Gareth Parker: It was hard to fault the Morrison Government’s economic stimulus plans — then HomeBuilder came along

Job creation is now the only game in town in our pandemic politics. It’s the point of the $70 billion wage subsidy program JobKeeper; it’s the point JobMaker, Christian Porter’s tripartite powwow with business and the unions; and it’s the point of the new housing stimulus policy, HomeBuilder. While COVID-19 has been a boon for policies named by compound words, it’s also been awfully difficult to fault the Morrison Government’s response to the pandemic. HomeBuilder, however, is a rare and puzzling misstep. First-homebuilder grants are a familiar, but not uncontroversial policy option. They are popular retail politics but many economists argue they simply push up the price of housing by an amount equivalent to the grant. The Government has tried to prevent this in the scheme’s design by insisting that contracts be negotiated at a “fair market price” but it is the States who will be responsible for it and it seems even they aren’t sure how that would be enforced. Where the policy gets weird is the “substantial” home renovation aspect, which appears to be crippled by contradictory eligibility requirements. You must spend a minimum of $150,000 on your reno but you are ineligible if your household income is over $125,000 for a single or $200,000 as a couple. That’s a Venn diagram with very little overlap. You can see just how limited this proposal is by the example that Treasury chose to illustrate it in its explainer documentation. Cassidy, on less than $125,000 income is the owner-occupier of a $900,000 house and wants to do a $400,000 substantial renovation, according to the explainer. How on earth she is sliding this past the bank manager, who according to mortgage brokers has discounted the value of her home 20 per cent for the purposes of her mortgage application, is beyond me. Needless to say, Cassidy either has extremely wealthy parents (and doesn’t need the help) or, more likely, doesn’t exist. The Government wants to get the money out the door by September, when the building industry lobbyists tell them that the pipeline of work will fall off a cliff. But the renovator aspects of the package will require plans, a development application and local council building approval, too. By December? It’s touch and go. Was it not possible to craft a scheme that gave, say, $5000 grants to mums and dads to help do up a kitchen or bathroom in a house that might be in negative equity to make it more liveable for the next five years while the market turns around? The money would have gone to the smaller cottage trades rather than the big building companies, though clearly the Government is worried about a re-run of pink batts (hence offloading the operational elements to the States — plausible deniability if it goes pear shaped). The package will not be a job creator, though it may put a floor under employment in a sector that has been battling in WA for several years, but only if first homebuyers are persuaded they will not do their dough. Necessarily, the first-homebuilder is likeliest to purchase on a greenfields housing development in suburbs such as Baldivis, Byford, Ellenbrook and Yanchep. These suburbs are ground zero for mortgage arrears, with up to triple the rates of the national average. How sensible is it to encourage young couples into the meat grinder of a potential equity trap? The PM was on much safer ground when he put the spotlight on fixing the training system at his Press Club speech two weeks ago. He noted that the Feds give about $1.5 billion a year of training money to the States without any say in how it is spent, a good old-fashioned Commonwealth lament. But here is a real opportunity. Universities are crying poor at the evaporation of international students but the facts are the student boom has enriched vice-chancellors and the administrator class at the expense of Australian students, who have seen the quality of their education plummet. No one talks about this but ask your kids what it’s like to do a group assignment with the third of their classmates who can’t communicate in adequate English. The uncapping of university places has sucked young people out of the training system, which itself has been debased by too many private training colleges who have been happy to take the (Government) money and run. Meanwhile, we have persistently high youth unemployment as Australia’s business sector scratches its head at prolonged skills shortages, which it solves by going offshore to employ foreign workers on 457/482 visas. In a pandemic environment when immigration won’t be happening for the foreseeable future, the opportunity is so glaringly obvious that it hurts. Industry must get into the schools and explain to teenagers and their parents exactly what sort of workers they are looking for in the next decade, with the training system ready to build the bridge to get them there. Sally McManus’ union movement says its goal is the creation of secure, decently paid employment. Who could disagree? Porter says there is nothing more insecure than unemployment: a very good point. It seems to me that the opportunity from this crisis is right here at the intersection of industry need, youthful aspiration and the training to connect the parties.

Gareth Parker: It was hard to fault the Morrison Government’s economic stimulus plans — then HomeBuilder came along

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