Prime Minister Tony Abbott was asked this morning if he thought Australia had a housing bubble. He answered:
‘‘I don’t think any one should rush to the conclusion that there is too much exuberance in our economy at this time,’’ he said.
‘‘If anything, we could see a little more exuberance in many sectors of the economy, particularly manufacturing.’’
Memo to Tony. You can’t have one with the other, mate. If you want to repair manufacturing, then limit the fiscal, tax and market distortions around housing. It is these that make house prices bubble up when interest rates fall. If house prices remained contained, the dollar would be tumbling and manufacturing rising as foreign demand poured in.
It’s going to have to happen anyway. Do you want us to hollow out further first or control it?
