One of the skills Australian politicians have mastered over the years is finding ways to raise ever more revenue from the housing industry, but pretending that any new measures they’re introducing are actually motivated by a desire to fix housing affordability or a housing shortage.
The latest shameless exercise by a government entity to do this has come from the Brisbane City Council, which rules over a large chunk of the Brisbane metropolitan area.
The Brisbane council, headed by Lord Mayor Adrian Schrinner, wants to raise some extra revenue from every politician’s favourite cash cow, the housing market.
And they want to dress it up as a measure to fix the housing shortage – because, Brisbane, like everywhere else in Australia, has a chronic shortage of residential rental properties.
Now the key to getting away from a cynical cash grab from the housing market is to not only pretend that you’re fixing a serious problem, like the housing shortage, but also to scapegoat an unpopular minority for the problem.
In Australian politics, when it comes to housing issues, the scapegoat of choice is always property investors.
So Brisbane City Council has decided to blame the rental shortage on property owners who have put their properties into the short-term rental pool, rather than the permanent rental pool.
This is the premise on which they are seeking to justify a huge increase in rates to any property owners who is using short-term rental systems like Airbnb.
Now people earning money through Airbnb rather than renting to permanent tenants are a SMALL part of the rental shortage problem, but they are not the major part.
Slamming these property owners with significantly higher rates, thereby theoretically forcing them to make their properties available for permanent rental, will not fix the rental shortage problem.
Brisbane has a vacancy rate of just 0.7% – similar to every other major city and regional centre in the country. It’s been caused by years of decisions by politicians at every level of government which have actively discouraged property investment.
As a result, more and more investors have sold their properties, because politicians have made property investment increasingly unattractive.
And, little by little, over the past five years, the pool of rental properties has diminished.
And so now we have a chronic rental shortage crisis, with most places across Australia with vacancy rates below 1% – caused by the decisions of federal, state and local governments.
Brisbane is one of those places and this new measure by Brisbane City Council to dramatically lift council rates will not fix the problem. In fact, you could argue that it may very well make the problem worse, by forcing investors to sell their properties.
This is a cash grab by the Brisbane City Council, pure and simple, and Mayor Schrinner is perpetrating a cynical PR exercise to try to justify the rates rise by claiming it will help tenants seeking rental properties.
This is text-book “Yes Minister” politics, taken from the playbook of the iconic British comedy series. When you want to look like you’re helping an issue but really wanting to raise some new revenue … you identify a problem, blame an unpopular minority for the problem and slam them with new or increased taxes – and then hold lots of press conferences.
Several years ago the Federal Government wanted to give the impression it was doing something about housing affordability.
It staged not one, but two, lengthy inquiries and at the end of that drawn-out process they decided to scapegoat foreign investors as the cause of the affordability problem in Australia.
So that became an excuse to hit foreign buyers of real estate with major new taxes.
They successfully discouraged foreign investment in Australian real estate – but did it solve the affordability problem?
Clearly not, affordability has got considerably worse since then. Foreign investors were never the problem – but it was a great opportunity to raise more revenue from the housing industry.
It was, once again, a cynical cash grab from politicians.
And that’s what’s happening with the Brisbane City Council. It will raise lots more money from the housing market but it won’t fix the housing shortage.
A year from now, Brisbane will still have ultra-low vacancy rates and rents will still be rising at the rate of around 20% or 25% a year.
Brisbane City Council will be richer and tenants across the city will be poorer.
