The federal government’s Help to Buy scheme is before the Parliament. Both the Coalition and the Greens are opposed to it.
If the bill is passed, the government will provide an equity contribution of up to 40% of the purchase price of a new home, and up to 30% for an existing dwelling, with buyers needing a minimum deposit of 2%.
Participants will be restricted to buying cheaper-than-average homes — no more than $900,000 in Sydney and $800,000 in Melbourne, with lower caps in other capital cities and the regions.
It’s a limited scheme: 10,000 places will be offered each year.
Here’s why it is a good idea.
Help to Buy is a piece of the housing puzzle
The Help to Buy scheme is similar to a scheme the Grattan Institute recommended in 2022.
Help to Buy would help level the playing field when it comes to buying a home, which is slipping out of reach for many Australians, largely because it takes much longer these days to save for a deposit.
In the early 1990s it took the average Australian about seven years to save a 20% deposit for a typical dwelling. Now it takes almost 12 years. Unsurprisingly, a growing proportion of Australians now rely on the “Bank of Mum and Dad” to buy a home.
Help to Buy could be particularly helpful for older renters who do have a deposit but who won’t be in the workforce long enough to pay off a home by the time they retire.
Many older Australians were never able to break into the market as prices far outstripped incomes. Others have found it too hard to get back in after losing the home after a separation. Less than half of women who separate from their partner and lose the house manage to purchase another within 10 years.
Today’s older renters risk joining tomorrow’s renting retirees, nearly half of whom already live in poverty. Help to Buy offers them a pathway back to home ownership and a more secure retirement.
Even if federal and state governments adopt much-needed reforms to boost housing supply and reduce demand, house prices are likely to remain high relative to incomes.
But rent to buy can be improved
Beyond these benefits, there are drawbacks to the government’s plan.
The income thresholds for the scheme — $90,000 for singles and $120,000 for couples — are too high. About 75% of working-age singles earn less than $90,000, and 39% of couples earn less than $120,000.
It’s hard to argue for offering the scheme to people earning above-average incomes, because they have a good chance of buying a home anyway.
Also, requiring borrowers have just a 2% deposit, rather than a minimum of 5% as we proposed, increases the risk of them falling into negative equity if house prices fall.
And the house price caps should be reduced to match those available for stamp duty concessions for first-home buyers, which typically begin phasing out in most states for homes valued above $650,000.
Better targeting the scheme in this way would mean the annual cap on the number of places could gradually be raised. The current scheme risks becoming a lottery because the income thresholds are set at such a level that many more people are eligible than the 10,000 places available each year.
The impact on house prices would be tiny
Shared equity schemes can add to house prices, by adding to housing demand. Which is why the main game remains making housing cheaper by building more of it.
But the impact on prices of this capped scheme is likely to be very small. With just 40,000 places on offer over four years, it’ll have close to zero impact on house prices in the context of Australia’s $10.3 trillion housing market.
We estimate that after four years, the 40,000 places on offer could result in overall house prices rising by about 0.016%. That would add $113 to the purchase price of a $700,000 home.
Since participants are limited to buying cheaper homes, it could have a marginally bigger impact on the homes eligible for the scheme.
If the scheme were uncapped, but better targeted as we propose, it would still only have a small impact on house prices.
Our modelling shows that for every 100,000 homes the government helps finance through the scheme, house prices would rise by 0.04%, adding $283 to the purchase price of a $700,000 home.
Parliament should pass the government’s Help to Buy scheme, because it will help some Australians to own their own home. But better still would be a more targeted scheme, which wouldn’t need to be rationed, and which would help more Australians who are struggling to own their own home.
This article first appeared in The Conversation.
Ho hum, sigh. Yet another futile bolt-on non-‘fix’, and yet another piece of anti-analytical gimcrack mysticism which somehow tries to sustain the delusion that houses can somehow be simultaneously:
It’s the kind of magicke pixie dust economics that even the Socialist Alliance wouldn’t stoop to cop.
Here’s how you fix Australia’s looming
housing marketdomestic economy catastrophe , in five electorally painful steps.Once that’s all underway, we could start stripping away all the multiple, counter-productive, gimcrack ‘solutions’ that clog up our housing market. Such as this latest utter dud. All of which, as noted, are simply desperate expressions of a bipartisan LNP/ALP pie-in-the-sky political fantasy, that houses can be made cheaper for those who don’t yet own one while also becoming more valuable for those who already do.
None of them address the supply/demand mismatch, and won’t fix the underlying problem.
Also worth noting is that most of the “problems” around the tax-related issues are irrelevant without the property bubble. Nobody would be deliberately losing squillions up front to get it back later on CGT, if property were only appreciating in line with inflation.
Fix the bubble by fixing supply/demand mismatch (lower immigration & build more) and substantially tightening up lending (so that when there’s periods of too much demand or not enough supply, easy credit doesn’t send prices skyrocketing).
But any “solution” to the housing market inescapably means an absolutely epic (50-80%, depending on location) real reduction in the price/value of housing, which will be absolutely catastrophic in the short (and probably medium) term, albeit potentially very beneficial long term. It is unclear whether the Greens’ superficial desire to actually do this indicates they don’t understand the consequences, or are simply axe-crazy and willing to sacrifice the party to achieve it.
Nah, there is no great net supply problem that removing the demand side distortions won’t unkink fairly quickly. The price bubble – and it’s only in self-perpetuating Ponzi hotspots, nb – is mostly a function of the fact that serious investors (who drive the bubbles) are chasing the combined lure of rapid asset growth and income tax offset elements of housing investment, not any sustained rental income. That’s why so many properties are vacant and That is also why there appears to be a supply shortage: not so much absolute numbers as the type/kind/locale of supply stock is what has become disconnected from real market needs.
Do agree that there will be huge price drops and a lot of electoral pain. Whether we decide to try to control the change back to progressive (ie more accurately anti-regressive) housing policy and so minimise the human costs…or just (as I suspect) do nothing and let uncontrolled catastrophe come to us.
There is.
To use an easy example, just immigration last year (never mind natural growth and knockdown/rebuilds) consumed not only more housing than was built, but would have consumed as much housing as was built in the biggest year for housing construction on record.
This has nothing to do with the tax-based “demand side distortions” you are talking about. This is # of people > # of available dwellings, and is reflected particularly acutely in rental vacancy rates.
No, it’s everywhere. For example: the first house (in regional QLD) my wife bought in 2000, fresh out of Uni as an Engineer graduate cost her $60k – equivalent to slightly more than her first year’s wage.
That same house today is “worth” around $350k, while a graduate Engineer salary has increased to maybe $75k.
House prices – and it’s really land prices, not the structure – have bubbled basically everywhere that isn’t a complete ****hole (and even many of them). The graph of $/m^2 for land over the last 25 years is like a mountain. That’s why even in fringe and regional developments where land should be nearly “free” (ie: little more than the cost of making it useful) two-story houses are built eave-to-eave on tiny 400m^2 blocks along narrow streets.
Most investors (ie: the “mums and dads” – people without really high salary incomes) cannot support their investment properties without rental income. While their core strategy is capital gain, they need rental income to execute it.
The people you read about with dozens of rental properties have generally built their portfolios on houses of cards by using interest-only loans, leveraging capital growth in existing properties into deposits for new properties, and telling fibs to banks or using dodgy lenders. Almost any property they have going vacant for any length of time, or any significant unplanned expense, runs the risk of bringing their whole system crashing down.
some good points
my reply in Mod doc sorry
Quite possibly true in much of what you say.
These are all great ideas. However as @drsmithy has pointed out, that without fixing the supply/demand mismatch these fixes will only have limited success.
nope the supply/demand mismatch is a direct result of the way the demand side tax and capital gain incentives have disconnected supply from tea market needs. investors need to forced to respond to actual market buyer and rental demand, rather than just compete with each to win auctions for ‘housing tulips’: abstract entities whose artificial value pivots on their speculative and tax offsetting financial instrumentality rather than their saleable market supply attributes
there are tens of thousands of empty, near useless, near unliveable tiny box flats in our cities…yes rapidly filling with foreign students and new arrivals but that’s fairly recent…our supply/demand equation became unhitched decades ago, all due to demand side distortions
Doc is right that immigration levels are stupidly and wilfully recklessly high though
Highly subjective or loaded statement ‘there are tens of thousands of empty, near useless, near unliveable tiny box flats in our cities‘ and using the pejorative ‘foreign student’, what does that even mean?
If you think describing international students as ‘foreign students’ is some kind of automatic pejorative, then boy do you have a serious case of projected anxiety about your own latent racism matey. not remotely interested in that kind of undergrad drivel.
ABS stats last year put the number of vacant homes at about 136,000…in Melbourne, Sydney and Brisbane LGAs alone there were 4449, 5368 and 5952 unused dwellings. That’s just one LGA….there are many developmental belt suburbs in those capital cities where rapid expansion in small, cheap and fast-build flats has been staggering across the last decade plus.
Obtaining an accurate picture of exactly what investors are doing – in terms of reciprocating housing stock value – with all the generous tax subsidy we grant them is being made even more difficult than ever by the advent of the short stay rental market.
Many many man ‘landlords’ make their CG and tax break speculative Ponzi tulip-houses only nominally available for rent, in order to get the tax breaks. You can confirm this anecdotally just by walking around the high rise development belts of our main cities. It’s also why local and state governments are often so sloppy about providing amenity infrastructure for the new development sprawls. There’s no real pressure from developers, who often don’t give a sh*t about the actual liveable amenity of their tax avoidance/asset accumulation vehicles. Up until the recent interest rate pressures…actual tenants weren’t high on their list of housing market desirable metrics.
Make even a few or a variation of those five key changes I list above, and we will very very very very very very very quickly establish a (long overdue) REAL picture of our housing market supply and demand metrics. Including the true numbers of ‘should be available’ empty dwellings, the real revenue cost of NG and CGT rebates, the true numbers of ‘ordinary mum and dad, cop, teacher and nurse’ who are geared housing investors, the true impact on the rental market of tax changes, and so on.
More brazen lies are spruiked by vested interests about housing policy than by any other rent-seeking lobby in any policy area in Oz. The 1% of Australian investors who own 25% of our housing stock – about 7% of all property owners, ie a a bit over 200,000 multiple property owners – are ruthlessly and brilliantly clever at hiding the true layout of the property owning and property tax break exploiting landscape . They are aided by a venally dishonest housing and real estate sector, and most of the mainstream and especially business press, which relies for survival on the real estate ad spend (one of the few remaining legacy media reliables).
There are about 20,000 Australians who own six or more properties.
This group and their lobbies are the key ‘investor cohort’ that is driving Australia apart economically, by bifurcating the property haves from the have-nots, a polarised economic division soon to become a civic one, too. It’s not their fault. Financially, they are acting rationally, reasonably, responsibly and predictably. They are not to blame for taking advantage of insanely unfair housing tax policies that both governing parties, and – repeatedly – we voters have endorsed.
Our sustained housing policy failures since 1999 represent an immoral and regressive catastrophe that we all have to take responsibility for creating…and fixing.
‘ Make even a few or a variation of those five key changes I list above….’
Or even just clearly, publicly announce your locked-in future intention to do so…the housing bubble being a speculative Ponzi market, what matters to buy in price at least as much as concrete supply-and-demand reality is buyer pool projected sentiment.
You avoided addressing the qualitatively different student and apartment markets by focusing upon detached (family) housing, dominated still by boomers, especially policy making.
In the early days of fee paying international in the ’80-90s, key stakeholders suggested students to be the ‘other’ by describing as ‘foreign’ and a ‘commodity export’; not just depersonalising and giving a negative descriptor, but symptom of casual racism and eugenics in Australia that requires an empathy bypass.
Drew, the determined insertion of the race/racism trope into the housing debate by a certain type of economically illiterate moralising mindset is one of the most tedious and infantile aspects of it. It’s also a ‘useful idiot’ helping hand to the property sector cynics who want nothing to upset the Ponzi scheme’s artificially pumped demand side irrational exuberance.
For at least a solid decade plus across the last two, the phenomenon of international ‘students’ – who were no such thing, they were a cheap workforce stewarded by a cynical pop-up immigration industry, doing some scrappy, crappy vocational course – acting as buying agents and conduits for foreign money had a very real price impact. The inflow of that money had a real and lasting impact on both price expectations – a Ponzi bubble is about market perception – but also new project/stock type, and in turn buyer expectation. A lot of projects were flogged to overseas off the plan, with no real consideration of infrastructure or amenity because the point of the ‘houses was never about providing someone a place to live, it was about getting money out of prohibitive economies and into international free ones with attractive stability, tax and capital growth characteristics.
It’s been not the only or main driver but the international ‘student’ impact on our housing market has been not insignificant. For ‘anti-racists’ to run protection for the property sector Ponzi hustlers using the ‘racist!’ dog whistle is tedious. Grow up, maybe.
I don’t know if these numbers are meant to sound big, but they’re not.
5,925 dwellings represents about 1% of the Brisbane LGA, which is growing in the ballpark of about 100k people per year (and as someone living in Brisbane, this growth has been very noticeable).
At 2.5 persons per average household, that’s equivalent to… maybe one quarter’s growth at most. And that is (incorrectly) assuming all ~6,000 are vacant but usable, and not condemned, being renovated, on the market for sale, etc, etc.
136,000 dwellings across the whole country isn’t even enough to handle a year of the ~350k/yr of national population growth in the decade before COVID, let alone what the numbers look like for the last year, and probably next few years at least.
The idea there’s substantial numbers of genuinely vacant-but-usable dwellings just doesn’t stand up to any sort of cross-checking or analysis. ERP divided by household size gives a number consistent with ABS estimated total dwellings. The supposed million empty homes from the last census were mostly empty with perfectly valid reason, just like they were every census beforehand. The holding costs of a property sans income for the typical punter are enormous (ie: only the richest could afford to leave extra homes empty) and the ABS looks dimly on – and does automated checking of – claiming tax deductions for properties that aren’t genuinely being used as rentals.
As with many aspects of our society, we have been cruising on the inertia of the post-war decades – in this case, massive housing “overbuild” (total number of houses built annually has been basically flat for over half a century) – for a generation or more, and many, many chickens are coming home to roost.
My replies keep getting modding/disapearing, sorry.
.* we just don’t have a clear picture of vacant ie should be rentable/providing a home because they reap the tax breaks but they are made not so…’holiday’ homes, wilful non -amenity, air bnb, peppercorn rotating non-resident ‘tenants’… to suggest the ato is sternly all over this is amusing.
* the price pressure of vacancy is also largely about investor perception/assumption…the market demand side distortions are all about creating a Ponzi. You’re right that the chicken party is coming home to roost now that housing credit isn’t cheap but the damage is long done. everyone is over geared.
Remove those demand side distortions doc. Then and ONLY then wil the tide of contrived exhuberance go out and we will see how many houses we have and need, and what type and where. And do not.
hope this gets thru
Again, the suggestion there’s huge numbers of useable properties being withheld from the rental market just doesn’t stand up. Few have the cashflow to support a second (or third, etc) dwelling without it generating rental income and the dwelling completions vs population growth just doesn’t provide enough excess for there to be a massive surplus of vacant housing hiding in the numbers.
And the ATO does do automated checking that will pick up obvious circumventions eg: people advertising their property for way above or below market rents, or only renting for parts of the year while claiming a full year’s deductions.
Homeowners buying new-builds are a bit different, and to some degree the shortage there is artificial (epsecially 15-20 years ago before population growth ramped up), mostly through landbanking and zoning, but ultimately it’s also a matter of how quickly dwellings can be physically constructed. The most ever in one year was about 220k – enough to just cover the NOM from last year – but typically more like 160k, and forecast for I think about 130k this year. Note that’s gross, not net, new dwellings.
High purchase prices (underpinned by shortage) were significantly ballooned by easy credit in the 2000 and 2010s, and more so now by access to the subsequent capital gain. However, the typical leveraging of capital gain is through either selling the family home (oldies downsizing) or accessing the increased value of a property through remortgaging (“equity mate”) rather than selling, neither of which are subject to CGT.
There’s a lot of factors in play and all need to be looked at, and ultimately adjusted, holistically, into a coherent housing and population policy suite (and I genuinely don’t think anyone remotely near power has the ability or more importantly the desire to do so). However, there is only one variable that can be changed easily, with quick results and with relatively little political blowback, and that is population growth – ie: immigration.
There is a strong rwnj push to halt immigration so the LNP will back it.
Also immigration makes everything in politics look fabulous, oh the growth… ! If immigration is cut right back the real state of things will emerge, its ugly and that has to be good for any opposition. Therefore msm would support it.
Sustainable is about 60,000 a year i think.
And in doing so, migrants will be demonised, we’ll see an increase of racial motivated attacks, etc. It will be horrible and ugly to watch.
Sigh.
This is why the faux Left in the country are so dumb. They refuse to acknowledge the IRREFUTABLE evidence that high migration rates are tool of the Right to achieve economic outcomes that Left typically fought against for decades (eg: suppressed wage growth). So when the boiling point is reached, the gaslighters will wring their hands and blame ordinary people who are sick of suffering under a neoliberal system that gives them no future prosperity – all while living through multiple crises in housing, the environment, inflation, etc. Just wait until Peak Oil really bites soon.
Meanwhile those of us on the honest Left are demonised ourselves for pointing out the facts when we’re trying to prevent migrants becoming a political plaything of the RWNJs by simply saying – “just slow down for a bit”.
Well said.
It’s both. It’s tax incentives, and it’s demand pumping via population pumping. It’s been going on for about 20 years.
We can agree on that.
“It’s the kind of magicke pixie dust economics that even the Socialist Alliance wouldn’t stoop to cop.”
Why give SA a guernsey? They are a bunch of weirdos who, like Adam Sandler in the Wedding Singer, live in their sister’s basement. They are the gimps of Australian politics (with apologies to Tarantino and the Pulp Fiction reference). But being communists they don’t believe in home ownership and think that if one is not lucky enough to have wealthy parents like most of them do, then the rest of us can rent and suffer or take our chances on the public housing waiting list and suffer there too or get in debt for 25 years if we deign to want to own a home. For some, the ultimate purgatory.
Actually, I know quite a few SA types – they tend to be older lefties in Sydney (the ones I know anyway) – and I have a fair bit more political respect for their Lefty ideological consistency and civic courage than I do for, say, the fairweather Lefty/Janus-faced Greens.
State governments have most power re housing, but the feds indifference to the issue is surprising, seriously disappointing and politicly dumb. Blindingly obvious that they need to throw serious $ at public housing via new deals with the states; at the moment Albo only mentions the houso sector to burnish his battler cred. Should do much better.
The vested self interests have argued forcefully against the Greens regulation policies around renting.
They still make sense as a quick fix for politicians to be seen as a doing something.
This has to happen at a some stage no matter what happens with supply. Note Europe does have sensible rent regulations built over decades.
Highlighting New York failures is not an argument against those decades of sensible European policies.
Looking at the Housing crisis only with ownership in Ming misses the point of why Liberal seats in Brisbane went Green
Ming=Mind
Rent caps are a reasonable short term “emergency” measure but unworkable long term.
They must go hand-in-hand with the only real long-term solution: fix supply and demand.
And the only one of those that can be adjusted quickly is demand. We already build a LOT of housing. Building even more is probably possible (ignoring the question of whether or not it’s a good idea), but ramping up takes time, as does the actual building process.
The current housing and particularly rental crisis is – under any likely policy outcomes – baked in for at least the next few years, probably longer.
dr smithy
Agree about the baked in. Thus the emergency measure of rent caps becomes essential. However don’t fall for the extreme examples which is why I highlighted decades of European experience. Rental caps in Australia have a long history. It’s called public housing, Europe has a well regulated rental market precisely because they don’t have the same mentality of owning a home as in Australia and the US.
Something to bear in mind when immigration comes up as the EU has right wing parties exploiting the fear factor of real issues for political purposes,
We have been ;the smug population looking down on the Europeans because they have a long lasting rental market, The whole quarter acre block myth building that has come to bite us in the butt. Rubbishing rent caps is the first cab off the rank to change the momentum created by the Greens away from looking at the regulations required for the rental market. Changes that will be good no matter how large or small the rental market is.
Oops and Teals. They have som good policy on renting too
Encouraging (/allowing) building and tempering demand to maintain a 3-4% vacancy rate would likely remove any requirement for rent caps.
Long term, rent caps along with too much demand for the supply, is probably going to lead to a subletting black market.
Huge investment in public housing would address a lot of issues both for buyers and renters. Greens have solid policy around this (though they also refuse to consider the demand-side).
We are agreed nothing is a quick fix.
I will repeat. Spotlighting rent caps is the Real Estate lobby first point in stopping momentum on talking about real regulation of whatever rental market exists. We have to do both at the same time to ,minimise damage.
Building and regulating.
lead to a subletting black market? Check Facebook Marketplace. We’re already there w/o rent caps BECAUSE the rents are too high and uncapped. People can’t afford to rent a house, that’s fine – rent them a room/garage/storage shed.
No, that’s not a black market.
A black market will be when the people lucky enough to get those rent-capped houses or apartments, will be subletting out their bedrooms / balconies / back yards / whatevers at the highest prices they can get, and pocketing the difference.
It is literally a black market dude. $1700/w for a 1.5 bed place crammed with 8 people. It’s a black market. https://vt.tiktok.com/ZSFU6oKHV/
LOL. Old mate can’t even get 30 seconds in without suggesting anyone else criticising this is racist.
Presumably just like suggesting the system happily ingesting thousands upon thousands of people prepared to live like this is “scaremongering” (and also presumably racist).
LOL, old mate is aware of what people are like on the internet and doesn’t want to see thousands of people hurling racist slurs because the person doing abhorrent things has a foreign name. He encourages people to criticise bad stuff like this, but doesn’t want irrelevant things (like the persons race) to be a factor in the criticism.
Thank you for ignoring the bleedingly obvious point that I was making by sharing this, which is that there are already black market accommodations being facilitated by the uncapped rental market.
How is it you think rent caps would fix this problem ?
Jack R is on the right track. Unfortunately our politicians are mostly beneficiaries of the current corrupt system. If they had ethics they would fix it no matter the personal cost. But… unfortunately they are mostly character deficient chances. So only the appearance of action matters. Not actual action that improves things.
Without a genuinely bipartisan, strategic approach, these critical demand-side reforms (or suitably tweaked variations there-upon) will never come into being. Because such is the insanely self-destructive paralysis we’ve engineering for our housing market, any government that initiates them will be turfed out at the first chance. Not because Australians are unusually greedy and self-serving, but simply because a lot of them will lose, and badly, and after having rationally (and even sensibly, responsibly) taken advantage of what were, however insane, legal, bipartisan and democratically mandated policies. Truly, our current housing market disaster is one of the greatest, most sustained bipartisan policy failures in Australian history. A real betrayal of ourselves, by ourselves.
We are all going to have to bear a share of the economic pain extracting ourselves from it will demand. Meaning an incoming alternative government to whichever side initiates this scale of reform had better be willing to carry on their good faith.
The politically paralysed ‘alternative’ of housing policy BaU…is brutal economic polarisation and social implosion on a scale I don’t think this still-young country is equipped to comprehend, or navigate easily. Chrs Michael.
That’s what happens when you underpay public servants :-/
Our politicians are by no measure underpaid.
They are also not public servants.
I’ve mixed feelings about whether members of pariament are underpaid. As representatives of the citizens they should be very well paid indeed. In the UK, one of Margaret Thatcher’s cleverest moves was to freeze or cut MP’s pay when there were signs the country was annoyed with the government. She said she was listening to the public, and the public was delighted. Most of them completely failed to see that ministers, including the PM, were still getting increases, while parliament, which Thatcher regarded with contempt as a hindrance and a bloody nuisance she preferred to ignore if possible, was made to suffer. This continued long after Thatcher was gone, and MPs were fobbed off with the terrible idea they should make up their salaries by milking their expenses. This blew up spectacularly in a huge scandal in 2009 that did real damage to the already battered reputation of parliament.
MPs should not carry the can for the wrongs done by ministers. On the other hand, MPs would have a far better case if they tried harder to hold ministers to account. That’s asking a lot though when parliament always contains a majority of MPs on the side of ministers, a great number of those are in addition on the government payroll and the government controls parliament’s timetable.
I used to summise if you multiplied their wage by 3 or 4 you may get a much more competent MP who would be prepared to work for the country.
But after the 80’s that would never now happen. A lot more money would be wasted on an ex accountant, ex union rep, ex political staffer….
It is time to revisit Labor’s 2019 housing investment reforms. Just as the stage 3 tax cuts were able to be successfully revisited due to changed economic circumstances, so too could the negative gearing / CGT discount reforms be implemented for similar reasons, emphasising that investors can still access those tax rorts if they invest in new housing. The justification for the change, as with stage 3 tax cuts, is that circumstances have changed and we have a housing and rental catastrophe on our hands now.
Of course that is not enough by itself. However, if the purchase of the AUKUS submarines were to be cancelled, the estimated, realistic eventual cost of a trillion dollars would buy an enormous amount of PUBLIC housing and still leave sufficient left over to beef up our defence, appropriate to the actual credible threats we might face. At this point in time nobody has yet put forward any credible threat scenario that warrants such stupendous defence expenditure. (Deterring China from invading us is not a credible threat scenario).
Even better if the billions that the negative gearing and CGT discount cost us is invested into public housing.
Incredibly, rental investment properties in Australia are now a net NEGATIVE revenue burden for the rest of us. Collectively property investors take more money from the tax yield than they put into.
Think about that: after two decades of insanely huge but utterly unproductive housing capital gains have made the most heavily-geared property investors the richest asset class among our tribe…they are now repaying the largesse of the single home-owning and renting PAYE taxpayers who subsidised their asset accumulation… by…stealing money from the shared kitchen kitty they have mostly not contributed to.
It’s repulsive, untenable, regressive, divisive fiscal policy insanity. Air’s got to end. It will, one way or another.
Yep, classic rent-seeking. All just ordinary ‘Mum and Dad investors’ of course.