Adjournment – Housing, 8 February, 2023
Senator BABET (Victoria—United Australia Party Whip) (19:49): Today I rise to speak about government intervention in the housing market. As senators we are elected to improve the lives of every single Australian man, woman and child. The pandemic housing bubble and subsequent loss-making construction boom are perfect examples of how government intervention, no matter how well intentioned, ultimately makes things a whole lot worse.
During 2020 our federal government panicked. It acted out of fear and decided to throw everything, including the kitchen sink, at our economy. Their excessive and often unchecked spending was a reaction to pressure from both domestic and international forces, who were united in their campaign to break every single rule in our tried-and-tested pandemic handbook. JobKeeper, JobSeeker, and construction and renovation grants are key examples of the waste, which total hundreds of billions of dollars.
The housing sector, obviously, was the immediate beneficiary. Combined grants provided by federal and state governments totalled up to $55,000 in some cases. That’s $55,000 of hard-earned taxpayer money being gifted to a select few people. Anyone—anyone—with a basic understanding of economics knows that handing out large sums of money will destabilise and manipulate the market. That’s obvious. To make matters worse, many of these grants were conditional upon recipients borrowing an excessive amount of extra money from their lenders at a time of record low interest rates.
The government effectively used the Australian people as pawns—that’s what they did—to bail out our economy in the very short term. Fast-forward a few months, and we began to see both land and build costs skyrocket. A year later we saw massive workforce shortages, and two years later we saw unchecked inflation, leading to a construction sector overwhelmed with work and going broke due to combined inflationary pressures, materials and worker shortages. These issues were created not by the pandemic but by the former government’s unnatural reaction to the pandemic.
The United Australia Party took to the election a platform of lower taxes, lower government debt—a focus which should, if I’m honest, be bipartisan in our democratic nation. Our fiscal policies were based on the known macroeconomic consequences of government debt accumulation. Empirical evidence shows that a more sustained public debt accumulation will lead to long-term interest rate rises. Never again can our country run up such an irresponsible amount of debt like the former government ran up. We know that it is our children and our children’s children who will be left to service this debt, and by then the cost of these funds will almost certainly be more expensive, which will lead to higher tax rates just to pay the bill on the interest.
Our states also have their thinking upside down. In my home state of Victoria, developers are going to be hit with a windfall gains tax, a massive 62.5 per cent, on all property over $100,000 that is rezoned. None of these measures do anything to help struggling Aussies achieve the dream of homeownership. Every dollar that the government injects into the housing market manipulates the natural cycle. Every new tax imposed on builders, developers and investors reduces supply.
The answer is actually very simple: less stimulus, lower taxes. If governments remove financial barriers, the market will naturally provide adequate supply at a price acceptable to consumers. For too long, the focus has been on government incentivising the demand side of the equation with taxpayer money. It’s time to focus on the supply side. The most effective way to increase supply in the market is to reduce taxes, levies and duties which stand in the way of progress. Government dictates and socialist ideology will not solve our housing supply problem. Government must instead focus on bringing down barriers. Only then can the market meet demand.