Young people must apply green passion to financial security

Tasmanian first home buyer Tonika Hudson and her dog Jessie at Bridgewater. Picture: Chris Kidd

How long will it take for younger Australians to understand their deep concerns about the environment are obscuring the fact that they copping it in the neck when it comes money matters and living.

In time, hopefully, they will wake up and while they should not reduce their environmental passion – they need to embrace a wider canvas so that they can affordably buy or rent a dwelling.

Right now one of their few avenues to break the ring of dwelling hardship they are facing is the bank of mum and dad.

But this involves considerable risk for parents.

Two events this week highlighted that while the Reserve Bank fiddles with interest rates, the Treasurer plays with the budget and the states – particularly Victoria – realise their borrowed money spending bonanza is over.

There is fundamental community pressure to fix a system that currently discriminates against the young and do so without smashing the older generation.

The first event was the revelation in The Australian by Sydney’s largest apartment developer, Meriton’s Harry Triguboff.

That, at a time of acute housing shortage and skyrocketing rents, he was building substantially less apartments than in past years.

Then this week a NAB survey showed that a quarter of young Australians actually wanted to buy a property and were saving money via bank deposits.

That’s a tough gig.

In looking for solutions let’s first isolate some of the reasons why our younger generation has been squeezed out of the housing market and must rely either on their parents for purchase assistance or accommodation.

The first answer is, of course, that cost of the actual housing construction has jumped. There is no easy answer to that apart from better construction technology so we need to look at the other forces that are creating the problem.

The biggest is the total morass in the building approval process. When land is purchased it can take two years and often much longer to gain approvals as a myriad of chronically overstaffed bodies play table tennis with the process – usually with absolutely no interest in the costs they are adding to the final dwelling.

While young people should not reduce their environmental passion – they need to embrace a wider canvas so that they can affordably buy or rent a dwelling. Picture: NewsWire / Monique Harmer

The situation is worst in New South Wales and best in Queensland.

The higher costs of construction might have slightly altered the ratio, but two years ago it was the government morass and taxes that doubled the cost of building.

It’s time the younger generation embraced dismantling that discrimination with the same enthusiasm that they devote to the environment.

There are huge housing cost reductions available.

Part of the process is the stamp duty game which in many states discriminates against those that are entering the market for the first time. And while NSW might be a leader in stamp duty reforms their approval morass offsets their stamp duty assistance.

Australia prides itself on having a strong banking system and the value of that was underlined in recent months by the troubles in the banking sectors of the US and Europe.

But it comes at a cost and bank interest margins on housing are high. In recent months the sharp contraction in the rate of home building and dwelling sales has caused banks to lower their margins.

That’s a clear sign that there is fat in the system which delivers a strong banking sector but makes it tougher for young people, particularly as banks have been very tardy in lifting bank deposit rates which young people need as they build up their savings to buy a property.

We have a superannuation system that was designed for Baby Boomers who when younger were easily able to buy the asset that is most valuable in retirement – a dwelling – and so needed extra savings.

It was not designed for the current young generation, who unlike their parents, can’t buy that base retirement asset.

Increasingly the younger generation will wake up and look at superannuation as a tax that makes it harder for them to buy a dwelling.

The trustees of our superannuation funds all come from the a different era and have no concept but the superannuation game needs to change so that there is a role for superannuation in helping young people gain a dwelling.

If we tackle the approval morass, the cost of loans and the availability of dwelling equity capital we will have made significant first steps which will no doubt lead to other reforms.

And when it comes to renting all the emphasis is applied to the rights of the renters and not on helping and encouraging the landlords who are exiting.

We need to attract older savers to buy dwellings to rent and that requires clear landlord rules so that delinquent tenants can be removed.

The much maligned negative gearing also has a role to apply in increasing supply of dwellings for rent.

State and federal governments talk about funding social housing which is not going to work because there is a squeeze on government money and there are better and cheaper options.

You might not agree with all my solutions and readers will no doubt have other ideas but we have a deep community problem that requires a different way of thinking.

I hope I started the process