Coalition MP Jason Falinski, who will chair the parliamentary inquiry into Housing Affordability and Supply, penned an article in The AFR lamenting the destruction of housing affordability across Australia and the need to boost housing supply:
The Tax and Revenue Committee’s inquiry is our last and best chance to understand why in 1985, growth in house prices radically accelerated away from underlying inflation. Everything the vested interests told us to try has only made the problem worse: we turned housing commission into social housing, we introduced affordable housing quotas, we discounted capital gains tax, we incentivised first home buyers. We even eliminated immigration for a couple of years.
The problem only got worse.
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Maybe, just maybe, it is time to ask the usual suspects to justify their ideas. To ask them why they think the Australian housing market is the only market in the world where supply has no effect on prices?
It is a rare opportunity to take stock, consolidate and recalibrate the gap between the aspiration of every Australian sharing in our nation’s dream and reality.
As I noted in my submission to this inquiry:
…this inquiry is a waste of time and taxpayer’s money.
Australia’s governments have run numerous housing affordability inquiries over decades, including but not limited to:
- Menzies Research Centre: Prime Ministerial Taskforce on Home Ownership 2003;
- The Productivity Commission’s First Home Ownership Report in 2004;
- A Good House is Hard to Find Report from the Senate Select Committee on Housing Affordability in Australia in 2008;
- Western Australia’s Affordable Housing Strategy 2010-2020;
- NHSC: State of Supply Reports (2008, 2010, 2011, 2012, 2013 onwards);
- COAG Review of Capital City Strategic Planning Systems Report 2011 and report on Housing Supply and Affordability Reform 2012;
- Senate Inquiry into Affordable Housing, 2014-2015; and
- Parliamentary Inquiry into Home Ownership 2015.
On top of these we have received many reports from think tanks like the Grattan Institute, the McKell Institute, AHURI, and others.
Thousands of work-hours and millions of dollars worth of salaries and consultants’ fees have been spent on these reports and absolutely nothing has come from them. So what is the point of wasting more taxpayer dollars? Nothing will come from this inquiry because our politicians don’t actually want more affordable housing, since this requires prices to fall.
The solutions to Australia’s ‘housing affordability’ problem include:
- 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 an average of 219,000 between 2005 and 2019 [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];
- Banning borrowing into property by SMSFs [reduces speculative demand];
- Boost investment in social housing [increases affordable supply]; 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];
- reform rental tenancy laws to give greater security of tenure [reduces demand for home ownership and reduces rental turnover]; and
- force developers to supply housing for lower income earners via inclusionary zoning [boosts supply of affordable rentals].
The Morrison Government has no intention of tackling these issues. Heck, it vigorously opposed Labor’s negative gearing and CGT reforms last federal election.
As we know, this year’s Intergenerational Report (IGR) also projects that ‘Big Australia’ mass immigration will also be promptly rebooted after the pandemic, which will see 235,000 net overseas migrants arrive in Australia every year from 2025:
This turbo-charged immigration intake is projected in the IGR to increase Australia’s population by a whopping 13.1 million people (~50%) over the next 40 years to 38.8 million people – equivalent to adding another Sydney, Melbourne and Brisbane to Australia’s existing population.
Such a population deluge will guarantee that housing demand swamps housing supply, resulting in worse affordability.
As I illustrated in my submission, “any housing supply problem is first and foremost an excessive immigration problem”.