Yesterday’s article, Aussie politicians MIA on housing, lamented how the issue of housing affordability has received next to no attention from Australia’s politicians in the lead-up to the Federal election.
After posting the article, a reader sent me through the Coalition’s 2010 housing policy (below) which, while stating nothing about curbing speculative demand (e.g. via winding-back negative gearing), contains some sensible statements on freeing-up the supply-side of the market:
The Coalition has a plan for real action on housing.
We believe that the best way to make housing more affordable is to encourage the States, Territories and local government to release land, cut red tape, improve planning processes and reduce charges.
The Coalitions housing policy is focused on outcomes not inputs. Through national leadership the Coalition can help make housing more affordable for all Australians.
The Coalition also believes that the Federal Government has a role to encourage States and Territories to be more active in addressing social housing and homelessness.
The Coalition’s Plan for Real Action for Housing will –
Introduce a National Housing Affordability Compact.
The Coalition will establish a National Housing Affordability Compact with accommodation targets for each State or Territory over five years.
In order to continue to receive federal funds, States and Territories will need to increase land supply and reform their planning and approval systems under the National Housing Affordable Agreement (NAHA).
States and Territories will need to set affordability targets to guide land releases and dwelling approvals. In order to receive federal funds, States and Territories would need to demonstrate that they had a plan for delivering these targets and those approvals and land releases occurred consistent with the targets established.
The Coalition will review State, Territory and local government charges, which have been contributing an increasing component to the cost of development. State and local governments that build higher charges into the cost of housing will be less able to meet their home affordability obligations under the compact.
While the Coalition has yet to release its housing policy for the upcoming election, its leader, Tony Abbott, earlier this year deferred to the states on this issue, stating that “home ownership is part of the great Australian dream but that is essentially a state government matter”. These comments suggest that the Coalition might have placed supply-side reform in the too hard basket.
That said, the likelihood for real housing reform is more likely, in my view, under a Coalition government.
While neither party is likely to attack negative gearing or Australia’s strong population growth, it was primarily Labor state governments that first embraced “smart growth” urban consolidation policies (e.g. urban growth boundaries, in-fill targets, stricter planning requirements, etc), which contributed to Australia’s excessive land prices and stifled development (similar parallels can be drawn with the Democratic Party in the US). It was also the Rudd Labor Government that in 2008-09 implemented large additional first home buyer subsidies and loosened foreign ownership rules, which led to the massive post-GFC boom in home prices.
By contrast, since Coalition governments have taken control at the state level, they have gradually worked to stimulate housing supply through shifting the First Home Owners’ Grant to newly constructed dwellings and, in the case of New South Wales in particular, reforming planning processes and infrastructure funding and provision.
In the event that the Coalition wins government at the upcoming Federal Election, hopefully they will work with the states to further reform the supply-side of the housing market along the lines of their 2010 policy statement.
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Coalition Housing Policy (2010)
