Where or where have the likes of great Labor leaders like Hawke and Keating gone? We now have a bunch of followers and reporters. The report on what is happening to their economy and how it immediately affects how much they can spend. What we need is structural reform to address our greatest economic mistake, housing affordability for owner occupiers. We’ve been headed down this path for a while with a succession of useless Treasurers and the current one is no better and arguably worse as the problem is now very clear.

Somehow we have got locked into interest rates as though it has something to do with the problem. It’s not the problem because they are so low it is affecting the ability of hard working tax payers to avoid welfare in their retirement. The problem is housing costs too much because the cost of housing has risen at as much faster rate the wages. Lowering interest rates doesn’t make housing cheaper and arguably pushes it up because the problem is supply where supply is affected by an unjustifiable increase in the number of owner occupiers’ looking for housing plus the fact that they need to compete with tax payer backed property investors. Decreasing interest rates increases the competition from property investors. Wages growth also isn’t the answer as it also grows the wages of all the people involved in building a house.

I guess we shouldn’t be surprised when we have articles like this one that report on the mumblings of the Treasurer as though he actually has some interest/ability in guiding the economy.

Don’t be fooled into thinking wages growth and controlling inflation will make any significant difference to the housing crisis.

We need to increase supply of affordable houses. Building more new houses at the current price is not the answer as they are already too expense. We need to decrease competition by limiting any increase in the owner occupiers, reduce the property investors in the market and convert rented properties into owner occupied properties.

It’s also worth pulling apart the concept of we need immigration to drive taxes as people like to say cut immigration and we’ll be poorer as government will lose revenue. Well, that is just an admission the governments cannot budget properly and rely on estimates of future revenue from immigration to balance the books. (aka provide a surplus). If the Treasurer budgeted so that he wasn’t relying on taxes from immigration then that argument would go away. That’s the problem. Joining the dots, the government is deliberately making the housing crisis worse through immigration as it relies on the estimated tax revenue from immigration. We need fundamental tax reform moving away from a reliance on income taxes which is currently structured as a disincentive to earn more. We need to earn more to do something as simple as buy a house. We should also make things like income from property investment a net positive to the tax payer.