In this article, Saxon Davdson contextualises and disseminates the findings of the IPA’s research into immigration and its effect on housing shortages, and how this affects Australia’s economic freedom and prosperity.
The IPA has been dedicated to preserving and strengthening the foundations of economic freedom through research and analysis since its inception in 1943.
National Cabinet was a missed opportunity to act on the major economic and social issues facing our nation today.
Housing was top of the agenda at the meeting, with a housing shortage causing the prices of purchasing and renting homes to soar, locking out first home buyers.
According to the Australian Bureau of Statistics, rental prices rose by almost seven per cent over the past year, which is the highest annual change in 15 years.
Yet, National Cabinet’s only response was to announce that the housing target to 2029 will increase by 200,000 to 1.2 million, along with some modest funding to create an incentive for state governments to increase land supply for housing.
For those looking for relief from housing cost pressures, this response merely tinkers at the edges of a crisis and fails to address the key underlying problem of how demand will be controlled.
Worse still, the federal government is proposing new laws which could cause construction costs to increase sharply, an eventuality that would militate against its stated goal of increased housing supply, while further driving up housing costs.
The planned crackdown on labour hire arrangements, through the clever but misleadingly named “same job, same pay” reforms, brings workers engaged on projects through an agency into the scope and control of trade unions.
The practical effect of this would be to capture labour hire workers in the collective bargaining system, which adds to costs and dramatically reduces flexibility.
Workers have often chosen to be employed through an agency because it is a more flexible arrangement that suits their circumstances, as it is not subject to rigid regulation.
Further, the reforms would also significantly curtail the ability of businesses to rapidly increase or decrease their operations in response to changing market conditions.
Labour hire arrangements provide businesses with surge capacity so they can meet unexpected increases in demand for their services, such as in relation to the housing shortage the nation is currently experiencing.
And it is not just construction.
Other critical sectors which experience boom and bust and seasonal cycles, such as agriculture and mining, would be crippled by these proposed laws, adding to costs and fuelling inflation, and therefore putting further pressure on household budgets.
Such a policy is an article of faith of Prime Minister Anthony Albanese, who introduced a private member’s bill back in 2021, to try and push it through parliament.
It is a proposal that would have multiple short and long-term implications for Australia’s economic future, including job losses, halting productivity, and the prolonging of worker shortages.
The implication of most concern however is how it will affect the supply of housing.
The construction industry has a large proportion of its employees who are not directly employed, at approximately 36 per cent.
This includes labour hire arrangements, which the construction industry uses at twice the rate of the economy-wide average.
This should be of particular concern to states such as Victoria, which have had multiple infrastructure projects delayed and paused because of unforeseen expenses.
Making matters worse, at the same time as the government proposes to add to construction costs, it has also committed to the largest expansion of migration in Australia’s history.
The federal government has announced an unplanned rise in the migration intake which will see 1.7 million more migrants arrive in Australia between now and 2028, despite the housing shortage that is currently locking Australians out of housing and pushing rents to record highs.
Recent analysis by the Institute of Public Affairs (IPA) found that the proposed increase in migration will exacerbate the nation’s housing shortfall, leading to a shortage of more than 250,000 homes in the five years to 2028.
Added to this is the large intake of international students, who took up an equivalent of approximately 70 per cent of new housing supply last financial year.
And Australians are increasingly concerned about this development.
IPA polling found that six in ten Australians want the intake of new migrants paused until more economic and social infrastructure, such as schools, roads, hospitals, and houses, is built.
Additionally, 64 per cent said that they believe the proposed intake is too high.
Polling from The Guardian and Sydney Morning Herald returned similar results.
Unfortunately for Australians, the federal government doesn’t appear to be listening.
While short-sighted policies may get the crowds cheering at party conferences, they also ensure that the rest of us have to live with high and ever rising housing costs.