A few weeks back I mentioned in passing the Federal Housing Minister.
This prompted several on the Missive mailing list to ask me what I would do if I held that position. Serendipitously, I engaged in a similar online discussion a week or so ago and that resulted in being asked to speak at several business forums over the next month or two.
So, what would I do if I was the Federal Housing Minister?
But before I start, I will slightly misquote John Mellencamp from this 1980s tune Between a Laugh and a Tear.
“Hypocrite used to be such a big word to me, and it don’t seem to mean anything to me now”.
It is not lost on me that I have benefited from the things that I am suggesting need changing.
Another important point is that I believe that housing is a home and shouldn’t be the financial vehicle it has now become.
At present over 60% of our domestic credit goes to housing related activities and just over 30% goes to business. A generation ago these were the opposite. See the chart below.
This is one of the most telling charts on the Australia economy, yet it gets little airplay nor is it regularly updated.
My aim – as housing minister – would be to reverse these proportions over the next 25 years, if not sooner.
That said, here are the ten things I would do.
1. All publicly promoted/exposed housing market-related research, such as price growth predictions, must go through a peer panel review and an equally weighted ‘con’ argument must run alongside the ‘pro’ pitch.
2. All states/territories to remove stamp duties and federally we will remove the investor capital gains tax discount and all negatively gearing tax breaks.
3. Impose a broad based land tax on all properties set at between 2.5% and 5% per annum, depending on use, tenure and length of time held. Overseas interests pay a higher rate per annum. Too many land-bank.
4. Introduce a capital gains tax on all properties, with the % set to decline on length of time held – under 2 years say 20%, 2 to 5 years 15% …. over 25 years 1% etc. This is to help stop flipping.
5. Stop all first home buyer grants and related gifts – they just stuff things up by making housing less affordable, distorting the building cycle and resulting in fewer first home buyers than would otherwise be the case.
6. You cannot use more than 50% of your SMSF assets to buy an investment dwelling/s.
7. Same set of development and building rules across the country varying only due to climatic conditions.
8. Infrastructure charges per new dwelling are also the same across Australia, set at 5% of sales price and payable on final settlement.
9. Caveat emptor applies to all buyers – off-plan included and especially high-rise apartments. And developers and builders are responsible for all shonky workmanship, within a specified time frame and with fair caveats, not the general public.
10. No Passport, No Buy – regardless of dwelling type, development status or origin of purchaser.
Too harsh? Too many? Maybe start with items 1, 8, 9 and 10 if my list is too onerous.
Confucius once said, “The strength of a nation derives from the integrity of the home.”
And obviously I think some major changes are needed in the housing space.
Australia is blessed but we seem to be increasingly living on our dumb luck.
We need to change our focus from being a nation of housing speculators; one that continues to rely on what we have in, and on, the ground and one that also mindlessly exploits it’s geography and start focusing our efforts on the future.
Smarter minds that mine need to be employed here, but I will tell you without a moment’s hesitation, that our economic future is grave if we don’t make some major changes and soon.
Housing is a home. Full stop.
And yes, hypocrite used to be a big word to me.
PS Of course if I told the Australian electorate that I was going to implement these ten things in the lead up to a federal poll, I would remain the opposition housing minister, and even then not for a very long after the result.
PPS I am not denying anyones right to make a fair profit in the housing game, far from it.
Until next time,