Pollies prefer to milk the property cow than to make meaningful change
Few things make me more cynical than the sound of a politician mouthing concern about housing affordability.
In my lifetime, there have been hordes of politicians and governments claiming to want to solve the problem, but none willing to take any real action.
When it comes to improving affordability, many politicians talk a good fight, but none is capable of delivering a knockout punch.
The latest masquerade in this regard is being led by MP Kelly O'Dwyer.
O'Dwyer has obviously watched a few episodes of Yes Minister before deciding on a course of action: bring on an inquiry, issue lots of press releases, target an unpopular minority and take "strong action" against these alleged perpetrators of the perceived problem – but essentially do nothing meaningful so that the status quo remains intact.
The truth is, 40% of the cost of a new house in Australia comprises government fees, charges and taxes. Remove those and the cost of a $400,000 house-and-land package would drop to $240,000.
In all the froth and bubble coming out of the federal inquiry, we haven't heard O'Dwyer or any other politician confront this reality. Why not? Because if they did, their advancement within the party would suffer a sharp U-turn.
Governments are addicted to the revenue they milk from their favourite cash cow, the real estate industry. That's sacred and the possibility of scraping stamp duty, for example, is not up for discussion.
So what to do? How to create the illusion of doing something while changing nothing?
Many Australians have a big issue with Chinese investors, although they don't seem to mind American, British, Dutch, Italian or New Zealand investors.
The answer, as always, is this: target an unpopular minority, talk tough, issue lots of press releases, look strong, do nothing. Works a treat every time.
O'Dwyer has a bee in her bonnet about foreign investors. I'm not sure whether she truly believes that foreign investors are the cause of the perceived affordability problem. I seriously doubt that she does, because someone armed with all the relevant information, as she should be, must know that foreign investors are not impacting the price of suburban houses in Australia.
But foreign investors are a great scapegoat, particularly as this currently means Chinese investors. And many Australians have a big issue with Chinese investors, although they don't seem to mind American, British, Dutch, Italian or New Zealand investors.
So tough-talking Kelly is going a come down hard on Chinese investors. It'll be good for some media sound bytes and it'll help to advance the career of a politician no one had heard of until recently.
But will it make housing more affordable? No, it won't change a thing.
A quote from Shakespeare comes to mind: "It is a tale told by an idiot, full of sound and fury, signifying nothing."
Chinese investors are not impacting the price of houses in first-home buyer markets in Australian cities. Overwhelmingly, they are buying high-rise apartments in the CBDs of Melbourne and Sydney, as well as the Gold Coast, which is a perennial favourite for Asian investors who enjoy losing money.
If they're buying suburban houses, it's primarily top-end homes in the millionaire suburbs.
The Federal Government could pass a law tomorrow banning all foreign investment in Australian residential property – and the price of houses in the suburbs of Sydney and Melbourne would not change.
But if they removed the taxation component of a house-and-land package, that would make a dramatic difference.
Any chance of that happening? Not remotely.
This is a publicity exercise. Meaningful change is not on the agenda.
Terry Ryder is the founder of hotspotting.com.au. You can email him or contact him on twitter.
