Opposition Leader Rudd’s innovative move to mimick the low tax rates for super and apply it to First Home Owners Savings is commendable but as with most housing policy, runs aground when applied to economic principles. The extra purchasing capacity such policies will deliver can only result in yet higher housing prices.
Who will it subsidise in the end? Younger generations with an economics background must be very angry at little johnnie’s admittance that the FHOG only added to land prices. His advisors would surely have assured him in the first place that the FHOG was really a subsidy for land owners.
Will Rudd be doing the same in years to come?With house prices still increasing at greater rates than wages, housing affordability will only improve when we encourage greater efficiency in the use of land. The need for urban infill rather than Howard’s parroting of the IPA’s call for added land supply is what is needed. This is best encouraged when higher Site Rentals are charged on land.
This ensures those “Hidden Land Barons of Australia” (front page, AFR, 30/06/07) who ‘Land Bank’ their way to wealth and cheeky ‘mug-shot’ grins, actually put the land they own to everyone’s advantage. No longer can they just witholding such land to manufacture capital gains.
Did they produce anything for such wealth?