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Australia's Housing Famine
24 June 2026
Food and shelter are two
of the most
fundamental necessities.
If there was a food shortage,
would people
treat food
as an investment asset?
Would they take out huge loans
to buy food and hoard it
to sell it later for a profit
while others starve?
For housing,
this is exactly
what has been happening.
There are
material and moral parallels
between a famine
and the housing shortage.
The similarities
point the way
to a solution
for the housing shortage.
This strategy
is designed
to make ownership
of empty residences
prohibitively expensive.
A tax would be levied
on empty residences
as a percentage of the
property value.
If a residence is neither
anybody's
principal place of residence
nor used
for most of the time
as temporary accommodation
then the empty residence tax
will be applicable to it.
An owner of an empty residence
will have to choose between
paying the tax
or selling the residence
or renting out the residence
or using the residence
as a residence.
The result will be
that eventually
nearly all
privately-owned residences
will be owned
either by owner-occupiers
or by investors
who rent out
their properties.
With many owners
disposing of
empty residences
to avoid paying the tax,
property prices will fall.
Some empty residences
will become available
as long-term rentals,
which will solve
the rental shortage.
Residences will become
more available
and more affordable
for owner-occupiers.
With property prices falling
and with more rentals
becoming available,
rents will fall.
This strategy
would take
a year or two
to gradually solve
the housing shortage.
The only other strategy
that could have
a similar impact
would be to
dramatically increase
the rate
of housing construction,
which is not
a realistic option.
It is shown
later in this article
that there are at least
half a million residences
in Australia
that are empty
for most of the time.
If all the unused
and underused residences
had people living in them
then there wouldn't be
a housing shortage.
Most residences
that are not used
as residences
are owned by people
who have bought a second residence
to use as a holiday home.
Many residences that are not used
as residences
are short-term rentals.
Some empty residences
are owned by
speculators and investors
who have borrowed money to buy property
at interest rates that are lower than the
rate of property price appreciation.
They avoid the hassles
that landlords sometimes experience
with tenants,
while still hoping
to make a profit.
In recent years,
due to steeply rising
property prices,
some investors have made
enormous capital gains
by just sitting on
empty properties.
Some empty residences
are owned by people
who reside overseas.
Some of these owners
are Australian citizens
and some are not.
Many have never lived
in Australia.
They own property in Australia
for a variety of reasons
such as for investments
and such as for occasional use
when they visit Australia.
It is inevitable
that property prices
will fall
as a result
of this new tax,
which is of course
one of the
reasons for
implementing it.
There are many
alternative ways
to structure
the tax.
An empty residence tax
has the potential
to crash
the property market.
To prevent this from happening,
the new tax
will have to
be implemented
gradually.
The progression of the
tax rate can be
designed
to ensure that
the property market
is able to absorb
the inflow of properties,
with prices falling gradually
rather than steeply.
For example,
the tax rate could
initially be set at
close to zero
for the first year of operation
and then raised annually
in 1% increments.
Alternatively,
it could start at zero
and increase by, for example, 0.25%
each quarter.
It might be preferable
for 500,000
empty residences
to hit the market
gradually
over five years,
rather than quickly
over two years.
High-value residences
being put onto the market
do not help much
to reduce
the housing shortage
because relatively few people
can afford to buy them.
A tiered tax rate
corresponding to
different valuation brackets
would prevent
a disproportionately high
number of
higher-value properties
from being dumped
onto the market.
The higher the property value,
the lower the tax rate.
Alternatively, there could
be a cap on the tax payable
for each empty residence
Unlike most taxes,
where the tax rate
for the coming year
is known well in advance,
this is a tax that may
require some adjustment
to the tax rate
during the year.
So, if residences
were coming onto the market
too quickly to be absorbed,
then the tax rate
could be reduced
at short notice.
To ensure that taxpayers
are able to
plan their finances,
any intra-year adjustments
to the tax rate
can only be
in a downwards direction.
Another advantage of
a gradual implementation
of the new tax
is that it would give
owners of empty residences
plenty of time to weigh up
their options
and adapt.
Taxing empty residences
is analogous to
discouraging the
hoarding of food
during a famine.
An eventual
tax rate of
four or five per cent
of the property value
might be enough
to make ownership of
an empty residence
so financially painful that
it would deter
most people
from buying a residence
with the intention
of not using it
as a residence.
A tax on empty residences
allows people
who are very wealthy
to continue to own holiday homes
if they wish,
but only if they are willing to pay
a hefty tax
for the privilege.
Although raising revenue
is not one of the main aims of the tax,
the tax might raise
a substantial amount of revenue
in its early years.
The proceeds
could be used
for such things as
shelters for the homeless
and expediting the construction
of new residences
for owner-occupiers.
A high rate of immigration
increases the demand
for residences,
fuelling the housing shortage
and pushing up prices.
Reducing immigration
would help to prevent
the housing shortage
from getting worse
and it would help to prevent
a chronic shortage of housing
from recurring
in the future.
However,
for housing,
it is not
the magic bullet
that many people
seem to
think it is.
Reducing immigration
cannot solve the
housing shortage.
If immigration was
completely halted
then there would be
neither a reduction
in the size of the population
nor an increase
in the availability
of residences.
The demand for housing
and the supply of housing
would both be unchanged.
The housing shortage
would still persist
until the rate of
housing construction
catches up with excess demand.
This could take many years,
or possibly decades.
Apart from the housing shortage,
there are many other reasons
why some think that
immigration should be reduced,
related to the availability
of essential
infrastructure and services,
and related
to cultural issues.
A policy
of reducing immigration
has already been adopted
to varying degrees
by most political parties.
Some immigrants arrive
as asylum seekers.
International agreements
relating to asylum seekers
were developed after
the second world war
when the world was
a very different place
from today.
Many think that the
current asylum seeker system
is no longer appropriate
for the modern world
and ought to be replaced
with a system that
abolishes Australia's
asylum seeker obligations
and gives
Australia a free hand
to detain and deport
asylum seekers
who arrive without
prior approval.
Short-stay rentals
began as a way
to rent out spare rooms.
The short-term rental market
soon evolved
into renting out
whole residences.
The number of
short-term rentals
is still growing.
There appears to be
more of them
than what is
actually needed.
Some of them
appear to be empty
for much
of the time.
Operating a short-term
rental business
is attractive to investors
because it can
generate higher returns
than long-term rentals.
It also gives owners
more flexibility
about how they use their property.
Also, owners are not bound
by laws that protect
the rights of long-term tenants
and there is less risk of
suffering the sort
of financial losses
that a bad tenant
can cause.
Converting a long-term rental
into a short-term rental
may be wonderful for
property investors,
but it frays
the fabric of society
because it reduces the
number of long-term rentals
that are available.
Increasingly,
some local councils are using
zoning systems and licence fees
to regulate the number
of short-term rental properties.
Councils may do this
to prevent
the number of
long-term rentals
from being reduced.
Sometimes, councils regulate
short-stay rentals
because of
sociological issues
that they can cause.
At a national level,
policies
should be aimed at
short-term rentals
that are empty
for much of the time,
so that there would be
more residences
that are actually used
as residences.
Short-term rentals
that are run as a genuine business
provide a useful service
to society.
The empty residence tax
should be constructed
so as not to adversely impact
the owners of
short-term rentals
that are
rented out
most of the time
and that are genuinely
available to rent
all the time.
For example,
because it is
not always possible
for a genuine short-term rental
to be occupied all of the time,
there would have to be
a realistic allowance
for empty time.
For short-term rentals
that are empty
for much of the time,
the empty residence tax
would be applied
in proportion to
the amount of time
that the property
is empty,
and there would be no allowance
for empty time.
According to
a 2014 research report
from Roy Morgan Research,
one in forty Australians
owns a holiday home.
Although this information
is a bit out-of-date,
it gives an indication
of what the numbers
are today,
which are
probably higher.
Based on Australia's
current population
of about 28,000,000 people,
there would be
about 700,000
holiday homes.
An ABC
(Australian Broadcasting Corporation)
news report
about census data
in September 2022
indicated that more than
346,000 residences
were being operated as
short-term rentals.
This figure
appears to include
some holiday homes
as well as residences
that are dedicated
to short-term stays.
From this information
it can be deduced
that at least half
of holiday homes
are never
rented out at all.
Of the holiday homes
that are sometimes rented out,
many are rented out
for only a few weeks
per year.
So overall,
there are probably
at least 500,000
holiday homes
that are
empty for
most
of the time.
Some owners
of holiday homes
offer their properties
as short-term rentals
or holiday rentals
to generate
some income.
There used to be
substantial tax advantages
from renting out a holiday home
for just a few weeks per year.
This has recently changed.
A holiday home that is not
genuinely available for rent
at all times,
including during
peak holiday periods,
is now classified by the tax office
as a leisure facility,
and tax deductions
are no longer
allowed for it
except for costs
that have been
directly incurred in
renting out the property.
If the tax office
classifies a residence
as a leisure facility,
and if it is not
anybody's
principal place of residence,
then the
empty residence tax
would be applied to it
in proportion to
the amount of time
that the property
is not rented out.
When they go on holiday,
holidaymakers who no longer
own a holiday home
will have to lease a holiday rental
or stay in a short-term rental
or stay in a hotel
or go camping
or maybe buy a caravan
with some of the money
they receive from selling
the holiday home.
A reduction in the number
of holiday homes
will create an opportunity
for some holiday homes
to be converted into
profitable short-term rentals
or holiday rentals
to meet
the increased demand.
This should mean
that there will be
plenty of
accommodation options
for holidaymakers
to choose from.
It is inevitable
that there will be winners and losers
as a result of any change.
As has been observed
following the recent budget,
there will be howls of outrage
from vested interests.
Much economic modelling is required
before any practical new taxation policy
can be optimised,
including an analysis of
possible economic knock-on effects.
Otherwise, new problems may be created
that probably could be avoided
with careful forethought.
For example, if a particular housing policy
resulted in a substantial reduction
in bank lending for property purchases,
then the profitability of the banks
would be impacted,
which would have
knock-on effects on shareholders
including retirees and superannuation funds,
which in turn could have knock-on effects on the
number of people who depend
on welfare benefits
such as the means-tested age pension.
The risk that bank profits might fall
could be used as an excuse
for not making any reforms.
If stamp duty revenue falls
then state governments
might disappear
into financial black holes.
The reforms described
in this article
will lead to lower property prices,
but because empty properties
will be forced onto the market
the number of sales
should rise
as there is an excess
of demand over supply.
It is important to ensure that
a thriving rental market is maintained.
Taxation policies should
be framed so as to not
discourage property investors
from operating a business of
renting their properties
to long-term tenants.
It must remain feasible
for an investor
to be able to
operate a profitable
rental business.
Otherwise the availability
of long-term rental properties
will shrink.
One of the reasons why rents have
risen so high
is that demand for rentals
is higher than the available supply.
This is elementary economics.
At the moment,
the supply of rental properties
needs to be increased.
So,
although it may
seem counter-intuitive
to some people,
until the housing shortage
has been resolved
there is a sound
economic argument
that tax incentives
may be justifiable
for properties that
are used
as long-term rentals.
At the same time,
it must not become so profitable
to own rental properties
that investors
drive up property prices
and push owner-occupiers
out of the market.
Here are two minor
alternative strategies
that could be implemented
quite quickly,
to be used
in the interim
until the
empty residence tax
can be implemented.
A minor method
of helping to prevent
the current housing shortage
from getting worse
would be to restrict
the borrowing of money
to buy a residence.
A residential property loan
would be approved
only if a residence
is either intended to be
an owner-occupied residence
or is intended to be
a long-term rental.
This strategy would not
solve the
housing shortage.
But it would prevent
some residences from
being removed from
the housing stock
by being turned
into holiday homes.
Cash buyers would still
be able to buy properties
and then
do whatever they like
with them.
To completely prevent
any residences from being
turned into
holiday homes,
there would need to be
an outright prohibition
on buying a residence
unless the residence
is either intended to be
an owner-occupied residence
or is intended to be
a long-term rental.
If either of the above
methods of restriction
is adopted then,
in many cases
when a holiday home
is put onto the market and sold,
it would automatically
be compelled
to become a residence
that somebody lives in.
Another strategy that would reduce house prices
would be to reform some aspects
of the operations of the RBA
(Reserve Bank of Australia).
For example,
2% is the inflation target
for some countries
that are comparable
with Australia.
Lowering the RBA's inflation target
from its current 3% to 2%,
which would be a relative change of 50%,
would result in
structurally higher interest rates
which in turn would depress property prices.
Inflation would also
be lower.
Another possible reform
would be reducing the emphasis
given to unemployment
by the RBA
when setting interest rates.
Some think that unemployment
is a complex issue
that is potentially
influenced more by political policies
than by interest rates.
Some even think that
compelling the RBA
to make unemployment
a main component
of their deliberations
is just a strategy
designed to keep
interest rates low.
Higher interest rates
would be extremely unpopular
with borrowers
and media commentators.
Media coverage of interest rates
generally concentrates on
the effects on borrowers
rather than on savers.
Commentators habitually
treat mortgage holders
as a protected species.
The media backlash and propaganda fallout
from any reforms that would lead
to higher interest rates
would be so severe
that it would probably mean death at the polls
for any political party that
announced that this
was one of its policies.
Any government could of course
reform the RBA
just after they have won an election,
and then hope that
the reforms would be forgotten
with the passage of time
before the next election.
Probably the biggest freeloaders
in Australia are wealthy people
who go to extremes
to avoid paying taxes.
It appears that
one of their tricks
is to flood the media
with misinformation
in the hope of
swaying public opinion
and influencing politicians.
Taxation changes in the recent budget
mean that
an investor's capital gains
will no longer be subsidised
from taxes
on other peoples' wages.
It seems hard to believe,
but many commentators
have expressed outrage
about this attempt
to bring greater fairness
to the taxation system.
The changes
have even been
branded as
anti-aspirational.
Several pundits have
claimed
that the changes will
have a major impact
on investment choices.
Their logic is flawed.
Apart from investments
in existing residences
that are now
much less attractive
than before,
and apart from investments
in new residences
that are still
nearly as attractive
as before,
all capital investments are
equally less attractive
than before the budget.
So, there is no reason
to change investment choices.
Comments made by
aggrieved investors
about mounting an
investment strike
are irrational.
Investors with money to invest
will still invest it somewhere,
unless they are planning
to hide their money
under the mattress.
Even a term deposit
is an investment,
although it is not taxed
as an investment asset.
In any case,
a term deposit may be
channelled through the
banking system
to some other investor.
Several comments have been made
about companies
choosing to invest
overseas rather than in
Australia.
But the corporate tax rate
has not changed,
so what on earth are they
talking about?
At an individual level,
investing money overseas
does not change the
personal tax rates
that Australian residents
have to pay.
It is claimed that
there are some innovative
Australian entrepreneurs
who may emigrate to countries
that have lower taxes
than Australia.
But most businesses
are not built
on things
that are internationally portable,
such as intellectual property,
so most businesses
don't have the option
of moving overseas.
In summary,
despite all the economic
misinformation
that appears
in news bulletins
and TV programs
and investment websites,
it is highly likely that
investment choices
will not change much
because of the recent
budget taxation changes.
Except for property investors,
who will now definitely
be less likely
to buy existing residences.
By reducing the attractiveness
of property investing,
the recent budget
encourages property investors
to instead invest their wealth
into assets
that might actually
generate new wealth
for the economy.
Aspiring tycoons
who leave Australia
will be
helping to solve
the housing shortage.
Each one
that leaves
frees up a residence
for somebody else
to live in.
And maybe they will sell
their holiday homes
as well.
An empty residence tax
is likely
to be vigorously opposed
by those with vested interests.
Extraordinary measures
are likely to be used
to try and circumvent it.
Penalties for infringements
may need to be draconian
to deter evasion of the tax.
Legislators often pander
to special interest groups
who clamour for
dispensations, exemptions,
special cases and carve-outs.
Quite apart from undermining
the fundamental purpose
of the legislation,
the more exceptions that are included
then the greater will be the scope for
finding tax avoidance loopholes.
An empty residence tax
would be groundbreaking.
Considerable thought must be applied
to defining the central concepts.
The three most important definitions will be for:
- "residence".
- "principal place of residence".
- "empty residence".
The definition of a "residence"
for the purposes of this tax
may differ slightly
from other usages
of the word.
It would probably
be necessary
to restrict its meaning
to buildings that are
categorised under the building codes
as being either class 1
or class 2 residences,
and that are fit
for habitation.
Empty blocks of land,
blocks of land
that have only a caravan
or a class 10 structure
(such as a shed or a garage),
class 3 buildings
(such as hostels and hotels)
and class 9 buildings
(such as aged care facilities)
would not be included.
Unapproved dwellings
could not be included
because otherwise the tax
would be levied
on an empty dwelling
that is illegal to be
used as a dwelling.
Local councils have responsibility
for unapproved dwellings.
The definition of
"principal place of residence"
already exists in tax law,
from the
capital gains tax exemption
that applies
to a property owner's home.
The concept of a person's
"principal place of residence"
is at the heart of what makes
this tax reform practical.
It is a very specific thing
that is determined
by a person's circumstances.
It is practical
because it is verifiable.
A data item for
a person's
"principal place of residence"
will need to be added
to individuals' tax returns.
Residential landlords will be required
to obtain the tax file numbers
of each of their
lessees and tenants
and supply them to the tax office.
Using data matching,
the tax office will then
be able to
detect when a person
rents a residence
and uses it, for example,
as a holiday home.
With the exception of
short-term rentals
and other types of
temporary accommodation,
the essential elements
of the definition of an "empty residence"
would be that
the residence
is not the owner's
principal place of residence,
and it is not
anybody else's
principal place of residence.
For example,
a holiday home
that is not a short-term rental
would be
an empty residence
because it is never
occupied by anybody
as their
principal place of residence.
For the purposes of this tax,
legislation will have to define
the proportion of time
that a property has to be empty
to be classified as empty.
Another temporal issue
is whether the tax would be applied
on an annual, quarterly
or monthly basis.
The set of definitions
relating to an "empty residence"
must recognise
that some residences
that are not anybody's
principal place of residence
are used
as genuine short-stay
rental businesses.
Short-stay rental properties
that are rented out
for most of the time
would not be
classified as empty residences.
Short-stay rental properties
that are rented out
occasionally
would pay the
empty residence tax
in proportion to
the amount of time
that they are empty.
Many trusts and charities own residences.
It is unlikely
that there would ever
be a good reason
in the public interest
why a trust or a charity
would own
a residence
that is intentionally
kept empty for most
of the time.
The most common reason
for establishing a trust
is tax avoidance,
although changes
in the recent budget
will have reduced
the attractiveness of trusts
whose main purpose
is tax avoidance.
The main purpose
of a few charities
also appears to be tax avoidance.
Legislation
for a tax
on empty residences
must ensure that there
are no exemptions
for trusts or not-for-profits
or charities.
Otherwise there will be
a mushroom explosion
of empty residences
being transferred
to them.
Developing a foolproof tax
will require consideration
of a multitude of factors.
Care must be taken
to ensure that the devil
does not get into the detail.
Here are a few examples
of the types of questions
that must be considered.
One of the purposes of including
these examples here
is to demonstrate
that an empty residence tax
is a perfectly viable
and practical tax
that could be administered
efficiently.
It would genuinely
be feasible.
Q.
If the owner of a holiday home
rents the residence that they live in
and does not own any residence
other than their holiday home,
then wouldn't it be fair
if they were exempted
from paying the empty residence tax
on their holiday home?
A.
No, the tax would apply to all residences
that are empty.
An exemption such as allowing
each person to own one empty residence
free of tax would undermine
the purpose of the tax.
The owner of the holiday home
is not a special case.
The owner could
choose to sell
the holiday home
and use the proceeds
to buy a residence
to live in.
Q.
What happens if somebody
takes out a lease
on a rental property and then
leaves it empty
for most of the time?
A.
The empty property tax
would apply to all residences
that are empty
for most of the time.
In this example, the tax
would be payable by
the renter.
The tax office will be able to detect
when a person
rents a residence
that is not used
as their
principal place of residence.
To avoid the tax,
the renter would be required
to show that the residence
is not an empty residence,
for example if it had been
sublet.
Q.
If a couple own their residence
and also own
a holiday home elsewhere,
can one of them claim
that the holiday home is their
principal place of residence
to avoid paying
the empty residence tax on it?
A.
No, the empty residence tax
would be payable on the holiday home
because it is empty
for most of the time.
A claimed
principal place of residence
must be genuine.
The tax office will be able to detect
many fraudulent assertions
about principal places of residence
from the information that they
possess about
people's employments.
Q.
If the owner
of their
principal place of residence
goes overseas to live,
leaving the residence vacant,
would the empty residence tax
be payable
on the residence?
A.
Yes, the tax would
be payable.
In this example,
the property
becomes an empty residence
and it would no longer be
the owner's
principal place of residence.
To avoid paying
the empty residence tax,
Australians who go overseas to live
will either have to sell
their residence
or rent it out.
Alternatively,
if the property is not actually empty,
for example if a family member
or a friend
lives there
while the owner is away,
then the empty property tax
would not be applicable.
The property
would have become
the principal place of residence
of whoever is living in it.
Q.
Will the empty residence tax
act as a deterrent to new builds,
because some new residences
might not be sold
until some time after
they have been completed,
and also there may be a delay
before the first owner
moves in?
A.
No, the tax would not
deter new builds.
A reasonable amount of time
would be allowed
for new residences to remain empty
until they are sold
and until they become occupied.
Q.
There are many normal reasons why
a residence may become empty for a while.
For example, renovations, illness, death, change of job,
moving house, house for sale, temporary postings, etc.
Will the tax be applicable
during these times?
A.
For most of these example reasons,
the residence will still be somebody's
principal place of residence,
so the tax will not be applicable.
If the residence is nobody's
principal place of residence,
for example while renovations
are being carried out before a new
owner or tenant moves in,
then temporary exemptions
for reasonable purposes
will be
granted on request.
Q.
What happens if a natural disaster
causes some residences
to sit empty
for a significant
amount of time?
A.
Exemptions
would be granted
where force majeure
can be demonstrated
or where a residence
is not fit
for habitation.
According to various media reports,
approximately one third of Australians
live in homes that are owned outright,
one third live in homes
with a mortgage
and one third live in rentals.
These figures are probably
not very accurate,
but will be used here
as a rough guide.
According to other media reports,
one third of young people
now have no prospect of ever being able to
afford to own a home.
Presumably the parents of these people
would be from homes
in all of the
three groups mentioned
in the previous paragraph.
These figures can be used
to generate an approximate estimate
of how many people
might vote for a political party
if it adopted a policy
of implementing a tax
on empty residences.
The one in forty Australians
who own a holiday home
can be ruled out straightaway,
but that is only 2.5%
of the population.
Many of them will have families,
so the 2.5% expands to,
at a guess, 10%
of voters who would strongly
oppose a tax on empty residences
because of a vested interest.
Most renters would probably approve
of the tax.
So, at a guess, maybe up to
30% of voters.
That leaves 60% (100% - 10% - 30%)
of voters
whose votes
cannot be predicted
by this analysis.
Safe to say that many of these 60%
would oppose the tax.
But only 21% of the 60%,
about one third,
would need to
support the tax
to push the supporters of the tax
into a majority.
A majority is not
beyond reach.
For example,
many of the young people
whose parents own their own homes
or are paying off mortgages
are among the one third
of young people
who are shut out
of the property market.
These ballpark figures demonstrate
that there is,
at the very least,
a large
untapped potential
for a political party
to capture
a lot of votes
if they adopted a policy
of a
tax on empty residences.
The reaction to the
recent budget has demonstrated that
a political party that
increases taxes
on the wealthy,
even if it is done
in a fair manner,
will be comprehensively savaged
by the media.
From this it can be predicted
that an empty residence tax
will be treated similarly.
Economic misinformation
will flood the airwaves
and the internet.
As a generalisation,
it seems unlikely that many people
who are wealthy
would support
an empty residence tax.
It has become part of Australian culture
that residences should be treated
primarily as investment assets
rather than as places where people live.
Also,
for many Australians,
owning a holiday home
is considered to be
a perfectly reasonable aspiration,
if not an absolute birthright.
It is likely that
many voters
will stick with political parties
that oppose the tax.
It is thought that
many of the leading lights
of the main political parties
may own holiday homes.
For example,
realestate.com.au
reported on 6 November 2024
that the prime minister bought a
"$4.3 million clifftop mansion ... on NSW's Central Coast".
It seems unlikely that this would be
his principal place of residence
because he has an official residence
in Canberra
where he must spend
most of his time
while working in his job
as prime minister.
Perhaps the mansion will become
his principal place of residence
when he retires.
If ownership of holiday homes
is common
among senior politicians
generally,
then the probability of any of the
main political parties
supporting an
empty residence tax
would be
close to absolute zero.
Senior figures
in the Liberal/National and One Nation parties
have made comments
about rolling back the reforms
in Labor's recent budget.
Their comments
suggest that they have
a substantial bias in favour of wealthier people
to the detriment of poorer people.
Their promises to roll back
Labor's budget reforms indicate that
all of the right-wing parties
would automatically oppose
an empty residence tax.
Labor's recent budget changes
create an impression
that the Labor party understands that
distortions of the property market
are not good governance.
However,
one of the biggest distortions
of the property market
was the recent introduction by Labor
of the
5% first home buyer deposit scheme.
Before implementing this scheme,
the government used taxpayers' money
to commission an economic study
that conveniently concluded
that the scheme would have
only a minor impact on property prices.
Even Blind Freddy could see
that this was nonsense
and that the impact
on property prices
would be substantial,
which indeed turned out
to be the case.
Even before the scheme began,
property prices
rose substantially
in anticipation.
The effect of the scheme
on property prices
has been a huge distortion.
First home owners now
have much bigger mortgages.
This was not the only distortion
that the scheme caused.
Senior Labor figures proclaimed
that the scheme would enable
first home buyers
to own their first home
years sooner than otherwise.
Which is indeed true.
What they didn't bother to mention
was that the scheme did not just make it
less feasible for property investors
to compete against first home buyers
for entry-level properties.
Homeseekers who had previously
owned a home, but no longer did so,
found that they could not compete
with first home buyers either.
What the distortions
caused by
the first home buyer deposit scheme
reveal
is that many Labor politicians
appear to have
a poor grasp of economics.
Otherwise they might not have
supported the scheme.
A poor understanding
of economics
would also explain
why so few Labor politicians
seem to get actively involved
in economic debate,
such as the debate about
the recent budget changes.
Therefore, it can be expected
that the Labor party will blindly follow
whatever economic policies
are adopted by its leadership.
It is not too difficult
to predict what
the Labor leadership's views
would be about an
empty residence tax.
According to website greens.org.au,
the Greens' housing policy is:
- Stop unlimited rent increases.
- Bring down mortgages.
- Phase out tax handouts going to wealthy property investors with more than one investment property.
- Build public & affordable homes.
- Establish a National Renters Protection Authority.
Nothing about a tax
on empty residences there.
However, the Greens have not
totally ignored the issue.
In the same website,
the Queensland Greens
have a
housing wishlist
that has a policy
about vacant dwellings
near the end
of the list
at item number 27.
27. Use financial disincentives
such as targeted rates categories,
levies or land taxes to discourage
investment property owners from
leaving dwellings
vacant for more than six months.
Item 27 shows that
the Queensland Greens
already support
a tax on empty residences,
although they have identified
less than an outer shell
of the concept.
Being near the bottom
of their housing wishlist,
it is probably not
one of their
most important
housing priorities.
They don't seem to have
realised just how effective
an empty residence tax
could be.
There is insufficient detail in item 27
to see how the Greens would
operate the tax,
or even how they would know
when a residence is not
being used as a residence.
This is typical of Greens' policies.
The Greens' lengthy
wishlists are full of
Utopian idealistic dreams,
but lacking in practical details
about how to implement
anything
in the real world.
It is of particular concern
that if the Greens were to achieve
even only half
of their housing aims,
the number of
private sector rentals
would probably fall
dramatically.
Idealists
don't seem to
be able to
understand
the concept of
"action and reaction".
If they did,
then they probably
wouldn't be idealists.
The Greens' policies
are so full of impractical
ideological fantasies
that it seems unlikely
that the Greens would ever
be capable of putting together
a viable roadmap
for implementing any tax.
However,
it is conceivable
that the Greens
might vote in favour
of an empty residence tax
if another party
introduced it.
There is a risk that the Greens
might attempt to hijack
what is a realistic and practical reform
and superimpose
their unrealistic and impractical
ideologies onto it.
A green version
of an empty residence tax
would probably be unworkable.
There is also a risk
that some wealthy owners
of holiday homes
may be influential
in the Greens party.
This is an unknown.
There must be
some reason
why the Greens
have never developed
more than an empty half-shell
of a policy about
empty residences.
The door is wide open
for anybody
to seize the opportunity
to fill the political vacuum
that exists because of
the absence
of a realistic plan
for solving the
housing shortage.
There will be
an unusually strong
political differentiation between
the party
that introduces
an empty residence tax
and most of the other parties.
All the other main parties,
with the probable exception
of the Greens,
can be expected to
oppose the tax.
The prospect of
an empty residence tax
is sufficiently divisive
to cause many voters
to switch parties
in one direction
or the other.
If some reformers
of social injustice
were to set up a new party
with a central policy
of implementing
an empty residence tax,
then there could be
a political earthquake
that would be bigger
than if One Nation
wins the next election.
The above voting analysis,
albeit simplistic,
indicates that
if a political party
promised to implement
an empty residence tax
then that party would have a good
chance of
winning seats.
To improve the odds,
a new party could borrow
other policies that
have already been proven
to be popular.
No party has a monopoly
on policies.
The only thing that
can solve
the housing shortage
is more houses.
Although reducing immigration
would help to prevent
the housing shortage
from getting worse,
it would not
increase the availability
of houses.
Implementing a tax
on empty residences
is the standout strategy
that would solve
the housing shortage.
It would make
upwards of 500,000
empty residences
available
to be used
as residences.
An empty residence tax
can be implemented
only if the government
buries the concept
that residences are
primarily investment assets
rather than places
where people live.
Owning an empty residence
must become
financially toxic.
None of the main political parties
has a plan that can
solve the housing shortage
in a reasonable timeframe.
There is a political vacuum
waiting to be filled.
The door is wide open.