For something completely different, Question Time this week was pretty stupid, and the stupidity was led from the front by the Prime Minister.
We must not fall into the trap of thinking that Question Time represents the whole of parliament. To do so would make it easy to believe that nothing of importance occurs while parliament is sitting, but the past two weeks have seen the rather wonderful process that is Senate estimates.
Senate estimates provides an opportunity for Senators to quiz public servants about pretty much anything to do with the budget – which, in effect, means pretty much anything.
There’s always some nice nuggets of information about government spending that crops up, and a good opposition knows that good questions can reveal embarrassing secrets the government would wish to keep quiet.
But this week the most embarrassing thing said during estimates was not all that secret, nor all that embarrassing.
On Monday morning, the Treasury Secretary, John Fraser was asked by Greens Senator, Peter Whish-Wilson whether he thought we were at risk of a housing bubble.
The Treasury Secretary replied that “When you look at the housing price bubble evidence, it is unequivocally the case in Sydney. Frankly, whatever the data says, just casual observations tells you it is the case”.
Now, it was certainly surprising to hear a Treasury Secretary be so unequivocal. But the suggestion that Sydney might be experiencing a housing bubble is not exactly out on the fringes of economic thought.
The Reserve Bank has been for some time expressing concerns of risks regarding investor lending especially in Sydney, and in the RBA’s governor’s statement issued on Tuesday it noted that “Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The Bank is working with other regulators to assess and contain risks that may arise from the housing market”.
The risk that they are talking about is that of a bubble – where buyers are borrowing to purchase assets whose price is rising at an unsustainable pace, and which ends with prices collapsing.
Tony Abbott replied that “As someone who, along with a bank, owns a house in Sydney, I do hope that our housing prices are increasing. I do want housing to be affordable, but nevertheless I also want house prices to be modestly increasing”.
It was a fairly anodyne answer. He didn’t really go on to express any ideas about how he would keep housing affordable other than to keep “interest rates low and stable” – which is odd, given many economists believe the low rates are what is fuelling the increase in housing prices.
The next day Joe Hockey was asked about the same issue.
He replied with some intelligence that “Of course, there are two issues here: there are housing prices and then there is housing affordability”.
Indeed. No one is really wishing for housing prices to fall – the concern is that they are rising faster than the average income.
Housing prices across Australia are now around 5 times the average annual disposable income. Twenty years ago they were just 3 times the average income.
That’s great if like Tony Abbott (and myself) you are a home owner, but not so good if you are trying to be one.
But that short bit of sense uttered by the Treasurer did not last long.
Soon after Tony Abbott was again asked about the issue. And rather than add to the debate with talk of the issues involved, he instead doled out a big dollop of stupid.
He suggested that Bill Shorten “is saying that people's houses are worth too much. This is someone who wants to be the Prime Minister of Australia, and he wants your house to be worth less. The Leader of the Opposition wants your house to be worth less”.
It was a rant equal to Malcolm Fraser in 1983 suggesting your money would be safer under your bed than in a bank if Bob Hawke were to be elected Prime Minister.
The response had the government front bench cheering because he turned defence into offence. Pity though that his statements were complete tripe.
But once Tony Abbott has found a line, however stupid (the more stupid and divorced from reality the better one would think) he is loathe to let it go. When asked again about the issue he responded that Shorten asking about the risk of a housing bubble meant he was “saying to the homebuyers of Australia, ‘I want your asset to be worth less.’ That is what he is saying. He wants that asset—that they have invested their heart and soul in—to be worth less. That is what he wants”.
The Prime Minister then read out the RBA’s governor’s statement regarding price rises in Sydney and then suggested that Shorten wanted “to punish the people of Sydney”.
Oddly the Prime Minister failed to read out the RBA’s statement about working “to assess and contain risks that may arise from the housing market.”
But the stupidity of the Prime Minister infects those around him. Joe Hockey who had at least acknowledged the differences between housing prices and affordability, by the end of the week had fallen into line behind Tony Abbott like a sheep too cowered to offer a slightly different view no matter that it might be more intelligent.
On Thursday, when asked about the performance of the economy he replied that “we heard that from the Leader of the Opposition earlier this the week. He was out there saying, ‘We don’t like that, those housing price rises in Sydney’. He’s opposed to that.”
At this point forget any suggestion that we might discuss policies such as removal of stamp duty, or negative gearing or public housing supply or median density housing that might actually have some impact on housing affordability.
Nope. To express concern about a housing bubble – because you worry that it might burst and see housing prices plummet – is now to suggest that you want housing prices to fall.
Political debate in this country has become infected with a virus of irredeemable stupidity.
And judging from this week’s effort on housing affordability, the host of the virus is the Prime Minister.
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