Page 228 - Week 02 - Tuesday, 6 March 2007
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housing, people who buy their own home, but, on the other hand, not putting housing out of the reach of ordinary Canberrans. Unfortunately, that is what we are starting to see at the moment for many people.
The Chief Minister spoke about housing stress for those on low incomes. That is certainly the case, although I suggest that, for many on low incomes now, housing is out of reach. Housing stress often applies to many on middle incomes these days that have just enough income to scrape up the deposit and to make the monthly mortgage repayments through working extra hours or working an extra job. We see that all over the place. As I said, there is no easy fix. But this government have been very slow to come to it, so it is going to take some time, and I urge them to speed up their efforts.
What are the causes of a lack of housing affordability? The causes are many and we have had some of them laid out by Dr Foskey and others: capital gains tax being halved; negative gearing; property taxes at a state and territory level; ever increasing regulation at a local level and, of course, the squeeze on land releases. In the ACT it is clear that this squeeze has been deliberate. The land squeeze part of the equation could have been avoided. That would not have solved everything, but it certainly would have changed things if we had seen somewhat quicker land releases over the past few years.
According to the Demographia International Housing Affordability Survey, nearly 90 per cent of the increase in housing costs is attributable to land price inflation, which has risen at double the rate of the most escalating component of the consumer price index. It is clear that in the ACT, where the government controls the vast majority of the land, the government has a fair say in this massive increase in the cost of houses.
For a long time, certainly since I came into this place and before, I have been arguing that the government needs to have land ready to go to meet spikes in demand. It needs to be bringing it online. You cannot flood the market. You cannot then suddenly try and play catch-up and throw lots of land out there. That is not the way to do it. You will affect those people who have just bought into the market, those who then go into negative equity. No one wants to see that. I certainly would not advocate policies like that and that is why it takes some time.
That is why the land release policy has to be sensible. That is why you cannot go on the best-case scenario or the lowest estimates of what growth is going to be like and what demand is going to be like. You have to be ready for the upper limit of what demand might be. We here in the ACT certainly have not been ready. That was clear last year when we saw the hurried announcement of the west Macgregor release.
Clearly the Chief Minister there bypassed the planning minister and the LDA. It was an acknowledgment that the LDA and the planning minister have been too slow to react. We certainly knew. We should have been planning for high-end scenarios, rapid growth and high demand, but we seemed to be planning for moderate and slow growth and moderate and slow demand. We have been caught short.
We have known for some time there was going to be a spike in demand. The economy has remained solid. For some time the ACT has been benefiting economically from
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