Fresh from an election campaign in which he and his Prime Minister actually boasted of helping property investors buy houses for their one-year-olds, Treasurer Scott Morrison will today talk about growing housing unaffordability, and the need for the states to get housing supply and infrastructure right. How do we know? In what is the single most pointless and yet annoying trend of modern political communications, Morrison’s office handed out his speech ahead of time to journalists across several outlets — so it would appear in the morning papers.
“Of all the determinants of house prices in Australia, whether cyclical or structural, the most important has been the long-running impediments to the supply side of the market,” Morrison will say, according to reports, and that state governments should address “residential land use planning regulations that unnecessarily impede housing supply.” We need “policies that mitigate the artificial inflation of asset prices, ensure that supply is not restricted from responding to genuine demand and that enable home buyers, through their own efforts, to make more rapid progress to being able to enter the market.”
All sounds good. If only there were an independent expert body that could actually inform such policies in a calm and measured fashion, in contrast to politicians celebrating one-year-old home owners and a Property Council hell bent on propping up policies like negative gearing that ensure taxpayers hand billions of dollars to well-off investors.
Well, there was such a body, called the National Housing Supply Council, which had respected economists like Saul Eslake, academics, planners, property developers and social policy experts on it, which produced a wealth of in-depth reports and studies about housing supply and the infrastructure development that should accompany housing supply release.
The government abolished the council virtually the moment it got into office.
But while the Treasurer is guilty of rank hypocrisy in feigning concern about housing supply — this is the man, after all, who admitted that negative gearing had “excesses” and then savaged Labor for proposing to address them — the more substantial problem is, we’ve been here before. Morrison says he’ll be raising issues like supply and infrastructure with the states. Well, the states shouldn’t have to go back too far: all of these issues were canvassed in 2010.
Back then, when Kevin Rudd was prime minister, COAG elevated what was a long-standing item on the COAG agenda to the status of “a housing supply and affordability reform agenda and timeline”, complete with a “Housing Supply and Affordability Reform Working Party report to COAG” on issues like housing supply and principles relating to infrastructure development. The working party would report “via the Ministerial Council for Federal Financial Relations”.
That’s the Commonwealth-State-Territory Treasurers’ ministerial council. The same one Morrison says he’ll be raising housing supply and infrastructure at later in the year. In fact, you can read the working party’s 40-page report right here. Because the states and territories generally prefer not to make recommendations too specific, the detail in the report wasn’t matched by detailed recommendations:
- “jurisdictions will continue to work to improve the efficiency of (including the time frames involved in) referrals, development assessment and rezoning processes;
- States and Territories will continue to work towards greater use of code-based frameworks for assessing residential development applications as appropriate; and
- States and Territories will maintain or establish (as applicable) an internal process to ensure state-level consideration of the costs and benefits before local councils introduce planning and development requirements that are in addition to or exceed state planning and development requirements. Any proposed changes to existing arrangements in a State or Territory would be subject to the Regulation Impact Statement (RIS) requirements applying in that jurisdiction.”
But the issue entirely slipped off the COAG agenda after 2010, getting a passing reference in a 2011 communique, but that was it. Housing construction hit a nadir at the end of 2011 and then began growing strongly, primarily in apartment construction, fueled by two rate cuts by the Reserve Bank at the end of 2011 and then two more in mid-2012, including a 0.5% cut in May 2012.
The problem is, of course, the cash rate is now a third of what it was in 2011, and there are warnings of an apartment glut in Sydney and Melbourne, but housing affordability is still a problem in those cities, partly fueled by extraordinarily expensive tax policies that remain jealously guarded by the Coalition and the property lobby. Is Morrison serious about affordability in our two biggest economic centres, or merely looking for a way to shift blame to the states — a much older strategy than referring a difficult issue to a COAG working group.