Labor and the Greens remain in a standoff on housing, with the Albanese government accusing the self-described “party of renters” of holding legislation hostage. Meanwhile the crisis worsens with property prices and rents through the roof and an enormous backlog in social housing demand.
Are the Greens really derailing progress on housing? To debate that question in today’s Friday Fight, we have comedian Tom Ballard arguing the negative and economist Steven Hamilton arguing the affirmative.
Don’t forget to vote for your debate winner in the poll at the bottom of this article!
Trust the Greens to propose “more government” as the solution to a housing emergency that is entirely the result of government failure. No matter how deep the hole, the Greens’ answer is simply to keep digging deeper.
For something so devastating and seemingly intractable, our housing emergency (that’s what we should call it — it’s well beyond a crisis) is remarkably simple: there aren’t enough houses for people to live in.
The simplicity of the problem correspondingly suggests a simple solution: we need to build more houses. Now, if you don’t probe too deeply, you might be forgiven for thinking that building more houses is precisely the Greens’ plan.
Indeed, they claim that the main objective of their “Homes for all” housing policy is to “build one million public and community homes that are high quality, sustainable and accessible”.
And that might be possible if their pathological, Malthusian de-growther mindset didn’t trip them up at the very first hurdle.
The Greens are NIMBYs.
The Greens do not believe in abundance; they believe in scarcity.
The Greens do not believe that markets, even if robustly supported by government, are capable of improving people’s lives.
The Greens do not believe that the incentives of profit-making enterprises can ever be aligned with the interests of their customers and employees, and serve only to extract rents from them like parasites.
The Greens are certainly not positive-sum economic thinkers. But they’re not even zero-sum economic thinkers. The Greens are negative-sum economic thinkers.
And so, before they even get started on achieving their laudable goal of building a million new homes, they’ve taken off the table all the forces that could be marshalled to achieve that outcome.
I am yet to meet a single credible economist who disagrees about the primary cause of our housing emergency. And that’s the role of local governments in restricting land use.
Whether it be height restrictions on new developments, heritage listings, or even just basic permitting for building or modifying an existing building, Australia’s local governments are a malignant cancer that riddles our housing market.
Reams of high-quality evidence from across the world are crystal clear that these local government regulations are the prime cause of limited supply, resulting high prices, and the flow-on effects on people’s welfare. Everywhere that these restrictions have been loosened, supply has expanded and prices have fallen.
With this one weird trick we can solve our housing emergency.
And yet nowhere in the Greens’ housing policy manifesto will you find any mention of overcoming what is the single most important barrier to expanding supply.
Indeed, the centrepiece of their plan is to establish a “Federal Housing Trust” that would see the government directly build a million public houses. But I guess the local governments that have fought tooth and nail to keep out new development will welcome all this public housing with open arms?
It would be funny if it weren’t so disingenuous. The call is coming from inside the house. The Greens themselves are the local government NIMBYs blocking the very development causing the problem that they claim so aggrieves them.
The other big force holding back the supply of new houses is the cost of construction. This has a number of causes. A big one, as economist Richard Holden noted recently, is an 18% fall in labour productivity in the construction sector over the past decade.
This in part has been driven by truly absurd conditions in enterprise bargaining agreements such as no work (but full pay) when there’s been a drop of rain. Or no work at all (but full pay) on Fridays.
And these same interests that have worked to monopolise construction supply have also lobbied the government intensively to keep out migrant workers that could help close our acute worker shortages in construction and thereby lower construction costs.
Yet, notwithstanding all of this pernicious undermining of housing affordability by this vested interest, Greens MP Max Chandler-Mather thought it appropriate to front a CFMEU rally in Brisbane recently to show his support. If it wasn’t already, it should be crystal clear where the Greens’ priorities lie.
What about the rest of their plan? It’s at most ineffective and at worst highly counterproductive. Their solution to high rents is for government to cap rents. Which is quite literally the first example we use when teaching undergraduate economics students why price controls are a bad idea. The evidence is overwhelming that such measures only make things worse. I could go on…
On housing, at least, the Greens are simply not to be taken seriously. Their plan, if implemented, would be a catastrophic disaster for our housing market. But, thankfully, they will never get the chance to implement it as they will never be a party of government. So sleep soundly on that.
Read the opposing argument by Tom Ballard.
