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Regulate first, ask questions later

By David Leyonhjelm - posted Friday, 6 October 2017


Living in Australia sometimes feels like living in a bureaucrats’ version of a spaghetti western. The heroes are the brave and all-knowing public servants, while the villains are the naughty people who are too foolish to realise that government knows best.

Politicians and bureaucrats alike want to regulate first, ask questions later. It seems barely a week passes without someone trumpeting the expansion of the nanny state. And with each new crackdown, ban or tax, our freedom gets that little bit smaller.

Whereas once the government would at least go through the motions of citing things like market failure, all it takes now is for a politician to want to look tough or be seen ‘doing something’. So it is with the proposed regulation of short-term accommodation platforms like Airbnb and Stayz.

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Sharing our home with someone is as old as time. Who has not stayed with a family member or friend, or the friend of a friend? The difference these days is that it is much easier. Technology allows us to stay in someone’s home nearly anywhere in the world.

The immense popularity of these platforms is simply staggering. Globally, Airbnb has just passed four million listings, more than the rooms of the top five hotel brands worldwide. Australia is particularly fertile ground for the company, with almost one in five adults having an account. The company claims Airbnb is the “most penetrated market in the world”.

For government, the platforms are confronting. With no red tape or government involvement, travellers are protected, bad apples ejected and quality maintained via hosts and guests providing reviews of each other using sophisticated technology and a trusted online marketplace. Airbnb says that, on average, a host could have a new reservation every day for over 27 years before experiencing a single bad incident. A track record like that would be the envy of any pub, hotel, motel or caravan park in the country.

The so-called sharing economy challenges the idea that people need red tape, regulations or government to keep them safe from harm. But that does not stop some from trying. Currently, the NSW Government is toying with a grab bag of Big Brother and nanny-state policies ranging from new taxes and caps, to licences, planning approval and complete bans.

Loudly cheering them on is the hotel industry, which sees the sharing economy as a competitor. Since Airbnb opened its Australian operations in 2012, the Australian Hotels Association, which represents big hotel owners through its Tourism Accommodation Australia division, has donated more than half a million dollars to the two major political parties at both state and federal levels.

The hotel industry argues there isn’t a level playing field between them and these new competitors, insisting that ordinary people sharing their homes should be subject to the same red tape burdens as they are. They claim that these homes are death traps for unwitting guests, and say it is the fault of the government that people are choosing to stay in these homes rather than their hotels.

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They are wrong. As US President Ronald Reagan said, "Government is not the solution to our problem - government IS the problem". There is nothing wrong with people sharing homes to make ends meet, or for travellers to enjoy a different form of holiday or business trip.

This debate goes to the heart of the role of government and property rights. Does government, your neighbour or even your strata committee have the right to tell you what you can or cannot do with your own home?

What if politicians, public servants and staffers were all encouraged to use the sharing economy on their work travels? Taxpayers would save a lot of money and policy-makers would quickly understand how safe and efficient the sharing economy is. Goodbye to the rent-seekers, hello to the rent-sharers.

My fear is that the end of this argument is just as predictable as those old time spaghetti westerns. The brave and all-knowing public servants will prevail, leaving a raft of restrictive and invasive policies.

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This article was first published in the Australian Financial Review.



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About the Author

David Leyonhjelm is the Liberal Democrat Senator for NSW.

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