Housing Industry reaches new depths of hypocrisy.

5 06 2013

Mark O’Connor

Another guest post by Mark O’Connor……

The growth lobbies in Australia keeps our media full of repetitive demands for “economic growth”, by which they mean  more and more Australians  consuming and producing more and more.

They do this partly by ventriloquising through dozens of different front groups.  Some of these fronts have quite bizarre names like “The Urban Task Force” (in fact an alliance of Australia’s biggest developers). Others incorporate subtler forms of spin, like developers calling themselves not the Developers’ Council but the Property Council (as if everyone who owned a house should be on their side).

Even when the names are accurate, this plethora of related business organisations all demanding GDP growth and the removal of “red tape” seems designed to drown out the interests of ordinary citizens.

The HIA or Housing Industry Association is yet another group representing business-owners in the construction industry. But amazingly it is on our side.

Has you life been half ruined by mortgage slavery caused by Australia’s bizarre housing prices?  The HIA bleeds for you.

In its pre-election lobbying material, just received by all federal MPs, the HIA requests that politicians sign on to its policy imperatives.  Something must be done because, says the HIA’s letter dated 22 May, “Affordable housing is increasingly beyond reach to many people living in Australia”.   Hence it has produced a glossy booklet called Housing Australians which contains “50 policy imperatives developed to address the dual challenges of producing sufficient affordable housing to meet Australia’s current and projected population.”    It calls for a “”comprehensive plan to increase rates of home ownership in Australia, to make housing more affordable, to increase housing stock…”


Fine words!  Fine sentiments!

A major problem here is population growth. This is a major driver of unaffordable housing prices, and of people being forced to live in remote outer suburbs where governments seem able to provide only minimal infrastructure and services.

For instance a report by Curtin University found that the costs to the State Government for connecting up each new house in the outer suburbs were  $684,000 per dwelling, or about $263,000 per person housed. Thus the total infrastructure cost of adding one new person to our resident population is over $200,000 per person, and perhaps, when all infrastructure requirements are counted, more like double that. No wonder state governments have been going broke, and selling off the silver, while people in newer suburbs are left short of infrastructure and services.

The HIA’s solution?   Somehow the the government, i.e. the taxpayer,  should give more. It requests (p. 12) a new form of “infrastructure funding” in which the federal government financially supports “large-scale residential developments” whose infrastructure is currently paid for by State governments or by the developers (who pass it on to the home buyers). In other words, the taxpayer should pay this crippling cost, so that new houses will be cheaper, and the HIA’s members can sell more houses.

What about the simpler solution of  reducing Australia’s bizarrely high immigration rates, which have given us population growth at around 1.7% a year (almost off the scale for developed countries, and much higher, for instance, than Indonesia’s 1.2%)?  That would quickly reduce both housing prices and infrastructure bills.

Yet the HIA’s list of policy imperatives include not a word about reducing immigration or removing baby bonuses. (The HIA’s letter appears to have been drafted before the end of the  baby bonus was announced.)

Worse. The HIA actually wants an even crazier ramping up of immigration. They demand (p. 12) that federal politicians “Introduce a rolling 5-year net overseas migration program and other measures to encourage population growth.”





4 responses

5 06 2013
Terry J Wall (@terryjw7)

Crazy alright!

Is it something to do with the fact that productivity and labor costs are so last century. When will we have the balls to get rid of the antiquated trade unions (we all know that activity works so much better when the whole team pulls in the same direction).
When will corruption (fed by low level transparency) get its comeuppance? $200k per person for infrastructure – white collar crime. Institutionalized theft.

Of course the good news is that we don’t have a housing bubble. Nothing will go bang! There will just be gentle hiss as the wealth of this country deflates just at the time when the commodities air bag is also looking a bit poorly..

6 06 2013

Where I live The situation is that the cost of new houses is composed of:

1. The cost of the block of land which is made up of the following:
(a) The price demanded by the owner of the land when sold to the developer.
(b) The contributions that councils require.
(c) The facilities that councils require the developer to provide to the block. e.g. Water supply, sewerage , telephone, electricity, roads, drainage (including environmental treatment of drainage discharge), and parks etc.
(d) The profit the developer requires, which seems to be about 40% or more.
2. The cost of the building materials.
3. The cost of actually building the house much of which is done by subcontracting tradies ( plumbers, electricians, tilers etc) who in the main are self employed.

The major part of these costs occurs in No1 and are part of the matrix system.

The article is meant to detail the absurdity of our attachment of continual exponential growth and its costs. The unions only come into the problem because of their want of jobs irrespective of the cost to the environment. They are not the main driver of the HIA.

5 06 2013
Daniel Boon

The HIA is a self-serving lobby organisation (infamous for decrying energy efficient housing) and accordingly, not to be taken seriously …

12 06 2013

yes, mark is partly right. over-population adds to the cost of housing, infrastructure, services, etc.

but the main reason for high house (ie land) prices is our tax system. it rewards property speculators by granting them special privileges such as negative gearing, reduced capital gains tax, generous tax deductions for depreciation, etc.

the first home buyers grants simply put up the prices again as sellers just hiked up their sales prices. now, the qld premier newman is up to his old tricks – selling off lots and lots of public land to his mates to “make development easier”, and reducing red tape (ie social and environmental considerations).

both of the old parties want to keep the big bubble afloat.

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