ECONOMIC AFFAIRS by Bob DayNews Weekly
Making housing affordable for young couples
, October 11, 2014
In his maiden speech, South Australian Senator Bob Day AO called for a reform to home ownership rules to make homes more affordable, addressing one of the major problems for young people and families, and addressing the artificial barriers to employment.
Senator Bob Day AO
Before being elected as a Family First candidate in SA, Senator Day was one of South Australia’s leading home-builders. A strong believer in the Australian Constitution and states’ rights, he served for many years as secretary of the Samuel Griffith Society, which was founded in 1992 by John Stone. These are extracts from his maiden speech.
“Every family, a job and a house.” If every family had a job and owned a house, the benefits to this nation would be great indeed. Australia would be transformed. So why doesn’t every family have a job and own its own home?
There are a number of reasons, but in the main it is barriers to entry.
As a senator, I have been elected to do two things: represent the great state of South Australia, and implement the policies that my party and I have been expressing for many years — namely, removing the barriers that prevent people from getting a job and owning their own home.
When it comes to jobs and houses, Australia is not a free country.
Let me begin with barriers to getting a job. For the low-skilled, poorly educated or socially disadvantaged, or for those who lack connections or even self-confidence, the barriers to entry to getting a job are serious indeed.
When I started in the housing industry 40 years ago, every tradesman had an apprentice. Apprentice wages were very low, as apprentices were treated very much like students and received the equivalent of a student allowance — like every other student in the country.
Young people who were not particularly suited to or interested in academic study attended technical schools and then did an apprenticeship. Since then, we have made employing apprentices such a nightmare that few tradespeople are willing to take them on, yet there are thousands of unemployed young people who would love to learn a trade and get a start in the workforce.
I spent many years working on building sites.
I came across many young lads not enjoying school, causing trouble at home and getting in trouble with the police, who then started working on a building site. I can tell you that by Friday night they were too tired to be hooning around in cars, setting fire to brush fences and spraying graffiti at all hours of the night.
I know hundreds of tradesmen — carpenters, bricklayers, tilers — who left school at 15 and have gone on to lead very happy and successful lives.
These same early school-leavers now all have cars and boats and two or three investment properties — and they send their kids to private schools. They are also members of the local Country Fire Service or surf-lifesaving club and they coach local football or netball teams.
They are good citizens, yet they received very little in the way of formal education. As the old saying goes, it is not what you are good at in school that matters, but what you are good at in life.
I note the Newstart allowance at the moment is worth about $240 a week and the minimum wage is about $640 a week. Between $240 and $640 there is a no-go zone where anyone who offers or accepts anything in between is breaking the law.
In fact it is even worse than that because we do not permit anyone to work for any amount between nought and $640.
We praise people who work for no money — working up to 40 hours a week in op shops and nursing homes and for the RSPCA — but we do not allow them to work for more than zero until you reach $640. If you are allowed to work for nothing, surely you should be allowed to work for something. It is absurd.
Let me now move on to barriers to home ownership.
For more than 100 years, the average Australian family was able to buy its first home on one wage. Young couples got a start in the housing market and worked up from there.
The median house price was around three times the median income, allowing young home-buyers easy entry into the housing market. The median house price is now more than nine times what it was for 100 years between 1900 and 2000.
At nine times median household income, a family will fork out approximately $600,000 more on mortgage payments than they would have had house prices remained at three times median income.
That is $600,000 that they are not able to spend on other things — clothes, cars, furniture, appliances, travel, movies, restaurants, the theatre, their children’s education, charities and so on.
The economic consequences of this change have been devastating. The capital structure of our economy has been distorted to the tune of hundreds of billions of dollars. And for those on middle and low incomes, the prospect of ever becoming home-owners has now all but vanished.
Housing starts have plummeted, and so have all the jobs associated with it — civil construction, housing construction, transport, appliances, whitegoods, soft furnishing, and the list goes on. That is not to mention the billions of dollars in lost GST revenue to the states.
The single most important factor affecting housing affordability has been land. In no other area of the economy has the interference of government been so pronounced, so unsuccessful in its implementation and so catastrophic in its effect.
The deliberate policy to limit urban growth — that is, limiting the supply of land on the urban fringes of our cities by introducing urban growth boundaries and, at the same time, promoting urban densification — has been a disaster socially, economically and environmentally.
And it was all designed for one purpose: to make money. It had nothing to do with the environment, the cost of infrastructure, public transport or any other reason put forward.
If, at the end of my term in parliament, everyone who wants a job has one, everyone who wants to own a home can do so, and my home state is stronger and more independent than it is now, then my time in this place will end well.