After Treasurer Scott Morrison’s speech on housing today, and his promise of more to come in the budget, it’s difficult to avoid the impression the government is putting together a colossal policy disaster on housing that will inflict serious collateral damage on the super systems — with repercussions that will be felt decades into the future.

The guts of Morrison’s speech was really to confirm that the government wants to explore ways of getting private investment in social housing (low cost rental housing for people who would otherwise struggle to obtain accommodation) and affordable housing (low cost housing for low and middle income earners who face being priced out of the rental market, especially in areas that need their skills).

Much of what Morrison said about what is happening on social and affordable housing is eminently sensible and welcome. He accurately described the process by which soaring house prices are driving even young people on high incomes to rent, and keeping young people in rental accommodation longer than previously, meaning low income earners are, in turn, priced out of rental accommodation.

Morrison also explained how Commonwealth block grants to the states on affordable housing aren’t achieving their goals. Too right. And, he might have added in recent years, the NSW and Victorian governments (of both parties) have dramatically cut their spending on social housing. Whereas in the 1990s the NSW government built over a hundred, and often several hundred, social housing dwellings every month, in recent years some months have seen single figure approval levels for public housing — especially when then prime minister Kevin Rudd handed out big social housing grants as part of his financial crisis stimulus package.

Morrison’s proposed solution is to encourage financing vehicles that mean long-term investors — investors with more patience and less appetite for risks than normal property investors — will look to invest in affordable housing — or lend to entities that will re-lend to community housing bodies, reducing the cost of capital for the latter. It’s smart, innovative stuff and full credit to Morrison for pursuing it — except it won’t touch the sides when it comes to dealing with the bigger issue of skyrocketing house prices. It may also mean that the states feel even less obligation to invest on social housing if the private sector moves in.

Oh, and when Morrison says “what could be more in the interest of nurses, teachers or police pension fund members than investing in affordable housing for nurses, teachers and police officers?” it makes one wonder why he and the rest of his party are determined to demonise industry superannuation funds — they very entities he’s calling on to investigate such opportunities. Then again, Morrison and the rest of the government routinely vilify industry funds even after they saved Mike Baird’s bacon after Morrison crueled the former’s electricity sale.

Morrison used the speech to flag that there will be further housing announcements in the budget. The problem is that, having refused — despite Morrison’s own misgivings about negative gearing — to use the one major lever the federal government has on housing, which is taxation, the government is likely to cobble a housing “package” together from a collection of half-baked, inadequate  or downright harmful ideas. Already, as part of a witless effort to make the package look “whole of government” (one of those wonderfully obtuse Canberran terms meant to impress outsiders), the great “send migrants to the region” cliche has been dragged out — a policy idea so old that ancient Egyptian hieroglyphics have been unearthed showing pharaohs incentivising Nubians to move to Libya.

As every government that has ever tried sending migrants to the regions — which is most of them — have discovered, migrants go where economic opportunities are, which is in urban areas, and refugees in particular go where both economic opportunities and support networks are. And given we’re supposedly running a more skills-based immigration program than we used to under this government, why would we be sending highly-skilled migrants to places where there are no opportunities for them to use those skills?

Worse, though, is that it appears that the government has fallen for the ridiculous idea that people should be allowed to access their superannuation to buy housing — an idea literally no one outside the real estate industry thinks is good — even property bodies think it’s a bad idea that will just pump yet more money into demand for housing. But this rotten idea gets you coming and it gets you going — not merely would it make housing more expensive in the short-term, it will mean significantly lower retirement incomes in the long-term, which means Scott Morrison’s successors as treasurer in decades to come will face bigger pension costs.

Morrison conspicuously flagged in today’s speech that some people are using their superannuation to pay off outstanding mortgages as they head into retirement. Perhaps he wants us to think that, if you can do it at the end of your working life, why can’t you do it at the start? But retirees paying off mortgages aren’t pumping more money into the housing market. And as retirees they’ve reached the point where they can decide how to allocate their wealth. They’ve left the accumulation stage of the superannuation system behind. Young people saving for a home deposit are at the start of the accumulation stage, and any redirection of savings away from super has significant long-term financial impacts on them.

Still, it may be that the Liberal Party simply hates the superannuation system so much, they want to cripple it, and don’t mind if the big bank retail super funds, who will be damaged by this like industry super, corporate and public sector super funds will be, pay the price.

Finance Minister Mathias Cormann has expressed steadfast opposition to allowing super to be used for housing. It seems he may have lost the battle within the government. He also opposes changes to the capital gains tax concession that is fueling house prices. Let’s hope he loses that battle as well. Otherwise, the government will be so desperate to create the impression it is crafting a huge, “whole of government” housing package, it will chuck downright damaging policies into the mix.

Peter Fray

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