View from the Street: Housing bubble finally replaces mining bubble!

And domestic violence isn't that big a deal after all, apparently. Your news of the day, reduced to a snarky rant.

The endless boom will never end!

There's great economic news out there, Australia: the real estate bubble is now larger than the mining bubble! The economy is… um, saved?

"Sure, the mining boom has collapsed messily - but luckily the housing boom will last forever and ever!"
"Sure, the mining boom has collapsed messily - but luckily the housing boom will last forever and ever!" Photo: Andrew Meares

Yes, new data from the Australian Bureau of Statistics has confirmed that earnings from real estate have now outstripped those of the mining industry, in what is being touted as a positive sign of growth rather than the deeply terrifying portent of doom that it would appear to actually be.

The figures show that real estate produced $8.6 billion of taxable profit in the last quarter of 2015, while mining produced just $3.6 billion. That's partially because housing prices have risen sharply since 2011, which is worrying, but also because mining profits plummeted in 2015. So… um, huzzah?

Of course, this is all great news provided that you think that houses are largely items of investment, and not things that people need to live in. Some might even be somewhat scared at the very idea that the economy apparently rests on the speculative value of an actual human necessity. But heck, there's never been a more exciting time!

Our treasurer of sorts Scott Morrison confirmed that he doesn't see anything to worry about with regards this enormous looming problem, criticising Labor's sensible-seeming bubble-reducing plan to make changes to future negative gearing of investment as "one big fat tax on investment… At a time when we're trying to encourage investment in the transition of our economy."


So that seems pretty clear, anyone who doesn't already own property: there will be zero attempt to make housing more affordable. Heck, the economy can't afford it - and you don't want to worry the economy, right? After all, it's an angry god that will punish those that don't believe in its benevolent munificence.

Also, it can breathe fire. True story.

So, how's the government going to do a budget, then?

The plan for the budget, evidently, is going to be spending cuts.

Indeed, PM-in-exile Tony Abbott called on Turnbull to "take on the spending challenge again" in Tuesday's party meeting, citing his own government's massively destructive 2014 budget as evidence for what a successful policy looks like.

That might seem to illustrate the exact opposite point, given that a) most of the 2014 budget still isn't passed, and b) it was the moment when Abbott blithely drilled the hole that was to ultimately sink his leadership. Then again, as we discussed only the other day, Abbott's long since stopped bothering acknowledging boring, embarrassing reality.

However, given that the government has largely ruled out anything that looks like taxing the wealthy or removing upper-class welfare like negative gearing or superannuation concessions, it's the only option on the table.

At least, unless they win the next election and figure they can ram through a subsequent GST hike, of course, but such economic reform is unlikely to be mentioned until after the election. You know, just like Abbott did with the "budget emergency".

But we were all meant to go get "a good job that pays good money", right?

And look, let's just remember what "spending cuts" means: sacking people.

Given that the cuts are likely to be used to fund reductions to personal income tax ahead of the election, it turns into an endless cycle: the government cuts spending to give revenue-reducing cuts, thereby ensuring that the government can't afford to provide services, inspiring further cuts. And that's a problem, because government is the largest employer of Australians.

And there are those who argue in favour of small government and advocate for the market to provide services - most of whom sit on the government side of Parliament. However, Australia's situation is similar to that of Canada: there's not many of us - there are almost as many people in New York City as the three most populous states combined, and more Tokyo natives than Australian residents - and we're clumped into smallish cities that are a long way from one another.

And that means that service provision is more expensive - and for the free market, less profitable - than it is in countries with less centralised metropoli.

Indeed, services like electricity and water are exceptionally expensive, partially because the market isn't big enough to sustain meaningful competition and mostly because our governments have largely sold them off to private monopolies in any case. As far as our formerly state-run utilities go, we basically sold the house at a loss and have kept paying ever-increasing rent to the new owners.

Cuts to government spending means unemployed people without incomes, which means they're not spending money with the rest of us - which looks awfully like a shrinking economy.

Then again, just because austerity failed to work everywhere else during the last economic crisis, that doesn't mean it's not the path to economic prosperity now, right?

The Government's War on Children, redux

All snarking aside, though, let's not pretend that making government savings doesn't have a human cost.

For example, the Family Court is currently unable to deal with the vast amount of applications by people seeking to protect themselves and their children from domestic violence. And while this might seem like an excellent example of government cutting wasteful spending on fripperies like "justice" and "human safety", Family Court Chief Justice Diana Bryant seems to think that it's a bad thing for some reason.

"The family courts are currently overwhelmed by urgent applications regarding children in which allegations of violence are raised and lack adequate resources to deal with them in a thorough way, pending a complete and final hearing," she explained, adding that the period of time between applications for parenting orders and a final hearing was generally more than a year.

"This delay is unacceptable and leads to the further problem that interim orders - which are made without a thorough investigation of allegations from both sides - will have to be in place until the final hearing, rather than being only in place for a short period," she said.

So in the best case scenario, a parent gets to carry potentially-baseless accusations of being unfit. In the worst case, people's lives are put at serious risk.

Attorney-General George Brandis was quick to make clear that this serious shortfall of justice has got nothing to do with him or his government, with a spokesthing declaring "The management of courts is the responsibility of the administrators of the courts, not the executive government." How are the courts meant to exercise cost-saving justice, exactly? Two-for-one custody rulings? No-judge Tuesdays?

Still, at least Brandis is keeping on message with his governmental colleagues: policy should always trump the well-being of children, right?

The cocktail hour: when in doubt…

…pour a strong drink and deploy the kitten videos. They'll make it all alright again, surely?

Maybe things will be better tomorrow, friends. Let's meet back here and see.

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