Rhian,

I think we have allowed the discussion to be sidetracked.

The discussion is not about the merits of the AWB's monopoly.

It is not about the bias (or lack of) of the corporate newsmedia and it is not even about whether or not the views I am espousing have widespread support amongst the population. I would be more than happy to discuss those issues elsewhere.

The discussion is about whether or not the Government's record for good economic management is deserved (regardless of whether Keating deserves any of the 'credit' for the 'achievements' of the Howard Government). In my article I focussed on how the measures of prosperity upon which Howard's claims of rising living standards are obviously not a complete and accurate picture. In my article I gave examples of both the degredation of our quality of life and of increases in the cost of living which have not, as far as I can tell, been included in CPI adjustments.

One of these was the coat of land. In regard to land consider the facts:

As divergence pointed out "average house prices have gone up, from 3.3 times the median wage in 1970 to 7.4 times in 2005" (http://forum.onlineopinion.com.au/thread.asp?article=6326#92771).

As wizofaus pointed out it now takes two incomes to pay for a house, when it used to only take one (http://forum.onlineopinion.com.au/thread.asp?article=6326#92938).

And as Alun Breward pointed out, mortgage loan repayment periods have been extended to 30 or 40 years, where they used to be 20 years at an absolute maximum (http://forum.onlineopinion.com.au/thread.asp?article=6326#93681). I have even heard of 50 year loan repayment periods being offered.

Is it any wonder that arcticdog's parents agreed with him that "On a comparative scale (he has) far fewer benefits than they did then."? (http://forum.onlineopinion.com.au/thread.asp?article=6326#93239)

All of this evidence which you choose to dismiss as 'anecdotal', however I would think that if your 'broader data' were correct, then there would have to be at least some anecdotal evidence in support of it.

If living standards and costs are so great now and people can afford to live on their wages,why are so many in so much debt to credit card and hire purchase companies?I'll tell you why,it's because our wages are not covering the massive increases in the cost of living.People are robbing Peter to pay Paul more then ever before.Sure you get people who max credit cards out on frivolities but i think more are using them to survive than to have a good time.The whole system stinks at present.Maybe the current govt wants to starve out the little people so only the wealthy will be left,then this will be a nation of wealthy people only.I think Howard and his henchmen have forgotten that the little people are the backbone of the nation.

Daggett

I haven’t dismissed the examples you cite as anecdotal, nor denied that housing affordability has deteriorated. I said:

“House price rises are a serious problem for first-time buyers who bought homes in the past 4 years, which is a minority of households. Owners who haven’t moved house in recent years, or who traded up, are less stressed by house price rises (and some are substantial winners). “

House prices are highly cyclical. The REIA housing affordability index shows affordability at its lowest level since the late 1980s, but not as bad as at the peak of that house price boom. Prices in Sydney have dropped quite markedly since their peak in 2003. Price booms are usually followed either by busts (as is happening in the USA at present) or drawn-out plateaus, when prices stagnate and affordability steadily catches up through rising incomes (as happened in most Australian capitals in the early 1990s, and again later in the decade after the mini price-boom of 1993-1995).

Affordability will probably improve.

As to the causes, the Moran article discussed earlier contains elements of truth - regulation and government policies restricting land development have led to land prices soaring.

Freer markets, then, are part of the solution.

However, Moran is too simplistic. Many other things have contributed –shortages of skills and materials, the fact that neither public sector planners nor private sector developers and builders anticipated the extend of the growth in demand in recent years, rising incomes and tastes shifting to larger/better fitted homes and more desirable suburbs, changes in insurance conditions on builders, etc.

Further, it’s hard to slate this home to Howard’s management. If any layer of government bears most blame, it’s probably the States, whose policies have most effect on land supply and development costs, followed by local government.

Commonwealth policies giving favourable tax treatment to homeowners are also probably ill-conceived, and may add to the tendency of price rises to become bubbles. But they’ve been around a long time, and politically its hard to see the government getting rid of them.
(Gittins again – see http://www.smh.com.au/news/opinion/renters-cant-home-in-on-jackpot/2007/09/18/1189881508793.html)

Rhian,

The 'improvement' of housing affordability that you believe will 'probably' happen is just not good enough as far as I am concerned. We need to establish in law the principle that decent affordable shelter is a birth right and take housing back out of the hands of property speculators.

Today we are suffering the consequences of Menzies' privatisation of housing and population growth forced upon us by govenments to suit the demands of land speculators and property developers. I have had something to say about that at http://forum.onlineopinion.com.au/thread.asp?article=4834#83259

As I have become fond of saying on OLO, the Housing Trust of South Australia provided good quality housing to all levels of South Australian society for decades and never cost taxpyers a cent. This proves that wher there is a political will Govenments can do a far beter job of providing housing than private investors.

I do agree with you that Moran's solution is simplistic, but I woud go further and say that it is plain wrong for reasons I have given above. I also agree with Gittins that it is idiotic for the Government or Opposition to propose to 'solve' housing unafordability by giving various tax breaks to first home buyers. How can it possibly do other than fuel housing inflation until either the supply or demand for housing is fixed?

Dagget,
I entirely agree about first-time buyer tax breaks, they do just push pu prices.

Moran gives less weight than I’d prefer to the social and ecological cost of urban sprawl, though I’m not sure he entirely ignores it. But I'd agree with his point that policies to prevent sprawl come at a cost, especially in terms of housing affordability, that was not intended by the planners. Bad social outcomes are often unintended consequences of well-intentioned but ill-informed government interventions like this. There are better ways of addressing the costs of sprawl than banning development , such as factoring the true cost of transport, sewerage services etc into the costs of new developments.

I’m not as hostile to the housing trust example as you’d expect. Agencies like this are often better at creating and running social housing than government departments, and often do it more effectively and at a lower cost. The community sector plays this role.

It’s simply unrealistic, though, to expect new social housing alone to solve our current housing stress problems. The expansive construction in the 1920s and 1930s was against a background of under-used economic capacity and high unemployment. Neither the private not public sector has the capacity to engage in additional large-scale construction at present - the skills, materials and capacity just aren’t there.

Rhian,

HOUSING

Yes, it will be harder now to fix the problem of housing than it had been before, but I think you need to confront the question of private versus public solutions to housing.

I think you will also need to acknowledge that Australia's ecology is fragile with relatively little fertile land and little water, and that many scientists fear that further demands made upon it in order to house an increasing population could well turn this country wholesale into a barren desert. (See "We Fiddle as th Continent turns to Dust" 0f 23 October 2006 by Paul Sheehan at http://www.truthout.org/cgi-bin/artman/exec/view.cgi/65/23370 http://www.smh.com.au/news/scorchedearth/we-fiddle-as-the-continent-turns-to-dust/2006/10/22/1161455605817.html) So, we should even be very wary of any plan to convert substantially more amounts of land into housing, whether it is currently being used for agriculture, or simply performing essential ecological services as bushland.

I don't see how the housing crisis can be solved until we stabilise our population and, at least, bring the private housing sector under control. It seems self-evident that property speculation has distorted Australia's economy and will make it unsustainable in the longer term. As I have also mentioned a few times before on OLO, the cause of Australia's housing problems are explained in Sheila Newman's excellent Masters thesis of 2002:

The Growth Lobby and its Absence :
The Relationship between the Property Development and Housing
Industries and Immigration Policy in Australia and France

It's core is 248 pages but IMHO it is well worth effort of downloading from http://candobetter.org/sheila, printing and reading.

---

John Howard has only recently 'discovered' that housing unaffordability should be of concern to his Government. It wasn't long before that he was crowing that the high cost of housing as if it was some kind of achievement of which his Government should be proud and for which the Australian people owed him a debt of gratitude. As he put it prior to the 2004 elections (quoted at http://johnquiggin.com/index.php/archives/2007/07/20/a-bit-more-on-housing/):

'"I haven't met anybody yet who's stopped me in the street and shaken their fist and said: "Howard, I'm angry with you, my house has got more valuable."