Housing

Oz Econ Pulse: Housing policy, Albo's record, Election flop, Why pollies don't reform

Justin Pyvis

17 Apr 2025 — 5 min read

Is this the worst election campaign ever?

This is the first of what I intend to become a regular Oz Econ Pulse, a free roundup of the economic, political, and social trends that impact Australia.

Normally I'd send it out on a Friday or Saturday but with the Easter break this is a short week, so here you go!

Dumb and dumber housing policy

Monday's Hot Take covered the latest housing policies to come out of the federal Labor and Liberal brain trusts. Neither will improve housing affordability:

"Both policies are political theatre, packed full of unintended consequences—if, with the mountains of evidence now out there, I can still call them "unintended"—designed to win votes rather than fix the housing crisis.

Unless these policies are accompanied with a heavy dose of yet-to-be-announced plans to navigate Australia's decentralised political system to ease restrictive zoning, fast-track approvals, overhaul onerous building codes, and tackle local government obstructionism, then they're only going to raise prices, reduce affordability for all but a lucky few, add to the nation's rapidly-growing debt, and increase risks to the nation's financial system."

You can read it here.

The tragedy of Albanese

On Wednesday I published a Deep Dive on the Albanese government, looking at its past, present, and possible future. With just two weeks to go until the election, Labor is pulling ahead in both polling and on prediction markets, so it's worth a read. Here's a slice:

"What Australia desperately needed—and still needs—is supply-side reforms to boost productivity. So-called Dutch Disease is a real concern, but the most effective way for a federal government to deal with that is by running budget surpluses and squirreling away the proceeds of any revenue windfalls to provide a buffer for when the day comes that the golden goose stops laying eggs.

Instead, Albo has delivered endless subsidies and winner-picking industrial policy, policies that historically deliver inefficiency and waste and are all too similar to his social policies—that is, substituting the judgement of people making deals with their own private property for the ill-informed and ill-directed judgement of government officials."

You can read it here.

The worst election campaign ever

In separate opinion pieces, Bernard Keane and Ross Gittins described this as the "worst election campaign ever" and "one of the worst I've seen", respectively.

Regular readers know I'm no fan of Gittins' economic takes. But I agree with his take on the politics of this election:

"Have you noticed the way politicians expect us to be – and encourage us to be – completely selfish? It simplifies their job. They tell us what they can do for us and our families, never what we should be agreeing to in the interests of the country.

And the more they talk about doing this little thing or that little thing for us – the more they make following elections good preparation for a trivia quiz – the more they avoid having to talk about a host of big but controversial issues: climate change, the environment versus jobs, AUKUS, school funding, online gambling and even uninsurable homes. Of course, I couldn't swear the media had played no part in dumbing-down election campaigns.
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This has taken the election-campaign fantasy land to a whole new level of unreality. The laws of economics have been suspended for the duration of the campaign. Government spending can only ever go up, while taxation can only ever go down. The budget deficit is presumed to be unaffected, covered by a sign saying Don’t You Worry About That."

And here's Keane:

"The terrible nature of this campaign isn't just around its profligacy, it's the wilful indifference to the need for serious climate action, to Australia's loss of its traditional security guarantor and the economic chaos Donald Trump has unleashed, to the unfolding disaster that is AUKUS, and to fiscal sustainability and surging net debt that will mean we'll soon be paying tens of billions a year in interest.

I've been watching elections since 1983. I can't recall one that's been as reckless, or where the big challenges facing Australia have been more persistently and deliberately ignored."

You may not agree with all of Gittins' and Keane's ideas of what the "big but controversial issues" are—I certainly don't. But at least they're willing to openly discuss them, unlike either of the two major political parties.

We haven't had tax reform for a quarter-century

Steve Hamilton wrote a great essay for the AFR, offering "a 3x3 blueprint to fix" the "dog's breakfast" that is Australia's tax system, starting with three "no-regrets" reforms:

"The first is to index the income tax thresholds to kill bracket creep. Bracket creep means all new spending is funded solely by income taxes, distorting our tax mix. We collect too much revenue from income and not enough from other sources. It also incentivises a lack of spending discipline by taxing by stealth.

The second is immediate expensing for all Australian businesses of any size for any investment. This is the 'instant asset write-off' on steroids. This is the single tax policy with the most overwhelming evidence in its favour to boost growth. No business would ever have to think about a depreciation schedule ever again.

The third is a standard deduction, which would give all taxpayers an annual deduction of say $3000 without receipts (or more with receipts). Nobody would be worse off, but taxpayers would save billions in compliance costs, nearly all tax avoidance would be eliminated, the ATO would face radically reduced administrative costs, and tax returns could become a thing of the past for nearly all."

He will no doubt be ignored because, as the next piece covers, the incentives for reform are all wrong.

Why aren't we more productive

Politicians talk a big game on productivity, but Lachlan Vass explained why their words are so often louder than action—they're "simply responding to incentives":

"Politicians are no different to the rest of us in that they respond to the incentives they face. And often productivity-enhancing reforms come with short-term costs (political, economic or social), while the benefits don't tend to materialise until the longer term.

With politicians (understandably) focused on re-election every three years, the prospect of incurring a clear short-term cost for a longer-term benefit isn't always a tempting one."

I'm not confident that the balance of those incentives will shift without a crisis. And no, I don't think increasing political terms to four years will do anything to fix it, either.