Both Labor and Liberal have announced new policies designed to appeal to anger about the cost of housing. But neither will address the main cause of skyrocketing prices.
Labor is offering subsidies to allow all first-home buyers to get a home loan with a 5 per cent deposit, with the government covering another 15 per cent. This will help some people but it will do nothing to reduce the cost of housing.
It also says it will build 100,000 homes itself over eight years at a cost of $10 billion. Direct government spending to build housing is a good step. But Labor’s plan may not be enough even to reach its existing housing target.
The government is already 30,000 homes behind in the first six months on its target for private sector developers to build 240,000 homes a year for five years.
Peter Dutton is offering to allow a tax deduction for home loan interest payments for first-home buyers of newly built homes. This would be limited to five years on up to $650,000 of a mortgage. Those eligible could save significant money—around $11,000 a year.
But the policy could significantly push up housing prices, cancelling out the saving.
And neither party has addressed the fact that housing prices are so high that many people can’t afford a mortgage.
Racism
Peter Dutton has also stepped up racist scapegoating, trying to blame migrants and international students for the housing crisis.
Labor has gone along with this racism, introducing new visa rules to restrict international student arrivals. It also adopted the Liberals’ policy to ban overseas investors from buying existing properties for two years—even though they only account for 1 per cent of purchases.
Dutton has sought to step up the scapegoating during the campaign. He wants to slash the number of international students by another 30,000 per year, introducing a brutal $5000 visa fee for students applying to Group of Eight universities—with no refund if the visa is refused.
He also wants a savage cut to net migration of 100,000 a year, or almost 40 per cent. This includes people arriving on temporary work visas as well as those who stay permanently. It would be such a challenge for bosses trying to fill work shortages that Dutton backed away from it after he first proposed it a year ago. And he would also cut the refugee intake by 6250 people every year.
But migration is not responsible for the surging cost of housing.
Neither Labor nor the Coalition are willing to deal with the main reason housing prices are through the roof—the rich Australian investors who are buying up houses.
The changes to negative gearing and capital gains tax under John Howard’s Liberal government in the 1999 have handed massive subsidies to the rich and made housing an investment plaything. Housing prices began surging immediately after the changes.
The Greens have rightly called for an end to this welfare for the rich, saying negative gearing should be limited to one investment property per person.
Another way to reduce housing prices is to build more public housing. This would both address the appalling public housing waiting list and put downward pressure on prices more generally.
But it would require building far more homes than Labor is contemplating.
The proportion of public homes in Australia has dropped from 6 per cent in 1991 to 4 per cent today. Other countries have far more—with 17 per cent in France and England.
There is plenty of money to fund this if Labor was prepared to tax the rich.
The handouts for property investors cost the government around $20 billion every year. Another $20 billion a year goes in superannuation tax concessions to the wealthiest top 10 per cent. And increasing corporate tax could take back some of big business’ obscene profits—like the $44.6 billion the big banks made last year.
The Greens estimate the government could build 360,000 homes over five years—about six times what Labor is proposing—for around $28.5 billion a year. This is the kind of spending that could make a real difference.
The government can find $368 billion for nuclear submarines yet it dismisses the idea of similar spending on housing or services.
Labor’s budget just before the election saw another increase of $10.6 billion for the military over four years. The Coalition has hinted that it is set to promise even more spending on weapons and war.
After the election, we are going to have to fight whoever forms government to demand an end to policies that benefit the rich and powerful and win the kind of spending on housing and services that working class people need.
By James Supple
