Silver bullet slogans are not going to fix our housing crisis

Last Saturday The Age called on Anthony Albanese and Peter Dutton to put forward big ideas that could profoundly shape the path of the country and the lives of voters.

The next day Albanese and Dutton launched their campaigns with not rockets, but sparklers that were supposed to illuminate their vision. Both spoke of solving the housing crisis. Lamentably, what they offered was not so much solution as soundbite.

This being an election campaign marked by policy timidity rather than boldness, we should not be surprised. Perhaps the phrase the “dismal science”, coined by historian Thomas Carlyle in 1849 to describe the discipline of economics, should now be transferred to the practice of politics in this country.

The reactions to Sunday’s announcements have ranged from lukewarm to scathing. Economist and former Treasury officer Chris Richardson described the big parties’ platforms as a “dumpster fire of dumb stuff” (surely in the running for phrase of the campaign); independent economist Saul Eslake labelled the Coalition’s tax deduction plan as “candidate for dumbest policy decision of the 21st century”.

There is no argument that housing in all its facets – whether it be social or private, supply or demand, new buildings, renovations, construction costs, the rising costs of buying a property, mortgages or the ability to raise a deposit – needs furious concentration from Labor and the Coalition. What is also of no argument is that they have thus far failed.

Labor says it will allow all first home buyers to buy homes with a 5 per cent deposit, and that it will pledge $10 billion for the building of 100,000 houses over eight years for first-time buyers. The money would be channelled as grants to the states and territories. This is an example of Labor not being “shackled by old thinking”, Albanese said at Sunday’s launch.

Peter Dutton with son Harry in Bacchus Marsh on Tuesday. Credit: James Brickwood

Under the Coalition, first home buyers would be able to claim a tax deduction for five years on their mortgage interest bill if they buy a newly built property. It estimates that will typically deliver about $12,000 a year.

This would be scaled in proportion to income and the size of the loan. Dutton, in an effort to emphasise this is not only political but personal, has had his 20-year-old son, Harry, who is trying to save for a home, along on the campaign trail. It was a puzzling intervention given he says he will help his children with home deposits.

The leaders’ pronouncements may seem on the surface to be helping. However, if they fuel demand without a commensurate rise in supply then the price of properties must also rise, and hence housing affordability diminishes and the effectiveness of their chosen tools is blunted.

The Age agrees with the sentiment of Michael Fotheringham, managing director of the Australian Housing and Urban Research Institute, that the measures are “actually putting fuel on the fire”.

“One of the reasons we have a broken housing system in Australia is we’ve focused, over a number of decades now, far too much on measures that increase demand for housing, and not enough on supply-side measures,” he says, in remarks echoed with remarkable unanimity.

Tackling the gamut of issues in relation to housing necessarily demands a wider and deeper response than is possible in the few weeks of an election campaign.

The ripple effects of a policy are myriad. For instance, what about the shortage of tradespeople to actually build the houses, and the challenge of keeping construction costs from skyrocketing when demand is high and supply of materials is unable to meet that demand?

Then there are the financial debates around negative gearing, an issue which Bill Shorten found to his cost at the 2016 election was poll death, or the benefits and negatives of stamp duty versus land tax.

The solution to the housing crisis involves many players, from all levels of government – federal, state and local – to private enterprise, such as developers. They are all links in the chain.

The pity of Sunday’s pronouncements by Albanese and Dutton is that in order to gain poll position neither acknowledged this basic truth. Instead, the major parties are again pretending that go-it-alone, silver bullet slogans are credible solutions, they are not.

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