By Denis Hay
Description: Easier to Buying a Politician
Is it easier to buy a politician than a house in Australia? Explore the housing crisis and political influence, and how monetary sovereignty can help.
Introduction
Australia is grappling with two significant challenges: a burgeoning housing crisis and the ease with which political influence can be wielded through donations and lobbying. With house prices skyrocketing and political transparency under scrutiny, many Australians are left wondering: is it easier to buy a politician than to buy a house? This article delves into the complexities of both issues, examining historical contexts, current scenarios, and offering solutions to move towards a fairer and transparent society.
The Housing Market Crisis
Historical Context
In the 1950s, Australia’s housing market was markedly different from today. Post-World War II, the government played a crucial role in providing public housing. Approximately 20% of new homes were public housing, offering affordable options for low-income families. This period saw a strong commitment to ensuring that all Australians had access to stable housing.
Current Scenario
Fast forward to today, and the landscape has drastically changed. Public housing now accounts for less than 5% of new homes. The median house price in major cities like Sydney and Melbourne has soared to over AUD 1 million, making homeownership a distant dream for many. According to CoreLogic, housing affordability has declined significantly, with the median house price to income ratio reaching alarming levels.
Challenges
Several factors contribute to the current housing crisis:
1. High Prices: The relentless increase in house prices far outpaces wage growth.
2. Supply and Demand: A persistent imbalance between housing supply and demand worsens the issue.
3. Economic Policies: Policies favouring property investors over first-home buyers have intensified the problem.
Political Influence in Australia
Historical Context
The influence of money in Australian politics is not new. However, the extent and transparency of this influence have evolved. In the past, political donations and lobbying were less scrutinized, allowing significant sway by wealthy individuals and corporations.
Current Scenario: Easier to Buy a Politician
Today, political donations and lobbying activities are more transparent but still pervasive. Major industries, such as mining and real estate, contribute substantial sums to political campaigns. According to the Australian Electoral Commission, political donations have steadily increased, raising concerns about their impact on policy decisions.
Case Studies
– Mining Industry: Significant donations from mining companies have been linked to favourable legislation, such as relaxed environmental regulations.
– Real Estate Sector: Contributions from property developers have coincided with policies beneficial to their interests, further inflating the housing market.
Comparative Analysis
Financial Requirements
Buying a house in Australia requires significant financial resources, including a large deposit, mortgage repayments, and ongoing costs like maintenance and rates. Conversely, political donations, while large, can offer a more immediate and direct return on investment through favourable policy changes.
Accessibility
Entering the housing market is increasingly challenging for average Australians, with stringent lending criteria and unaffordable prices. In contrast, political influence through donations is more accessible to wealthy individuals and corporations, raising concerns about equity and representation in the democratic process.
Outcomes
Homeownership provides long-term stability and investment returns but is currently out of reach for many. Political donations, on the other hand, can yield immediate policy benefits, creating a belief that political influence is more attainable than homeownership.
Societal Impact
Economic Consequences
The housing crisis has broad economic implications. High housing costs strain household budgets, reduce disposable income, and worsen wealth inequality. This dynamic affects overall economic stability and growth.
Political Consequences
The belief that political influence can be bought undermines public trust in democratic institutions. It fosters cynicism and disengagement, threatening the very foundation of representative democracy.
Australia’s Dollar Sovereignty
Australia’s monetary sovereignty allows the federal government to spend on public needs without the constraint of “running out of money.” This unique position can be used to address both housing and political issues.
Housing Solutions
1. Increase Public Housing: Investing in public housing can alleviate the shortage and give affordable options to low-income families.
2. Support First-Home Buyers: Implement targeted incentives for first-home buyers with strict regulations to prevent market exploitation.
3. Supply-Side Measures: Increase housing supply through government-backed construction projects.
Political Reforms
1. Cap Donations: Implement strict caps on political donations to reduce undue influence.
2. Transparency: Enhance transparency in political donations and lobbying activities.
3. Ethics Code: Encourage adoption of Tony Fitzgerald’s code of ethics to promote integrity and accountability.
Evidence Supporting the Headline
Housing Market
– Historical Decline: The decline in public housing from 20% in the 1950s to less than 5% today highlights the shrinking affordable housing options.
– Affordability Statistics: The median house price to income ratio has reached unprecedented levels, making homeownership increasingly inaccessible.
Political Influence
– Mining Industry Influence: Significant donations from mining companies have led to favourable environmental legislation.
– Real Estate Donations: Contributions from property developers have coincided with policies that help the housing industry, inflating prices further.
Tony Fitzgerald’s Code of Ethics
Overview
Tony Fitzgerald’s code of ethics emphasizes transparency, accountability, and integrity in politics. It aims to restore public trust and ensure that political decisions serve the common good.
Importance
The code is crucial for promoting ethical behaviour among politicians, reducing corruption, and enhancing democratic governance.
Reluctance to Sign
1. Conflict of Interest: Many politicians may face conflicts between ethical standards and lucrative political donations.
2. Lack of Accountability: Increased scrutiny and accountability measures can be daunting for those accustomed to the status quo.
3. Political Culture: An entrenched political culture resists change, viewing the code as a threat to established practices.
Incentives for First Home Buyers
Designing Effective Incentives
1. Targeted Support: Focus incentives on low and middle-income first-home buyers to ensure help reaches those in need.
2. Price Caps: Implement price caps on properties eligible for incentives to prevent developers from inflating prices.
3. Supply-Side Measures: Increase housing supply through government-backed construction projects to meet demand.
4. Regulation: Enforce tight regulations to prevent developers from exploiting incentives, ensuring the benefits reach first-home buyers.
5. Monitoring and Evaluation: Continuously check and evaluate the impact of incentives to ensure they achieve desired outcomes without unintended consequences.
Examples
– Singapore: The Housing and Development Board (HDB) provides extensive public housing, ensuring affordability and accessibility.
– Germany: Strict rent controls and tenant protections help support affordable housing options.
Policy Recommendations
Housing Market
1. Increase Public Housing: Government investment in public housing to address shortages and offer affordable options.
2. Support First-Home Buyers: Implement targeted incentives with strict regulations to prevent market exploitation.
3. Increase Supply: Boost housing supply through government-backed construction projects.
Political System
1. Cap Donations: Implement strict caps on political donations to reduce undue influence.
2. Enhance Transparency: Improve transparency in political donations and lobbying activities.
3. Adopt Ethical Standards: Encourage the adoption of Tony Fitzgerald’s code of ethics to promote integrity and accountability.
Conclusion
Australia faces significant challenges in both housing affordability and political integrity. By using monetary sovereignty, increasing public housing, supporting first-home buyers, and adopting strict political reforms, Australia can move towards a fairer and transparent society. Addressing these issues requires a commitment to ethical governance and a focus on the common good.
Question for Readers
What changes do you think are necessary to make housing more affordable and politics more transparent in Australia?
Call to Action
Join advocacy groups, support policy reforms, and take part in discussions on social media. Share this article with your contacts and widely on your social media.
References
CoreLogic: Australian Housing Market Update.
Australian Electoral Commission: Political Donations.
Queensland Crime and Corruption Commission: The Fitzgerald Inquiry Report.
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8 comments
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Bert -
Harry Lime -
Bert -
Denis Hay -
Kimble -
Terence Mills -
GL -
Harry Lime
Return to home pageThe cost of and availability of housing is a political football. If social housing is made ‘too available’, it will impact on the value of the existing housing stock and aren’t we just so very proud of the value of the homes we have, especially those who bought at the right time and have paid off the mortgage. All those investors who have bought into the market to rent out their houses will scream bloody murder if anything is done to reduce their return on investment, including negative gearing and preferential rates of income tax on income ‘earned’ and on capital gains tax at the time of reselling the properties. Those were proposed in the 2019 election and we got Scotty from Marketing on his way to heaven as Prime Minister and his cohort of ‘big swinging dicks’ sitting behind him, eyeing off the available talent for other than legislative assistance.
The seekers of power are too intimidated by those who back them, or as was demonstrated in 2019, those who aspire to join the mega wealthy (good luck, that is a very exclusive club)
Unfortunately, those most affected by the difficulties of buying a house are generally too disaffected politically, so disinterested that they pose no threat to those having political power. (A discussion with one such person apart from cynically saying that all politicians are liars, compared being a member of a political party to being a member of a church, being part of an orthodoxy, subject to the power brokers within that party.)
I wish I knew the answer to the questions raised.
Hi Bert,as long as greed rules, we’re fucked.We can’t fiddle with the property market..just ask carp mouth Dutton or Susssan of the flannel mouth.
Care about the average punter?…fuck right off.
So true Harry.
Some people need to know that we cannot take it with us when we go. The ancient Egyptians thought so and hoarded their riches with them as gifts to the gods.
Interesting story on the ABC today about millionaires not paying tax, but making donations to their worthy causes.
Just think, if we did not make those deductions legal much more tax could be collected and used for the greater good as com[ared to good for the ‘greatest’.
Also, interesting to see that the former head honcho at the AFL is now in charge of TABCORP. Nothing quite like looking after mates in high places.
Bert,
This was “The New Liberals” policy at the last election: https://tnl.net.au/wp-content/uploads/2022/01/TheNewLiberalsHousingPolicy.pdf but unfortunately they did not do well. Despite that, their policies were excellent.
“What changes do you think are necessary to make housing more affordable and politics more transparent in Australia?”
What a shame the CBA was sold off! The most obvious solution is government funded home loans at low interest rates (with a possible additional buy in option as joint tenants for a percentage of the ownership to be held by government for a period of time, and favourable refinancing terms to remove them from the title) for first home buyers… I don’t suppose the RBA wants to get in on the action? More $$$ paid in interest to be directed to expand infrastructure to support more housing.
Rather than pillaging super for deposit more SMSF investment in residential housing, and a pathway to assist in setting up such opportunities for middle income households. Perhaps a review of the at arm’s length rules for this. Clearer guidelines and definitions. More scrutiny on current funds and a tighter auditing scheme.
Limiting negative gearing to no more than 3 properties for individuals investors (mum and dad investors should be satisfied with this concession), and one property for corporations and other entities such as partnerships and trusts.
More scrutiny on rental deduction claims at tax time.
Tighten up Airbnb loopholes for tax purposes.
Targeted audits for real estate and property investors. Published decisions on such would need to be more broadly highlighted in the media (good luck on that one while uncle Rupi is still alive and kicking).
More government funded financial planning services (not just when it’s time to claim the Age Pension).
A broader, federally adopted definition of “financial abuse”. With compensation payable to victims and awarded by a civil court. That one would be fun to play with, in the digital world…
As for the transparency?
Limitations on use of “parliamentary privilege”. Really not sure how that could be legislated and enforced, not a lawyer.
External oversight of disclosures made by politicians (I would suggest they are required to self represent at this, not through lawyers).
Public shaming of politicians who are caught out in multiple transgressions. Of course, innocent until proven guilty and all, but even a first year psychology student will be able to recognise a pattern of behaviour, you would hope!
Expand the remit of the Proceeds of Crime Act to include crimes against natural justice, not just the criminal code…. This would probably require an update to the Constitutional Act, Privacy Act, and several other statutes. Meh. Above my pay grade.
Of course, just spitballing here…
Interestingly, official interest rates in the US are higher (5.5%) than those in Australia (4.35%) but it’s not a big deal in America mainly because interest rates on housing loans are typically fixed for thirty years.
This stability in home loan interest rates in the USA was achieved by government intervention during the 1938 depression when The Federal National Mortgage Association, commonly known as “Fannie Mae,” and the Federal Home Loan Mortgage Corporation, “Freddie Mac,” were created and are the two government-sponsored enterprises chartered by the U.S. Congress to oversee interest rates. Neither originates or services its own mortgages. Instead, they buy and guarantee mortgages issued through lenders in the secondary mortgage market.
The result is that homeowners can benefit from fixed interest rates [not always the cheapest on the market] for the entire term of the loan rather than be subjected to the constant fluctuation we are exposed to in Australia – 13 RBA increases from May 2022 to November 2023 all of which were passed on to borrowers by the trading banks and arguably have contributed to the housing crisis we are currently facing.
Something we need to think about !
https://www.investopedia.com/articles/economics/08/fannie-mae-freddie-mac-credit-crisis.asp
It’s cheaper to buy a pollie than to buy a house. In fact, you could probably purchase multiple parliamentary seat warmers for the price of a home.
“What changes do you think we need to make housing more affordable ,and politics more transparent?”‘…vote the Labor/Liberal duopoly out.Politics in this country is a sick animal, and the only humane thing to do is put it out of our misery.We must also include the Nationals, who have a ridiculous advantage in number of seats per percentage of voters.Being ‘led’ by that clatterfart Littleproud just adds insult to injury.I’m optimistic that the Independents are going to tear a bigger hole in ‘business as usual’Dutton, in his supreme stupidity has guaranteed the Teals of retaining their seats and put a few more in serious risk.