Racism Rob capitulates on “unliveable” Melbourne

Finally Racism Rob writes up the Grattan Report:

This week’s Grattan Institute report into housing affordability suggested that building an extra 50,000 homes per year would lower prices and “stem rising public anxiety about housing affordability”. But where would we build them?

The obvious answer is the city with the highest population growth, Melbourne, which has also taken The Economist‘s ‘Most Liveable City’ award for the past seven years running.

That’s easier said than done because some parts of the city are starting to feel quite unliveable, whatever The Economist says.

The city is in catch-up mode, trying to expand roads, rail, schools and hospitals to cater for population growth averaging 2.3 per cent a year for the past decade.

That means crawling queues of cars on the major roads, packed carriages and frequent disruptions on the rail network, and a productivity drag for a city struggling to get to school and work, or to deliver freight.

…The Grattan Institute notes: “To build more homes, state governments should fix planning rules to allow more homes to be built in inner and middle-ring suburbs of our largest cities.

…The pain of traffic jams and full trains can easily be turned into populist campaigns to ‘slash immigration’, as former PM Tony Abbott tried to do recently.

The Grattan Institute sees that path as an undesirable last resort: “Reducing immigration would reduce demand, but it would also reduce economic growth per existing resident.

“First-best policy is probably to continue with Australia’s demand-driven, relatively high-skill migration, and to increase supply of housing accordingly.”

How long do we have to wait for this “first-best policy”? It doesn’t exist in Australia’s busted political economy. Meanwhile, most Aussies get poorer.

We like Grattan at MB but it really has no idea about macroeconomics. This is the reality of “economic growth per existing resident” since mass immigration took off in 2003:

I mean, come on.

As for middle ring building, it is too late and it’s never going to happen. Nobody wants it. Neither the NIMBYs of the middle ring suburbs that councils answer to, nor the state government that is addicted to stamp duties. Frankly, why should either of them give in to taking the brunt of falling living standards for a coterie of loony planners anyway?

Tony Abbott is not a “populist”. His three policy positions are to cut the immigration intake to 110k, way above the historical average, to reboot coal power and to pursue law and order. Only the last of these is identifiably “populist”. The other two will damage the interests of the ruling property elite and damage the interests of the broad majority of Australians that believe in climate change mitigation.

Abbott is a dickhead not a populist but that doesn’t mean he’s wrong on reducing the immigration intake which will make housing cheaper, will help wages growth, and will preserve our natural and built environments versus any counterfactual.

The aging population issues will be dealt with by automation and productivity such as in Japan where GDP per capita is doing as well as Australia without the all of the wider falling living standards and class wars so favoured by Racism Rob:

If that’s least-best policy then, your honour, guilty as charged!