Remember that Treasurer Jim Chalmers announcement the night of the budget that the federal government would aspire to “build one million new well-located homes in five years from 2024”.
I denied this announcement Wednesday, noting that 1.8 million homes have been completed in the past decade anyway. So:
Will Chalmers’ “million” new homes add to that? Or will the new schema just replace what was going to be built anyway? And where will the extra tradespeople, builders, and materials come from to build those extra houses?
I suspect Labor will simply try to take credit for what would have been built up anyway, while channeling financial kickbacks to its friends in the pensions industry.
Former RBA head of research and chief economist at the Center for Independent Studies, Peter Tulip, also interrogates the merits of Labor’s “one million new homes” pledge:
The budget announcement of 1 million homes over the next five years will do very little to improve housing affordability.
One million homes is about what we have built in the last five years (974,732 homes, to be precise). Relative to the size of the economy, 1 million will actually be a step up.
Demand for housing has increased due to low interest rates and more of us working from home. Going forward, increased immigration and rising incomes will add new pressures…
The result has been a record vacancy rate, soaring advertised rents and some of the highest house prices in the world.
We are essentially promised more of the same – even if recent levels of supply have clearly been inadequate.
In line with the unambitious goal, specific policy announcements were limited.
The centerpiece was an increase in subsidized housing. In addition to the previously announced 30,000 units, there will be another 10,000 from the federal government and 20,000 from the states.
This represents 60,000 new homes, representing an increase of only 0.6% of our national housing stock of 10 million homes. This small increase will have a negligible effect on housing prices, but a significant cost to the taxpayer.
I will add that this tiny 0.6% increase in our national housing stock will be overwhelmed by Labour’s massive immigration policy, with the budget forecasting 940,000 net migrants abroad compared to forecast estimates:
Along with an increase in Australia’s population of 1,460,000 over budget estimates:
Thus, the housing supply situation will worsen under the Labor government due to its “Big Australia” immigration policy, which will overwhelm the supply of additional housing.
It’s the classic Scotty of marketing.
Leith van Onselen is Chief Economist at MB Fund and MB Super. He is also chief economist and co-founder of MacroBusiness.
Leith previously worked at Australian Treasury, Victorian Treasury and Goldman Sachs.