, they would address this issue through multiple channels, including:

  • Significantly lowering Australia’s immigration intake to sensible and sustainable levels, thus alleviating pressures on infrastructure, housing, the environment and living standards, as well as curbing the rise of Pauline Hanson;
  • Properly enforcing foreign investment in Australian real estate;
  • Reducing tax distortions that fuel speculative demand; and
  • Working with and providing incentive payments to the states to free-up land-use and planning.

None of this is rocket science. But it’s not something that Do-nothing Malcolm’s property Coalition can address.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.