Building Inflation

The latest government 'deal' is a big-spending, market-distorting, unachievable policy that comes at a hefty financial and societal cost.

Building Inflation
Photo by Callum Hill / Unsplash

If you have any building plans it's probably best to get started right away.

There's more disruption coming to the construction market as a result of a new government policy.

Labor and the Greens have done a deal to establish a $10 billion Housing Australia Future Fund.

Like most lousy policies it's got a grand sounding name designed to lull you into thinking it's a great idea.

On paper it would tick a lot of boxes for the socially aware. The cash has been earmarked for for more public housing to relieve the accomodation crisis gripping the country.

Regular readers would know that the housing crisis has been caused by state and federal government policies, most notably the outrageous level of immigration.

To put it in context, we are adding hundreds of thousands of migrants every year but struggle to build just 165,000 homes due to a shortage of skills and materials.

Economists estimate it would require building 220,000 homes annually just to keep up with existing demand, and it's set to get worse.

That's why if you need a builder, you'd best lock one in.

As the government tosses taxpayer dollars into the system, builders will be forced to increase prices as the cost of retaining labor and obtaining materials rise.

The Federal government also agreed last month to tip a further $3.5 billion into States and territories to fast track 1.2 million homes over the next five years. That's something like 250,000 homes built annually - an impossible dream.

Opposition spokesman Michael Sukkar was correct when said the deal would do nothing to ease the supply pressures facing first homeowners.

“It will only see Australia’s housing crisis worsen with added inflationary pressures on the economy, ultimately leading to higher interest rates and more difficulty for those Australians looking to enter the housing market.”

The truth of those words will be lost on most Aussies who would be cheering on the government 'doing something' to not resolve a problem that they created in the first place.

And therein lies the greatest problem Australia faces.

The government knows they can hoodwink the majority of people with grand but completely unrealistic policy announcements. Even those who are not specific beneficiaries of the policy, cheer the government on because it makes them feel good about something being done for others.

While the 'vibe' is great, the truth is someone is always left footing the bill. In this case, the billions in borrowed money will be funded by the few paying taxes for decades to come.

The rest will be chipping in through the inflationary impact creeping through the economy as a result of artificially stimulated demand for skills, services and materials.

That cost will be passed on to tenants and customers, ensuring no family will be left untouched by yet another government big-spending folly.

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