Aussie politicians MIA on housing

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By Leith van Onselen

News Limited has today run a series of articles (for example here, here and here) questioning why the issue of housing affordability has received next to no attention from Australia’s politicians in the lead-up to the Federal election.

According to News Limited, housing affordability is a key issue amongst voters – more important than education, border security, or broadband. Yet Prime Minister Kevin Rudd, who is said to own a $10 million property portfolio, has not mentioned the issue since his 2007 election campaign. Likewise, the Opposition leader, Tony Abbott, has firmly placed the blame on the states, stating earlier in the year that “home ownership is part of the great Australian dream but that is essentially a state government matter”.

Australian politicians’ neglect is in strong constrast to their Kiwi counterparts, where housing affordability is front-and-centre. For example, New Zealand’s National Government has, over the past year, stepped-up the heat on Auckland City Council to speed-up residential land supply and planning processes in a bid to improve affordability. The National Government has also installed a dedicated housing minister, Nick Smith, whose main purpose is to “solve” the affordability issue, whereas its Finance Minister, Bill English, authored the introduction to this year’s Demographia International Housing Affordability Survey (can you imagine a major Australian politician doing this?).

New Zealand’s central bank and prudential regulator, the RBNZ, is also about to implement macro-prudential controls on riskier mortgage lending in a bid to cool house prices, whereas the RBA and APRA have all but ruled-out such measures in Australia.

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The sad thing is, despite Tony Abbott’s proclamation that housing is a state issue, there is a lot the Federal Government could do to help restore housing affordability. Whether it is amending the tax system to limit negative gearing on pre-existing dwellings (which inflates housing prices without boosting supply), coordinating infrastructure and land release, or providing fiscal incentives/dis-incentives to states and territories on housing supply, there is a clear role for the Federal Government.

But in the end, perhaps Australians have ourselves to blame. Governments are inherently reactive and they tend to respond only when community pressure becomes too big to ignore. As long as Australian’s remain silent about housing, so too will our politicians.

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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.