Monday, April 24, 2023

Australians have made the wrong choice about housing for the last 40 years

A lot of hot air below. He says that our wish for comfortable and convenient housing is all wrong and we need to completely re-do how we house ourselves. He is right that there is a housing shortage problem but seems to think that what we do about the problem has to be sweeping in some unspecified way

That is nonsense. There is only one basic problem behind the housing shortage: We are not buiding houses fast enough to match our population growth. And the big influence behind the population growth is massive immigratiom. Put a moratorium on immigration for five years and the problem would vanish. The shortage is a government-created one and with little more than a stroke of the pen, the Federal government could end it

That is not going to happen of course but we should not pretend that the problem is mysterious, complex or insoluble. It is a product of meddling in the market by governments, including local governments that obstruct new building on NIMBY and Greenie grounds.

Abolishing the right of local governments to obstruct new house-building would unleash a surge of new dwellings and thus drive prices down to more affordable levels

The weekend auction battles around suburban Australia are leaving more than just emotional scars on the losing bidders.

Our love affair with property, which has driven the cost of housing to eye-watering levels and left Australians among the most indebted people in the world, is literally destroying our way of life and that of future generations.

The series we start today is not just a response to the high-priced houses and super-sized mortgages we have inflicted upon ourselves this century. It reflects the mounting evidence that one of our most basic needs – shelter – has become a dangerous financial instrument.

People cannot afford to live where they need. Our banks’ business models are based on one asset class – housing. The Reserve Bank must make decisions about the entire economy hamstrung by the huge level of mortgage debt held by ordinary Australians.

We have an army of mum and dad landlords who churn through their properties as they chase a capital gain because of the structure of our tax system.

The young and poorly paid, who a generation ago could afford their own home, now hope for an inheritance or loan from their parents to get a slice of the property market.

According to economists Sam Bowman and Ben Southwood and housing advocate John Myers, housing is more than just the size of your mortgage or inability to find an affordable rental.

They have developed what they describe as the “housing theory of everything”, which argues high-priced housing is at the heart of the many economic ills facing the globe.

Housing costs dictate where people live, the jobs they have, the size of their families and how they lead their lives. They mean we have to spend more on mortgage repayments or rent, giving us less to spend on goods and services. More broadly, people cannot live where they will be most productive. Businesses can’t get access to the people they need to operate to their fullest potential.

The world’s most productive areas, the places where the biggest breakthroughs are made, are in cities. But if we make them prohibitively expensive, the chance of a scientific or technological innovation is reduced.

At almost every point over the past 40 years, when given policy alternatives around housing, Australians collectively have made the wrong choice.

From local council chambers to the federal parliament, the wrong policy road has been taken.

Robert Menzies, and the state governments of the 1940s and 1950s, made Australia one of the great home-owning democracies through their public housing programs. But these have withered for decades.

It’s not just buying a house. Australian renters are, by any international comparison, poorly treated, be it from owning a pet to the length of tenure they might enjoy.

That’s exacerbated by a tax system that effectively encourages investors to own a single property who often struggle to deal with the issues that come with being a good landlord.

This series outlines the problem that is staring us in the face, how we came to make the decisions that created the problem, and some prospective solutions.

The solutions are not easy. If they were, previous governments would have tackled them. Instead, they have again and again kicked the issue off into the future or, even worse, come up with proposals that would make the situation worse.

Unless something changes, we are consigning ourselves to more economic pain. That’s pain that will be passed on to the next generation and the next.

As Grattan’s Brendan Coates warns, we are in danger of repeating the mistakes of the world inhabited by Jane Austen, where property was the way to wealth for just the upper echelons of society.

It is a truth universally acknowledged that the Australian housing industry cannot continue on as if nothing is wrong.


NDIS: Disability claims are potentially infinite. Funding for claims is not

Only severe disability can reasonably be supported

This year the cost of the NDIS will hit $35.5bn, some $5bn higher than the cost of Medicare and $8bn more than federal support for hospitals.

It’s the second-fastest-growing item in the federal budget after the cost of servicing government debt. The bill for the NDIS will reach $60bn by 2032 if left unchecked, more than the cost of Medicare and hospital funding combined.

The Productivity Commission’s optimistic prediction in its seminal 2011 report that “the additional costs of the scheme … are much lower than many people might think” proved wide of the mark.

The commission estimated that 410,000 Australians would be eligible for the scheme. The latest reported number is 585,000 and is rising at a rate of 6000 a month.

The cost of each individual plan is rising in double digits. How large the scheme might grow under the current rules is anybody’s guess, since the definition of disabled is now somewhat fluid. In his 2009 National Press Club speech, Shorten said “it would not be an exaggeration to say that 2 million Australians are affected every day by disability”.

The NDIS is essentially a powerful, fuel-guzzling locomotive sloshing gravy as it travels at breakneck speed without rails, fasteners, sleepers or ballast to control its path.

Shorten’s failure to acknowledge that the chief flaws of the NDIS lie in its design, not its execution, renders him unsuitable for its reform. He may be understandably besotted by the imaged genius of his own creation, trapped by the arrogance of believing the complicated model built from scratch in less than four years was perfect.

That is not the view of those condemned to run the thing, its beneficiaries or even those in the growing NDIS industrial complex who extract billions of dollars in profits every year. It is certainly not the view of the shonks whose lucrative business model relies on the scheme rortability.

Yet it is evidently the view of Shorten, who ungraciously lays the blame at the feet of the “administrative vandals” in the Coalition.

Last week he attacked the former government’s “malign neglect”, criticising the Coalition betraying disabled Australians by “leaving the NDIS wide open to fraud”.

His gratuitous and partisan attack on the Coalition, which has offered unwavering in-principle support for the NDIS from the very beginning, was demeaning of Shorten. He knows any genuine attempts to help make the NDIS more efficient and effective will be eagerly supported by Opposition Leader Peter Dutton.

Why? Because Dutton fully expects the Coalition to return to government one day, perhaps with himself as prime minister. He would dread the thought of inheriting the mess the NDIS has become since he can expect no help from Labor to reform it.

In 2021, when Linda Reynolds, the minister then responsible for the NDIS, put forward the modest proposal that NDIS claims should be independently assessed before payment, Shorten led a colourful attack against her and then prime minister Scott Morrison.

He called Reynolds’ plan “an anti-disability monster” and said she should “put a stake in its heart – not just delay it”. He labelled an independent task-force established by the NDIS oversight body, the National Disability Insurance Agency, as the Coalition’s “razor gang” and a “disgrace”. It was, he said, “the latest leak of a broader plan against the NDIS and participants” that the government was hiding “because even they know it is shameful”.

Shorten’s crude attempt to smear the opposition as the flint-hearted, iron-fisted enemies of the downtrodden is, sadly, par for the course in an era of gross political intemperance. Yet it betrays a blind spot in Shorten’s understanding of the problem child he himself conceived.

The NDIS needs more than the rebooting he is promising. It requires re-engineering from the bottom up. It must remove the incentives for providers to maximise the size of packages, the gross disparities between payments to beneficiaries with similar needs, and remove the overflowing bowls of sugar left sitting on the table waiting to be scooped.

It needs radical restructuring to restore the original promise of assisting NDIS recipients to become more self-sufficient over time, rather than rewarding those who profit from extending their disability. It will require claims to be subject to the kind of independent oversight the Morrison government was prevented from introducing by Shorten.


Peter Dutton warns corporate Australia to stop ‘being played for fools by the Labor Party’

Peter Dutton has warned corporate Australia to stop “being played for fools by the Labor Party” and accused business leaders of chasing popularity by signing up to social causes even if they don’t believe in them.

In a scathing attack on elements of the private sector, the Opposition Leader told The Australian that “too many business leaders say one thing in private and don’t advocate it publicly”.

The Liberal Party leader, who along with deputy Sussan Ley and Treasury spokesman Angus Taylor have traversed the nation meeting small and big business leaders after last year’s election rout, slammed private sector chiefs for “craving popularity on social media”.

“It’s time the business community stepped up and stopped being played for fools by the Labor Party. My door is always open to business leaders and those who employ Australians, but too many business leaders say one thing in private and don’t advocate it publicly,” Mr Dutton said.

“To be frank, some business leaders need to stop craving popularity on social media by signing up to every social cause, even though they may not believe in it.

“Our country deserves an honest debate on energy. The business community should be staring down the extremes of ESG (environmental, social, and governance), proxy voters and industry super funds ­demands on capital and stand up for the national interest.”

Mr Dutton’s pushback against corporate Australia comes as some industry leaders privately criticise the Coalition for opposing Anthony Albanese’s safeguard climate change mechanism, forcing the government to negotiate with the Greens, and not negotiating on Labor’s referendum model for an Indigenous voice.

While acknowledging the importance of securing business support, ranging from sole traders and small businesses to major employers, senior Liberal Party figures are frustrated by the “quiet anger” ­expressed to them by private sector figures.

Industry leaders, including some who cosied up to Labor ahead of last year’s federal election, have raised concerns with The Australian about Labor’s industrial relations, tax, energy and environmental agenda.

Lobby groups including the Minerals Council of Australia and Australian Petroleum Production and Exploration Association have ramped up resources and are preparing campaigns. Other leading industry groups have adopted cautious approaches since last year’s jobs and skills summit, which laid the ground for Labor’s multi-employer bargaining IR shake-up.

Mr Dutton, who along with Mr Albanese attended billionaire Lindsay Fox’s 86th birthday bash last week, said the Coalition would “always fight for the job creators and employers who keep our nation ticking over”.

“We understand business – be it small or medium or big – in a way that the Labor Party and their union mates simply don’t,” he said.

In his Sir John Downer oration last Tuesday, Mr Dutton championed business and industry as the “engine room of our economy” and promised employers that the Coalition was on their side.

Amid concerns about the Liberal Party’s splintering base, ageing membership and changing face of corporate and private donors, senior party strategists agree the party must modernise to ensure it remains competitive.

Amid concerns about the ALP’s support from unions and cashed-up industry super funds, some Coalition figures are agitating in favour of publicly funded campaign models. The Liberals and Nationals are facing long-term challenges in ­attracting donors, as companies come under pressure from shareholders, party members age or drop off and cashed-up entrepreneurs seek alternative options like the teals.

Prominent businessman, ex-Macquarie banker and former Myer Family Investments deputy chair Peter Yates said that in Victoria – where the Liberals are at their weakest – the party had focused too much on fundraising and not enough on membership.

Mr Yates said people donated to the Liberals because they wanted representation in government from a party that backed individuals taking risks to create wealth.

“A successful Australia is an economically strong Australia. Those who risk their human and financial capital for an unknown return should be celebrated. Those who grow the pie should be rewarded not diminished, and donors to the Liberal Party wish to see that purpose properly represented in government,” he said.

Billionaire retail king Gerry Harvey, who is not a prolific political donor like the Pratt family or Harry Triguboff’s Meriton Group, said the Liberals and other political parties had lost their way on delivering coherent policy positions: “When you start to talk about democracies like Australia, the world’s never been in a sillier place.”

The 83-year old businessman, who opposes political donations, said while the Liberals were “on the nose” after almost a decade in power, their time would come again.

“Labor got in with 32 per cent of the primary vote. It’s not what you’d call a ringing endorsement of any political party. A bit further down the track the Labor Party will be on the nose and the Liberal Party will be doing well,” Mr Harvey said.

Bankers and chief executives, many who live in inner-city electorates lost to the teals, said they believed the Liberal Party must attract more women and win back female voters.


Long Covid costing Australia at least $5.7b a year

While the exact level of absenteeism caused by long COVID is not known, new analysis by Impact Economics and Policy, using a “lower range” estimate that an average of 40,000 people are unable to work due to the illness, puts the weekly cost to gross domestic product at $110 million, or $5.7 billion annually. If the highest estimates for long COVID absenteeism is used the cost to GDP rises to $880 million a week, or $46 billion a year.

Dr Angela Jackson, an economist at Impact Economics and Policy who did the costings analysis, said the figures “highlight the long-term economic costs from COVID-19 and the ongoing need for public health measures including vaccination and education”.

Writer and editor Jackie Bos is one of the thousands whose working life has been disrupted by long COVID. She contracted the virus a year ago and has still not recovered. Her symptoms included breathing difficulties, persistent “brain fog” and memory loss, chest pain, nerve pain, internal tremors, palpitations, dizziness, rashes, fatigue and weight loss. “Unfortunately, it is not past tense, but it is improving,” she said.

Bos tried to return to work last May but felt too unwell to continue. After using all her sick leave and holiday leave she started receiving social security payments in January.

As a permanent part-time employee who worked just over three days per week, she was earning $1400 net per fortnight. She estimates she has lost about $9000 in income since January, not including any additional freelance work she would normally do.

Bos, 57, has been living in a shed on her sister’s property in the Southern Highlands since late August. "I’ve got that family support and company,” she said.

A submission to a federal parliament inquiry by Mary Angeles, of Deakin Health Economics, and Professor Martin Hensher, of the Menzies Institute for Medical Research, says there is growing international concern that long COVID is preventing people from working “at levels high enough to impact the overall labour force”.

The submission says people in Britain and the US with long COVID typically reduce their work hours and around one in 10 reduce them to zero. Researchers from the University of Southampton and the University of Portsmouth in the UK estimate that 80,000 British workers have left the workforce due to long COVID.

Modelling by Angeles and Hensher for the Deakin-Menzies Institute submission (and used by Impact Economics and Policy to estimate the economic cost of long COVID-19) showed the number of people whose daily activities are “limited a lot” by long COVID was at least 35,000, although under a worst-case scenario that number increases to almost 197,000.

“These people will still be experiencing symptoms that limit their daily activities a lot, with likely impacts on their ability to work with potential for long-term disability,” the submission noted.

“Mounting an appropriate response to long COVID is especially challenging … it cannot be ignored simply because it is inconvenient.”

A study by the Brookings Institution published in August 2022 found that more than 4 million Americans were out of work due to long COVID. It put the cost of lost wages in the US at $US170 billion a year (and potentially as high as $US230 billion).

The estimates of the economic cost of long COVID by Impact Economics and Policy (for Australia) and the Brookings Institution (for the US) focus on lost earnings.

But Harvard University professor of applied economics, David Cutler, says any economy-wide assessment of long COVID costs should also take account of lost quality of life.

Last July Cutler estimated the “implied cost of reduced health” and quality of life due to long COVID in the United States to be a mammoth $US2.2 trillion ($3.3 trillion) over a five-year period.

When lost earnings (put at $1 trillion over five years) and additional medical care costs ($528 billion) were included, Cutler found the overall cost of long COVID in America to be $US3.7 trillion ($5.5 trillion) equivalent to about 17 per cent of the output of the US economy in 2019.

Those vast totals, says Cutler, make policies to address the effects of long COVID an urgent priority.

“With costs this high, virtually any amount spent on long COVID detection, treatment, and control would result in benefits far above what it costs,” he concluded.

Angela Jackson, from Impact Economics and Policy, says COVID-19 is likely to permanently increase the cost of healthcare in Australia which is already equivalent to more than 10 per cent of GDP.

“Being responsive to this will make a lot of sense in terms of long-term health outcomes, but also due to the economic impacts,” she said.

Because long COVID can affect relatively young people, and potentially keep them out of the labour force for an extended period during prime working years, it has the potential to affect the long-term earning capacity of many sufferers.

“COVID represents something that may well reduce the productive capacity of the economy in the long term, so it’s something we do really need to get a handle on, and make sure we respond to it well,” says Jackson.




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