The real issue of housing affordability
There is a major issue in this country about housing affordability, and no, Chinese buying is not a problem as long as we increase supply. Michael Pascoe comments.PT0M0S 620 349
Viewers of those great documentaries, Yes, Minister and the ABC's The Hollow Men, will understand exactly what happened this week when the House of Representatives Economics Committee chair, Kelly O'Dwyer, announced an inquiry into housing affordability: nothing.
As Sir Humphrey would advise, when wanting to be seen to be doing something about an issue without actually doing anything about the issue, hold an inquiry. But Sir Humphrey also knew that you don't want to hold an inquiry without already knowing what the answer will be. That was a lesson lost on a previous coalition government when the Painters and Dockers royal commission ended up exposing the bottom of the harbour tax scandal that seemed to capture more Liberal supporters than Labor types.
Thus it's important to limit the inquiry's scope to something relatively minor and avoid the big problems. And that's just what O'Dwyer is doing her "Inquiry into foreign investment in residential real estate".
Barney Gardner, 65, was one of the public housing residents in Millers Point who have been told they will soon have to move on. Photo: Tamara Dean
The inquiry's official name is a euphemism for the alleged Asian invasion, those hundreds of millions of rich Chinese supposedly Hoovering up the nation's bricks and mortar, leaving local-born would-be first home buyers sheltering under bridges or having to buy something less that absolutely ideal, or perhaps being forced to take off for another gap year overseas instead.
Meanwhile there are serious problems about Australia's housing affordability that an inquiry won't go anywhere near. There are the bad tax policies, the inefficient and simply dumb local and state governments, the gormless politicians unwilling to take on the NYMBYs and the low level of public housing investment. But the terms of O'Dwyer's little sideshow means that big stuff won't have to be faced.
It's safe territory for the ambitious O'Dwyer – hmmm, there might be a spare assistant minister's job about. The inquiry can be seen to be doing something about a barbeque stopper subject with the answer already known: no, Chinese buying is not the problem, it's that we need to grab the opportunity to increase supply.
Kelly O'Dwyer announced the inquiry into housing affordability. Photo: Wayne Taylor
That lack of supply and the constraints on it is something that can unite the left and right. The Centre for Independent Studies is making the point on these pages today while anyone remotely involved with social welfare can tell stories of the hopeless battle of the homeless.
But it's hard, that tricky open-ended issue of housing affordability. Opening up the very smelly can of worms might mean the government would be challenged to actually do something, starting with tackling the distortions and disincentives built into the tax system. For starters, hands up what politician want to embrace a broad, no-exceptions land tax? Who wants to reduce NYMBYs' local power? No hands are visible among those interested in holding or winning government.
That's way too hard. Best to keep it limited, traipse around a few of the likely suburbs and listen to people complain for a while and go home to file the report that could be written before it starts.
Perhaps it's symptomatic of our housing myopia that as the economics committee inquiry was announced, a little circus act was launched in Sydney when the State government belatedly moved to continue something started by its predecessors: selling off the multi-million dollar terrace houses in the Rocks presently used for a lucky few public housing tenants.
The cosseted tenants understandably aren't happy about losing their privilege, bemoaning the loss of "generations" of welfare entitlement, their subsidised housing in a prime waterfront area. Of course, the landlord deciding to sell a property is something that the rest of nation's renters in the private sector know rather well. And any admission of generations of welfare housing is the most effective argument of all for changing it.
The money raised from the Rocks sales must be quarantined from the government's other demands and applied as a boost to the public housing budget, but when the price of the average Sydney unit is $530,000, only Clover Moore and like-minded souls could justify lavishing a property worth $3 million on a single tenant who effectively won the lottery by inheriting it.
Wonder if the Sydney Lord Mayor is more interested in a few of her voters than the best use of scarce resources – it's the sort of irrational behaviour that typifies politicians and housing.
Michael Pascoe is a BusinessDay contributing editor.