Our house of cards policy

Australia's Federal Government has committed $32 billion over five years to deliver 1.2 million new homes promising a mix of both public and affordable housing.

Predictably, the PR machine went into overdrive to support the announcement which was delivered with all the grandiose and self congratulation we've come to expect in this pageant age of career politicians and identity politics. In stark contrast, progress updates on how many homes have actually been completed, raises barely a whisper.

Heralded with all the familiar pomp and confounding rhetoric, one might be under the impression it was implied that the hard part had already been done. The profound irony lost somewhere in our Capitals echo chambers is that there is little to no chance the target will ever be achieved, and most assuredly the budget will be materially exceeded. And whilst an almost perfect record in failing to deliver anything on time and on budget may foretell that inevitability, the greatest frustration is that even as a basic plan it makes no attempt to address any of the systemic root causes of the actual problem.

The 2021 Census estimated over 122,000 people to be homeless (the bookies won't be taking bets on whether that number will be higher next time around) and last year approximately 166,000 unique properties were listed on Airbnb. Concluding a linear relationship between the two is simplistic in the extreme, but with some Councils introducing measures to curb the impact of short stay rentals in their communities there appears to at least be some acknowledgement that availability may just be a problem big enough to rival the narrative around supply.

It must be noted that several State Governments have also introduced measures which universally consist of some form of tax. The cynic in me can't help but feel the revenue opportunity was a higher consideration than any desire to address the problem... perceived or otherwise.

No doubt housing in this country is a complex issue subject to many different factors but the effect on affordability from a succession of governments abject policy failure is undeniably significant.

It is estimated around 28% of mortgage holders (around 1.4 million) are currently "at risk" of mortgage stress... 18% are considered "extremely at risk," and despite three interest rate cuts by the RBA this year, the rate of mortgage stress has only fallen marginally, indicating that other pressures are keeping it high including the amounts borrowed as house prices continue to skyrocket.

For the Prime Minister to publicly encourage those who can least afford it to borrow more, with less deposit, as part of his policy solution at best demonstrates a serious disconnect from reality and a special kind of reckless delusion. However, the most sinister comment I've heard about Albo & Co's 5% guarantee policy came from a senior bureaucrat that stated it "mitigates the risk to the banking sector"... so when everything goes tits up, at least our hideously profitable banks, will be ok. Phew... unfortunately we all know who won't.

The reality is "affordable housing" has been resigned to the pages of history and will remain so permanently without a dramatic change in government policy. The conundrum for career politicians who's only true objective is to get re-elected, is that the required changes represent political suicide, so... nothing. And when you consider the vast majority of Federal parliamentarians (94%) are home owners there is little incentive to consider anything that may adversely affect the value of ones own asset.

But of course, the conflict of interest doesn't end there, as a significant part of the aforementioned cohort (48%) also own more than one property. Family trusts and negative gearing may not be solely responsible for ever increasing house prices, but they certainly contribute, with investor competition for said "affordable housing" a common story across the country.

Negative gearing for property was introduced in 1936 to encourage investment in housing and increase the supply of rental properties during the great depression. Ninety odd years ago it was a targeted policy suitable to the conditions of the time. Today it is an outdated taxpayer funded fuel to an out of control inferno and a contributing wedge between generational wealth... and who pays for it?

In the 2014-15 financial year negative gearing reduced the personal income tax payable by investors by $6.7 billion and $10.9 billion in 2023-24. That figure is expected to be $12.3 billion for FY25.

A progressive society would have acted a long... long time ago. Our current Government aren't to blame for the problem... entirely, but they have elected as those before them to bury the collective head firmly in the sand, thus painting us further into an economic and political corner. The courageous option... the only chance at mitigating some of the inevitable damage to communities all over the country is to introduce a suite of policy changes to soften the landing. Alas, that is a fantasy even our Prime Minister would have trouble believing.

So disastrous hard landing it will be.

I imagine Mr. Albanese reflects on the great Australian home ownership dream with some satisfaction from his multi million dollar clifftop home on the NSW Central Coast. Such a shame that the boy who's single parent mum raised him in public housing, as he likes to constantly remind everyone, seems to be of the view that his rags to riches tale somehow absolves him... after all, if we could all just be a bit more like Albo.