Legislative Assembly for the ACT: 2010 Week 05 Hansard (Wednesday, 5 May 2010) . . Page.. 1778 ..
really how wrong they got it. They particularly got it wrong several years ago, and I have made this point on a number of occasions in this place. There was a squeeze on land supply at just the wrong time in the cycle back in 2002, 2003 and 2004. We saw this massive gap open up between the growth in ACT house prices and the growth in total earnings in the ACT.
We have this graph which demonstrates that. I will show it to you, Madam Assistant Speaker, but I will talk to it. It shows very clearly the fact that what we saw from March 2002, and particularly from June 2002, was this massive gap begin to open up. If you look at the total earnings in the ACT, they have tracked fairly steadily up over the period from 2002 right through to 2009. They have been pretty consistent.
Wages growth in the ACT has been very strong for many years, stronger than in the rest of the country most of the time. It has not always been the case, of course. The mining boom states will often outstrip us from time to time. But in terms of consistency, we have been strong, partly because of the commonwealth public service being here. Of course, we have seen that around the nation. Wages growth, particularly under the Howard government, was very strong for many years.
What we saw though, despite that growth in wages, was the squeeze on land supply that occurred around 2002, 2003. This massive gap opened up where from March 2002 to December 2003 house prices in the ACT went up around 50 per cent. So that happened in only a little over a year. They went up over 50 per cent in that period. Wages growth could never, ever keep pace with that kind of increase. It simply would not be sustainable in any way for wages growth to catch up in any way to that.
That is what we have seen. We have seen since that time that that gap has never closed. I will get to some of the reasons why I think we see some of those issues. Because of the government’s very slow land release policies, a lot of strain has particularly been put on first homebuyers in the territory.
The announcement in yesterday’s budget referred to in Ms Porter’s motion I think is a reflection of that. It is a reflection of that failure. It is a reflection of the fact that this government has not got it done. I have got to say this, and I have made this point a number of times: once you let that genie out of the bottle, once you really squeeze that supply at times of high demand and you see unsustainable prices going up, it is very difficult to actually put that genie back in the bottle. It is very difficult because the policy fixes are mainly unpalatable.
It is actually not sensible to try to quickly correct that because that can have very bad consequences. It is not sensible to turn around once you have pushed prices up in that unsustainable way through squeezing land supply and try to quickly correct it, as I say, through flooding the market. We have never advocated that because that would have serious impacts for those who have purchased, particularly recent purchasers.
It might be okay for those who have a lot of equity in their homes, although they would not be comfortable with it, but particularly it would hurt those people who have recently bought, who may not have much equity in their home and who are relying on some growth in their house prices. This is the vicious circle we get into once you let that genie out of the bottle.