Labor releases housing affordability paper

By Leith van Onselen

The Labor Party has released a housing affordability discussion paper, which is aimed at informing Labor’s Housing Affordability Strategy that it will take to the next election. The discussion paper calls for submissions by 1 May 2015.

Below are some key extracts from this paper:

A key focus of this Discussion Paper is first home owners who are increasingly being locked out of the housing market. If first time home buyers are finding it increasingly difficult to get in to the market, it has the potential to exacerbate inequality between those who already own homes compared to those who cannot get in to the market. As the Grattan Institute recently pointed out in its ‘Wealth of Generations’ report, the wealth of households aged 24‐35 have gone backwards in recent times, in large part due to their inability to get into the housing market…

The median value of a Sydney property is now nearly ten times median income in that city. By this measure that makes Sydney the third most expensive city to live in the world. Melbourne is not far behind, ranked sixth most expensive in the world with the median value of a property costing nearly nine times median income in that city…

It is difficult to compare housing affordability between countries. But on most measures Australia has expensive housing relative to other advanced countries…

ScreenHunter_6841 Apr. 01 08.09

In total over fifteen important initiatives were introduced under the previous Labor Government: the National Rental Affordability Scheme; Housing Affordability Fund; National Housing Supply Council; First Home Saver Accounts; First Home Owners Boost Social Housing Initiative; bank guarantees and mortgage market support during the GFC; Homelessness White Paper The Road Home; A Place to Call Home; National Affordable Housing Agreement; National Partnership Agreements on social housing, homelessness and remote Indigenous housing; release of surplus Commonwealth land for housing; Henry review of taxes and transfer including housing related taxes and transfer; inquiry into homelessness legislation; Housing Help for Seniors; and COAG references on social housing reform, housing markets and city planning…

No mention, of course, of the Rudd Government’s disastrous abolition of foreign ownership rules in the wake of the GFC (later re-instated) or its massive first home buyer bribes.

The discussion paper then asks for feedback on 14 questions:

  • To what extent are existing planning laws inhibiting the supply of new housing?
  • What role could the Commonwealth play to encourage greater uniformity of planning rules across jurisdictions?
  • To what extent have foreign purchases of residential housing affected affordability?
  • Do you consider that first home buyer schemes are effective in improving housing affordability?
  • What aspects of existing taxation arrangements act as barriers to housing affordability?
  • How might taxation policy be designed to achieve positive housing affordability outcomes?
  • Please provide your views in relation to the effectiveness of rent assistance in improving housing affordability?
  • Do you consider that rent assistance is appropriately targeted towards those that face issues of housing affordability?
  • Do you have a view on which sections of our community are expiring housing stress most acutely?
  • What role might Government policy have in improving secure occupancy for renters in Australia?
  • How might social and public housing best be targeted towards those who need it most in order to improve housing affordability?
  • What role would you like to see the Commonwealth Government taking to improve housing affordability outcomes in both the short term and long term?
  • How might the Commonwealth improve the transparency of arrangements around the National Affordable Housing Agreement between the Commonwealth, States and Territories?
  • Are there any other issues not already covered in this Discussion Paper that you consider of high importance for improving housing affordability for Australians in the short and long term?

Hardly earth shattering stuff, but at least Labor is having a go. This is more than I can say for the Abbott Government, which has shown next to no interest in the housing affordability issue.

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  1. Not any mention of the disgusting FHOG Boost, notwithstanding Plibersek (future Minister for Housing Unaffordability) & Rudd’s comments, while in opposition, that any such policy would only inflate house prices and benefit vendors.

    • Actually, they mention it, but word it very softly:

      “However, critics consider that given supply constraints these grants simply boost house prices and present a transfer from the Government to existing home owners.”

    • C’mon what politician or party is ever going to own up to a mistake in this day and age?

      At least they’re making some right noises, although whether it leads to any sensible policy change I am rather dubious.

      Then again, as some below point out that the same noises have been made before and the results were totally ignored, so history is doomed to repeat itself.

  2. ResearchtimeMEMBER

    Not strictly true (last sentence) – Liberals are tackling foreign ownership which has a far bigger impact than anything above in Sydney. Something that the Labour Party suggests is xenophobic and has ruled out completely!!!!!

      • ResearchtimeMEMBER

        NG – its too hard to do before a crash occurs. No one wants the blame for taking down the housing market…

        But it appears (at least to me) that a number of other issues that I have not seen anywhere else except mentioned here on MB, the Liberals are pursuing with absolute vengeance. You have to give them credit where its due – bias aside. I have counted at least three policy initiatives in the past eight days that you and H&H have ben pushing strongly!

        Labour are currently a policy free zone, and if they don’t watch out ,it honestly feels like they will throw away the next un-loseable election!!!

        As for me, I rarely vote Liberal or Labour, so it matters not… (although I did vote for Liberals for the senate in last NSW election – good outcome).

      • “But it appears (at least to me) that a number of other issues that I have not seen anywhere else except mentioned here on MB, the Liberals are pursuing with absolute vengeance. ”

        Which are?

      • ResearchtimeMEMBER

        The are looking at NG (although doubtful on that one what they can realistically do – but you never know), super reforms, true tax reform measures with fairness in mind in contrast to that despicable last budget, some car support (marginal I know), but they have tackeled other things such as foreign ownership, rural ownership reform, etc and a host of other items (franking credits will be a big one! although not discussed here as far as I know).

        Seriously, none of this was taken to the last election, but a bunch of it is policy, some of it being implemented. And unless I have been totally myopic, I haven’t seen any of these discussions anywhere else except on MB!!!!!

      • “The are looking at NG (although doubtful on that one what they can realistically do – but you never know), super reforms, true tax reform measures with fairness in mind in contrast to that despicable last budget,…”

        Well yeah, in the same way that Labor looked at tax reform with the Henry report. We’ll see whether Hockey and Abbott are “brave” (in the Yes Minister sense) to actually try to reform anything. I hope so but I doubt it.

      • Tedblack44MEMBER

        Would Macrobusiness members like to respond to Bowen’s 14 questions? Can we develop a consensus and lodge it? I know I have a lot of views on the subject having had to help all three of my children get out of our rent neg. geared rent trap. It is no surprise that Germany has affordable housing. They predominantly rent from viable landlords who compete for occupants. Where are the landlord firms in Australia? Blown away by the loss making salary men. I thought the Conservatives were a free enterprise, no red tape, free market party. Apparently not if it attacks the personal wealth of their major voter rump. Ask readers for their answers to these questions and summarize and submit.

    • Liberals are tackling foreign ownership which has a far bigger impact than anything above in Sydney
      Granted and when I start to see lots of “heads on spikes” I’ll tip my hat to the LNP – not before.

  3. De ja vu for Labor once again? They released nearly exactly the same paper in 2006 (Plibersek, Rudd, Swann) and then when they got to power they ignored it completely pretty much.;query=Id%3A%22library%2Fpartypol%2F4ZLN6%22

    Do they take us for fools that they actually care about housing affordability? How about they talk about putting the brakes on the Big Australia push, that will be a start.

    15 years all we’ve had is discussions and nothing has been done except inflate housing prices further.

    • +1 power I haven’t forgotten the deplorable character of the minister for housing unaffordability (plibersek). Another piece of work pollie.

    • Great comment and link P. Even for the long suffering party voter (never ceases to amaze me there are any left) they surely have to be wondering about just how genuine these guys are?

  4. It’s taken them this long to launch a discussion paper, and all it does is ask some soft questions about “what are your views on this and that?”. Pathetic lip service from both sides of politics. Major parties won’t be getting my vote until I see action.

  5. It is a start.
    This is a slow burn political shift.
    It is ultimately generational and will rely on generational change.

    Only once the baby boomers have retired and the next generation taken up the reigns of power will the shift be complete.

    That Labor is even talking about these issues is a BIG change from the past. Don’t expect too much, but it is a start.

  6. “House prices in Australia have increased significantly over the past 30 years. Much of this increase can be attributed to our increasing wealth as a society and is a reflection of our economic success, with Australia just about to notch up its 24th consecutive year of economic growth, something unparalleled
    in the developed world.”

    Methinks they are confusing cause and effect.

    • Yes, this is bubble psychology at its finest. Everyone in an overvalued place wants to believe that it has somehow been “earned” or it is “justified”. Pride comes before a fall.

      • Mining BoganMEMBER

        Yes, the type of arrogant pride that can only be cured by a well deserved beating.

      • Actually, pride comes before destruction, and a haughty spirit before a fall. Which seems even more appropriate.

  7. ceteris paribusMEMBER

    If Labor don’t know what to do about affordable housing by now, they never will.

    This Discussion Paper/Consultation process is utter bullshit. They have been through these issues a thousand times in recent years and have researched and consulted interminably

    This Paper is just another Bowen excuse for not releasing priorities, directions and specific proposals to argue and defend. The Paper is a ploy to remain a small electoral target for as long as possible, till after an election if they could get away with it.

    Please don’t give credit to Bowen for at least finally raising the issue He is almost as shifty and self-serving as Abbott and Hockey, if that is possible. Write back to the Discussion Paper and demand to know what he intends to do about the affordability problem and tell to stick his delaying “process” up his jumper. Tell him to have the courage of his convictions and speak up for what he knows is right- NOW.

  8. kinetic ritual

    As others suggest, this is completely disingenuous on the part of Labor. They know what the problem and solution is, but lack the conviction and courage to pursue it. They are more interested in self-preservation than leadership. They are implicated in priming investor and foreign demand for housing in the midst of a domestic credit boom, knowing full well that supply could never match that juiced up demand. Timing was unfortunate for them in 2008 in terms of pursuing policy, but right now they are being gifted a platform and policy opportunity to take on the current government’s equivocation. We cannot afford to sit on our hands and wait and hope that the market restores balance. When people on six figure incomes are priced out of buying housing within the inner city ring, you know that public policy has completely failed. We continue to place too much faith in markets. Markets are just people, and all of the greed and self-interest that implies. It is time for aggressive public policy to apply a firm slap in the faces of those indifferent to the national consequences of overpriced housing. Both mainstream parties deserve to be destroyed for their culpability in this. They have sold this country out for the benefit of the few.

  9. Sorry, I still don’t get it.
    We are a small nation of 24Mn people, and a very attractive, safe place to live.
    Charging people outside this country a tax of $5000 to buy a residence is a complete joke.
    There are now 300 million middle class Chinese that can afford to buy a residence in Australia.
    If you charged $100,000 for the privilege, foreigners would probably still buy….even more so at this time in history when central banks are printing many trillions to buy their government’s debt, which eventually ends up in the hands of the very well off who can buy residences in safer havens like Australia.
    Will both sides of politics make it impossible for our children to buy a decent home with the resulting home hyperinflation?

    • Yep this is the problem as I see it, I can’t compete with foreign investment. $5,000 is a piss in the ocean compared to the cost of a house in Sydney these days.

  10. mine-otour in a china shop

    We need to have a conversation about starting to have a conversation about the policies driving our house prices way out of equilibrium.

    FFS why can nothing be done quickly in this country? When people sniff any change for the greater good it quickly descends into a distracting blame game between the 2 main political parties.

    Change amongst this stupidity and economic arrogance, will sadly only come when the market has its say and there is a crisis and people are forced to make decisions quickly.

  11. This: “If first time home buyers are finding it increasingly difficult to get in to the market, it has the potential to exacerbate inequality between those who already own homes compared to those who cannot get in to the market.”

    They just don’t get it. This opening sentence shows they think affordability is about helping first home buyers get ‘on the ladder’ so they can make shitloads too.

    • Yep, housing is not a productive way to invest in an economy. Make housing affordable for all people at all levels of society which will reduce their dependence on the government and free up that wealth to be spent in better parts of the economy. Heck we might even create world class businesses at the same time.

      • Young people have to run for the Senate in 18 months time.
        Half the Senate will be up for election… That ‘s one chance in six for each state, 5 Senators in all for the Homes For Australians Only
        Parents and grandparents and your own generation will vote for you.
        You won’t need big money to get it going because EVERYONE is angry and insulted by the feeble attempt of charging $5,000 to stop people who are not citizens of this country from buying a home here.
        If you can use the Internet to good effect, you might get 2 senators per state.
        There is no political will for this in any political party.
        You have to do this yourselves.

  12. Wrong wrong and wrong. It’d all a waste of time. Government needs to get out of the way. Remove all policy that distorts the market including land supply and ignore “not in my back yard” protests.

    The last point is the funniest. We who live in nice suburbs are the biggest rent seekers of all.

    Don’t blame Abbott for the greed and stupidity of Australians.

    You cannot fix this, it requires the total destruction of the banking system… When that happens we will be paupers and work for our Chinese overlords.

  13. Labour has a good intention. and that’s about it. It ends right there. I m not a fan of labor cos I think they are purely a waste of time and money. History has proved this over and over. the housing affordbility is largely if not all caused by the governments ill policy itself. investors have been and will always get into the market and crowd out FHB , as long as 1. the housing demand is strong and supply is low. 2. it’s relatively easy for release the exisitng equity to purchase more.

    it’s relatively easy in my view to solve the housing affordbility, the goverment got the guts needs to do :
    1. release land , simplify the building approval , and cut down the cost for developers
    2. increase the Stamp duty for investors to double the amount of FHB
    3. increase the LVR for investors to 60% to 70% .

    Having said that, what that lead to us ? didnt we need a little bit ‘wealth effect’ to push up consumption in a current market environment ? wasnt it said that a little bit inflation is a good thing for a staled economy ?