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The Political Will Is Lacking To Fix Our Housing Affordability Crisis

Voters at the next election may well make it their priority to replace our current pollies with those who will fix the problem.

09/03/2017 6:18 AM AEDT | Updated 09/03/2017 6:25 AM AEDT

Video by Tom Compagnoni

Unacceptably, for too many Australians, home ownership has turned from dream to nightmare.

Soaring property prices in our capitals have seen many low and middle-income earners excluded from property ownership despite increasing average wages. The upfront cost of housing for ordinary Australians has increased from almost three times their household income in 1980, to almost nine and a half times in 2016.

Those consigned to renting now face a financial double whammy. Between 2002 and 2012, the average nominal rent increased by 76 percent for houses and 92 percent for dwellings such as flats and apartments.

This national housing affordability and availability crisis illustrates all that is wrong with Federal politics in Australia.

Homelessness seems intractable, the number of families experiencing housing stress is on the rise and home ownership is increasingly out of reach. And news on the weekend that a three percent rise in interest rates would cause a million Aussie home owners to struggle with repayments is a massive wake-up call.

This year's Demographia International Housing Affordability Survey placed Australia among the world's least affordable markets. Sydney took second place in global unaffordability, but its report also described Adelaide -- my home town -- as "severely unaffordable" and the 16th least-affordable market.

This national housing affordability and availability crisis illustrates all that is wrong with Federal politics in Australia. It's a festering wound that has grown under the stewardship of successive Coalition and Labor Governments over the past few decades. There has been plenty of talk, numerous inquiries and dozens of recommendations at a Federal level, including nine major housing affordability and home ownership reviews since 2003.

On the weekend the Liberal member for Bennelong, former Davis Cup tennis hero John Alexander, described the situation as "the biggest domestic issue in Australian politics". He has a "grave concern" that "the bubble is out of control".

He's right.

Alexander describes himself as a lone voice within the Federal Government on the issue and I commend him for making his voice heard.

I've been calling for action for years -- and action is needed now more than ever.

In 2014-15 I was part of a Senate Economics Committee Inquiry into Affordable Housing. The report, after hearing evidence from around the nation, turned into a massive 496-page door-stopper. Pity it didn't turn into a barbeque stopper as well because a lot of its recommendations made a lot of sense. But even so, the report was split among party lines with the Labor and Coalition senators producing conflicting reports.

I recommended a set of holistic national goals to include local and state government planning laws, the infrastructure and social costs of urban developments, and the role of the Commonwealth to provide 'carrot and stick' incentives to encourage home ownership and housing affordability.

Measures such as employment growth, superannuation, tax credits, capital gains tax, negative gearing and decentralisation all need to go into the mix.

I also wrote that there ought to be transparent and accountable goals on increasing levels of home ownership, reducing rental and mortgage stress as well as levels of homelessness.

Now, more than ever, all members of Federal Parliament need to put political point-scoring aside and unite to find the right balance of solutions on this enormously challenging task. Measures such as employment growth, superannuation, tax credits, capital gains tax, negative gearing and decentralisation all need to go into the mix.

We may even be able to pick up on an approach in the US, from a surprising source. Ronald Reagan's 1986 Low Income Housing Tax Credit model is worth a look. It offers tax credits to developers that build rental housing targeted to lower-income households. It has provided an enormous amount of low-cost, affordable rental accommodation, and been described as one of the most effective housing policies ever in the US.

This policy from a conservative war horse has been embraced and enhanced by the Clinton and Obama administrations. It is the sort of innovative approach that boosts housing affordability and availability.

Negative gearing may also need to be tweaked.

It wasn't designed to benefit those with dozens of properties and who have the capital to outbid prospective owner-occupiers. Any changes to negative gearing need to be carefully made to prevent further inflationary impacts on the housing market. One option may be to place a cap on the number of properties that can be negatively geared.

It's the sort of approach that was floated by Treasurer Scott Morrison early last year, only to be shut down days later from the PM's office. Now the Treasurer has recently reiterated that negative gearing will not be touched.

There is plenty of research and measures that could be used to tackle this burning issue.

Capital gains tax breaks for property sales also need to be re-examined, taking a careful incremental approach so as to avoid market distortions.

On a state level, Victoria is now doubling first-home buyer grants in regional areas to give them a boost.

There is plenty of research and measures that could be used to tackle this burning issue.

Let's at least start with clear national goals and governments at a local, state and federal level working together.

What we lack is the political will of our elected representatives to make it a priority. This may mean that at the next election voters may well make it their priority to replace our current pollies with those who will.

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Over the next few weeks The Huffington Post Australia will run a series of daily blogs on housing affordability called The Great Australian Nightmare.

Everyone from senior government ministers to first-home buyers will have their say on what we at HuffPost Australia consider one of the biggest issues facing Australia.

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