Talking Point: The great Australian dream is fading fast

Housing is a human right and it is no good thing for a nation to be pricing low and even middle-income earners out of having a stable roof over their heads, writes GREG BARNS.

RARELY a week goes by without a headline about ever-rising house prices both here in Tasmania, and broadly across Australia.

The impact of this trend is to widen wealth inequality.

Brendan Coates, economic policy program director at Grattan Institute, recently told Business Insider Australia “wealth inequality is widening, basically because wealth is rapidly accelerating,” because of property investment.

REVEALED: Suburbs where homes earn more than residents

Politicians and those with a vested interest in a rising housing market think it’s all about supply of housing. But it’s not, according to prominent Tasmanian economist Saul Eslake.

It is government polices, such as first home owner grants and a distorted tax system, that need be tackled if that wealth inequality is to be reduced.

As Eslake puts it: “The repeated pattern of governments giving ever-larger cash grants to first home buyers and the Reserve Bank cutting rates every time it looks like there might be large and widespread falls in house prices has become for Australian property investors the equivalent of what became known as the ‘Greenspan put’ was for investors in the US stock market.”

What Eslake is referring to is what happened when the United States Federal Reserve was run by Alan Greenspan and Ben Bernanke, a period from the late 1990s through to early 2010s.

There was, says Eslake, “the widespread belief’ in the investment community during this period that the Fed “would cut [interest] rates whenever the stock market fell, or looked like it was about to fall. This led investors to believe that they ‘couldn’t lose’, which in turn encouraged them to take on more leverage than they might have done otherwise, and to invest in riskier products than they might have done otherwise.”

The result of course was the 2008 crash, otherwise known as the GFC.

Rising house prices are putting home ownership beyond many Australians. Picture: Tim Carrafa

Eslake detects something similar in the Australian property market. He observes that “property investors have good reason to think that governments and the RBA won’t allow property prices to fall nationwide, which encourages them to take on more risk in addition to the incentives that the tax system provides for leveraged investment in property”.

The tax issue appears, sadly, a political no-go area when it comes to housing because of the cynical, dishonest and reckless scare campaigns run by political parties and some in the media whenever even the mildest reforms to abolish the current distortions that ramp up housing prices are mentioned.

In the last federal election, the Morrison government ran a disgraceful campaign against Labor’s mildly reformist push on negative gearing.

In a presentation last week by to the Council to Homeless Persons, Eslake drew together the factors that are adversely affecting housing affordability.

The first of course is interest rates, including on mortgages, that are at record lows and which the RBA says will stay there until 2024.

While the RBA policy is right given the impact of the Covid pandemic, try telling that to those who can’t find a property to rent at an affordable price, let alone buy a home.

The second factor is the banking system has been both willing and able to lend for housing and there “appears to have been some relaxation in lending standards”, observes Eslake.

Then there are the state and federal cash grants to home buyers noted above, which “as always, these have ended up adding to the price of both existing and new housing”, and the federal government has thrown fuel on the fire by allowing withdrawals from superannuation, and providing guarantees for low deposit borrowers.

The scare campaign against reforming the negative gearing and capital gains tax machinery means it will be a while before any political party has the courage to do what is right for Australia.

So we have to add in the fact, says Eslake, that investors have come back into the market, “confident that their preferential tax treatment will remain intact whatever the outcome of the next election following Labor’s decision to walk away from the policies on negative gearing and the capital gains tax discount which it took to the 2016 and 2019 elections”.

Contrast this with New Zealand, where the Labor government of Jacinda Ardern has made sweeping reforms to reduce tax incentives for property investment, designed to cool that nation’s booming market.

While it is comforting for those who own their property — or a number of them — to read stories about how “hot” the market is, remember this fact: It is no good thing for a nation to be pricing low and even middle income earners out of having a stable roof over their heads.

Housing is a human right.

The political class should end policies that unfairly advantage property owners via the tax system and buckets of cash.

You can increase housing supply all you like but until these reforms are designed and implemented the wealth divide will continue to widen.

Hobart barrister Greg Barns SC is a human rights lawyer who has advised federal and state Liberal governments.

Creativity the key to live long and prosper

HOW many of us keep working until we are in our 80s and 90s?

Two occupations where it seems to be common are visual artists and conductors.

What is it that enables them to find the energy and stamina to lead orchestras, paint or produce sculpture?

Is it that creativity lengthens the working life?

Or is it that the physical act of baton waving or moulding clay is a fruitful daily exercise?

Last week the San Francisco Chronicle featured Riccardo Muti, an Italian conductor who is now 80 and who has just extended his contract with the renowned Chicago Symphony Orchestra until 2023.

The Chronicle listed conductors who are still working over the age of 80 and it’s a veritable list.

Christoph von Dohnányi is 92, regularly features with American orchestras and has conducted the Sydney Symphony Orchestra.

Another is Australian opera conductor Richard Bonynge, who is 90.

German conductor Christoph von Dohnanyi is still leading orchestras at the age of 92.

Herbert Blomstedt, who at 94 is the world’s oldest conductor, was asked earlier this year by German broadcaster Deutsche Welle how it is he can undertake the physically and intellectually taxing role of crafting music with an orchestra to such an exacting standard.

“It’s the love of music. Of course, you also have to have a certain level of fitness. But music — and by that I mean the great classical tradition — provides a lot of strength because it stimulates the intellect and the emotions equally,” said Blomstedt.

Maybe it helps that Blomstedt starts his day with a prayer (a form of meditation), is a vegetarian and does not drink alcohol.

And when it comes to visual artists there are plenty to rival the octogenarian and nonagenarian conducting fraternity.

Tasmanian artist Max Angus was painting until he died aged 102 in 2017.

Max Angus opened an exhibition on his 101st birthday.

Another artist who adopted Tasmania as his home, Lloyd Rees, was painting up until he died in 1988. He was born in 1895.

Guy Warren, who at 100 is Australia’s oldest living artist, told the Sydney Morning Herald in April this year that “good genes, good luck and a whiskey every night”, might be an explanation for his creative longevity. He told visual arts writer John McDonald there might be “two golden rules” — “don’t sit around in pubs” and “look for the good in everything”.

Overseas there is the German artist and glass maker Gerhard Richter who is 89 and David Hockney, one of the most important British artists of modern times, is 84.

Is there any science behind this pattern?

A 2014 paper by Russian researchers Anisimova and Zharinov, published in Advances in Gerontology, suggested that “intensive creative work is a contributing factor to the increase in life span and longevity”.

The paper linked education and higher socio-economic status as factors. Other research shows that the music itself and the exercise conductors get by “flapping their arms around”, and doing it day after day, are also factors that explain the ability of these musicians to work into their 90s.

Artist Guy Warren in his Leichhardt studio. He is 100 years old and is Australia’s oldest living artist. Picture: Craig Wilson

Similarly with visual artists, the impact on the brain of creating art is to reduce stress and heighten emotional expression. There is also the physical act of painting or creating a sculpture.

“Creativity in and of itself is important for remaining healthy, remaining connected to yourself and connected to the world,” Christianne Strang, a professor of neuroscience at the University of Alabama, told American broadcaster NPR last year.

But even if you are not fortunate enough to be a professional visual artist or conductor, other research shows the benefit of engaging with art by going to concerts and visiting galleries or theatres.

A groundbreaking UK study, the results of which were published in the British Medical Journal in 2019, found that after “taking account of a range of economic, health and social factors, the researchers found that people who engaged in arts activities once or twice a year had a 14 per cent lower risk of dying at any time during the follow-up period than those who never engaged (3.5 deaths per 1000 person years vs 6 deaths per 1000 person years)”.

The study also reported that people “who engaged in arts activities more frequently (every few months or more) had a 31 per cent lower risk of dying (2.4 deaths per 1000 person years)”.

The likely explanation for these results was, according to the research, “differences in cognition (thinking and understanding), mental health, and physical activity levels among those who did and did not engage in the arts”.

At 65, the TSO’s conductor Evind Aadland is positively youthful.

Here in Tasmania we are fortunate to have ample opportunity for engagement in the arts with a leading orchestra such as the Tasmanian Symphony Orchestra, whose chief conductor Eivind Aadland is a youthful 65, not to mention chamber ensembles and solo artists.

There is visual art in abundance on this island.

As the population ages, the lessons from conductors and visual artists on longevity are timely. And they are in reach for most of us.

Hobart barrister Greg Barns SC is a human rights lawyer who has advised federal and state Liberal governments.