How Labor can still fight for housing affordability

There’s some serious scuttlebutt around Labor’s position on negative gearing reform today. Previously, the media has reported that senior Labor figures had decided to dump negative gearing reforms at its national conference. That happened but according to the AFR it’s not over:

  • House prices are out of control and likely to generate angst in the polity.
  • The RBA won’t touch it.
  • “We will be announcing our proactive policies in the lead-up to the election. If we don’t announce them, they’re not our policies.”
  • The agenda may yet be revisited.

This reads more like the AFR trying to dredge up policy ghosts to the benefit of the Morrison Government than it does any factual article. Labor knows PM Morrison would be thrown a fear-mongering lifeline if it threatens property again. Not least because rising house prices are currently being driven by first home buyers and owner-occupiers, the complete opposite to the last boom triggered by an investor frenzy. Arguably right now negative gearing reform wouldn’t stop it anyway.

What Labor should do instead is take a leaf out of the Jacinda Ardern playbook. Rather than make itself the target before the election with an explicit policy to deflate house prices, it could begin a discussion on Australia’s broken monetary policy regime. Right now, we have the RBA determined to inflate house prices and APRA already considering how it will have to tighten as lending standards inevitably fall.

The two are operating at cross-purposes because nobody has direct responsibility for house price inflation.

This is a political opportunity. There needs to be a high-level inquiry into Australia’s broken monetary policy regime. It should conclude the obvious, that APRA and the RBA need to be banged back together so that they can coordinate monetary policy properly. Much like the RBNZ does it.

Labor could commit to such as inquiry before the election on the condition it wins power. Then follow its dictates which, if managed right, will include the recommendation that Australia followed NZ by making the newly combined entity responsible for house prices.

The combined entity will then have the policy tools to smash ’em without lifting interest rates.

David Llewellyn-Smith
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Comments

  1. Listen to Andrew Charlton and understand that Labor’s definition of unaffordable is different to yours. Labor will have no problem at all with the perpetual house price rises via cheaper credit.
    https://josephnoelwalker.com/60-on-recessions-andrew-charlton/

    Also remember that it was Labor who put a rocket under house prices with FHOG, opening up foreign investment, deregulating superannuation investment. They are part of the Big Australia houses/holes establishment.

  2. DingwallMEMBER

    Labor are too frightened now. Like rabbits caught in the headlights on the median strip, they are not sure whether to move Left or Right. They should have stuck to their own lane.
    Useless Opposition = useless Government.

  3. Cynical snake

    ” that APRA and the RBA need to be banged back together so that they can coordinate monetary policy properly. Much like the RBNZ does it.”
    How are house prices going in NZ?
    And the obvious, a combined APRA/RBA still doesn’t control most of the factors effecting house prices, while also still being responsible for financial stability and maintaining “full” employment and those conflict with reducing house prices.

    • Jumping jack flash

      The most obvious barrier to implementing anything like this is the fact that none of our democratically elected, glorious politicians with planet-sized brains would think of suggesting doing it in a pink fit.

  4. If Labor got rid of Negative Gearing and made Housing more Affordable, they’d go up a lot in my eyes and I’d probably tick the box.

    I dont like Labors attachments to China but Im not sure they are really in control of that anymore. I think the US has taken over and whether Labor likes it or not, the US is going to pull the strings here.

    The other is all this Feminist garbage but honestly, Housing is more consequence in Australia then Feminism. You can always tell woman to bugger off but homelessness is a pretty serious thing.

    Im half inclined to think Labor will just give free houses to migrants and leave Australians to rot. Labor doesnt seem to like Australians very much. Thats the other aspect which concerns me.

    I can pretty much guarantee if Labor does nothing for Housing, I wont even be considering them. If they did then I’d have to think about this really carefully. They’d be walking the line with me and I’d have to weigh up the pro’s and con’s… and think about it all very seriously.

    SAP is still my number one choice. Labors got a long way to go if they want to beat SAP. SAP has many great solutions to societys problems and Labor seems like more of a popularity contest. Im concerned once Labor gets the power, they’ll become two faced.

    SAP hasnt changed its policys in years. I suspect thats because they saw all this coming in advance:

    https://www.youtube.com/watch?v=zbXHPaUq7gk

  5. Jumping jack flash

    A good rule for any politician is to not go down the path of “housing affordability”

    At the very best they could promote building enclaves for poor people far, far, far away from the houses that have all the debt attached to them. The reasons for this are simple.

    Quite frankly, once a house has debt attached to it, it is very, very important that its value does nothing but go up. Too many important stakeholders demand it.

    The government is but a lackey to the private banks who actually control the debt, which is the foundation of the New Economy. It wouldn’t do anyone any favours if they were to anger the banks, their masters.

    “Housing affordability” is not even a thing in the New Economy. It is now “debt eligibility” and this should be quite obvious to see given Joshy boy’s recent attempt at “irresponsible” lending.

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