13 November 2021

No simple solutions: Government rejects call for a review into 'housing crisis'

| Lottie Twyford
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Housing development.

Liberals MLA Mark Parton called on the Government to investigate the impact their own policies are having on the “housing crisis”. Photo: Michelle Kroll.

The ACT Government has refused to explicitly acknowledge Canberra is facing a housing crisis and has rejected Opposition calls to investigate the impact its own policies are having on the market.

Canberra Liberals MLA Mark Parton this week moved a motion in the Assembly calling for an independent review into what impact government policies have had on rising house prices and rent levels, and asking the Government to declare a housing crisis.

READ ALSO Minimum ceiling insulation for rental properties a step closer

Instead, the Government passed a heavily amended motion acknowledging a housing affordability crisis is unfolding across every OECD country, including Australia, and “the ACT is not immune from this”.

Minister for Housing Yvette Berry substantially watered down Mr Parton’s motion so that rather than an independent review being conducted, the ACT Government will continue to implement its housing strategy.

The amendment states the government will also review and assess any available levers and continue to lobby the Commonwealth Government to take measures to improve housing affordability.

Mark Parton

Mr Parton is calling for the Government to label the housing “crisis” as just that. Photo: Dominic Giannini.

Mr Parton, for his part, blames ACT Government policy for the current state of the property market and referenced a recent Suburban Land Agency ballot for Taylor in which almost 7500 people applied for a chance to secure one of just 115 blocks of land as an example of the lack of supply.

He says issues like high land taxes and residential rates and a lack of land supply, coupled with disincentives for landlords, were pricing aspirational homeowners out of the market.

“These policies have led to a perfect storm when it comes to housing affordability,” he said.

“This is denying a whole generation of Canberrans (the opportunity of) … ever owning their own home.”

Mr Parton also pointed out the rapidly shrinking number of houses for sale in the ACT for less than $1 million.

He says the ACT Government needs to take more responsibility for land supply, over which it has control, and the Federal Government cannot be the only tier of government held to account.

Ms Berry said the Government was simply getting on with implementing the ACT Housing Strategy and acknowledged the “challenge that every government faces when addressing housing affordability”.

READ ALSO Barr points finger at low rates as house prices gain almost 30 per cent in a year

The median house price in Canberra has now skyrocketed to almost $1 million, and a CoreLogic report released earlier this month showed house prices in Canberra increased 30 per cent in just one year. Canberra was once again the most expensive city in the country in which to rent.

This week’s Vital Signs report also revealed housing affordability was one of the major factors keeping Canberrans in poverty.

Ms Berry said it was far too simplistic to suggest land supply was solely to blame, instead pointing the finger – as Chief Minister Andrew Barr had done earlier this month – at record low interest rates and tax incentives by the Federal Government for property investment.

“Any suggestion there is a simple solution to this is opportunistic, lazy and wrong,” she said.

She also noted additional land could not easily be secured as it would likely mean the destruction of green spaces and nature reserves.

Ms Berry released the latest report card for the ACT Housing Strategy, telling the Assembly consistent progress across all goals had been recorded in its third year of implementation.

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An arrogant government that knows the rusted on will keep voting for them, aided by an inept opposition that couldn’t fight their way out of a wet paper bag

Tom Worthington10:51 am 15 Nov 21

More low cost housing options, including forms of sharing would be useful. There is no way everyone can afford a detached house.

Tom Adam is becoming a regular commentator complaining against ACT Labor policy on this site. His chief argument is that the ACT government isn’t throwing enough taxpayer money to business. This is despite ACT businesses getting over $475m in funding and tax breaks during the pandemic. And a Labor government! As a businessman and President of the Phillip Business Community he has shown himself to be unprofessional and amateurish with his constant whining!

Estelle,
I think his main complaint is that the government has treated business interests as an extremely low priority throughout the pandemic and its hard to argue he isn’t correct.

Whether you think that his behaviour is unprofessional or not is not really relevant though.

We all have our opinions, some even think Jonathan Davis is performing well in government despite being almost invisible in the electorate.

William Newby6:37 pm 14 Nov 21

Property prices the world over have gone crazy, a costly independent review into this tiny piece of the world will solve nothing. Release more land he says, yes let’s just scrap the urban forest, build cheap houses everywhere and shift this problem 10 years down the road.

I wish you had mentioned Johnathan Davis’s brilliant speech in response to Mr Parton’s motion. It is up on the parliamentary website if anyone is interested. Again, Mr Parton was trying to score a few cheap political points. Mr Parton’s response to Mr Davis’ speech simply showed what a smart alec he is! Mr Davis couldn’t have said it better so I won’t try. Here it is in part… “The challenge for all people both in this place and in the machinations within their own respective political parties is to be honest about the range of policy settings that challenge housing affordability. I must say, if this is what the Canberra electorate is to expect from the new, moderated and reformed Canberra Liberals, there is an awful lot left wanting”. This young man is simply shining in his new role as an MLA and is going places. If he was in my electorate he would have my #1 vote! Keep up the good work Johnathan!

Are you kidding? Davis’s response contained too much smug snideness – it dismisses the well founded concerns of ACT community members and proposes the ACT government continue with policies that have been driving up land prices since 2007 – auctioning land on the market at a drip feed. Davis is wrong – releasing more land does equate to or require infinite land supply – especially if it is well targeted . While the points about federal government settings are well made, words are cheap – the ACT government ‘for’ land price inflation continues to sit here fiddling while Rome burns, blaming others and waiting for the Canberra liberals to do the job of government by releasing a detailed plan for the creation of additional housing supply to restrain prices and address the clear supply/demand imbalance.

So Davis conveniently ignores the almost 7500 people who applied for a chance to secure one of just 115 blocks of land as an example of the lack of supply. None are so blind as those who will not see.

So where is the land in the ACT that you propose building on assiduous and Acton? Doing away with Kowen Forest and sending in the bulldozers to trash the Murrimbidgee like the puppetmaster Zed Seselja suggests? Building on all those sports fields throughout Tuggeranong and Belconnen? What about all of those sports grounds surrounding all of those schools and colleges? Mr Parton loved invoking the conservative Menzies age but this is Canberra and I think we have moved on since then.

Estelle, your suggestion that we have to resort to developing sporting grounds is nothing less than hysterical. Try driving around the ACT and noting all the empty cleared land – there is quite a lot of it as i’ve pointed out elsewhere on this website. What are Canberran’s moving on to Estelle? Homelessness? Financial exploitation by a rentier class? A game of russian roulette with defective high rise apartments built by (quote) “a poorly oversighted industry with a lack of competence and in some cases a lack of integrity”?

I think Parto probably knew in advance that the Government would reject his “housing crisis” motion and certainly their contribution towards it.

And yes, low interest rates and Federal taxation policy (50 % discount on CGT) are issues. I think everyone understands this but at a Federal level, even their own party colleagues have walked away from changes to CGT and no one really wants a hard correction in prices that comes from increasing interest rates. So, there is little point blaming the Feds.

The question then remains; Within our own jurisdiction, what can our local Government do to ease the problem?
Simply, it comes down to increasing supply and reducing local property taxes ie Rates and Land Tax.

Kenbehrens,
It’s very simplistic to say reducing rates or increasing local land supply would “fix” the housing affordability issues.

At best, you could potentially use these to kick the can down the road a little bit but they wouldn’t make any long term, sustainable changes.

Whilst it’s convenient for existing landholders and property investors to blame taxes and rates, these really don’t make a large difference to property prices.

And with land releases, we only have a limited supply of potential greenfield land available and it will only get more expensive to develop as time goes on with the “easier” areas already developed. So whilst the government could maybe fast track some more releases, it would be a short term thing and the impact would be dwarfed by the issues you raise that exist at the federal level.

At the last election, the ALP were proposing to grandfather their changes to CGT, because they knew it wasn’t going to be popular with the electorate.
In my opinion, any legislation that requires grandfathering, is poor legislation. They’ve now walked away from changing CGT.
Personally, I believe the Keating model on GST (fully taxable after CPI), was a better policy than the Costello 50% discount model, but to undo GST is now politically too hard.

The cost of housing isn’t just about supply or purchase price. The cost of housing also includes the ongoing cost of ownership.
The Chief talked about Stamp Duty as being a barrier to entry. True, but it’s a one-off cost. Policies like increasing Rates at levels greater than pay increases are also burdens that impacts housing affordability. When Land Tax is is charged at 150% of the cost of Rates (that are increasing faster than pay increases), that flows onto the cost of rent; which are the highest rents on the country.

I don’t own any investment properties, so I don’t have any vested interest in Land Tax. To me it’s just an insidious tax.

Kenbehrens,
Whether making changes to CGT is too hard politically is a bit irrelevant if we are considering whether it should change.

No doubt it’s difficult to change because there are so many people who can’t think beyond personal impacts on their own finances.

And you have to think longer and broader on the impacts of land taxes on rents. If you increase holding costs, landlords can’t just automatically pass through any increases to higher rents. If landlords could arbitrarily increase rents they would already have done it.

Higher holding costs should also place downward pressure on property prices because it makes investments less attractive reducing demand.

Property spruikers like to imagine taxes increase house prices because it suits their spin and their hip pockets.

The insidious effect of “stamp duty” (a transfer tax) is that it is a barrier to mobility and thus to productivity, whereas land tax is an efficient and equitable tax on capital where capital is invested in a non-renewable national resource.

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