My weekly Op Ed column in today’s Daily Advertiser: Housing affordability crisis can and must be solved
by ray goodlass
It seems as though we are bombarded every day with stories about rising house prices in the east coast capital cities, with Sydney taking the prize. Though such stories may seem irrelevant to Riverina residents they do have implications for us.
To a much smaller degree the capital city price rises do trickle down to regional cities and towns, but that’s not their broader significance. Rather what we all need to be concerned about is its ramifications for social services such as the old age pension.
More of that later, but before examining it the reasons for the price rises and governmental lack of action to curb them need looking at.
Whether house prices have been inflated by the government’s extremely weak argument of limited supply or because of policies such as negative gearing and the current shape of the capital gains tax have created incentives to investors rather than family based homeowners, government policy is now trapped in a vicious cycle. The wealth accumulated in our houses has become a central part of the retirement system, and the government itself can’t afford for prices to fall.
Generous tax subsidies and asset test concessions on the family home have incentivised the accumulation of wealth in property and fuelled demand pressures in the housing market for decades.
As a result the family home has become a cornerstone of the Australian retirement system. Sustained house price increases have allowed government income support to be set at historically low levels, based on the assumption that the low-income elderly will be housing asset-rich, and can therefore get by on smaller pensions. That’s why our pensions are, compared with many other countries, so low.
Clearly we need to fix this very broken system. As Peter Wish-Wilson, Greens Treasury spokesperson said last week, the Government needs to end its reckless support for negative gearing and capital gains tax discounts that are fuelling a housing crisis.
Senator Whish-Wilson said, “It doesn’t seem to matter which expert comes out against negative gearing or what happens to house prices, the Government remains in denial about its role in the housing crisis.
“Malcolm Turnbull and Scott Morrison are culpable in locking an entire generation of young people out of home ownership simply to line the pockets of property speculators” he said.
In addition, Senator Lee Rhiannon, who has the Greens Housing portfolio, noted that we get a lot of rubbish from the government designed to blame the victims, “The rubbish that young people should save their money, the rubbish that young people should raid their superannuation accounts, and the rubbish that young people should get a higher paying job”. As the government cuts penalty rates, mind you.
Senator Rhiannon also added “Today the Turnbull government went over the top in terms of their own actions. They came up with the ugliest, most insulting idea on the housing crisis—an idea that not only distracts from the real problems of tax breaks and underinvestment in public housing but also scapegoats communities already under attack from the far right and, increasingly, all sections of the Liberal-National party. The headline in the Murdoch papers said it all: ‘Send migrants bush to ease house prices’.
“The Greens are not against stimulating regional cities”. Indeed they are not. As Wagga Wagga, Griffith and Albury demonstrate our regional cities welcome refugee and migrants. I am sure all of regional Australia would be equally welcoming if it was provided with the proper investment, more jobs, better transport links and improved infrastructure.