The chatter in federal politics this week is that housing construction stimulus will be a key plank of the federal government's recovery plan - a lofty and meritorious goal.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
It is, however, important to ask what housing problem this proposal seeks to solve - what shortage is being filled? Is it social housing for low-income families and individuals, is there a lack of availability in the private housing market, or not enough available land? Why isn't the private sector filling those gaps? Is this the best use of substantial borrowings made on behalf of the taxpayer and is it for the best overall benefit of the community?
Many would argue that government money to stimulate the housing and construction sector should best be used to build housing for those unable to provide for it themselves. Those who favour small government and fewer interventions on the free market would also argue that the best form of stimulus for private enterprise is to make it easier and cheaper for developers and prospective owners to spend their own money, not the governments.
Yet another argument is that government should fund forward-looking infrastructure, such as headworks and power connections, for future population expansion areas to accelerate residential development and sensible population growth.
The reality of COVID-19 and the need for extraordinary economic actions to bring about recovery means bold and forward-thinking measures. Inevitably that means large amounts of government-provided money - JobKeeper, for example, has kept millions of Australians employed. As JobKeeper showed, although this was an initiative to fix a serious short-term problem, it also filled an important long-term goal - to keep people connected with their workplace and for employers to retain skilled people.
The short-term aim for stimulating the construction market is to insulate the broader community from another economic shock. The long-term aim should be to ensure that this spending delivers lasting reform to the residential development sector to make it easier to build new homes.
Stimulating the demand side to boost the construction of houses without undertaking the overdue reform of the sector to make development cheaper and easier misses a once in a generation opportunity.
If the planned stimulus to build more houses is to fulfil its potential, then there also needs to be a deep, meaningful and swift reform of the constraints that have to this point held back construction of homes.
- Neil Grose, Launceston Chamber of Commerce chief executive