10/05/2023
This week’s Federal and West Australian Budgets show both governments are riding high on the windfall gains of rising resources prices, low unemployment and strong business activity — for now.
But with inflation continuing to rise, the community wants cost-of-living relief.
This is understandable, given the Federal Budget position has improved substantially — with its first surplus in 15 years — and WA is expecting another surplus.
While many households are struggling with the soaring cost of living, particularly those on lower incomes and who are renting in the private sector, both governments are striking a difficult balance.
Unleashing big spending programs that end up stoking inflation could cause more financial pain for those already crying out for help.
Instead, to keep inflation in check, new spending must be prudent, and assistance must be targeted towards those who are doing it toughest.
Relief from rising electricity prices in the WA Budget should provide some help without being inflationary, as long as it comes in the form of modest, one-off measures.
State-level utility-price rises below the level of the consumer price index should also provide some comfort that the Government is sharing the gains of a strong economy.
But more bold action is required to address Australia’s housing affordability crisis.
Governments at all levels are still failing to properly address it and households around the country are suffering from this lack of action.
This week’s Federal Budget has made a start, providing some long overdue relief in the form of a 15 per cent increase to Commonwealth Rent Assistance and tax relief for build-to-rent projects.
But we must also reform CRA eligibility rules to better reflect housing need. Households that receive CRA are some of the most vulnerable in our community.
The Federal Government also has a role to play in funding and encouraging States to build more social housing, although this will take some time.
In Perth, house prices and rents have continued to rise over the past year. The rental vacancy rate remains extraordinarily low at 0.7 per cent and median rents have risen nearly 30 per cent in the past year.
The McGowan Government’s announcement of an additional $511 million in funding for social housing and homelessness initiatives is a positive investment in this critical area and builds on significant funding in recent budgets.
There will be construction challenges due to worker shortages and supply-chain constraints, but we must ensure there is a long-term program to continue to build social housing in WA.
We are facing this housing crisis in part because we did not invest during the economic downturn.
The number of social housing dwellings in WA has been falling over the past few years, despite recent higher levels of investment. The Government should encourage more, and higher-density, residential development.
Both State and Federal governments must continue to push forward on the National Housing Accord announced as part of October’s Federal Budget, which aims to build one million new homes over five years.
This includes addressing the underlying barriers to housing supply, such as working with local governments on planning and zoning regulations.
The McGowan Government should also replace stamp duty with a broad-based land tax, as stamp duty acts as a barrier to mobility and downsizing.
There are many obstacles to clear to adequately increase our housing supply, but we must act now.
Fixing the housing challenge is the best investment governments can make for the future wellbeing of our community and our economy.
This article originally appeared in The West Australian on 11 May, 2023.
