By Elisa and Robert Barwick

When the Albanese Labor government housing minister Clare O’Neil told Triple J radio on 28 November 2024 that the government does not want to see housing prices fall, she was revealing more than her government’s views on economic policy (which it shares with the Opposition). She was inadvertently revealing the reason the socalled “parties of government” both act the same when they take their turn in office—because the same interests tell them what to do! She was revealing who the major parties really work for.

Housing in Australia is so out of reach to the average citizen that the annual Demographia International Housing Affordability last year had to introduce a new, higher, category of unaffordability—called “impossibly unaffordable”—to capture the extreme circumstances of cities including Sydney, Melbourne and Adelaide. (AAS, 3 July 2024.)

Asking what the government was going to do about soaring house prices, Triple J “Hack” host Dave Marchese quizzed Minister O’Neil about the goal of the government’s housing strategy: “Is it to bring down house prices?”

O’Neil said bluntly: “So we’re not trying to bring down house prices …”

She begged to differ with the young people trying to get into the market who “definitely want to see house prices come down”, in Marchese’s words, but provided no justification for that view.

“We want to see sustainable price growth”, she reiterated.

Marchese interjected: “If house prices don’t come down doesn’t that mean that this system is stacked against young people?”

O’Neil restated that her view was different: “Our government’s policies are not going to reduce house prices …”

There are many actions the government could take to reduce the heat in the housing bubble. Why won’t they do it?

The answer is that the banks—which fund the major parties—won’t let them. Together with the big auditing firms, major corporations, the press and neoliberal think tanks, they have a lock on policy, advising and sometimes even designing legislation (as the PwC scandal revealed).

The banks have trillions of dollars tied up in the property bubble and can’t afford to see it burst. The government can’t increase supply of housing, at least not too much, or prices will fall.

What would happen if prices fell substantially?

For the banks, with around 70 per cent of their loan books in mortgages, it would mean the value of the houses that are the collateral for their mortgage loans would fall below the outstanding debt on many homes. They would also have to crimp new lending. When prices are rising the banks are happy to lend exorbitant amounts, even if they know their customers will never fully repay it (remember subprime and low-doc loans?) because they assume they will be able to sell the house for a higher price to ensure they are repaid and make a tidy profit.

Who owns the ‘Australian’ banks?

These bank profits are not to be messed with. It’s not just the banks’ overpaid CEOs—it’s their shareholders, up to 80 per cent of which are in the USA. The interests of the shareholders are put ahead of the average Aussie wishing to own a home. According to the bipartisan economic consensus of both parties, Australia must prioritise foreign investors because we are dependent on foreign capital to fund the economy—a patently ridiculous notion given that we have financed our own development in the past (including for housing, more on that below) with the government-owned Commonwealth Bank.

Since it was privatised, the Commonwealth Bank of Australia was over 80 per cent foreign owned as of 2022, with 60 per cent of stock held by American investors led by BlackRock Inc. and the Vanguard Group, the two biggest private investment funds in the world. According to analysis by Australian historian Clinton Fernandes (published 12 September 2019), Bloomberg company ownership data shows that all of the Big Four Australian banks are majority-owned by American investors. So too are other big “Australian” companies, such as the “Big Australian” BHP, now 73 per cent owned by US investors.

An inquiry into common ownership and capital concentration in Australia was held in 2021 to prevent “corporates imposing public policy agendas while bypassing democracy”, as the Liberal party warned, and to address Labor’s warnings that “the world’s largest asset managers, such as BlackRock and Vanguard, and local super fund giants may be inhibiting competition by owning large stakes in rival businesses.” (AAS, 18 Aug. 2021.) However, the Liberal government did not respond to, let alone enact, the committee’s recommendations.

The private sector’s profit privilege is protected at all costs.

It is time the people were put first—ahead of big business profits!

Rigging the market

There is another aspect to this profit privilege. Due to policy decisions of past governments an increasing proportion of mortgage lending by banks goes to investors rather than people buying a home to live in. Those investors, by definition, require increasing house prices in order to make money when they resell.

In 2004 the Productivity Commission recommended a review of the Capital Gains Tax discount as it had led to skyrocketing house prices. It had precipitated an influx of investor loans (which now comprise more than a third of all bank mortgages), pricing first homeowners out of the market. But Howard and Costello would not take the advice of the review they themselves had commissioned. Referencing the “sensitivities” and “delicate” nature of the market they “shelved the report”, according to the Sydney Morning Herald’s report of 1 January 2025. Released cabinet documents revealed that they feared house prices would fall. “[P]olicies directed at curbing investor demand may result in a disproportionate decline in house prices in a short amount of time (investors fleeing the market), resulting in significant costs to household balance sheets and potentially serious impacts on the economy”, Howard and Costello wrote in a submission to cabinet. (AAS, 22 Jan. 2025.)

Return to policies that work

If the government were to issue credit to build homes through a national bank—like it did under both Labor and Liberal governments for decades before the Commonwealth Bank was privatised—the supply of inexpensive housing would grow rapidly. A government housing program would ensure that first home buyers were prioritised and that an ample proportion of new homes are made available for rental.

This is what we did from 1945 onwards, when the Commonwealth Bank made loans to state housing commissions, building 100,000 public homes in a decade. This program did on a national scale what had been done earlier by state banks. In just one year, 1922-23, Victoria’s State Bank funded and built 5,000 homes, at a time
when the population was 1.5 million.

With a population of 6.5 million today, that would be the equivalent of 21,600 homes in Victoria in one year; extrapolated out to the whole of Australia, it would be the equivalent of building 80,000 homes nationwide today in one year.

By contrast, the Albanese government’s policy is to build 30,000 public and affordable homes over five years—barely touching the sides in terms of the need.

The ACP pledge: No family will lose their home!

Australian Citizens Party candidate Bassima Hawli for Calwell issued the following policy statement to address the housing crisis in the Calwell electorate on the north side of Melbourne. It is a working model for all regions of Australia.

Calwell is the centre of the housing crisis in Victoria:

• In postcode 3064—Craigieburn, Donnybrook, Kalkallo, Mickleham and Roxburgh Park—9,383 households, or 44.2 per cent of households that have mortgages, are mortgage stressed, according to a report in January from Digital Finance Analytics.
• Postcode 3064 has the highest percentage of households in Victoria that have fallen behind on paying their mortgage—2.81 per cent of home loans are in arrears, and risk foreclosure, according to S&P Global.

The soaring cost of living is pushing more families into mortgage stress and mortgage arrears. They are hanging on by their fingernails, dreading the expenses that come up outside of their ordinary cashflow, including rates, insurances, and back-to-school expenses.

The Australian Citizens Party has a comprehensive policy to fix the housing crisis.

The ACP’s housing policy involves emergency measures to save families’ homes, and long-term measures to make housing affordable again.

Emergency solutions

1. Stop foreclosures

• Under the ACP’s policy, the government would declare a moratorium (ban) on banks foreclosing on family homes.
• The moratorium would only cover your residence, not an investment property.
• It means if you are having trouble meeting your mortgage payments, the bank will not be able to kick you out of your home and sell it.

2. Write down debt

• The ACP will direct the Reserve Bank to work with the banks to write down the outstanding debt on loans the banks wish to foreclose, in order to reduce mortgage payments to affordable levels.
• The program will be means tested to avoid rorts, and it will apply the same scrutiny of borrowers as banks do when they make loans.
• The RBA has the capacity to scale up the program as necessary.

Long-term solutions

1. Public housing

• The ACP’s policy includes using a new public bank owned by the government to invest in a big public housing program, so the poorest households can live in affordable housing.
• The availability of public housing will also reduce demand for private housing stock, which will be a brake on house prices.

2. Loans to first home buyers

• The public bank will make affordable loans to first home buyers, at lower interest rates than the private banks.

3. Reform the tax system to remove homebuyers’ disadvantage

• The ACP will change the tax rules to remove the advantage housing investors currently enjoy over homebuyers, which allow them to outbid young families for housing.

Australian Alert Service, 12 February 2025