Housing solution beyond discussion:

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03 Apr 2017
Age, Melbourne
Author: Tony Walker
Section: General News

Our streets reflect ballooning household debt Photo - Michele Mossop
Our streets reflect ballooning household debt. Photo: Michele Mossop

We need to closely examine optimum distribution of population and immigration.

Core Logic, the real estate data collection agency, produced numbers last week that should have got people’s attention. Data for the first 28 days of March show Sydney house prices rose 19 per cent in the past 12 months, and the rate was 14 per cent in Melbourne, on average. Prices this year alone have risen 5.3 per cent in Sydney and 4.4 per cent in Melbourne.

These are bubble numbers. In such a spiral of expectations, warnings get put aside like those from the Organisation for Economic Co-operation and Development of the risk of a housing rout against a background of ‘‘ballooning household debt’ ’Australia’s household debt as a percentage of disposable income exceeds 200 per cent and such debt to GDP is in excess of 120 per cent, placing Australians in the unenviable top tier of those in hock.

Housing affordability, pressures on first homebuyers, risks to the financial sector from mortgage defaults, geopolitical uncertainties and the politically sensitive issue of immigration all tend to be swept aside.

This is especially so in the case of immigration, where arguments for a ‘‘big populate-or-perish Australia’’ – based on a belief in the contribution of raw population numbers to economic growth – hold sway.

Discussion about optimum immigration tends to get sidetracked by concerns that those advocating a review of the net overseas migration intake – plus student arrivals as a proxy for individuals seeking permanent residence – have ulterior, racially tinged motives.

Putting aside those unfortunate constraints on open discussion, let’s ask a simple question: what remedies might be considered to ease pressure on the housing market in the larger cities and on Melbourne and Sydney’s overburdened infrastructure?

This is a conversation the country needs to have with itself beyond the various Productivity Commission reports that nibble at the edges of the issue and intergenerational reports that have tended to misfire.

These intergenerational reports have been overwhelmed by shifting demographics. For example, in 2002 the Australian Bureau of Statistics was forecasting a population of 26.4 million by 2051 from numbers then of 19.7 million.

We are within less than 10 per cent of that figure now, with our population rapidly approaching 24.5 million.

Last week, I canvassed the views of two politicians, one federal, one state, one Liberal, one Labor, to gauge attitudes from a sensible centre about population pressures and immigration.

John Alexander (member for Bennelong in Sydney and chairman of the House of Representatives standing committee on transport, infrastructure and cities) believes the best way to relieve the housing affordability crisis is to unlock ‘‘value capture’’ from the sale of land along fast-train rail corridors between Sydney and Melbourne and regional centres such as Goulburn and Shepparton. His committee report to this effect is awaiting a government response. He should not hold his breath.

In the meantime, he believes there needs to be a review of the country’s capacity to take people in, or what he describes as a ‘‘strategic plan’’ to deal with Sydney and Melbourne’s ability to grow in an orderly manner.

Whatever description might be applied to population policy, the phrase ‘‘strategic plan’’ does not come to mind.

In Melbourne’s north, hit hard by factory closures, Labor’s Frank McGuire would not disagree with Alexander’s assessment about the need for better planning between the three tiers of government to accommodate population pressures.

His concern is jobs in his electorate of Broadmeadows, where empty car parks at the shuttered Ford factory on Sydney Road attest to a process of deindustrialisation in an area with some of the highest unemployment and crime rates in the country.

‘‘You can’t keep putting poor people into areas where big factory jobs have gone and have yet to be replaced,’’ McGuire says.

In the interests of promoting reasonable discussion about population pressures, sustainability and quality of life in what have hitherto been regarded as some of the world’s more liveable cities these are the facts.

In the 12 months to September 2016 growth in Australia’s population numbered 348,700, or 1.46 per cent above a 30-year average.Net overseas migration increased to 193,200, or 55 per cent of the total, the fastest rate of net overseas migration growth in four years.

Victoria’s population outstripped the rest of the country, growing by 2.1 per cent, or 127,498 new arrivals compared with NSW by 1.4 per cent, or 109,605 new residents. Last week, the ABS reported that greater Sydney’s population had topped 5 million, compared with greater Melbourne’s 4.64 million. At present rates of increase, Melbourne will overtake Sydney by mid-century, when both will have populations above 8 million.

In 2002, the ABS was forecasting populations for Sydney and Melbourne respectively by 2051 of 5.6 million and 4.7 million.

Against this background and given planning snafus by NSW and Victoria too numerous to mention but including successive Victorian governments’ failure to plan adequately for a bulging population to Melbourne’s west, the time would seem to have arrived for a searching discussion about optimum population distribution. That includes the sacred cow of net overseas migration.

Tony Walker is a vice-chancellor’s fellow at La Trobe University, and a Fairfax columnist.

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