In the 1950s a house cost about three times the annual average wage. Today it’s more like eight times. The political fall-out from this housing affordability crisis is gathering momentum.
Voters under 40 now outnumber “Boomers”, threatening to change the electoral arithmetic. With these storm clouds on the horizon, Labor and Liberal have been desperate to assure younger voters that there is a path to home ownership.
The Coalition proposes to allow new home buyers a tax deduction on interest payments, in addition to allowing them to access their superannuation to service a mortgage.
Labor’s new policy, the First Home Buyers Guarantee, allows first house buyers to access a loan with only a 5% deposit with the government stepping in as guarantor for the rest of the deposit plus it continues its Help to Buy scheme, in which it takes a share in the property.
As economists have explained, like any market subsidy without an enforced price cap, both the Coalition and Labor proposals will inflate prices by the same amount, much like the first home owners grant did.
To the extent that they acknowledge that spiralling property prices are a problem, both Labor and the Coalition focus on pumping more private properties for sale into the market.
For the Coalition, that means providing $5 billion for infrastructure to service new housing estates. Labor is allocating $10 billion to build 100,000 new homes, exclusively for first home buyers, and launching a Build-to-Rent program that the Property Council estimates will deliver about 80,000 additional units over a decade.
Labor also proposes to fund the construction of 30,000 new social housing dwellings — a miniscule amount compared to waiting lists across the country.
True to form, Opposition leader Peter Dutton is trying to deflect attention from decades of bipartisan policies that have inflated property prices by blaming immigration for over heating demand.
Absent from both major parties are measures that would stop and reverse the cost to buy a house and, in particular, nothing to stop or slow the increase in rents.
The truth is they don’t want to.
For all the froth and bubble about making the “Australian dream” accessible for all, keeping banks, investors, landlords and speculators onside remains their true priority.
Dutton is sometimes honest about this. When asked at a press conference on April 15 if he wanted house prices to rise or fall, he replied: “I want to see them steadily increase … I don’t want to see a situation where Labor crashes the economy and somebody who’s paid $750,000 for a house today is worth $600,000 in 18 months’ time under an Albanese government.”
Let’s be clear: Dutton wants to blame migrants for the cost of housing and increase the cost of housing at the same time!
Socialist Alliance proposes as starting measures the scrapping of negative gearing and the capital gains tax, limiting rent increases to the consumer price index, ban no-fault evictions and embark on a program to seriously expand the stock of public housing.
It’s only in Australia that these proposals are seen as radical or extreme. It has the weakest protections for private tenants among Organisation for Economic Co-operation and Development nations and public housing stock is a miserable 4%, compared to 20% in Denmark.
While the capital gains tax and negative gearing are a wholly unjustified subsidy to landlords and property investors, that are set to cost us over $20 billion in lost tax revenue in a decade, it’s not just the big banks and property tycoons that Labor is afraid of offending if it adopts these policies.
Over the last four decades Labor and the Coalition have implemented neoliberal policies. This means pensions have failed to keep pace with the cost of living, social services have been wound back and employment insecurity has become widespread.
Faced with this, working people on higher incomes have been encouraged, in fact incentivised, to buy an investment property to guarantee themselves a liveable income in retirement. It’s the fears of these “Mum and Dad” property investors that Dutton seeks to stoke and that spooks Labor.
In fact, guaranteeing every citizen access to dignified affordable housing should be seen as a basic obligation of government.
The erosion of this understanding, including in the minds of many working people, is a sign of what will happen to healthcare and education — if we let it happen.
Turning this around is a political battle we have to win. However, making housing a human right cannot be won in isolation.
When people, including workers who own their own home, see the super rich being made to pay more tax and their own tax payments pay for services that improve everyone’s lives, including their own, then negative individualistic thinking can be challenged and not just on housing.
Labor can’t lead this fight because its policies in government, and not just on housing, have helped create the problem.
There is no easy road either. Regardless of the election result, the true balance of power will remain in the hands of the Coalition and Labor, which remain committed to maintaining the unjust and grotesque situation.
Winning this battle will involve connecting a vision for systemic change to grassroots housing campaigns, including the fight to defend and extend public housing, strengthen protections for tenants and impose rent caps.
Socialist Alliance is committed to doing that, through the election campaign and beyond. Join us now.
[Sam Wainwright is a national co-convener of the Socialist Alliance.]