There has been a lot of media attention recently regarding negative gearing etc. so I decided to take same action and write Mr Hockey an email stating my displeasure at his inaction on housing affordability. His email address is joe.hockey.mp@aph.gov.au for anyone interested in doing the same. Email was as follows:
Dear Mr. Hockey,
I'm a 31 year old non-homeowner and single working professional and I wanted to state my displeasure at your lack of real action on tackling affordability issues of housing for young Australians.
You have previously stated recently that "I get a lot of people approaching me saying that young people should be able to use their superannuation to fund a deposit on their home". Now this is obviously very different to "I get a lot of young people saying they should be able to use their superannuation to fund a deposit on their home". If I was a baby boomer with investment properties and I was only concerned for my own welfare I'd probably want young people to access Superannuation also as this additional buying power would go straight into my pockets. However, I'd like to think I put the welfare of Australia first before my own benefit - These people do actually exist Mr. Hockey.
By focusing purely on increasing demand you do very little to increase housing affordability and this simply increases already extremely high housing. The same thing happened when First Home Owner Grants were double or even tripled by the Labor Party during the last financial crisis it simply brought future demand forward and increased the cost of housing. Young people don't want gimmicks to assist with housing they want cheaper housing which the generations before them received.
In regards to negative gearing which you have talked about recently you stated that this actually increased the costs of rents when it was previously removed by the Hawke/Keating government in 1985. You are 100% correct that rents increased during this period however clearly you don't understand the difference between correlation and causation or you are choosing to ignore the real reason rents increased. As you are aware this was an extremely high inflationary period so if we actually adjusted for inflation rents were actually stable during this period although they did rise in Sydney and Perth but fell in every other state in inflation adjusted terms.
I think we should constantly strive to be the best country in the world and at the moment if I was being honest I feel ashamed to be Australian. High house prices does not create wealth it creates debt. For every seller there must be a buyer it is a zero-sum game. We had a once in a life time mining boom and we have nothing to show for it except for high housing. The fascinating thing about basic economic theory is you can constantly change the rules (i.e. negative gearing, FHOG, leverage for super funds etc.) as much as you want but you are only prolonging the inevitable when things revert to the mean. So you can either take some initiative now or potentially be remembered as the treasury who led us into the next depression. Three out of four of the major bank CEO's have left in the last six months or so and the current CEO of CBA recently sold a property in Paddington, Sydney. Perhaps they see the writing on the wall..
Although I would benefit greatly from a crash in house prices this is not my wish. The only way to prevent a crash from occurring is to take action today. Sadly I think real tax reform will only happen during times of crisis which is a real shame. All the work has already been done for you Mr Hockey with the David Murray inquiry and the Ken Henry tax review. It is just awaiting someone of your capacity to implement. Wouldn't you rather have this as your legacy?
Regards,
Dear Mr. Hockey,
I'm a 31 year old non-homeowner and single working professional and I wanted to state my displeasure at your lack of real action on tackling affordability issues of housing for young Australians.
You have previously stated recently that "I get a lot of people approaching me saying that young people should be able to use their superannuation to fund a deposit on their home". Now this is obviously very different to "I get a lot of young people saying they should be able to use their superannuation to fund a deposit on their home". If I was a baby boomer with investment properties and I was only concerned for my own welfare I'd probably want young people to access Superannuation also as this additional buying power would go straight into my pockets. However, I'd like to think I put the welfare of Australia first before my own benefit - These people do actually exist Mr. Hockey.
By focusing purely on increasing demand you do very little to increase housing affordability and this simply increases already extremely high housing. The same thing happened when First Home Owner Grants were double or even tripled by the Labor Party during the last financial crisis it simply brought future demand forward and increased the cost of housing. Young people don't want gimmicks to assist with housing they want cheaper housing which the generations before them received.
In regards to negative gearing which you have talked about recently you stated that this actually increased the costs of rents when it was previously removed by the Hawke/Keating government in 1985. You are 100% correct that rents increased during this period however clearly you don't understand the difference between correlation and causation or you are choosing to ignore the real reason rents increased. As you are aware this was an extremely high inflationary period so if we actually adjusted for inflation rents were actually stable during this period although they did rise in Sydney and Perth but fell in every other state in inflation adjusted terms.
I think we should constantly strive to be the best country in the world and at the moment if I was being honest I feel ashamed to be Australian. High house prices does not create wealth it creates debt. For every seller there must be a buyer it is a zero-sum game. We had a once in a life time mining boom and we have nothing to show for it except for high housing. The fascinating thing about basic economic theory is you can constantly change the rules (i.e. negative gearing, FHOG, leverage for super funds etc.) as much as you want but you are only prolonging the inevitable when things revert to the mean. So you can either take some initiative now or potentially be remembered as the treasury who led us into the next depression. Three out of four of the major bank CEO's have left in the last six months or so and the current CEO of CBA recently sold a property in Paddington, Sydney. Perhaps they see the writing on the wall..
Although I would benefit greatly from a crash in house prices this is not my wish. The only way to prevent a crash from occurring is to take action today. Sadly I think real tax reform will only happen during times of crisis which is a real shame. All the work has already been done for you Mr Hockey with the David Murray inquiry and the Ken Henry tax review. It is just awaiting someone of your capacity to implement. Wouldn't you rather have this as your legacy?
Regards,