Politicians time to take the reins with RBA out of ideas: Alan Kohler

Politicians time to take the reins with RBA out of ideas: Alan Kohler
Politicians time to take the reins with RBA out of ideas: Alan Kohler

The Australian columnist Alan Kohler says to a large extent the 2016 Federal will be all about house prices, which he suggests "is both good and bad."

He says the Reserve Bank is out of ideas as "cutting interest rates to lower the dollar just sends house prices higher."

Instead Kohler says its the politicians’ turn to do something. 

The Labor Party wants to limit negative gearing to new construction, the Coalition wants to reintroduce the Australian building and Construction Commission.

The policies, he suggests are seeking to address high property prices and  high wages. 

"Workers have to be paid a lot to service their housing debt; without overpriced houses, Australian wages wouldn’t have to be so high," he notes.

"Labor has a tricky selling task selling its negative gearing policy because it is trying to argue that the change will make housing more affordable, but won’t result in house prices falling. 

"So Labor leader Bill Shorten has to assert that it will merely lower the rate of increase in house prices.

"Similarly, the Coalition’s policy of cracking down on the construction union and bringing back that ABCC, which is the potential trigger for the double dissolution election and therefore its key reason, is an attempt to reduce the cost of building apartments and thereby reduce Australia’s high cost structure."

Kohler suggests despite it being discussed politically as an ideological anti-union crusade, "which it is to some extent", at a practical level it’s just an attempt to bring down Australia’s high cost of housing. 

"The dividing point between union and non-union construction is three storeys: anything above that height must involve the CFMEU.

"Research commissioned by Master Builders Australia has found that the difference in labour cost between four storeys and two storeys is 24 percent."

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

Tags: 
Interest Rates

Comments

Be the first one to comment on this article
What would you like to say about this project?