When you can’t build homes, set a target


Communists love to set “targets”. In that sense, ALP state governments are looking like radical lefties. NSW:

Housing will be the centrepiece of the New South Wales budget, with money for social and affordable homes, regional development and essential services to support growth across Sydney.

While the treasurer, Daniel Mookhey, acknowledged there was no quick fix for the crisis, he said he has been listening to experts who called for more homes to help those most in need and stem the brain drain from the state.

“If we simply do nothing, we will condemn the next generation of people in NSW to a future without the prospect of home ownership and that’s not something we should give up easily,” Mookhey told Guardian Australia ahead of Daniel Mookhey.

…Earlier this year, the premier, Chris Minns, announced $200m for councils that meet and beat a fresh set of housing targets as part of the NSW government’s push to build nearly 400,000 new homes over the next five years.

And VIC:

The premier, Jacinta Allan, and planning minister, Sonya Kilkenny, will on Sunday announce their proposed housing targets for local government areas (LGA), which they say could lead to the construction of 2.5m new homes by 2051.

However, there is a difference between real central planners and the ALP.

The former owns everything, so hitting such targets is easy.


The latter controls only a few levers, and not the most important, so its “targets” are phony and they build nothing:

Indeed, when one understands that the ALP is just another custodian of the immigration-led politico-housing complex, such “targets” are no more than a smokescreen for a deliberate and ever-growing affordability crisis in rents and capital values.


That is, “targets” are a symptom of failure, not success.

How do we know that NSW and Victoria will miss their impressive housing “targets”? Because the macro conditions for delivering them are absent.

Builders cannot afford to build because input cost inflation has eaten up their margins versus selling prices:

Residential construction costs

Fundamentally, this is why current dwelling starts are running at 150k instead of Albo’s “target” of 240k in the face of huge demand, making a mockery of all government “targets”:

Dwelling approvals

There are only two ways to fix this.

Slash immigration and interest rates until a capital value boom lifts selling prices by one-third.

Or deflate building input costs for land, materials, and labour.

This requires the mass release of acreage for development. The heavy-handed control of gas prices, including some form of domestic reservation, will crash energy costs for building materials. And the mass training of tradies or putting all trades on immigration priority lists.


None of this is even being discussed.

So, the ALP phonies instead issue fake “targets” and buy another investment property.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.