News from the front desk: Issue No 335 – On why we decided to hold a Flash Forum on housing affordability
The Fifth Estate | 19 April 2017
Our Flash Forum on 2 May. Like so many of the big issues we’ve jumped into during our eight years, this one started with a massive need.
Decent housing. A basic human right, now out of reach of many young people and a growing number of older people as well, especially in Sydney and Melbourne. Housing is essential to the social equity we need to fight climate change, and for creating the vibrant economy we need to power that fight.
Our Surround Sound last year, Let’s Hack Housing, now looks like a precursor for the one of the biggest media blitzes in living memory.
Every day there is a new salvo on how to fix the issue of affordability, fired from the front pages of major newspapers, the opinion pages and often several pages in between.
Each solution seems matched by an equal number of passionate calls to desist lest this solution or that wrecks the very thing it was intended to save.
Negative gearing tweaks – yes, no. Rich people only benefit, no wait, poor people use it too. Superannuation, let’s tap it: great investment for your old age. No, wait – anything that puts more money in the hands of the buyers will push up prices.
So how about we bring all the solutions we can think of into a common space and let some of Australia’s best experts debate the merits. And let’s invite a bunch of people to chip in, debate, add to the thinking.
Let’s give it a structure.
Let’s get a great moderator, someone who won’t be fooled by the short memories and vested interests dominating the debate and is respected by all (Rob Harley, ex property editor AFR), someone who understands the economy and how the property industry intersects with it (John Daley, CEO Grattan Institute).
Let’s get the input of someone who gets the property industry backwards and the impact tax policies can have on it (Adrian Harrington, AHURI board member, Fund Manager Folkestone) and someone who gets the whole kit and caboodle but also cares about the impacts of all these things on the planet and sustainability in its broad sense (Nicki Hutley, Chief Economist Urbis.)
Let’s ask Louis Christopher, owner SQM Research, to reality check the prices and potential impact of the “solutions”.
Then let’s try to bring the debate together to craft some ordered policy of measures that could work.
And hand the whole thing to federal Treasurer Scott Morrison. Yes it might (or might not be) too late to shape the final outcome of any measures included in the budget a week later on 9 May, but there is always the potential for a mini-budget, the budget after or special measures.
This problem is not going away in a hurry.
Our game plan is a tight structure so that all the issues are given a weighted airing (we’ll be tweaking that in the next two weeks).
We’ll ask our readers and audience to send in ideas and questions in advance, Q&A style, so we can add to the depth and breadth of debate.
In a briefing this week with Rob Harley, we’ve come up with an initial list.
Here’s the list:
- Prices – Why do house prices matter? What’s the impact of sharp downturns in prices on the financial system and potential creation of a two-tier owners and renters society.
- Negative gearing and capital gains tax. Can it/should it be tweaked? Eliminated? Can we regionalise changes to negative gearing and capital gains tax? Melbourne and Sydney are hugely expensive but not other places.
- Interest rates. How likely is a rise? What impact would it have? Can macro prudential restrictions perform as de facto interest rates changes? (Such as limiting interest only loans or investment lending by banks.)
- Housing Bonds. What about a Housing Finance Affordability Corporation to aggregate money for social housing projects. The Treasurer seems keen on this.
- Immigration. Louis Christopher says we’re getting 90,000 people a year into Sydney and 120,000 into Melbourne. Sydney is headed for 5 million and Melbourne is headed for 4.6 million.
- Wealthy migrants. What’s their impact on housing prices?
- Foreign buyers. Should we have bigger taxes on foreign buyers? What happened in Vancouver when they put a tax on foreign buyers? (Buyers moved elsewhere and pushed up prices. Would we care if that happened to, say, Adelaide or Hobart?)
- Empty apartments. Can we tax them? (How are we going to put fair metrics on that? Would a long overseas sojourn be taxed?)
- Value capture? Can’t that fund affordable housing?
- Supply. Every developer’s answer. But will it help affordability? Would even double the supply actually bring down prices in any place people actually wanted very much to live?
- Boosts to buying power – Superannuation or stamp duty cuts. What about a last home buyer stamp duty reduction for downsizers? Or other changes?
- Pension tests. Imagine if you could sell the family home and keep the money out of the pension test. Would that help supply?
- Land tax. Can that replace stamp duty? Should it?
- Developer charges. What’s the impact or fairness of developer charges.
- Affordable housing contribution in all new developments. Inclusionary zoning.
- Rental. What about creating a safe secure rental market.
Phew, no wonder many of us are as confused as the daily newspaper reports.
No wonder the Treasurer can’t help but get things wrong, miss opportunities, use the wrong levers with all those unintended consequences. And is otherwise bound to disappoint. Tough gig. No easy answers.
We get that. We can all be wrong. But let’s do the very best we can.