April 14, 2025 • 16 mins
The Australian government and opposition party have both announced policies to address the country's housing crisis, with young people in particular priced out of the market.
Labor say they want to drop deposits for mortgages to buy a home to five per cent, while the Coalition want to make mortgage repayments tax deductable.
In an early release episode, Brendan Coates, who is the Grattan Institute's housing and economic security program director, talks through these policies and which could boost housing supply and home ownership.
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S1 (00:01):
From the newsrooms of the Sydney Morning Herald and The Age.
This is the morning edition. I'm Samantha Selinger Morris. It's Monday,
April 14th. The housing crisis has become the issue of
the federal election. And young Australians have been telling us
for years of their desperation and resignation over home ownership.
(00:25):
What is the point of trying hard at whatever they do?
And should they even have kids? They've wondered if they'll
never be able to own a home, no matter how
tiny in the city of their choice. They've long been
priced out of the market. Today, Brendan Coates, the housing
and economic security program director at the Grattan Institute on
the housing policy proposals newly set out by the government
(00:48):
and the coalition and which is most likely to boost
housing supply without raising prices even further. So, Brendan, first
of all, welcome to the Morning Edition. I'm so excited
to have you here. And first up, I'm hoping you
can just tell us about these new housing policies that
(01:10):
have been announced by both the government and the opposition.
S2 (01:13):
Sure. So if we start with the coalition first. So
the federal opposition, what they are proposing is to make
mortgage payments tax deductible for first home buyers that purchase
a newly built home.
S3 (01:26):
In this cost of living election, both parties using their
big moment to announce big changes to the cost of housing, so.
S2 (01:32):
People will be able to deduct the first $650,000 of
their home that they buy or the loan, provided that
they're earning less than $175,000 as a single or $250,000
as a couple. So this will put more money in
the pockets of first home buyers.
S3 (01:46):
Peter Dutton announcing interest payments of first home buyers would
be tax deductible for five years, means tested, and for
loans of $650,000 or less.
S4 (01:56):
I will be a prime Minister who restores the dream
of home ownership.
S2 (02:00):
But, you know, this is a policy that really, frankly,
no serious economist had been calling for ahead of time.
You know, we don't have mortgage deductibility in Australia because
we're not being taxed on the, you know, on the
capital gains for the homes. And no one is proposing
doing that. So this is a policy that will boost
house prices. It may help some people into the housing market,
(02:24):
but it's pretty regressive. You know if you're a high
income earner, if you're on the top tax rate, you know,
over five years, the policy's worth $87,000 to you. If
you borrow the full $650,000, whereas if you're a low
income earner, say you're on 60,000 and you only borrow
two $50,000, then the value is worth $23,000. So it's
basically first home buyers grant on steroids, focused on wealthier
(02:49):
Australians who are likely to already buy houses.
S1 (02:53):
Okay, so that doesn't sound great so far. So let's
go to labor. Tell us. Tell us what labor is proposing.
S2 (02:58):
You could call this, in a sense, a pox on
both their houses, right? Labor's policies essentially extending an existing scheme.
The first home guarantee scheme, which guarantees 15% of the
value of the mortgage, which means that people can buy
a house with only a 5% deposit and avoid lender's
mortgage insurance. And that's worth for the average first time buyer,
about $23,000.
S3 (03:16):
All first home buyers can purchase with just a 5%
deposit under Labor's plan, with the government acting as guarantor.
S5 (03:24):
No competition from property investors, just a fair crack for
young Australians.
S2 (03:29):
There's currently income thresholds of $125,000 for singles, or 200,000
for couples. They're going to go and they're going to
boost the house price caps as well. So you could
buy a house worth up to $1.5 million in Sydney
and correspondingly lower values in other capitals. Now, the government
expects this to lead to 80,000 more first home buyers,
or 80,001st home buyers in total using the scheme. So
that's another 30 to 40,000 beyond where we are today.
(03:51):
But again, we're talking about boosting a policy that's going
to mainly help high income earners to buy a house
who are going to buy anyway, because those lower income
earners that struggle to buy and, you know, first, home
ownership rates are falling fast amongst younger, poorer Australians. They're
already eligible for the scheme. So it's not really going
to shift the needle on home ownership either. It will
probably raise house prices a bit as well, although frankly
(04:14):
less than what the coalition's proposing because the coalition is
proposing extending the guaranteeing scheme and then mortgage deductibility, whereas
Labor's only extending the guarantee scheme.
S1 (04:23):
Okay. So I will want to pick through the different
proposals and I guess get get into the minutia a
little bit more in a bit. But first, just a
tiny question for you. Can you just explain what is
wrong with housing in Australia.
S2 (04:35):
So the problem with housing is it's become increasingly expensive.
You know, go back decades and a house used to
cost 3 or 4 times average incomes. Now it's, you know,
north of ten times average incomes in Sydney to buy
the average house. Um, and housing is expensive because it's scarce,
like Australia has not built enough housing to meet the
needs of a growing population. We have had faster population
growth than many countries because of immigration. But we are
(04:57):
one of only four countries in the OECD where the
number of homes per person has gone backwards over the
last two decades. And so why is that the case?
Why is housing scarce? It's because we make it really
hard to build more. So land use planning controls. So
these are the rules the states have to determine what
gets to go where. Spatially those rules are biased against change.
They make it really hard to build more housing where
(05:19):
people most want to live and where people most want
to live is in the inner and middle suburbs of
our major cities, because that's where rents and prices are highest.
That's where you can see that demand massively outstrips supply.
That's why it costs, you know, $10 million for a
house in Potts Point, because everyone would like to live there,
but no one can.
S1 (05:35):
Okay, so you've taken us through a little bit what
the government and the coalition are proposing with these housing
policies they've both brought out, but how are both sides
actually arguing that their respective policies could actually help home
buyers first? Home buyers?
S2 (05:48):
Well, they're doing that classic thing that we've seen in
every election for the last 25 years, which is basically
saying we'll put more money in the hands of first
time buyers, and that will lead to them being able
to afford a home. Um, and, you know, if we're
thinking about the individual, that may be true. But when
you give more money to everyone and we don't build
more housing, the result is more cashed up buyers competing
for the same number of homes. What does that lead to?
(06:09):
Higher prices. Uh, and not necessarily huge increase in home ownership.
In fact, home ownership has gone backwards over the last
25 years. While these kind of policies have been rolled
out by successive governments, you know, starting with first home
buyers grants with the coalition in say, say, 2001 election.
S6 (06:25):
And so what do you actually make.
S1 (06:27):
Of these policies in terms of will they actually help
at all? Because your first sort of introduction into what
they've proposed, uh, I'd say was lukewarm at best. I
think a pox on both their houses is what you said.
So will these policies help first home buyers at all?
S2 (06:42):
You know, the short answer is both policies are they're
going to raise prices, right. Because you're putting more demand
in the pockets or more money in the pockets of
first home buyers. Um, When the coalition policy will probably
raise house prices by more, because it's actually a combination
of what labor wants to do and mortgage deductibility, the
effect on home ownership. Look, it might help some people
(07:02):
into the market, but by raising prices, you're making it
harder for everyone else who doesn't use the scheme to
get in. Um, like the one saving grace is both
parties are also pushing to get more housing built. So
this is probably the first election in a while where
we're not just seeing the parties committing or competing over
first home buyers votes, but they're actually saying they're competing
over how many more homes they can build. Labor is
(07:26):
part of the announcement, said that they're going to put
$10 billion on the table, $2 billion in in grants,
8 billion in concessional loans or equity stakes to work
with state government developers that build housing. If all those
homes were truly additional, that would be enough to reduce
house prices and rents by about 2.5%. So it shows
you that more supply can work. But at the same time,
(07:47):
the coalition is actually competing along similar lines. They've pitched
previously to put $5 billion in on the table for
councils to basically meet that need for infrastructure, sewerage, water, roads.
A lot of growth councils can't afford to pay for
that because they don't have an existing rate base. Um,
the contributions they get from developers are not enough. And
(08:10):
so we have lots of examples of housing that doesn't
get built because we can't connect the pipes and the sewers.
S1 (08:16):
We'll be right back. And so how significant are those
proposals in actually helping this issue of a lack of
supply of houses.
S2 (08:28):
So those supply policies are steps in the right direction.
But it doesn't get over the fact that this is
a state problem. There's limits to what the federal government
can do to solve this. Um, you know, the most
potentially impactful thing that's happened over the last couple of
years is national cabinet agreed a target of 1.2 million homes. Now, look,
voters are sceptical about targets, about whether they're going to
(08:49):
be met. They did put $3.5 billion on the table
in incentive payments to the states. So, you know, if
the states meet those targets, they get $15,000 for home
that they build above some baseline level. That plus the
kind of things that we're seeing from both parties over
the last few weeks, would be enough to start to
shift the needle. Like if those targets were met, you
(09:10):
would expect to see house prices and rents at least 10%
lower compared to the track we're on, which is probably
only building 900,000 homes over the next five years. That's
the only way we'll make housing more affordable.
S6 (09:23):
And you mentioned just before.
S1 (09:24):
That, you know, the federal government has limitations to help
solving the housing problem. So what are those main limitations
for those of us who, like myself, are thinking, how
come the federal government just can't solve this?
S2 (09:35):
Well, we have a constitution, and that Constitution is, you know,
relatively rigid in its conception. Um, you know, it sets
really clearly what the states and the federal government's responsibilities
are and puts limits on what the feds can do.
And so planning controls what gets built where is determined
by the states. So all the federal government can do
there is really encourage the states um, with basically bribes
(09:57):
to get them to make changes that would improve things.
And there's a good case for that, because if only
one state moves on planning controls, lets more housing be built,
then it the benefit to affordability is spread across the
country because more people will probably move to that jurisdiction.
Like Sydney has been exporting its housing affordability problem to
the rest of the country for the last 30 years
(10:18):
because there's been an outbound migration of people leaving Sydney,
particularly young people, and going elsewhere because they can't afford
to buy a house in Sydney. Like, we know how
to solve this. It's just the hardest thing we've got
is we've got a world where for the federal government,
they don't control the levers that matter, and they want
to make an offering every election. And the offerings they've
got at the moment is more support for first home buyers,
because it's what they can do. Um, unfortunately, if they
(10:41):
if they control the levers that mattered, you could you
could do something more constructive. It'd just be better if
we did something that wasn't counterproductive.
S1 (10:47):
And you're saying to to actually have those levers, we'd
have to change the Constitution. Yes. Okay. And we know
how referenda go in this country.
S2 (10:54):
Yeah, yeah. The Australian Constitution is a funny one where,
you know, the founders were very confident that they knew
exactly what good government would look like and exactly what
levels of government should do what, you know, humility would
have been a great thing at the time.
S1 (11:05):
Yep.
S2 (11:06):
There are other things the feds can do, though. And
the big one is that they do control the levers
on migration. We're in a world where it's really hard
to get more housing built because we don't have the
construction workers. There are reforms the federal government could do
to make that easier, particularly making it easier to for
firms to sponsor workers to get more workers into the sector.
In New Zealand, for example, they tripled the number of
(11:29):
migrants in the construction sector in just seven years between
2012 and 2019 following the Christchurch earthquake. You can do it,
but it requires them making some tough calls. And then
just slowing the amount of infrastructure that's being built. When
I heard the other day that David Crisafulli, the Queensland Premier,
is going to build a new stadium. My immediate reaction was,
oh no, it was not great, a new stadium. It was,
(11:50):
oh no, that's 20,000 fewer workers. We're going to have
to build housing because they're going to be building this
new stadium in time for the 2032 Olympics. So the
feds can withdraw funding from the kind of projects. The
suburban rail loop in Victoria is a great example that
have really questionable benefits for big costs. Whereas we know
we need more housing, we know there's a positive business
(12:12):
case for doing that and that's what we need to prioritise.
S1 (12:15):
And so if you had to compare, you know, what
the coalition is proposing and what the government is proposing,
which best addresses the current housing problems that we've got
in Australia.
S2 (12:26):
So I'd break it down into two parts. So who's
doing more to help people into home ownership? Labor's policy
is clearly more targeted at those that otherwise won't buy.
So the Help to Buy shared equity scheme, which involves
government taking up to a 40% equity stake, is clearly
targeted at low income earners. By contrast, the coalition for
Housing Policy, where you can withdraw up to 50 grand
(12:46):
from your super to buy a house, you know that's
not much value if you don't have much super in
the first place. And those that are falling out of
home ownership don't have much. Again, the extension of the
home guarantee scheme is focused more, um, is probably better
targeted at helping those than, say, the um, the mortgage
deductibility proposal from the coalition. And then the second part
of this is well, who's going to do more on supply.
(13:09):
And so Labour is um, pushing the states to get
more housing built. So they reform those planning controls, um,
that have stopped housing. And that's having an effect in
Victorian New South Wales. There are serious reforms on the
table to allow more housing to up zone to relax
those controls, particularly in Victoria. The Victorian reforms look really promising.
New South Wales, they've scaled them back quite a bit,
(13:31):
whereas the coalition is relying more on working directly with councils,
putting money in their pockets to pay for the infrastructure.
But it's hard to see how they can do that
in a way that they won't end up paying for
things that, frankly, the councils wanted to do anyway. That's
always that question of additionality. Did you unlock extra homes,
or did the councils all just put in bids for
the things they were going to do anyway, and have
(13:52):
the feds pay for it? So, and the coalition policy
is obviously more focused on greenfields and less on established homes.
The reality is we need both. We want housing choice.
Some people want to live close to the city. They're
happy to accept a townhouse or an apartment. In fact,
one third of Melbourne and Sydney's housing stock is already
townhouses and apartments, whereas others, they want it going to
(14:13):
want a house on the urban fringe, a house and
land package. We should allow that to happen as well.
But we want to give people choice because that's only
when housing is abundant. Is it going to be affordable?
S1 (14:23):
Now, Brendan, I do have one last question for you,
which is, is there another country that we should be
looking to that our government perhaps should be looking to
as to, well, they're doing it better. Is this uniquely Australian,
this problem or have other countries sort of figured it
out and there's something maybe we should even copy.
S2 (14:40):
So there are a lot of the problems we have
are common across any country. That was, um, you know,
once an outpost of the British Empire, which unfortunately is
a lot of the world. Um, but particularly Canada, the
United States, you know, New Zealand, England itself, or Great
Britain itself, all have this same planning scheme, this planning system.
The one country that's done more than anyone else, though,
(15:00):
is New Zealand, because Auckland in 2016, they up zoned
three quarters of the land area of the city. It
used to all look like my street. You couldn't subdivide anything. Um,
within six years they'd added the equivalent of 4% of
the dwelling stock above and beyond what you'd expect. Uh,
you know, rents were down 25% compared to where they
otherwise would be. And it's actually cheaper to rent a
(15:22):
place in Auckland now than what it was in 2016,
where across New Zealand as a whole, it's up 20%.
That was mainly done by just allowing gentle density townhouses
2 to 3 storeys, the kind of policy we should
all be allowing across our cities. And I think that's
the strongest evidence we have for if we wanted to
make housing more affordable, we could.
S1 (15:46):
Well, Brendan, thank you so much for your time.
S2 (15:49):
Thanks very much.
S1 (15:55):
Today's episode of The Morning Edition was produced by Tammy Mills,
with technical assistance by Josh towers. Tom Mackendrick is our
head of audio. To listen to our episodes as soon
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(16:17):
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Links are in the show. Notes. I'm Samantha Selinger. Morris.
Thanks for listening.
From the newsrooms of the Sydney Morning Herald and The Age.
This is the morning edition. I'm Samantha Selinger Morris. It's Monday,
April 14th. The housing crisis has become the issue of
the federal election. And young Australians have been telling us
for years of their desperation and resignation over home ownership.
(00:25):
What is the point of trying hard at whatever they do?
And should they even have kids? They've wondered if they'll
never be able to own a home, no matter how
tiny in the city of their choice. They've long been
priced out of the market. Today, Brendan Coates, the housing
and economic security program director at the Grattan Institute on
the housing policy proposals newly set out by the government
(00:48):
and the coalition and which is most likely to boost
housing supply without raising prices even further. So, Brendan, first
of all, welcome to the Morning Edition. I'm so excited
to have you here. And first up, I'm hoping you
can just tell us about these new housing policies that
(01:10):
have been announced by both the government and the opposition.
S2 (01:13):
Sure. So if we start with the coalition first. So
the federal opposition, what they are proposing is to make
mortgage payments tax deductible for first home buyers that purchase
a newly built home.
S3 (01:26):
In this cost of living election, both parties using their
big moment to announce big changes to the cost of housing, so.
S2 (01:32):
People will be able to deduct the first $650,000 of
their home that they buy or the loan, provided that
they're earning less than $175,000 as a single or $250,000
as a couple. So this will put more money in
the pockets of first home buyers.
S3 (01:46):
Peter Dutton announcing interest payments of first home buyers would
be tax deductible for five years, means tested, and for
loans of $650,000 or less.
S4 (01:56):
I will be a prime Minister who restores the dream
of home ownership.
S2 (02:00):
But, you know, this is a policy that really, frankly,
no serious economist had been calling for ahead of time.
You know, we don't have mortgage deductibility in Australia because
we're not being taxed on the, you know, on the
capital gains for the homes. And no one is proposing
doing that. So this is a policy that will boost
house prices. It may help some people into the housing market,
(02:24):
but it's pretty regressive. You know if you're a high
income earner, if you're on the top tax rate, you know,
over five years, the policy's worth $87,000 to you. If
you borrow the full $650,000, whereas if you're a low
income earner, say you're on 60,000 and you only borrow
two $50,000, then the value is worth $23,000. So it's
basically first home buyers grant on steroids, focused on wealthier
(02:49):
Australians who are likely to already buy houses.
S1 (02:53):
Okay, so that doesn't sound great so far. So let's
go to labor. Tell us. Tell us what labor is proposing.
S2 (02:58):
You could call this, in a sense, a pox on
both their houses, right? Labor's policies essentially extending an existing scheme.
The first home guarantee scheme, which guarantees 15% of the
value of the mortgage, which means that people can buy
a house with only a 5% deposit and avoid lender's
mortgage insurance. And that's worth for the average first time buyer,
about $23,000.
S3 (03:16):
All first home buyers can purchase with just a 5%
deposit under Labor's plan, with the government acting as guarantor.
S5 (03:24):
No competition from property investors, just a fair crack for
young Australians.
S2 (03:29):
There's currently income thresholds of $125,000 for singles, or 200,000
for couples. They're going to go and they're going to
boost the house price caps as well. So you could
buy a house worth up to $1.5 million in Sydney
and correspondingly lower values in other capitals. Now, the government
expects this to lead to 80,000 more first home buyers,
or 80,001st home buyers in total using the scheme. So
that's another 30 to 40,000 beyond where we are today.
(03:51):
But again, we're talking about boosting a policy that's going
to mainly help high income earners to buy a house
who are going to buy anyway, because those lower income
earners that struggle to buy and, you know, first, home
ownership rates are falling fast amongst younger, poorer Australians. They're
already eligible for the scheme. So it's not really going
to shift the needle on home ownership either. It will
probably raise house prices a bit as well, although frankly
(04:14):
less than what the coalition's proposing because the coalition is
proposing extending the guaranteeing scheme and then mortgage deductibility, whereas
Labor's only extending the guarantee scheme.
S1 (04:23):
Okay. So I will want to pick through the different
proposals and I guess get get into the minutia a
little bit more in a bit. But first, just a
tiny question for you. Can you just explain what is
wrong with housing in Australia.
S2 (04:35):
So the problem with housing is it's become increasingly expensive.
You know, go back decades and a house used to
cost 3 or 4 times average incomes. Now it's, you know,
north of ten times average incomes in Sydney to buy
the average house. Um, and housing is expensive because it's scarce,
like Australia has not built enough housing to meet the
needs of a growing population. We have had faster population
growth than many countries because of immigration. But we are
(04:57):
one of only four countries in the OECD where the
number of homes per person has gone backwards over the
last two decades. And so why is that the case?
Why is housing scarce? It's because we make it really
hard to build more. So land use planning controls. So
these are the rules the states have to determine what
gets to go where. Spatially those rules are biased against change.
They make it really hard to build more housing where
(05:19):
people most want to live and where people most want
to live is in the inner and middle suburbs of
our major cities, because that's where rents and prices are highest.
That's where you can see that demand massively outstrips supply.
That's why it costs, you know, $10 million for a
house in Potts Point, because everyone would like to live there,
but no one can.
S1 (05:35):
Okay, so you've taken us through a little bit what
the government and the coalition are proposing with these housing
policies they've both brought out, but how are both sides
actually arguing that their respective policies could actually help home
buyers first? Home buyers?
S2 (05:48):
Well, they're doing that classic thing that we've seen in
every election for the last 25 years, which is basically
saying we'll put more money in the hands of first
time buyers, and that will lead to them being able
to afford a home. Um, and, you know, if we're
thinking about the individual, that may be true. But when
you give more money to everyone and we don't build
more housing, the result is more cashed up buyers competing
for the same number of homes. What does that lead to?
(06:09):
Higher prices. Uh, and not necessarily huge increase in home ownership.
In fact, home ownership has gone backwards over the last
25 years. While these kind of policies have been rolled
out by successive governments, you know, starting with first home
buyers grants with the coalition in say, say, 2001 election.
S6 (06:25):
And so what do you actually make.
S1 (06:27):
Of these policies in terms of will they actually help
at all? Because your first sort of introduction into what
they've proposed, uh, I'd say was lukewarm at best. I
think a pox on both their houses is what you said.
So will these policies help first home buyers at all?
S2 (06:42):
You know, the short answer is both policies are they're
going to raise prices, right. Because you're putting more demand
in the pockets or more money in the pockets of
first home buyers. Um, When the coalition policy will probably
raise house prices by more, because it's actually a combination
of what labor wants to do and mortgage deductibility, the
effect on home ownership. Look, it might help some people
(07:02):
into the market, but by raising prices, you're making it
harder for everyone else who doesn't use the scheme to
get in. Um, like the one saving grace is both
parties are also pushing to get more housing built. So
this is probably the first election in a while where
we're not just seeing the parties committing or competing over
first home buyers votes, but they're actually saying they're competing
over how many more homes they can build. Labor is
(07:26):
part of the announcement, said that they're going to put
$10 billion on the table, $2 billion in in grants,
8 billion in concessional loans or equity stakes to work
with state government developers that build housing. If all those
homes were truly additional, that would be enough to reduce
house prices and rents by about 2.5%. So it shows
you that more supply can work. But at the same time,
(07:47):
the coalition is actually competing along similar lines. They've pitched
previously to put $5 billion in on the table for
councils to basically meet that need for infrastructure, sewerage, water, roads.
A lot of growth councils can't afford to pay for
that because they don't have an existing rate base. Um,
the contributions they get from developers are not enough. And
(08:10):
so we have lots of examples of housing that doesn't
get built because we can't connect the pipes and the sewers.
S1 (08:16):
We'll be right back. And so how significant are those
proposals in actually helping this issue of a lack of
supply of houses.
S2 (08:28):
So those supply policies are steps in the right direction.
But it doesn't get over the fact that this is
a state problem. There's limits to what the federal government
can do to solve this. Um, you know, the most
potentially impactful thing that's happened over the last couple of
years is national cabinet agreed a target of 1.2 million homes. Now, look,
voters are sceptical about targets, about whether they're going to
(08:49):
be met. They did put $3.5 billion on the table
in incentive payments to the states. So, you know, if
the states meet those targets, they get $15,000 for home
that they build above some baseline level. That plus the
kind of things that we're seeing from both parties over
the last few weeks, would be enough to start to
shift the needle. Like if those targets were met, you
(09:10):
would expect to see house prices and rents at least 10%
lower compared to the track we're on, which is probably
only building 900,000 homes over the next five years. That's
the only way we'll make housing more affordable.
S6 (09:23):
And you mentioned just before.
S1 (09:24):
That, you know, the federal government has limitations to help
solving the housing problem. So what are those main limitations
for those of us who, like myself, are thinking, how
come the federal government just can't solve this?
S2 (09:35):
Well, we have a constitution, and that Constitution is, you know,
relatively rigid in its conception. Um, you know, it sets
really clearly what the states and the federal government's responsibilities
are and puts limits on what the feds can do.
And so planning controls what gets built where is determined
by the states. So all the federal government can do
there is really encourage the states um, with basically bribes
(09:57):
to get them to make changes that would improve things.
And there's a good case for that, because if only
one state moves on planning controls, lets more housing be built,
then it the benefit to affordability is spread across the
country because more people will probably move to that jurisdiction.
Like Sydney has been exporting its housing affordability problem to
the rest of the country for the last 30 years
(10:18):
because there's been an outbound migration of people leaving Sydney,
particularly young people, and going elsewhere because they can't afford
to buy a house in Sydney. Like, we know how
to solve this. It's just the hardest thing we've got
is we've got a world where for the federal government,
they don't control the levers that matter, and they want
to make an offering every election. And the offerings they've
got at the moment is more support for first home buyers,
because it's what they can do. Um, unfortunately, if they
(10:41):
if they control the levers that mattered, you could you
could do something more constructive. It'd just be better if
we did something that wasn't counterproductive.
S1 (10:47):
And you're saying to to actually have those levers, we'd
have to change the Constitution. Yes. Okay. And we know
how referenda go in this country.
S2 (10:54):
Yeah, yeah. The Australian Constitution is a funny one where,
you know, the founders were very confident that they knew
exactly what good government would look like and exactly what
levels of government should do what, you know, humility would
have been a great thing at the time.
S1 (11:05):
Yep.
S2 (11:06):
There are other things the feds can do, though. And
the big one is that they do control the levers
on migration. We're in a world where it's really hard
to get more housing built because we don't have the
construction workers. There are reforms the federal government could do
to make that easier, particularly making it easier to for
firms to sponsor workers to get more workers into the sector.
In New Zealand, for example, they tripled the number of
(11:29):
migrants in the construction sector in just seven years between
2012 and 2019 following the Christchurch earthquake. You can do it,
but it requires them making some tough calls. And then
just slowing the amount of infrastructure that's being built. When
I heard the other day that David Crisafulli, the Queensland Premier,
is going to build a new stadium. My immediate reaction was,
oh no, it was not great, a new stadium. It was,
(11:50):
oh no, that's 20,000 fewer workers. We're going to have
to build housing because they're going to be building this
new stadium in time for the 2032 Olympics. So the
feds can withdraw funding from the kind of projects. The
suburban rail loop in Victoria is a great example that
have really questionable benefits for big costs. Whereas we know
we need more housing, we know there's a positive business
(12:12):
case for doing that and that's what we need to prioritise.
S1 (12:15):
And so if you had to compare, you know, what
the coalition is proposing and what the government is proposing,
which best addresses the current housing problems that we've got
in Australia.
S2 (12:26):
So I'd break it down into two parts. So who's
doing more to help people into home ownership? Labor's policy
is clearly more targeted at those that otherwise won't buy.
So the Help to Buy shared equity scheme, which involves
government taking up to a 40% equity stake, is clearly
targeted at low income earners. By contrast, the coalition for
Housing Policy, where you can withdraw up to 50 grand
(12:46):
from your super to buy a house, you know that's
not much value if you don't have much super in
the first place. And those that are falling out of
home ownership don't have much. Again, the extension of the
home guarantee scheme is focused more, um, is probably better
targeted at helping those than, say, the um, the mortgage
deductibility proposal from the coalition. And then the second part
of this is well, who's going to do more on supply.
(13:09):
And so Labour is um, pushing the states to get
more housing built. So they reform those planning controls, um,
that have stopped housing. And that's having an effect in
Victorian New South Wales. There are serious reforms on the
table to allow more housing to up zone to relax
those controls, particularly in Victoria. The Victorian reforms look really promising.
New South Wales, they've scaled them back quite a bit,
(13:31):
whereas the coalition is relying more on working directly with councils,
putting money in their pockets to pay for the infrastructure.
But it's hard to see how they can do that
in a way that they won't end up paying for
things that, frankly, the councils wanted to do anyway. That's
always that question of additionality. Did you unlock extra homes,
or did the councils all just put in bids for
the things they were going to do anyway, and have
(13:52):
the feds pay for it? So, and the coalition policy
is obviously more focused on greenfields and less on established homes.
The reality is we need both. We want housing choice.
Some people want to live close to the city. They're
happy to accept a townhouse or an apartment. In fact,
one third of Melbourne and Sydney's housing stock is already
townhouses and apartments, whereas others, they want it going to
(14:13):
want a house on the urban fringe, a house and
land package. We should allow that to happen as well.
But we want to give people choice because that's only
when housing is abundant. Is it going to be affordable?
S1 (14:23):
Now, Brendan, I do have one last question for you,
which is, is there another country that we should be
looking to that our government perhaps should be looking to
as to, well, they're doing it better. Is this uniquely Australian,
this problem or have other countries sort of figured it
out and there's something maybe we should even copy.
S2 (14:40):
So there are a lot of the problems we have
are common across any country. That was, um, you know,
once an outpost of the British Empire, which unfortunately is
a lot of the world. Um, but particularly Canada, the
United States, you know, New Zealand, England itself, or Great
Britain itself, all have this same planning scheme, this planning system.
The one country that's done more than anyone else, though,
(15:00):
is New Zealand, because Auckland in 2016, they up zoned
three quarters of the land area of the city. It
used to all look like my street. You couldn't subdivide anything. Um,
within six years they'd added the equivalent of 4% of
the dwelling stock above and beyond what you'd expect. Uh,
you know, rents were down 25% compared to where they
otherwise would be. And it's actually cheaper to rent a
(15:22):
place in Auckland now than what it was in 2016,
where across New Zealand as a whole, it's up 20%.
That was mainly done by just allowing gentle density townhouses
2 to 3 storeys, the kind of policy we should
all be allowing across our cities. And I think that's
the strongest evidence we have for if we wanted to
make housing more affordable, we could.
S1 (15:46):
Well, Brendan, thank you so much for your time.
S2 (15:49):
Thanks very much.
S1 (15:55):
Today's episode of The Morning Edition was produced by Tammy Mills,
with technical assistance by Josh towers. Tom Mackendrick is our
head of audio. To listen to our episodes as soon
as they drop, follow the Morning Edition on Apple, Spotify,
or wherever you listen to podcasts. Our newsrooms are powered
by subscriptions, so to support independent journalism, visit The Age
(16:17):
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Links are in the show. Notes. I'm Samantha Selinger. Morris.
Thanks for listening.
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