The failure of Jim Chalmers

But if Chalmers was serious about housing affordability the one thing he could do to fix the problem is reduce net migration not to the opposition’s unambitious target of 200,000, but to Canadian Prime Minister Mark Carney’s target of a very low sustainable level.

Instead, the government is trying to boost supply by retaining the current tax treatment for new home buyers. But in the March Quarter this year there were loans for investors of 57,342 and housing starts (not completions) of 53,567. If investors take the government’s bait, the new home market will be overwhelmed.

The industry is working pretty much at capacity, one reason being the high rate of government spending on things like train tunnels, the energy transition, the Olympic Games, infrastructure to cope with migration, and buildings to house new public servants, along with other projects that add nothing to the economy, and debt to budgets.

So all that extra demand won’t boost supply it will boost prices in the new home market which will then flow over into the established housing market. It’s Economics 101 that you can’t quarantine economic effects to one sector by government fiat (any more than you can quarantine people from respiratory viruses).

The Labor government obviously doesn’t know what it is doing, but the real question after the budget is, ‘Does anyone, in any of the three major parties, understand what needs to be done for the economy, and will they articulate it?’

Taylor’s pledge to index marginal rates of tax is a good start, as it implies he will keep increases in government expenditure to no more than inflation, but there needs to be much more detail. Hanson was on the right track with immigration, but again, real detail is missing as well as a frame within which the opposition parties can coherently attack the government’s budget and pave the way for their own potential government after an election.

With Chalmers’ credibility gone there is the opportunity for a new, accurate narrative to assert itself and describe the situation we actually face, rather than the student union version, and the moral imperative to put some real solutions in place.