Friday, February 17, 2006

Fixing housing affordability for GenX

Does the Housing Industry Association read Catallaxy Files (and my comments therein)? Possibly, judging by this off-the-cuff OpEd by HIA national president Bob Day.

High-immigration rates by relatively cashed-up immigrants is not, needless to say, even fleetingly mentioned as a contributor to the problem. Instead, changing its tune from a couple of years ago, when high taxes were the primary culprit, outer-suburban land non-availability is now the big issue.

Which factor is superficially – and only superficially – hard to disagree with: it’s simple demand exceeding supply, blah blah. But the moment the costs of servicing greenfields land start to be factored in, Day’s mind goes to (Bob) Jelly:

Ironically, the case for urban consolidation has been advanced on the back of a number of arguments: namely, that it is good for the environment, that it stems the loss of agricultural land, that it encourages people on to public transport, that it leads to a reduction in motor vehicle use and that it saves on infrastructure costs for government.

None of these is true.

What. The. Fuck. Now, the loss of agricultural land bit I’m not too fussed about (Australia runs a massive agricultural trade surplus, and running this down would help to force the issue of our existing banana-republicanism, re having almost zero “smart” exports).

But as for the infrastructure costs of carte-blanche suburban sprawl being insignificant, the HIA has simply lost the plot. The building of new public/“free” arterial roads/highways in Australia has virtually stopped – certainly in terms of those that weren’t already planned (and so land acquisitions made) decades ago. Likewise with public transport, particularly in Victoria: Melbourne’s suburban train system last had new track added to it one hundred years ago.

Plainly, Bob Day has a huge blind-spot when it comes to the Arthur Laffer game, aka keeping taxes down by denuding (or simply not building) public infrastructure. It is inconceivable, then, that boomers and other Laffer-ites would wear the large tax rise that properly servicing carte-blanche suburban sprawl would necessarily involve. (And only a couple of years ago, the HIA was saying that taxes were already too high).

“But why not private infrastructure?” I hear you ask. Fine – if you want the net cost of outer-suburban land to be as unaffordable as anything else, and for the taxpayer, sooner or later, to step in to bail out the privateers (as seems to happen in 99% of private infrastructure developments (sic) in the real world).

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