Housing should not be left to states: HIA
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Confirmation from Canberra this week of the axing of an affordable housing scheme has added to the discomfort about the federal government’s preference to leave policy settings to the states.
“They can’t just walk away from their responsibility [for broad housing policy settings],” the chief executive of peak lobby group the Housing Industry Association, Graham Wolfe, told The Saturday Paper this week.
“Housing Australians is a national objective, whether that is through home ownership or government-supported housing. Federal government policies impact on housing needs and demand at various levels. It has a role to play in meeting our housing needs, and should not pass that national objective on to the states to take sole responsibility. Housing Australians should not be a victim of imbalances in our federal system.”
Immigration policy, workforce capacity, workforce mobility, paid parental leave and family benefits are core federal responsibilities, and all have an impact on demand, Wolfe says. “Ensuring access to shelter for every Australian is a fundamental welfare objective, and not one left solely to the states and territories to fix.”
The HIA’s concerns about the federal government’s hands-off approach to the housing market were compounded when the unveiling of the budget on Tuesday night confirmed the axeing of the final tranche of the former Labor government’s National Rental Affordability Scheme – in a move set to save the government up to $235.2 million in the next three years. The scheme offered incentives to build low-cost rental housing, paying developers $10,000 a year for 10 years if they charge rent at 20 per cent below market rates. The industry had been expecting up to 10,000 more applications for the assistance after 40,000 had already been allocated.
The HIA also expressed concern about recent decisions to cut some of its construction-related data – information it says is important to maintain a detailed picture of the health of the sector. Among several examples it cites the recent Australian Bureau of Statistics decision to stop keeping track of some construction materials; and a 2010 discontinuation of records relating to the size of dwellings approved.
The HIA’s remarks come amid evidence that residential prices took a breather in the first three months of the year. National capital city prices rose 1.7 per cent during the quarter – taking the 12-month rise
to 10.9 per cent.
The latest ABS figures underscore Sydney’s position as the hottest market, with prices rising 2.3 per cent in the first three months of 2014. Canberra was the only capital to record a quarterly fall of 0.1 per cent – a position that may well be worsened when the public service job cuts announced in the budget begin to flow through.
“The rise in prices has contributed to a rise in the total value of residential dwellings to $5.1 trillion in the March quarter 2014. The average value of Australia’s 9.3 million residential dwellings was $546,500,” the bureau said.
But housing finance for owner-occupiers fell slightly in March, easing by 0.1 per cent compared to February.
For economists there is a correlation between housing finance and retail spending, which climbed just 1.4 per cent in the March quarter, adding to fears Australia’s economic growth is still sub-par, and underscoring concerns raised this week about weak consumer confidence.
Amid the avalanche of numbers that measure every element of commerce came one of the more popular economic statistics.
The Big Mac index – first invented by The Economist magazine in 1986 – compares the US dollar cost of this giant of fast foods around the world. Deutsche Bank’s version of the index shows the $US4.47 cost of the Australian Big Mac in the middle of the pack. For the cheapest burger, head to India, where the burger costs just $US1.54 (of course, in India, McDonald’s doesn’t sell beef burgers). In Norway, however, you’ll have to shell out five times as much: $US7.80.
But for those washing their meal down with a two-litre bottle of Coke, Australia is the second most expensive place listed (after New Zealand), with the soft drink costing $US3.19, compared with a paltry $US1 in Mumbai.
The more serious point of the bank’s annual “The Random Walk: Mapping the World’s Prices” report is that: “Australia is overall the most expensive major economy, while the United States is generally the cheapest developed country. Brazil remains very expensive for a developing country. However, partly due to exchange rate movements, Australia and Brazil have had their prices tempered in US dollar terms,” according to Deutsche global strategist Sanjeev Sanyal’s accompanying commentary.
Meanwhile, on Monday there will be a final footnote to the slow-motion takeover of Australian building giant Leighton Holdings by Spanish-owned Hochtief, as the details of the unusual proportional takeover deal will finally be voted through (a certainty given Hochtief now owns 69.2 per cent). It will mark a formal end to decades of slow stalking by the Europeans.
But the generosity of a $23 million payout to two ousted former executives, announced in March, has drawn the ire of shareholder groups and governance experts, and ran in stark contrast to the deal offered to shareholders, who were offered $22.50 for three out of eight shares.
Dean Paatsch, co-founder at Ownership Matters, says he would prefer that the extra money go to shareholders rather than departing executives, while other governance experts added their concerns about what they see as an excessive payment.
The bulk of the near $13 million payout for former chief executive Hamish Tyrwhitt, and $10 million for former chief financial officer Peter Gregg, was for “unvested equity options”, including those for all of 2014 – despite their departures in March, and the fact that Leighton had undershot market expectations in recent years.
Meanwhile, sports fans might note that one of the ACS directors about to join the Leighton board is Pedro López Jiménez, who just happens to be vice-president of Real Madrid – one of the world’s wealthiest and most celebrated soccer clubs.
This article was first published in the print edition of The Saturday Paper on May 17, 2014 as "Housing should not be left to states: HIA". Subscribe here.