Do-nothing Malcolm shows he’s a housing affordability phony

By Leith van Onselen

If you want iron clad proof that Malcolm Turnbull is a housing affordability phony, check out yesterday’s interview with 2GB’s Ben Fordham:

BEN FORDHAM: I’ve got a few other things I want to throw your way. Housing affordability. Every time we talk about it on the open line the phones just go into meltdown. One of the things that’s been floated so many times, but I know there’s been some denials out there as well, whether you’re considering allowing some people to access their superannuation to buy property. Now, you met with John Alexander on Monday night. He’s asked his economic adviser Peter Hendy, well I think that’s you have asked your c adviser Peter Hendy – I don’t know whether it’s John Alexander who has asked the question. But is it true that a question has been asked that they need to look into this idea, despite previously saying it was a bad one?

PRIME MINISTER: I’m not going to go into discussions with colleagues Ben. Obviously, John has got strong views on this matter and he puts them to me. He is a very accomplished and experienced Member of Parliament. He’s been a great sportsman, a great businessman. I listen to him and I pay a lot of attention to him, but I’m not going to go into speculation about what is, or will not be, or is being considered in the Budget.

BEN FORDHAM: So despite saying previously that it was a bad idea, there have been questions asked of Peter Hendy about it?

PRIME MINISTER: Ben, I know you’re more interested in politics than policy. But what I’ve announced today is the single greatest –

BEN FORDHAM: Well hang on a moment –

PRIME MINISTER: Hang on, just let me, Ben –

BEN FORDHAM: No hang on, when you say I’m more interested in politics than policy, I’m asking you about housing affordability policy and you started telling me that John Alexander was a good tennis player.

PRIME MINISTER: No, I said he was a very distinguished sportsman, and a very successful businessman.

BEN FORDHAM: Well I was asking you about housing affordability policy which is a big concern to my listeners.

PRIME MINISTER: Alright, well it’s –

BEN FORDHAM: They want to know if this is a bad idea or if it’s an idea that’s on the table.

PRIME MINISTER: What is –

BEN FORDHAM: I don’t expect you to confirm or deny.

PRIME MINISTER: What is the idea that you’re particularly referring to?

BEN FORDHAM: Whether there is a plan being considered for people, some, to be able to access their superannuation to buy property.

PRIME MINISTER: I’m not going to confirm, or I’m not going to discuss particular issues that are in consideration for the Budget. The fact of the matter is there are a lot of submissions being made by many different people, including very experienced and very capable colleagues like John Alexander, who has a long interest in this issue. He’s a very capable guy, a great businessman.

BEN FORDHAM: No worries. Great sportsman.

PRIME MINISTER: No, I said a great businessman.

BEN FORDHAM: I know it’s on the table anyway. It’s on the table.

PRIME MINISTER: No Ben, let’s just be quite clear. Everyone has got views on housing affordability. Let me tell you what the fundamental issue is. This is from my experience and I’ve paid a lot of attention to this issue over many years. The reason housing is not as affordable as it should be in Sydney in particular, is because we are not building enough dwellings. We’re not building enough houses and so forth. That’s because governments – local governments, state government s – have not provided the planning approvals, the zoning, to enable it to be done. So it’s basically a supply and demand problem. Now to their credit, the Liberal state government, Gladys Berejiklian’s government, Mike Baird’s before it, Barry O’Farrell’s have made a lot of progress in this area. But the supply – demand shortfall has taken a long time to catch up. That’s why, as part of our City Deals, we are working on agreements with state governments and city governments, to expand more housing supply. It’s very important.

BEN FORDHAM: I’ve been saying on this show for a while and I don’t know whether you are across this and you could be forgiven for not being across it because it’s been gathering dust on various bureaucrats and Ministers desks for about 10 years. But there is legislation sitting there in Canberra in regards to anti-money laundering legislation. There has been a big bust today, a big case today involving Tabcorp. But there is a second factor there of that legislation that’s been gathering dust for nine years, now that involves real estate agents. So if you’ve got people coming in from overseas, I’m talking about illegal buyers from overseas, from China specifically and elsewhere, that real estate agents should have to declare where that money has come from just like they have to do at the moment in banks and casinos and bullion dealers. Do you think that’s worth doing something about considering it’s been sitting there on someone’s desk for nine years now?

PRIME MINISTER: Look I haven’t seen the details of the particular case. I’ve been up in the Snowy Mountains today talking about the biggest change to energy supply in the east coast of Australia for many years. Really taking on this nation building project, the Snowy Mountain, that we’ve inherited from our grandparents and parents’ generations and carrying it forward.
Now that is what I have been focused on today so I haven’t caught up with the issue you referred to.

You’ll see from the above that Turnbull won’t rule-out allowing first home buyers (FHBs) to access their super for housing – an incredibly bad policy that would drive-up house prices, cost the Budget billions over the long-run, and put people’s retirement incomes at risk. It also comes despite Turnbull himself declaring the policy “a thoroughly bad idea” in 2015.

Next Turnbull tries to claim that Sydney’s housing is unaffordable “because we are not building enough dwellings… So it’s basically a supply and demand problem”.  Conveniently, Turnbull refuses to acknowledge that the main reason why Sydney is not building enough dwellings is because of the mass immigration program run by the federal government, which has seen Sydney’s population surge by 800,000 people over the past decade and is projected to see Sydney’s population balloon by 87,000 people per year (1.74 million in total) over the next 20 years – equivalent to adding 4.5 Canberra’s:

ScreenHunter_16409 Nov. 30 15.56

Clearly, the best way to solve the shortfall in dwelling supply is for Turnbull to rein-in Australia’s mass immigration program.

Finally, we have Turnbull feigning ignorance over Australia’s refusal to implement the second tranche of anti-money laundering (AML) legislation covering real estate gate keepers, which has been gathering dust for a decade despite explicit criticism from the global regulator, the Paris-based Financial Action Taskforce (FATF), that Australian homes are a haven for laundered funds, particularly from China, as well as similar warnings from Austrac.

In the meantime, dodgy Chinese money continues to pile into Australian property, to the chagrin of the global AML regulator, FATF. In the process, young Australians are being priced-out of home ownership, in part due to hot Asian money.

In short, Do-Nothing Malcolm is a complete housing affordability phony. Any policies implemented in the May Budget are likely to further inflate housing and make housing affordability even worse.

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Comments

      • But at least we now have the Grocery Code of Conduct. That was awesome. What an asset to this nation.

      • I went to Coles today, and everything worked as I expected, because the Grocery Code of Conduct is working!!! You just don’t appreciate what these hard working politicians are doing for us … /sarc

  1. Don’t the FIRB breaches, particularly of those Sydney water-front purchases so famously paraded by Joe Hockey, prove that AML is required as part of the checks and balances?

    It will kill the Black Diamonds model for real estate but that is a good thing in my books.

    • That’s a great article. This point is spot on:
      “Property income yields are at historic lows and yet property buyers couldn’t be more enthusiastic. Buyers who tell me that they don’t mind buying on a yield of 2.5% because they will get a capital gain need to understand that the capital gain will only come when a buyer is willing to accept an even lower yield. And yields cannot fall much further when your oversupplied property Is vacant and your yield is zero – as many leveraged Brisbane apartment owners are about to discover. The end of every bubble is marked by the appearance of the the greater fool principle; betting a bigger fool will come along and accept an even worse return. It’s speculation, pure and simple.”

      This is something I’ve noticed in property as well. When you speak to property investors about the low yields, their response is always ‘yeah but we are buying for CG’. They don’t understand where the CG’s come from.
      Unless you are expecting unprecedented growth in earnings the CG can only come from the next buyer buying a lower yield. ie. you are relying on greater fools. That’s why the lower rental yields/coupled with investor expectations of CG should always/and exclusively be pointed to as evidence for the bubble.

      • This. The issue is that there is a massive expectation of perpetual price growth and capital gain. Its not even up for debate in the mainstream. Recently I was reading a financial advice style discussion where a PI was looking to sell but hadn’t done his sums or whatever and the advice was literally “it hasn’t gone up enough yet. Just wait for it to go up some more and then sell”.

        There is no understanding at all that, leaving aside yield, it simply isn’t possible for prices to keep going up perpetually. So at some stage, a Greater Fool must be revealed. We just don’t know if its now, next or next-next. And when you’ve got a situation where some areas are doubling in 3 years, the end surely cannot be far away.

      • I’ve been tearing my hair out about this for years.
        I’m convinced that if the concept of a bubble had of been defined and broadcast correctly (in its narrow technical sense), and people dedicated their efforts to explaining why in a purely financial valuation sense it’s a bubble, rather than banging on about affordability, supply, telling people not to buy now (all this stuff which has confused and shifted the debate to imply prices are high due to fundamentals), this thing would have collapsed years ago.
        But we will never know.

      • All true but governments are already setting up the greater set of fools, FHO. This bubble still has plenty of steam …

      • I recently called an agent about this property.
        https://www.domain.com.au/33-oak-avenue-cheltenham-vic-3192-2013458270

        Since I’m a car guy and I like the garage set up, anyway talking to the agent on the phone about it, he said it was likely going to go for close to $1M. I said yeah look I know Cheltenham has already boomed. He was saying, oh it’s only just taking off lots of growth still in it. :).

        I’ve heard this a lot from agents and frankly I can’t give a shit if the property goes up in value. I just want to find a place to call home so I don’t have to rent with an either equal or lower repayment than what I rent in in Sydney.

        I recently missed out on this property also.
        https://www.realestate.com.au/sold/property-house-vic-reservoir-124611094

        I offered $738 before auction and was originally accepted, then declined and vendor wanted to go to auction. Thing is I was factoring in 7.5% interest rate and my $550k+ deposit. I could have gone higher but I just thought it’s madness. I can’t live in it right away so I’d have to rent and the rent was like $480 p/week or around that.

        I also asked about this 1 in Frankston. I was quoted 1.1M which I thought was NUTS. Then it sold for 1.35M haha.
        https://www.realestate.com.au/sold/property-house-vic-frankston+south-124643090

        In a normal market it shouldn’t be more than $600k in my opinion! But when I say that, people don’t believe me…

      • Disrespect and cowardice … that is how I describe it. And yet, every word they utter is about building their brand. They polish off their brand at election time hoping that no one remembers these interviews … it will all be washed over by our latest 3 word slogan … “jerbs and grewth” … these dumbfucks will jump on-board with that

  2. TailorTrashMEMBER

    If ever there was a demonstration of Tumbrils leadership failing that’s it …no vision …no strategy …no plans …….just empty waffle and avoidance ..jumping to the snowy scheme “that we inherited from our grand parents and parents ” is a bit like Tones diverting the questions to the grocery code of conduct . Tumbril should remember that the way things are heading our children will not be inheriting much from their grandparents or parents.

  3. “Now that is what I have been focused on today so I haven’t caught up with the issue you referred to.”

    Yeah cause a decade is not really enough time to catch up with this particular issue. What a joke.

    I’m thinking Ben made a mistake by even referring to the Tabcorp case as it gave old Mal an easy way out. If he’d just referred to the non-progress of the AML legislation in isolation Mal would have had a harder time of it to obfuscate with his response.

  4. Good on Ben Fordham for having a crack on behalf of his listeners.

    As for Turnbull. He is a policy and political prisoner of the hard right who have the numbers to roll him in the party room whenever they want. I’m sure he would like to do more, but he has to work with the political situation.
    Sadly he is a weak leader for that reason.

    • +1000
      It frustrates the fark out of me, but why oh why didn’t he just go for it from the start? Fark the far right and their bedwetting / sky falling in panic.

  5. A skillful drone strike question by Ben Fordham re Anti Money Laundering and RE agents.
    It takes a fully dedicated drunk to stagger around for 10 years and not find the keys to the car.
    If all interviews with politicians included that AML question they might actually legislate it into effect.

    • +1 especially to your last sentence. And kudos to Ben Fordham for nipping waffle in the bud (to mix metaphors). I haven’t heard any other interviewer even ask about AML. Yes, there needs to be a push for all interviewers to pressure pollies on AML or its lack thereof.

    • And replace him with…? The problem is the Liberal Party and the increasingly unworkable Coalition. Doesn’t matter who they put in, the Liberals are far too wedded to neoliberalism and divided between the wets and the Loon Pond to govern in this environment.

      • … Dutton … he has already reemed 30 CEOs today … so is on a winner … and that wacko SA Senator who believes God should be PM supports him.

        God save us …

  6. Gen Y Home BuyerMEMBER

    This highlights for me the utter failure of both the left and the centre.
    I have traditionally voted for leftist and centrist candidates although I’ve cast my vote for labor, liberal, greens and independent.

    The fact that it takes someone from 2GB (I could be wrong but I would consider them more right-wing) to highlight these things shows how useless the left and the centre have become.

    If it takes some RWNJs to deal with the very real problems that no-one dare deal with then bring on the RWNJs.

  7. If you believe the Twitterverse an announcement on super for housing next week.

    Oh boy it will be great watching them try and defend it.

    I’ll also wager this is Malcolm’s knighting Prince Phillip moment. Terminal decline from there on.

    • If they do it I’ll move my super allocation away from anything Australian and to global stock market or shares. Or might even consider a SMSF and i’ll buy up some vintage cars like Porsche’s etc.. When this shit breaks it’s going to destroy everything. Holding tangible assets is the only way to be sure you’ll have something to show for yourself when the levy breaks.

      • Its complicated and not all bullish for property. The obvious thing to expect is an allocation out of equities into property. Bank stocks could be sold off, also their fund management arms might suffer. But Malcolm has insisted it should be neutral for property prices, so something also coming to temper investor demand I expect.

        Then the question of how much it really matters. Not much in Sydney/Melbourne I suspect as even if $100k helps with the deposit repayments will still be a killer. Will go a lot further in regional areas, so may actually encourage more to relocate and ease demand in big cities. In which case, it may actually be positive – or rather negative for big city prices.

  8. https://www.domain.com.au/news/malcolm-turnbull-wont-rule-out-allowing-firsttime-home-buyers-to-use-super-for-a-deposit-20170317-gv02v8/

    excerpt….”Mr Alexander also said the government was working on changes to negative gearing, which may be presented at the next election. “But I think the time is of the essence and I think we need to act sooner rather than later,” he told Sky News on Thursday.”

    …and here I was thinking that John Alexander said the problem was with neutral & positively geared investors.

  9. CounterfiatMEMBER

    You are all too hard on Malcolm, he is do-everything for the banks.
    That is why the banks allowed him to be PM.
    Globalist golden boy, tax cut for foreign, I mean his kind of people…

  10. Absolutely roaring batshit crazy which is precisely why our numpty PM who opposed it and now doesn’t will allow all FHB’s to transfer their super to the older generations for the privilege of being able to buy and live in a negative equity time bomb.

    Why does this country insist on stupidity?

  11. In short, Do-Nothing Malcolm is a complete housing affordability phony. Any policies implemented in the May Budget are likely to further inflate housing and make housing affordability even worse.

    You seem disappointed? Like he was ever anything else? I certainly didn’t vote for the wanker. I should get T-shirts made that say that actually.

  12. Here’s the response from John Alexander’s office when I wrote to them about how they were not getting their hands on my super. I plan to write back and state that the problem with housing is the prices. Even if I can put together the deposit I don’t want to be spending the rest of my life paying a million dollar loan which no other generation has had to do before and the interest rates on mortgages are set to go up. So how does accessing my super now solve that??

    Thank you again for emailing regarding housing affordability and the use of superannuation to assist in the purchase of a home.

    John again appreciates your feedback.

    As discussed in my previous emails to you, John understands the concerns regarding the volatility in the housing market and the opportunities for home buyers to get into the market.

    John is of the view that investors currently have an advantage over the home owner. We need to develop a strategy of transition that transfers some of the advantage of the investor to the first home buyer. A complete suite of policies are required to address the issues of housing affordability and stability.

    On the issue of using super to purchase housing, this is an idea that John supports as part of a wider suite of policies on housing affordabilityJohn’s thought on the matter is that the home buyer may access a portion of their superannuation fund for the purchase of a home which they must occupy as a primary residence. The amount of money borrowed from super as a percentage of the property’s purchase price is retained as a component of the superannuation account. If the property is sold prior to the preservation age of the super account then the super account must claim back its percentage of the property at the sale price. If the super account reaches preservation age, then the percentage owned by the super account is cancelled as the property is now a component of retirement income. In this way, the super account maintains its purpose as a vehicle for retirement income but also allows the property to act as an investment contribution to superannuation. It specifically targets first home buyers who generally have less equity and enables them a leg-up into the housing market without affecting their retirement savings.

    To address the concerns about this leading to an increase in the price of houses, it is important to remember that such a policy must be just one part of a complete suite of policies. This policy can work alongside other policies which look at controlling demand, particularly from investors. By controlling investors and empowering the first-home buyer, you can bring greater stability to the market.

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