Politicians must “chew gum” and “skip rope”: Urban Taskforce's Tom Forrest

EXPERT OBSERVER

Urban Taskforce chief executive Tom Forrest has welcomed the National Housing Finance and Investment Corporation (NHFIC) first flagship report producing five-year projections for housing supply and demand across Australia’s major cities and regional areas.

The report identifies some tough choices for politicians.

The Report identifies some short-term affordability improvements for renters and prospective first home buyers as a consequence of lower population growth coupled with COVID-19 stimulus measures.

However, the report also warns that affordability could deteriorate if supply is not responsive to the rebound in demand once migration returns to earlier levels.  This is the biggest risk for the NSW economy and it falls at the feet of the Planning Department.  This is our dilemma. NSW Planning has responded well to COVID – but as 2020 closes it is yet to progress any significant planning reform and many within it would prefer less housing supply, not more.

Housing supply and population growth through migration cannot be seen as an either/or policy choice. We need both and our political leaders should be capable of developing a policy package which supports both. 

The challenge for Sydney’s economic growth is migration. Sydney’s migration levels must return to pre-COVID-19 levels and above to keep the economy moving and generating the tax receipts that we need to pay for the care of the aging population (the baby boomers) many of whom do not have large superannuation balances.

Simply halting the decline in tax-payers as a proportion of the total population requires migration.

Our economic future, and that of hundreds of thousands of workers in the property and construction sector, depend on population growth. Population growth drives economic growth. 

Without significant migration numbers, the ageing of our population (the baby-boomer phenomenon) will leave us with a lower and lower taxpayer base trying to support a bigger and bigger tax bill.

Governments need to re-open borders to investor immigration, skilled immigration, and the return of foreign students; WHILE still supporting a pipeline of housing supply.

The NHFIC report finds the longer term trends of declining affordability are likely to persist, particularly if supply is not responsive to demand when it recovers.

Housing supply also needs to be dramatically increased to create downward pressure on prices. This will mean some tough decisions for Minister Stokes and the Department of Planning.  The local character of suburbs will need to change – or they will change by themselves – as a result of the progressive decay of the city arising from the decline in the economy.