‘Pretty regressive’: Labor and Coalition housing policies explained

The federal government and the opposition have both announced policies to tackle the country’s housing crisis as young people in particular are priced out of the market.

Labor says it wants to drop deposits for mortgages to buy a home to five per cent, while the Coalition wants to make mortgage repayments tax deductable – a move Grattan Institute housing and economic security program director Brendan Coates says “may help some people into the housing market, but it’s pretty regressive.”

In an early release episode of The Morning Edition podcast, Coates talks through these policies and which could boost housing supply and home ownership with host Samantha Selinger-Morris.

To listen, click the player below, or read on for an edited extract.

Selinger-Morris: What do you actually make of these policies in terms of whether they will help at all? Your introduction was lukewarm at best, I think a “pox on both your houses” is what you said.

Coates: You know, the short answer is, both policies, they’re going to raise prices, right? Because you’re putting more money in the pockets of first home buyers. Look, it might help some people into the market, but by raising prices, you’re making it harder for everyone else who doesn’t use the scheme to get in.

The one saving grace is both parties are also pushing to get more housing built. So this is probably the first election in a while where we’re not just seeing the parties committing or competing over first home buyers’ votes, but they’re actually saying they’re competing over how many more homes they can build.

So those supply policies are steps in the right direction, but it doesn’t get over the fact that this is a state problem. There’s limits to what the federal government can do to solve this.

Selinger-Morris: What are those main limitations? How come the federal government just can’t solve this?

Coates: Well, we have a Constitution, and that Constitution is relatively rigid in its conception. It sets really clearly what the states and the federal government’s responsibilities are, and puts limits on what the feds can do. And so planning controls – what gets built where – are determined by the states.

So all the federal government can do there is really encourage the states with, basically, bribes to get them to make changes that would improve things.

We’ve got a world where for the federal government, they don’t control the levers that matter, and they want to make an offering every election, and the offering they’ve got at the moment is more support for first-time buyers, because it’s what they can do.

Unfortunately, if they controlled the levers that mattered, you could do something more constructive. It’d just be better if we did something that wasn’t counterproductive.

Selinger-Morris: And you’re saying, to actually have those levers, we’d have to change the Constitution.

Coates: Yeah. The Australian Constitution is a funny one.

Selinger-Morris: We know how referenda go in this country.

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