Band-Aid gimmicks will not solve housing problems

Middle-aged Australians who remember paying off homes at interest rates of 17 per cent or more in the late 1980s or struggling with soaring rents (for the time) know that markets move in cycles. The current housing market is challenging for young people, especially those unable to tap into the bank of mum and dad. Government policies to help increase housing supply are the soundest option. Anthony Albanese was on the right track on Monday when he said changes to state and territory planning regulations were needed to help alleviate the housing shortfall. From social and community housing and rental properties to owner-occupiers, the common constraint is supply, as Master Builders Australia chief executive Denita Wawn writes in our online edition. Fostering an environment conducive to investment and development, including better planning and building approval policies, needs to be part of the solution. So does restraining inflation, to relieve pressure on interest rates. Nor should migration be demonised, as Ms Wawn argues, at a time when the nation needs more skilled workers.

In contrast, the gimmicks proposed by Left-affiliated trade unions and the Greens would create serious difficulties for many Australians, and for the nation’s economic strength and prosperity. Planning laws will be discussed at Wednesday’s national cabinet meeting in Brisbane, where the Prime Minister, premiers and chief ministers will finalise a national strategy harmonising planning reforms and unlocking supply. Done well, it should be an ideal use of the national cabinet process.

Housing will be a contentious issue at Labor’s national conference starting on Thursday. There, unions such as the CFMEU and Australian Manufacturing Workers Union are preparing to push a radical agenda, geared to redistributing intergenerational wealth, removing levies on Australians who do not take out private insurance and pausing indexation on HECS loans. Reversing fair and sound policies such as HECS and the loading fee for people who do not have private health insurance before they turn 31, and the 2 per cent Medicare levy for middle-income earners who do not have insurance, would have adverse, unintended consequences. Encouraging people of any age to avoid private medical insurance is not in their long-term interests, or the interests of those Australians who have no alternative but to rely on already overcrowded public hospitals.

Tinkering with HECS would either kick the impost down the road for those who incurred the debt, or force taxpayers, including many who did not attend university, to shoulder more of the burden, unfairly. And the CFMEU’s push for a 40 per cent super profits tax on big companies, which the unions want used to plug a projected 760,000 shortfall in social and affordable homes, would punch a hole in corporate profits and the wider economy.

At least union leaders and conference delegates who support new taxes on property investors have been told crackdowns on negative gearing and capital gains tax will not be included in the ALP policy platform. Such imposts would make a difficult situation worse. So would the Greens’ demand for a national rent freeze, which the fringe party has made a condition of passing Mr Albanese’s $10bn Housing Australia Future Fund. Such a freeze would drive investors out, further squeezing rental supply and sending prices up. As outgoing Reserve Bank governor Philip Lowe told the House of Representatives economics committee on Friday: “The solution has to be putting in place a structure that makes the supply side of the housing market more flexible … that means zoning and planning deregulation, and it means … state and local governments being part of the solution.”