Labor’s treasury spokesman, Chris Bowen, last night appeared on ABC’s 7.30 report where he gave a mixed performance on the issue of housing affordability.
On Labour’s negative gearing policy, Bowen made the following sensible observations:
“These are reforms that will provide more stability for the financial system, because the high leverage in our economy as has been called out even most recently by the IMF, the OECD… is causing grave risks and concerns. It’s good for housing affordability and good for the Budget”.
However, when asked about whether Labor would consider providing incentive payments to the states to undertake housing-related reforms – such as swapping stamp duties for land taxes – Bowen ducked and weaved like Mike Tyson, effectively leaving reform solely up to the states.
This is very disappointing from Bowen. The fact remains that the Commonwealth raises 82% of total tax revenue, whereas the states and territories raise only 15%. If Bowen genuinely wants to drive fundamental housing reform, then he needs to commit Labor to providing incentive payments to the states to ensure they:
- free-up land-use and planning bottlenecks; and
- swap inefficient stamp duties for land taxes.
This is doubly important given it is the Commonwealth Government that has chosen to leave the immigration spigots wide open, leading to strong inflows of new residents into Australia’s cities (especially Sydney and Melbourne), which costs the states dearly in services and infrastructure delivery.
Given the massive vertical fiscal imbalances present in the federal system, the states have justifiably attempted to prevent growth of the urban footprint in a bid to save on infrastructure costs, simply because they cannot afford to fund this growth without federal help.
In short, Labor needs to commit to providing funding for housing reform. Ultimately what gets paid gets done.
