Wednesday, June 18, 2008

Housing Is The First Priority

Housing affordability is perhaps the most pressing challenge for Australia at this time. While high fuel prices are very much in the forefront, along with grocery prices and inflation generally, it is housing which presents the most fundamental dilemma. If a person’s residential status is secure, other challenges such as fuel and food can be confronted with greater confidence. Take away that security and everything else becomes so much more difficult.

While there has been a lot of focus on the undersupply of housing as a primary cause of the affordability crisis, there seems to be a reluctance to acknowledge the impact of high taxes and charges and user pays levies as causes for that shortage of supply. Ten years ago, those levies did not exist. Ten years ago there was no G.S.T. Of course those things make housing more expensive. Adding insult to injury is the fact that the G.S.T. is calculated on the price including those levies, which is in fact a tax on a tax.

The root of the problem is simple. It is the so called user pays principle which has seen the introduction of developer levies to pay for infrastructure and services which were once paid for by the public purse. The truth is that “user pays” is a con. The user already pays! We already pay our rates and taxes, and yet this all pervasive philosophy means that we also have to stump up for levies and charges which never existed before. It is the same scam which sees us paying an increasing number of tolls to use roads and bridges which should have been built by the tax payer.

Economic rationalism has delivered an economic environment where as much of the cost as possible is shifted to the end user to increase the bottom line at the top end. The result is that the pockets of the ordinary consumer are tapped until they are dry. And that is what we are now witnessing. As the cost of fuel, food, and housing goes up, ordinary people are finding that they have been bled dry.

The brave new world of economic rationalism has been designed so that the people serve the system, without the system properly serving the people. History tells us that any economic system which fails to sustain its general population is doomed to fail. Unless we ensure that ordinary everyday people can afford secure housing, it will be impossible to tackle the other challenges looming on the economic horizon.

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