Weak Construction gets Weaker
Dwelling construction continues to fall, according to the AIG-HIA Performance of Construction Index for May. Commercial construction and house building activity weakened to 34.7, where anything below 50.0 represents contraction.
In parallel, the ABS Building Approvals graph looks like a ski slope, down 24.1 per cent in a year.
380,000 houses are openly for sale across Australia, plus a substantial shadow inventory at least as large – so speculatively adding to the pile is a loser idea, whatever one’s view of future price movements.
Very low commercial, house and apartment building activity points to widespread under- or unemployment in construction trades, with only 70 per cent capacity utilized.
Here is the downside of The Great Australian Land Bubble: a breathtaking number of empty house rotting in the sun while an equal number of young adult households can’t or won’t buy them.
The bubble was driven by a national speculative fever: an excessive appetite for risk, unlimited debt and a tax system that bleeds labor and enterprise while treating gains from land ownership with a drooling respect that makes fools of us all.
So we have a stop-start economy that funnels money away from 99 per cent of the population who are constantly urged to work harder, pay more rotten taxes and defer to the self-proclaimed great and good. This is a caricature of democracy, a bastard form of ‘free enterprise capitalism’ and financial aparthied.
Wayne Swan can crow all he likes about presiding over a fast growing economy. Sadly, little of the gains will go to improving the lot of the voters who put him there.
There is a grand and big-hearted list of tax reforms in the Henry Review, Mr Swan. Embrace it. Enact it. End the waste.