The Queensland election this Saturday has the nation holding its breath. Will the Liberal/National Party government of Campbell Newman with 78 of the 89 seats in the parliament be displaced by a very angry electorate, or merely have their huge majority whittled back and Premier Newman unseated?
Intrepid researchers Soos, Egan and David have another line of inquiry. Are Queensland’s MPs biased toward existing landowners over the land-less?
They have compiled a comprehensive list of politician’s property holdings from the parliamentary register, along the lines of their extremely popular Federal and Victorian Parliament reports.
The ‘why’ is everything:
Australia, including Queensland, is facing a chronic housing affordability crisis. Housing price inflation has outstripped both rents and household incomes since 1996, leading to a residential property market that is most severely unaffordable by both historic and international comparisons. Queensland’s elected representatives, like their federal, state and territory counterparts have failed to address the root causes of the crisis. Policies appear purposefully designed to encourage speculation and rapid price appreciation, in spite of the skyrocketing household debt burden and the harsh economic impacts of expensive land..
The public should critically consider whether state politicians’ property holdings are negatively influencing their decision-making processes and causing them to ignore impartial evidence when formulating housing and state taxation policies. The parliamentary register of members’ interests provides a detailed report of the real estate holdings of Queensland state politicians; a small window into the potential conflicts of interest bedevilling our honourable members.
Does the evidence suggest a basis for such a bias? Sadly, yes:
Queensland parliamentarians are heavily invested in the property game. The 89 members of Australia’s only unicameral legislative assembly have stake in a total of 195 properties – an average of 2.2 properties per member, conservatively valued at around $91 million, calculated by multiplying the Brisbane median residential dwelling price of $466,500 (as at December 2014) by 195 properties.
The data demonstrates the majority of Queensland politicians have a vested interest in maintaining high housing and land prices, particularly the 76 per cent of members with one or more mortgages over their own investments. It would be naïve to assume politicians will put the common good before their own self-interest, if it means the difference between a moderately comfortable or a highly secure future retirement, or there are significant family interests to consider. The risk of a sharp correction in real estate prices and negative equity are just as real for those three-quarters of parliamentarians in bondage to lenders, particularly if they have multiple investments or are highly leveraged.
Queenslanders should be very sceptical about the supposed good intentions of many of their elected members in addressing housing affordability. Cynicism is warranted, for nationwide, politicians regularly enact legislative and regulatory ‘reforms’ in direct contravention of objective evidence, accelerating price growth and enriching a multitude of land owners in the process.
Contrary to reason, parliamentarians assume heavy debt burdens and record-low first home buyers are the new market normal.. The urgent entreaties from a series of Productivity Commission and Senate reports to reform broken tax systems at the state level have gone unheard, even though economic efficiencies and greater competitiveness would arise from a shift of the taxation base onto those appropriating geo-rent (the economic rent of land) and off wage-earners and enterprises.
The property-rich Queensland Parliament cannot be trusted to act in good faith on matters concerning real estate. Aversion to guiding housing policy with firm evidence has a long history in many jurisdictions, notably influenced by the projected future value of a politician’s collective real estate holdings and corrosive lobbying by the FIRE (finance, insurance and real estate) sector. A voter backlash is also feared following any substantive reforms that reduce prices, with large pockets of the citizenry having also gone ‘all in’ on enormous property bets.
Such a report cannot be complete without solid recommendations to get us out of this morass. Soos et al do not let us down. I particularly like the first one:
Recommendation #1: More efficient use of State Land Tax (SLT).
The SLT is an ideal tool to moderate both land price bubbles and their subsequent devastating busts, and is already in the toolkit of state and territory governments. Unfortunately, this tax has been rendered comatose by a host of exemptions and concessional treatments. . The SLT requires broadening to include owner-occupied housing and agricultural land, calculated on a per-square-metre value basis. The narrow existing base and progressivity of the SLT incurs only a small deadweight loss; the complete removal of exemptions and concessions would reduce this deadweight loss to zero. The SLT should apply per land holding, but not on an entity’s total holdings to encourage development.