Bob Day slams Australia’s housing policy failure

Above is a must watch video interview featuring Senator-elect, Bob Day, explaining to Business Spectator’s Alan Kohler why Australia’s housing policy is a complete failure and what can be done to fix it.

The interview follows Day’s eye-opening submission to the current Senate standing committee on affordable housing, which fleshed-out the issues in greater details.

Australia is very fortunate to have someone entering parliament that has such a good understanding of Australia’s dysfunctional housing system and genuinely cares about housing policy and the issue of housing affordability.

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Comments

  1. Even if his policy on housing affordability is sensible, many of the policies of Family First are not appealing. Family First and Bob Day advocate socially conservative policies, based on a regressive reading of Christianity. I would have to reject the party’s policy platform, despite its housing policy. Others may decide that the mix is right.

    • I agree Monkey-man. A glass of 1959 Grange good wine in a wheelbarrow of manure is still a wheelbarrow of manure.

      • Hey – I’m all for setting fire to the shack. But you and I both know that just burning the joint down is not nearly enough to kill this, There’s a dire need for casualties to teach the real lesson and instigate reform.

        Whether said reform will be *the right* one, that’s anybody’s guess, but going by the way things are run around the place, I doubt very much it will be.

        Yeah – pessimist, me?

      • Can’t agree with that UE. I’m not sacrificing my values for the sake of housing affordability.

    • Socially progressive conservatism and housing fairness go hand in hand, senator day has my vote. The greens have my enduring loathing.

      • PhilBestMEMBER

        You are VERY right, Squirell.

        There is an interesting paper from the IMF called ““Irrational Exuberance in US Housing Markets: Were Evangelicals Left Behind”?

        They find a strong correlation between the percentage of evangelical/fundamentalist Christians in the population in US cities, and the absence of house price volatility.

        They suggest that maybe this is because these people disapprove of speculation. But Albert Saiz of Harvard argues, correctly in my opinion, that the connection is these people’s antagonism to urban growth containment. He cites several academic works such as Dennis P. Hollinger: “The Ethics of Individualism: an Evangelical Syncretism”; to point out that evangelicals/fundamentalists often have the greatest appreciation of political freedom and economic liberty. Hence the antagonism to “we know what’s best for you” urban planning, and the stable, affordable housing markets.

      • drsmithyMEMBER

        Hence the antagonism to “we know what’s best for you” urban planning, and the stable, affordable housing markets.

        “We know what’s best for you” when it comes to your personal relationships, on the other hand, is enthusiastically welcomed.

  2. “The Baptists & Bootleggers phenomenon”.

    Hmmmmm. Both supporting prohibition on alcohol; one for moral reasons, the other for profit reasons.

    Makes one wonder about the possible (likely?) confluence of inner city Greenies and Usurers on restricting land supply; one for moral reasons, the other for profit reasons.

    Bob Day is impressive.

    • He is impressive – if you value conformity and moral conservatism. His party’s name, Family First, begs the question Who comes second? Single mums? Millennial singles? The infertile? If he wishes to advantage families, someone else must lose.

      He is very clear and useful on the dilemma of land cost and infrastructure charges, but I did not hear any proposals to change this. Hint: a Land Value Tax or removing the exemptions from the tattered State Land Tax bases would transform our land price spiral.

    • drsmithyMEMBER

      Bob Day is impressive.

      He’s a textbook religious conservative.

      Even a blind squirrel finds a nut once in a while.

      • Even a blind squirrel finds a nut once in a while.

        Bob Day is no blind squirrel. He came across as very intelligent and decent on the issue of housing.

        If you object to some of his other policies then please abuse them elsewhere.

      • “…a textbook religious conservative.”

        As are the aforementioned inner city Greenies, whose eco-religious views are largely to blame for the problem of land supply restriction.

      • Claw, Senator-elect Day enunciates the problem quite clearly, for which I am grateful. Did he offer a solution in his 20 minute interview?

        As for his social conservatism, Australia has no need for Straighteners and Diminishers holding the balance of power in the Senate. (See: Norman Lindsay)

      • drsmithyMEMBER

        As are the aforementioned inner city Greenies, whose eco-religious views are largely to blame for the problem of land supply restriction.

        Unless the polls have changed dramatically in the few weeks I’ve been on holidays, “inner city Greenies” don’t get laws passed because they represent a single-digit percentage of the voting public.

      • drsmithyMEMBER

        Bob Day is no blind squirrel. He came across as very intelligent and decent on the issue of housing.

        That doesn’t preclude him from being very wrong on other topics.

        Hence my comment.

        I don’t subscribe to an “enemy of my enemy is my friend” philosophy.

  3. “lets remember, it’s not increase in demand that causes increases in prices, it’s the lack of supply, reduction of supply.
    The great example of that, plasma TVs and digital TVs, …”

    It’s really depressing to hear such nonsense from a person who is supposed to shape policies that will determine our future.
    A person who thinks that market of digital TVs works the same way as market of naturally limited land supply is elected to lead this country – scary stuff.

    • that market of digital TVs works the same way as market of naturally limited land

      He doesn’t think that at all. You are the one posting nonsense.

      Now you explain to me (ignore if gutless) why Australia suddenly (last 20 years) has such a problem with naturally limited land. Australia has plenty of the stuff. Over to you.

    • “A person who thinks that market of digital TVs works the same way as market of naturally limited land supply is elected to lead this country – scary stuff.”

      That’s a bit pedantic, don’t you think? His point makes a lot of sense, albeit it could have been framed better. If urban land supply wasn’t choked, it would be better able to adjust to rising demand, lowering prices.

      Sure, land supply in a global sense is limited, but urban land supply is clearly not (except via regulation and geographical barriers in certain locations). Australia is less than 1% urbanised, after all.

      • Australia is about 0.13% urbanised … New Zealand 0.70% … the US about 2.5%, Ireland 4% and the United Kingdom about 9%.

        I just want to assure our Aussie pals that it will be a while before you have to put dykes in the Gulf of Carpentaria to accommodate the teeming masses.

        Australia and New Zealand have oodles and oodles of land available for normal urban development.

        The whole thing is a complete nonsense.

        Hugh Pavletich
        http://www.PerformanceUrbanPlanning.org

      • this is Economics 101 question:
        It doesn’t matter how large or empty this country is. What matters is that desirable land is limited (land at certain distance from capital city centres or other desirable spots). The fact that you can buy 1 acre for $1 in remote WA makes no difference to price of land in Sydney or Perth whether you allow development or not on that land.

        In case of TVs, people are not competing with each-other for the best TVs – number of good TVs is not limited (everyone can have the best TV with very little effect on price).
        With urban land is completely different, people are competing for limited “good land” (land that most of people desire), and the fact that many want the same limited land pushes prices up.
        This is basic knowledge that our politicians don’t understand. Land is natural monopoly and such should be regulated the same way as all the other natural monopolies.

        Unlimited supply of fringe land would make “desirable land close to CBD” less desirable for some people by providing cheaper second (or third) choice alternative but effect of that would be very limited and it would satisfy only some demand from (mostly poorer) people who are priced out in better places.
        Investors and speculators (and home-owners to lesser extent) prefer land in short supply because that “guarantees” price increase over time. That, mostly speculative demand pushes not only prices in the most desirable spots but prices nearby as well, and that effect just extends continuously all the way to the fringes (if price of 500sqm block x km from CBD goes up from $1m to $2m, price of block x+0.5 km from CBD will go up as well by almost the same percentage, and so on …

        At the end, many poor people would live in undesirable places far from everything, losing hours of their life and thousand of dollars on commuting

  4. Don’t forget the other half of his interview. Barriers to jobs:
    Rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules
    rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules
    rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules
    rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules,rules…

    The number of rules is proportional to the number of civil servants (the measure of how successful Australia’s federal/state government model is) + the proportion of union influence in government.

  5. So high house prices are only due to the lack of supply?

    Demand pressures play no part in the equation?

    No effect on house prices from high population growth/unfettered foreign investment?

    No effect from tax concessions for speculation in existing dwellings?

    Sustained record low interest rates have no effect?

    His simplistic statements do not withstand the most basic assessment.

    Serious question. What legislation can Bob pass/amend in the senate to increase new residential land supply?
    Aren’t these state and local govt issues?

    • “…What legislation can Bob pass/amend in the senate to increase new residential land supply?
      Aren’t these state and local govt issues?”

      They are but in our fiscally centralised federation the Federal Govt could do a number of things singularly or all of them (as trials)

      1. Offer the states that the Fed will take on the cost of servicing new land if the state agrees to charge, collect and remit for say 30 years a utilities levy on the land.

      2. Provide additional infrastructure funding if a state enacts the legislation required for a MUD model for financing the cost of servicing new land.

      3. Simply offer to pay for the servicing costs of X number of new blocks brought to market per year. This would be a very simple way of getting new land serviced and on on the market asap. But the lack of any user pay element may be an issue.

      With the Federal fiscal carrot and stick there is a lot the Federal govt can do to get new housing construction on the move and quickly.

    • Geez Patrick. You complain constantly about housing affordability. And yet when we finally get a politician talking some sense, albeit on the supply-side only, you slam them.

      Sure, there are demand-side issues that also need to be dealt with (e.g. negative gearing), but this should not prevent us from supporting sensible supply-side reform. Australia needs to take wins wherever we can get them.

      • Leith,

        Kudos to Bob for the supply side stuff but his demand-side denial has to be called.

        In the senate he is better placed to influence demand-side (population/FIRB/NG) reform than the supply-side stuff.

        How is his policy position any different to the HIA?

        How will he vote on NG for new-builds only?

      • I know Bob Day well and hold him in enormous regard.

        Australia is indeed most fortunate in having a man of Bobs abilities and integrity in public office.

        Do not fail him … and yourselves … by failing to support him.

      • Hugh,

        You are a vocal critic of the HIA.

        How is Bob Day’s policy position any different to that of the HIA?

    • PhilBestMEMBER

      Absolutely; if supply is elastic none of the other things matter.

      Not loose credit. Not low interest rates. Not favourable tax regimes. Not mortgage interest tax deductibility. Not immigration. Not population growth.

      However, if supply is rendered inelastic by central planning, then all these other things DO matter. However, not one of them is the area of the policy solution to the unaffordability and social injustice that results from the distorted supply. The best you can do, if you insist on not reforming supply, is “proof” your financial system by very tough restrictions on credit. However, house prices will still be at least double what they should be, and the same proportion of the population will be priced out of home ownership.

      • Hugh PavletichMEMBER

        The Patrician …

        Boy Day has spoken with clarity for years on housing issues.

        In contrast … the HIA has failed to do so.

  6. It is crushingly important to judge a policy response on its merits, not on the preconceptions based on those who did not have those policy responses. The domination of the major parties by interest groups has lead to an intellectual atrophy that distinguishes our current front benches. There was a time when reasoned debate, of which this is a prime example was the way that policies were resolved. His arguments are persuasive because of his reasoning and irrelevant labels as to his other beliefs distract and are counter productive. An idea is either good or it is not. Where it comes from is not relevant. He has my vote on these issues. He is impressive because he is so constructive and insightful.

  7. Isn’t it past time they woke up in Australia too ? …

    12 Reasons Why New Zealand’s Economic Bubble Will End In Disaster … Jesse Colombo … Forbes

    http://www.forbes.com/sites/jessecolombo/2014/04/17/12-reasons-why-new-zealands-economic-bubble-will-end-in-disaster/

    … and Hugh Pavletich Top Scoop NZ News response …

    New Zealand’s Bubble Economy Is Vulnerable | Hugh Pavletich | Scoop News

    http://www.scoop.co.nz/stories/HL1404/S00166/new-zealands-bubble-economy-is-vulnerable-hugh-pavletich.htm

    It is not a housing bubble until it is officially denied … Jesse Colombo … Forbes

    http://www.forbes.com/sites/jessecolombo/2014/04/21/its-not-a-bubble-until-its-officially-denied-new-zealand-edition/

  8. Very encouraging to hear this from a senator, even if he’s completely focused on the supply-side and blissfully ignorant of demand-side factors (eg. negative gearing).

    Finding anyone in Federal Parliament with enough sense to address even part of the issue is hard enough, so these comments are encouraging.

    • PhilBestMEMBER

      I don’t think it is fair to say that Bob Day is “blissfully ignorant” about demand side matters; I have known him well enough for long enough, to know that he is one of the people enlightened enough to understand that housing supply is the make or break factor. If you get that right, nothing else matters.

      In fact, with elastic housing supply, negative gearing would be beneficial. So would low interest rates; so would FHB subsidies, so would immigration.

      A big problem is that many of these demand side traditions date back to before “save the planet” urban planning, and WERE beneficial for years if not decades.

    • Now for the demand side….. Doesn’t mean he is wrong about supply and jobs for young people though?