A stoush has developed within the Liberal Party after the head of the NSW Young Liberals, Harry Stutchbury, ripped into the party over its failure to address housing affordability. Below are key extracts from Stutchbury’s article published in The SMH:
The Liberal Party is terrified of taking serious steps to tackle housing affordability, fearful that its political fortunes are tied up in billions in home equity across blue chip electorates built up over the past 30 years. However, bold reform could create a long lasting electoral majority for the Coalition as it did for Menzies half a century ago.
Fewer Australians are owning their own home and house prices surged 70 per cent in the last five years. There is huge political opportunity in providing the aspirational young people of our country with a pathway to homeownership. However, neither major political party is taking the necessary action…
Today the Coalition treads on eggshells around the pensions of retirees sitting on homes worth millions of dollars across Sydney and Melbourne’s blue chip electorates, burnt badly by its experience trimming some of the excesses of our superannuation system at the last Federal election…
Our housing market is riddled with dozens of taxation and capital cross-distortions that have coupled with decades of demographic and political factors to create the current housing affordability crisis. However, none of these are more perverse than that which allows retirees to sit on homes worth millions of dollars and still receive the pension, the primary dwelling pension asset test exemption…
This creates an incentive for Australians close to retirement to sit on large family homes instead of downsizing. This reduces the volume of housing available in the market, pushing up prices…
The primary dwelling pension asset test exemption means that those who were never able to afford a home end up subsidising the pensions of those who were…
We should not foster a society where the largest determinant of your future living standards is whether or not your parents bought a home in metropolitan Sydney 30 years ago. But with a convoluted array of capital, taxation and planning distortions that is exactly what we are doing.
The response from members of the Liberal Party has been scathing:
NSW Counter Terrorism Minister David Elliott blasted Mr Stutchbury on Facebook, suggesting Liberal voters in western Sydney would use the opinion piece to light their barbecues…
“A middle class eastern suburbs private school boy is hardly qualified to pass judgement on something he’s never faced,” Mr Elliott wrote. “Haven’t we already had our quota of policy brain farts?”…
Federal Assistant Home Affairs Minister Alex Hawke – a factional ally of Mr Elliott on the centre-right – joined the throng, dismissing Mr Stutchbury’s contributions as lazy and wrong.
“It definitely was intellectually lazy and inaccurately posited that older people exercising their absolute right to stay in their own home as long as they want are somehow hurting young people from getting ahead,” Mr Hawke wrote. “Sadly, there is a lot of this sort of groupthink around these days”…
Behind the scenes, the public pile-on has caused angst in the party’s senior ranks, including among the moderate-dominated state executive team.
Obviously, MB agrees wholeheartedly with Stutchbury’s view that one’s principle place of residence should be included in the assets test for the Aged Pension, given we have penned many articles on the matter (the most recent here).
That said, this reform alone will do little to improve the housing affordability crisis in Sydney and Melbourne. A broader package of reforms is required, including:
- Normalising Australia’s immigration program by returning the permanent intake back to the level that existed before John Howard ramped-up it up in the early-2000s – i.e. below 100,000 from over 200,000 currently [reduces demand];
- Undertaking tax reforms like unwinding negative gearing and the CGT discount [reduces speculative demand];
- Tightening rules and enforcement on foreign ownership [reduces foreign demand];
- Extending anti-money laundering rules to real estate gatekeepers [reduces foreign demand]; and
- Providing the states with incentive payments to:
- undertake land-use and planning reforms, as well as provide housing-related infrastructure [boosts supply];
- swap stamp duties for land taxes [boosts effective supply]; and
- reform rental tenancy laws to give greater security of tenure [reduces demand for home ownership and reduces rental turnover].
Still, it’s good to see some debate within the Liberal Party. Hopefully it will foster some much needed policy reform.
