Tim Wilson is the latest Coalition politician to cry crocodile tears over the housing affordability crisis, calling for Australians to access their superannuation to buy a house. Yet Coalition policies – from negative gearing, property subsidies, money-laundering, super fund borrowing to banking and lending standards – are all about pushing up house prices to benefit those who already own a house.
The Coalition’s track record shows it has no intention of making housing more affordable. It continues to implement policies that inflate the housing market, while offering straw-man solutions.
High housing prices in fact are demonstrably a plank of Coalition economic policy. Rising house prices, it is argued, lead to a feeling of wealth, which in turn, it is hoped, will translate into consumer spending.
Negative gearing
When in 2018 Labor announced its election policy of ending negative gearing, the Coalition claimed it would “smash” housing values with a “sledgehammer”. Former prime minister Malcolm Turnbull called Labor’s plan reckless and that it put “the value of every Australian home at risk”. As treasurer, Scott Morrison had acknowledged the “excesses” of negative gearing but in the lead up to the 2019 election Morrison claimed Labor’s policies would “erode the value of Australians’ homes”.
Treasury criticised the Coalition for exaggerating the impact of Labor’s policy: documents obtained by the ABC under freedom of information laws revealed that Treasury explicitly told the Coalition Government it should not claim that home values “will” fall under the proposal.
SMSF borrowing for property
Another Coalition policy that turbo charged the property market was the decision by John Howard, in the final days of his government, to allow self-managed superannuation funds (SMSFs) to borrow money to invest in property. Independent economist Saul Eslake described it as “the dumbest tax policy of the last two decades”.
The Council of Financial Regulators recommended the federal government ban such property investment after it was found that 18,000 SMSFs had more than 90% of their savings in a single asset class, primarily investment properties. Treasurer Josh Frydenberg ignored the recommendation, though Labor promised that if elected it would ban direct borrowing by SMSFs as part of its plan for housing affordability.
Action on money laundering
Australia’s property market has been labelled “a prime target for money laundering”, with young Australians forced to pay more for housing as a result.
In 2015, the global regulator of money laundering – the Paris-based Financial Action Taskforce (FATF) – released its mutual evaluation report, which found Australian homes were a haven for laundered funds.
Transparency International ranked Australia as having the weakest anti-money laundering (AML) laws in the Anglosphere, failing in all 10 priority areas.
Nobody really knows just how many billions of dollars in dirty money is pouring into Australia’s housing market.
And as AMP chief economist Shane Oliver noted in 2018, criminals willing to pay extra to wash illegal funds have probably had an impact on the high end of the housing market. Real estate agents say corrupt money can also increase average house prices, because criminals paying more than market value for one house are likely to encourage higher asking prices for similar properties in the same street.
Yet for more than a decade, Australia has refused to complete the second half of its anti-money laundering reform, despite repeated promises from federal government ministers that it was about to do so. The reforms are known as Tranche 2 of the AML/CTF regime — rules that would force lawyers, accountants, real estate agents and other “gatekeepers” to join the global fight against serious and organised financial crime.
As Nathan Lynch, a financial crime intelligence expert at Thomson Reuters, says:
“That Australia has become a sink for the illicit wealth of some of the Pacific region’s worst kleptocrats should horrify all Australians.”
Throwing bones at home buyers
Negative gearing, SMSFs borrowing and failure to act on money laundering are key areas where reform could make housing more affordable. But the Coalition’s policies instead are geared at the opposite.
The Coalition has offered $25,000 HomeBuilder grants for people buying a home or people who want to conduct substantial house renovations – those who are already in the market. As has been noted by experts, home buying grants increase house prices. For example, following the implementation of the First Home Owner Grant of $7,000 in July 2000, “property prices went up quickly – and by much more than the $7,000 value of the grant in many suburbs”.
Again, it gives the impression it is trying to tackle the housing affordability crisis. Yet, as Greg Jericho noted in the Guardian, Coalition policies continue to ensure the housing market goes in the opposite direction to the rest of the economy, especially wages.
Concerns have also been raised that the Coalition’s push to relax responsible lending laws could push up property prices by allowing people to borrow more – particularly given the record-low interest rates.
Meanwhile, the Coalition blames planning restrictions for pushing up house prices. It says cutting red tape is vital.
Yet as comprehensively argued by academic Cameron Murray, property developers maximise profits by limiting supply in a number of ways – from building developments in stages to reduce the number of properties available to letting planning approvals lapse and then reapplying for approval for a higher density. As Murray argues, it is economic incentives, rather than planning regulations, that limit the supply of housing and push up prices.
Public secret
In one survey 93% of respondents cited housing affordability it as a leading issue of concern. Yet large sections of the community keep voting for political parties with policies that keep prices high.
As Iain White, a professor of planning at New Zealand’s University of Waikato, points out, ever rising house prices is considered desirable by many in the community, at least among those already in the housing market.
Professor White calls this a “public secret” – a term coined by anthropologist Michael Taussig that refers to a collective social understanding, a truth generally accepted but not articulated. Public secrets allow the existence of seemingly contradictory positions and help maintain power relations.
While politicians from all parties routinely acknowledge the existence of a housing crisis, part of the public secret involves ensuring that any policies that are put in place to tackle the housing affordability crisis must have a minimal effect.
Former Liberal leader John Hewson described Australia’s housing affordability crisis as intergenerational theft. It is up to the community, all of us, to decide what we want to do about this theft.
A 30-year veteran of the mainstream media, Liz was the editor of Michael West Media until June 2021. Liz began her career in journalism in 1990 and worked at The Age newspaper for two 10-year stints. She also worked at The Guardian newspaper in London for more than seven years. A former professional tennis player who represented Australia in the 1984 Los Angeles Olympics, Liz has a Bachelor of Arts and a Bachelor of Letters (Hons).
Comments
18 responses to “Housing Hypocrites: Tim Wilson’s housing affordability crusade just an assault on super”
There is a degree of pent up demand for home ownership already, and boosting that demand (eg access to super) will only lead to higher prices and reduced affordability. Demand needs to be reduced, and/or supply increased, for affordability to improve.
Completely ignoring that a progressive Labor government should be implementing policies to increase supply through social publicly funded housing thereby bringing down the inflated bubble. Whoever said that the RIGHT (heaven forbid that workers should have a right to their own capital) to access a part of super for housing was the sole policy in regard to housing justice? I didnt.
The worst contributors to unaffordable housing after stagnant wages are negative gearing and subsidies for rent. If more people owned houses then negative gearing would be far less attractive, that impact would more than compensate any negative effect of allowing a one off home deposit from super. Those rent subsidies could become purchasing subsidies at zero cost to the government.
Using super as a deposit, first advocated by Dan Andrews in Victoria, would allow almost every person who has worked for a decade to put a deposit on a house. The increase in value of the house by normal inflation would more than compensate for the loss of super benefits later.
Rent is far more expensive in the medium term than purchase. Everyone I have heard can the idea of using super already owns a house! It would enable almost all to benefit from price increase in housing.
Spot on mate.
Thank you Elizabeth for another chapter in the saga of LNP bizarre handling – I cannot use the word ‘management’ – of the economy.
The proposition quoted here:-
‘Rising house prices, it is argued, lead to a feeling of wealth, which in turn, it is hoped, will translate into consumer spending.’
really needs researching: the effect of the high cost of housing on our society and international competitiveness is worthy of greater investigation – than the repetition of old dubious claims.
My P&I item, of last October, ‘China’s Wicked Competitive Advantage, tagged ‘economy’, is pertinent.
The effect of accessing super for housing is no different than what FHB grants do, and that’s push up the price of housing.
4+ decades of neoliberalism has placed us here and Hypocrisy has reached new heights as economic thought has been silenced !
The result is that today’s economy is burdened with property and financial claims that Marx and other critics deemed “fictitious” – a proliferation of financial overhead in the form of interest and dividends, fees and commissions, exorbitant management salaries, bonuses and stock options, and “capital” gains (mainly debt-leveraged land-price gains). And to cap matters, new financial modes of exploiting labor have been innovated, headed by pension-fund capitalism and privatization of Social Security. As economic planning has passed from government to the financial sector, the alternative to public price regulation and progressive taxation is debt peonage.
We have moved from an industrial economy to a financialised one a productive to an unproductive one and the consequences abound!
Ms Minter: excellent post. Long ago I started to come to a view that States-based land planning/regulation was, in practice and as it actually affects housing, was largely endogenous. That regulation was shaped by ‘market forces’ rather than it setting boundaries on free spirits or ensuring those forces to work for public benefit. That was from a transport-infrastructure perspective. Your post adds another nail to the ‘land planning is in charge’ coffin. It should be in charge, but will not be by planners et al pretending they are at the moment. Best wishes
The whole housing thing has turned into a wealth transfer reverse Robinhood Ponzi scheme where older asset owners (including politicians) rob the young via financial engineering allowing people to take on 30, 40 year term loans for exactly the same thing as a 10 year loan some 30 years ago when they were young.
The only thing that has prevented this from turning into HK is increase in supply which has provided somewhat affordable but really poor quality housing on the fringes but make no mistake, the quality of life is going downhill for quiet some time for the majority masked by asset Ponzis blown up by central banks.
Whilst i agree with the article and detest the appalling Wilson, the accessing of superannuation to contribute to purchasing a house has real merit. It is precisely what is allowed in Singapore which has the highest rate of home ownership in Asia. No doubt Timid Tony captive to the industry funds and the banks will reject the proposal despite it having real legs as an election winner.
The idea has no merit at all – unless that is you look at super policy as providing a simplistic, false binary slogan to win an election, whilst at the same time furthering a key long term goal of the coalition/IPA which is to destroy the dreaded industry super funds and their growing financial muscle. Wilson could not give a toss about workers wanting to buy houses, other than as fodder for his propaganda, and the amounts that workers have in their super would probably not even cover the stamp duty these days. Its a con. The aim should be to provide housing AND adequate super for retirement – not one or the other but not both.
I think you may have meant – “not one or the other but both”.
I did – cheers Ray.
Well heaven forbid that Labor could win an election with a simple slogan. “Its Time” ring a bell? I couldnt give a flying toss about industry funds or any super funds or the banks. My only concern is the welfare of the battlers, particularly the young people struggling to raise a deposit. Perhaps they should wait for a complete reconstruction of Australian capitalism and a massive social housing building program. Mate you cant even win an election with Tony and the Easybeats much less restructure the housing market. They will be my age when the ALP finally gets around to achieving social justice at this rate. So the kids wait for the revolution led by Albo? They should be able to access some of their super NOW. By the way, putting the future of young workers in their own home is morally and economically preferable to sinking it into the equity markets. Why not put it to a vote of those whose hard earned income is sunk in the equity market? I know the idea of worker democracy struck a visceral fear in the hearts of little Billy Kelty and Keating. Keating brought negative gearing back in 1987 when he was Treasurer. But put it to the contributors. And thanks for the lecture on social justice and ALP “socialism”. Always handy for someone who has spent about fifty years as a job delegate, union official and social activist. Much appreciated.
Are you sure you are responding to right post? I didn’t mention restructuring the housing market, don’t recall providing a lecture on social justice or mentioning the ALP or Albanese. I talked about Freedom Boy creating a false dichotomy between either having super or having a house and that “house or super” will be a handy slogan to get the LNP back into government. If you think Tim Wilson, IPA commisar in the house of reps, hard line libertarian capitalist spruiker and Peninsula Grammar School hall of famer is the answer to working class kids going somewhere, other than into further poverty, then you might have wasted that fifty years.
You implied it. And if you think i support Tim Wilson you are dimmer than your post first appeared. I dont need my class consciousness raised. I was stating a fairly obvious point that young people need assistance now to provide a roof over their heads in a brutal capitalist market. The issue is whether working class Australians should have the RIGHT to direct their money into their own housing. I am sure your puerile pamphlet politics will be a big help. By the way i answer as i please.
It is not “precisely what is allowed in Singapore”. High rates of home ownership in Singapore have absolutely nothing to do with access to superannuation, and everything to do with their ubiquitous and hugely successful public housing strategy.
Well it is “precisely” what is allowed. The Central Provident Fund is a fund for health care, retirement incomes and housing needs. There are three funds held by the CFPB. The largest Fund the Ordinary Account (OA) does allow investment in residential housing.
“Ordinary Account (OA)
Savings from contributions accumulated in the Ordinary Account may be used to buy
residential and non-residential property as well as approved assets and
insurance funds. The account balance can also be used to cover education
costs and can be redirected to affiliated accounts.”
Try this link champ. Its always handy to do some research before you post here. People actually reply.
https://www.pensionfundsonline.co.uk/content/country-profiles/singapore/101