How is it that a nation inhabiting the least populated continent in the world, with some of the highest wages in the world (with the highest minimum wage in the world) cannot house all its people or create an affordable stock of housing?
The answer is simple: Australian state and local governments have spent the last 70 years systemically and deliberately ensuring that housing in Australia is some of the most expensive in the world. This has resulted in homelessness, poverty, entrenched disadvantage and wealth inequality. In fact, this is one of the greatest pieces of inter-generational theft in our history. All the while self-righteous interest groups, often taxpayer funded, vehemently argue that the answer to these problems is more of the same: regulation, tax and higher super contributions. Their unexamined urgings have led governments to develop policies with insane outcomes.
At a federal level, compulsory superannuation costs Australians over $30 billion a year and taxpayers a net $23 billion. The cost to ordinary Australians is decreasing home ownership. Since the introduction of compulsory superannuation two things have happened: Labor’s biggest donors have become rich beyond their wildest dreams, and each generation has had lower and lower levels of home ownership embedding inequality.
The left is driving the inequality they say they’re fighting against.
At a state level, planning laws and taxes have done their intended damage. In the 1990s first homeowners spent a year saving for stamp duty. Today, it takes two and a half years. The ACT Government was going to remove stamp duty in favour of land tax, now the citizens of the ACT have both.
As for local government, ask the next person you walk past in the street what they think of their local council. They will happily tell you that it is bloated, costly, inefficient, spends money on saving the world while neglecting parking, parks, rubbish and footpaths. There is often a stench of corruption, whether it be brown paper bags or incompetence. Mayors drive $270,000 Tesla’s while their ratepayers see charges increase 297 per cent. And no one critically examines what goes on because the local media’s biggest advertiser is the council.
Approval processes are the stuff of punchlines – cubbyhouses being bulldozed because their roofs were too shiny, bush fire ordnances that simultaneously say you must cut down a tree while ensuring it is preserved for the environment, or the pool fence regulations that require a fence higher than the maximum allowable height.
In a little noted analysis, but much criticised by the self-serving interest groups who already own their properties, the Reserve Bank of Australia worked out that the average apartment price in Sydney is now $873,000, but over $355,000 of that is due to state government zoning rules and local government charges. When it comes to greedy property developers no one beats out local and state governments.
Given all this, is it any wonder that we have some of the most expensive land in the world? What Australians need is root and branch reform not more of the same lavish social housing projects.
This is a trigger warning: the answer lies not in more government help but less.
At some point we must accept that the orthodox solution is making the problem worse. That if we really cared about the people, we say we want to help we have to admit we have a problem.
This problem is not the result of too few planning laws and approval processes but too many planning laws, credit restrictions, government charges and prolonged approval processes.
In the mid-90s the Japanese government started the world's largest public housing program to stimulate their economy. It failed to do either and did not materially reduce homelessness. Five years later, as reported in the Economist, the Tokyo government undertook planning reform, from 2002 to 2012 homelessness in Tokyo was reduced by 80 per cent. The lesson seems clear.
Our clear preference should be for governments to increase home ownership does not force people to rely on government for shelter.
There are those that say the Australian dream must change, it needs revising, it’s an unrealistic ideal of a time gone by. We, this Liberal government, say the Australian dream of owning your own home is not dead. That a home, not super, comes first.