Fake housing affordability inquiry shifts blame to states

As expected, the Coalition’s fake housing affordability inquiry is set to shift blame the states by accusing them of restrictive planning and profiteering from rising property taxes:

The inquiry chairman, northern beaches federal Liberal MP Jason Falinski, said ­affordability could be improved over the long-term if the states boosted supply and slashed property charges.

Mr Falinski said the parliamentary committee conducting the inquiry would recommend federal government payments to states be conditional on undertaking these reforms…

Mr Falinski – who is the head of the parliamentary committee on tax and revenue that is ­conducting the inquiry – described the lack of affordable housing as a huge regulatory failure by state and local governments. “They are the ones massively winning from this situation,” he said.

“It is to their absolute benefit to sell fewer houses at higher prices than the other way round. That’s why we sold fewer houses in 2019 and that we did in 1992, Australia-wide.”

NSW Planning Minister Rob Stokes blasted the probe for failing to consider changes to federal taxation of property.

“Rather than repetitive inquiries, I encourage the commonwealth government to take concrete policy action that will actually do something to address supply and affordability,” Mr Stokes said.

Experts have told the inquiry that if an extra 50,000 homes were built across the nation each year for a decade, prices and rents could be as much as 20 per cent lower.

What a load of rubbish. It is the federal government that has chosen to flood the nation with migrants, thereby driving the purported housing undersupply.

In the 20 years before COVID hit, Australia’s population increased by a whopping 6.5 million people on the back of mass immigration, with Sydney and Melbourne each adding around 1.6 million and 1.8 million people respectively over that time.

The latest Intergenerational Report (IGR) projects that net overseas migration (NOM) will ramp up to 235,000 people a year for decades to come, which will drive a 13.1 million (50%) increase in Australia’s population over the next 40 years – equivalent to adding another Sydney, Melbourne and Brisbane:

Australia's projected population growth

The federal government also controls tax policies like negative gearing and the capital gains tax discount, which have helped fuel demand from investors, while also turning a blind eye to offshore dirty money laundered into Australia’s homes.

As expected, the Coalition’s housing affordability inquiry will be yet another snow job devised purely to shift the blame for the its own policy failures and to feather its developer mates. Its findings were predetermined from the outset.

Unconventional Economist
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Comments

  1. Put a government surcharge on interest on investment property loans (indirectly raise interest rates) for existing property and remove Howard’s capital gains replacing it with a calculation using CPI. The latter might encourage including house price inflation in the CPI. Pity it’ll never happen.

  2. The states deserve their share of the blame. Restrictive zoning adds significantly to the problem.
    Economics101: to increase prices either reduce supply, increase demand or preferably both.

    • Yes, it is very simple.

      To create a shortage (and concomitant high prices) you require both extra people AND choked supply.

    • Didn’t Cam Murray put paid that that furphy last week? The restriction is not in zoning, it is with developers who don’t want to flood the market.

      • No. That doesn’t make any sense. A cartel of developers could only do that IF govt channels rezoning into that cartel of developers – that would be the fault of govt.

        • Well, rezoning is a local council process and the local councils tend to be full of developers, so you do the maths.

      • Even StevenMEMBER

        To get a whole bunch of developers to agree on that (cartel behaviour) would be difficult. More likely it is the government restricting releases.

      • The only way the developers can prevent the market being flooded is by OWNING ALL DEVELOPABLE LAND.
        This is only possible if development is artificially restricted, ie zoning and land banking, strangely exactly what is currently happening.

  3. BoomToBustMEMBER

    In Victoria we have been Melbourne centric for as long as I can remember, very little effort has been put towards decentralization. A few towns along the Hume Hwy to Wodonga, (including Wodonga) could have been excellent prospects for new industry and employment.

  4. The Covid situation has shown us that discrimination is easily done and approved by most.

    So give the 300,000 extra immigrants full citizens rights but no Sydney passport and no Melbourne passport. That will go a long way to solving the problems in our two most shitholic cities.

  5. This is a fraud inquiry to buld the case of super for housing as an election wedge issue. Just watch.
    Falinski is the worst sort of bank stooge politican there is.

    I hope the voters of Mackellar have the wisdom to chuck him out for an independet at the next election.

  6. “It is to their absolute benefit to sell fewer houses at higher prices than the other way round. That’s why we sold fewer houses in 2019 and that we did in 1992, Australia-wide.”

    In that case, Falinksi should be encouraging Frydenburg to help NSW out with its transition to Land Value Tax.

    • I don’t see this statement as factual – is it backed up with actual evidence or just an opinion on Failinksi? If the states sell 1 house for $1m or 2 for $0.5m each the stamp duty is essentially the same.

      Or is he referring to infrastucture charges on brand new houses/estates? Even then I don’t see how this would be true.

  7. Even StevenMEMBER

    Restricted housing supply is absolutely part of the problem. But the easier mechanism to solve this is to dramatically turn down the immigration tap. Let housing construction catch up for 5 or 10 years, then re-evaluate.

  8. There is some truth that councils and states are restricting urban spread so that the only way to increase supply is to infill. So now you get a single medium block selling for 600k knocked down put 3 small units that sell at 550k each. Council and state governments don’t want to pay for infrastructure as the boundaries increase so they are forcing people into high density.