How do you make a wealthy and democratic country into a poor and despotic one? One Australian Greens policy at a time.

American journalist and satirist H.L. Mencken once quipped that, ‘For every complex problem there is an answer that is clear, simple, and wrong.’ This sentiment aptly describes Greens housing spokesperson Max Chandler-Mather’s proposal to address housing affordability by making every Australian poorer.

Chandler-Mather, who is often wrong but seldom in doubt, has indicated that the Greens’ housing policy objective is to reduce the value of housing in real terms.  Said Chandler-Mather, ‘I think our goal, our stated goal, is to stop house price growth, so zero per cent growth, to give wages a chance to catch up.’ This policy hinges on the expectation that wages will rise and not fall as a consequence of implementing this and other Greens policies.

The Australian property market faces significant issues and distortions, notably the growing difficulty for young Australians to buy a home or afford rising rents. These problems are leading to major social, economic, and national security concerns. However, the affordability crisis stems from a long fermenting cocktail of poor policies across all levels of government. These complex issues cannot be resolved through simple slogans or superficial policies, regardless of how passionately they are presented.

Oblivious to the broader consequences, Chandler-Mather has proposed ‘a combination of phasing out tax handouts for investors, rent caps and government-built affordable homes.’

If the goal is to improve housing affordability, government-built homes are not the answer.  Historical evidence shows that government construction does not provide lower-cost, higher-quality ‘affordable’ housing when compared to the private market. In fact, there is substantial evidence indicating that the unholy matrimony of government with the CFMEU in construction projects only increases timelines and costs. Costs which are borne by taxpayers further burdening Australians with higher taxes for longer.

Imposing rent caps would result in a significant reduction in the number of properties available leading to increased rents and reduced maintenance. Swedish economist Assar Lindbeck famously said that, ‘Rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.’

As to the tax policies proposed, phasing out negative gearing and abolishing the capital gains tax discount, are nothing more than massive tax increases with equally massive consequences.

The so-called capital gains discount is in fact not a discount but rather an administrative simplification of accounting for the effects of inflation. The abolition of the capital gain tax discount would thus require asset owners to pay a tax on asset price increases caused by inflation, and would not just affect property assets but all capital assets including shares, bonds, businesses and farms. This would lead to a decimation of the savings and wealth of all Australians.

The impact on the financial system of property price deflation (in real terms) would also be significant as banks and other lenders would be reluctant to provide loans against an asset declining in value. A collapse in lending would follow with a financial crisis almost certainly to ensue. Interest rates would spike. Businesses would collapse.  Unemployment would soar.

No doubt the Chandler-Mather and his Greens comrades would blame and further punish the middle-class Kulaks when the market did not behave as demanded.

Perhaps such policies won’t ever be implemented, but the social damage caused by raising false expectations for short-term political gain is unconscionable.

The factors contributing to young Australians’ struggle to afford housing are multiple but include Australia’s high levels of immigration, the labyrinthine layers of regulation, and the usurious levels of tax in Australia necessary to finance Australia’s bloated bureaucracy and middle-class welfare industrial complex. All policies supported by the Greens. Over one-third of the cost of a newly built home is tax; collected to feed the bloated, inefficient, and ineffective administrative and bureaucratic leviathan.

It is emblematic of the problem that a family with a combined annual income of up to $533,280 can access the government’s childcare rebate or that a family on a combined annual income of up to $302,000 can access the government’s private health insurance rebate.

NDIS waste and fraud coupled with perverse incentives have also placed the current $49 billion scheme on track to consume the entirety of all Commonwealth government revenues within 25 years.

The Greens offer no policies to address these issues. Policies to enhance young Australians’ disposable incomes through tax cuts, thus increasing their property purchasing and renting power are absent.

Similarly, the Greens offer no pro-productivity policies, such as regulatory or tax reform, to put downward pressure on inflation and interest rates, thereby improving young Australians’ ability to purchase homes. On the contrary, the Greens propose more taxes and more anti-productivity measures.

Chandler-Mather, who previously worked as a childcare worker, call centre employee, and organiser for the National Tertiary Education Union, appears to conflate the concepts of housing price and cost. Housing prices are determined by supply and demand dynamics, and effective policy should address the underlying factors influencing these prices rather than attempt to manipulate the end price through government force.

On the demand side, rents are impacted by the number of people seeking accommodation, which is rising and will be further exacerbated by the government’s plans to maintain high levels of overseas migration, plans supported by the Greens.

On the supply side, rents are effected by the volume and growth of premises available. In a normal market, rising prices are an invitation for more supply, but there are significant barriers to development, which limit and slow the construction of new premises.  These include complex and onerous approval processes, imposed by local and state planning authorities, often in electorates represented by Greens.

American economist Thomas Sowell once observed that humanity’s natural state is poverty, not prosperity. Therefore, Sowell emphasised the need to study the reasons why people are rich, rather than why they are poor. Axiomatically, wealth creation should be encouraged and incentivised rather than poverty subsidised.

Chandler-Mather and his colleagues advocate for policies that have been proven to be economically destructive and which would exacerbate rather than solve Australia’s problems.

The Greens’ policies will not improve the state of housing affordability in Australia. The Greens’ policies will not improve the state of anything in Australia. The Greens’ policies will only increase the size and power of the state in Australia ensuring only more poverty and more social division. Which is possibly their true objective.