Jeff Kennett: Government bribery is not the answer to Australia’s housing problems

Australia is desperately playing catch-up on the housing crisis but the federal government bribing state and territory governments to do their fundamental jobs, and build more dwellings, is just immoral.

There is no question that the need for housing, private and social and rental accommodation is the biggest infrastructure challenge facing Australia. And sadly, it will only get worse over the next few years.

Australian governments are now desperately playing catch-up.

In the short-term, property prices will continue to rise, rental costs will accelerate, and the number of existing and potential new properties for rent will decline as private investors exit the market because of government charges and regulations.

Do not be fooled, 1.2 million homes being built by 2029 simply cannot happen and will not.

Do not be fooled, 1.2 million homes being built by 2029 simply cannot happen and will not.

This is why:

1. The country is desperately short of tradespeople. It takes years to train apprentices, that is if enough people wish to pursue that career.

2. Supply of building products has been in short supply over the last few years, but that should slowly improve over the next year or so.

3. Many current tradies are working on federal and state infrastructure projects, and these projects will continue into the foreseeable future.

4. Tradies on these infrastructure projects are receiving wages at times multiple of what their colleagues are receiving in the housing and commercial markets.

5. Because of the high salaries, there are no incentives for the infrastructure projects to be completed quickly. Why give up astronomical wages for the unknown?

6. The private sector simply cannot afford to pay those tradies anywhere near what they are earning on government schemes.

7. House-building companies, big and small, have gone into liquidation in the past two years because of inflation, fixed-price contracts, lack of tradies and supply issues.

Of course, some of those businesses have closed one day and open the next. But that has meant not only have customers lost money and properties are half built, but there are thousands of tradies who have not been paid. And in many cases not just wages, but superannuation too. Hence, many have simply left the industry.

Right now we do not have the capacity to build what has been suggested. Picture: David Caird

Right now we do not have the capacity to build what has been suggested.

The federal government is now bribing state and territory governments with $15,000 for every dwelling they build above the original 1 million target for new dwellings by 2029, for a total bribe of $3bn, or an extra 200,000 homes.

The federal government bribing the states to do their fundamental jobs? And using our money? That is immoral.

Remember, these bribes are not using government money. It is our money. Our savings, or from our taxes, or more government borrowings which again is our money.

Then there is another $500m from the federal government for states, territories and councils as a carrot to encourage them to allow more housing around existing infrastructure and commercial centres. Common sense you would have thought. So why another bribe?

So, for the reasons I have given above, the proposed initiative will not deliver, even with the bribes.

We need to think differently on housing in Australia. Picture: David Crosling

So, let’s look at what might be done by governments for rental accommodation and or social housing:

1. Cancel or put on hold for five or 10 years all proposed new government infrastructure projects not physically started, to drive tradies back into the private sector.

2. Incentivise young and mature people to start apprenticeships in the trades to build housing.

3. Adopt the European practice and encourage banks or our superannuation funds to provide the private sector with funds at 3 per cent for 30 years for rental or social housing.

4. Rents can only be adjusted by government approval once a year.

5. The investor can get a guaranteed return of an agreed amount on their investment.

6. State governments to not assess rental properties built by 2029 with land taxes.

7. Current applications for building permits be quickly reassessed and approvals given wherever possible.

We need to think differently. One tier of government bribing another, using our money is not the answer.

It will lead to inefficiencies and not address the real challenges and could make the waste and financial abuse of public money from the roof batts scandal look like a kindergarten picnic.

Clearly the need for housing is real and now. Governments in the past decade have become the pacemakers for construction and salary and wages paid. The private sector in many cases simply cannot compete.

So now society is paying the price, not only in construction but in finding staff for hospitals, teachers in the classrooms ... the list goes on.

Governments have created this situation, now they must fix it, by being more creative.

Bribery is not, and has never been the answer.

Have a good day.

Jeff Kennett is former premier of Victoria