Latest news with #BenPhillips
7NEWS
5 days ago
- Business
- 7NEWS
What would it take for house prices to drop in Australia?
Homeowners and property investors may rub their hands together at Australia's ever-increasing house prices. However, for the growing number of Australians who have yet to secure a foothold in the property market, the great Aussie dream can feel increasingly out of reach. A parliamentary report released in May found rising house prices in Australia have seen home ownership decline from 70 per cent in 1981 to 67 per cent in 2021. The decline is particularly apparent among young people. For those aged 25-34, home ownership has decreased from 61 per cent to 43 per cent. In comparison, for those aged 55-64 home ownership has decreased from 81 per cent to 76 per cent. More than one type of home Ben Phillips, an associate professor from the ANU's Centre for Social Policy Research, says home purchase affordability is a substantial issue in Australia. He says that with more interest rate cuts expected this year and housing supply not keeping up with demand, it could be an issue for some time to come. Loading content... "The problem is clearly not unique to Australia, but house prices relative to income are very high in Australia and higher than most other developed nations," he says. However, he argues there are some policy reforms that could put the brakes on runaway house prices. "The main policies that would potentially improve affordability would be, firstly, supply-side reforms, particularly around zoning. "These reforms would increase the supply of new dwellings in well-located areas, particularly inner and middle-ring regions of major cities and towns," Mr Phillips says. He argues they would improve the efficiency of Australia's housing market with better located and less expensive housing styles, such as more townhouses and units and splitting large blocks into multiple dwellings. Help or hindrance Mr Phillips also argues that removing first home buyer grants and stamp duty discounts could ease house price growth. "While first home buyer grants do help some new buyers, it is also true that they likely lead to increases in house prices and may largely help those who were going to purchase anyway," he says. "Perhaps they purchase earlier than otherwise or buy a larger or better dwelling. "Stamp duty discounts also work in a similar way when directed toward first home buyers," Mr Phillips says. Independent property researcher and View economic expert Cameron Kusher agrees. "One of the reasons we've continued to see housing prices rise over recent decades is due to the type of support that governments, both state and federal, offer to first home buyers," Mr Kusher says. He argues the easiest way in which government could assist first home buyers to enter the housing market is to have cheaper housing. "But pretty much all of the incentives that are offered to assist first home buyers enter into the housing market... lead to further increases in property prices," he argues. "The assistance provided to first home buyers keeps getting larger and more creative and is more about helping first home buyers to enter the market at high prices and stimulate further price growth rather than to genuinely improve housing affordability," he says. Is regional housing the answer? Greater inter-connectivity between cities and to regional areas and increasing the supply of housing would also slow house price growth according to Mr Kusher. "What if we built faster rail from each of our larger capital cities to surrounding areas where housing is cheaper?" he proposes. "What if in Sydney you could commute within an hour and a half to Cessnock, Lithgow or Bathurst or within two hours to places like Goulburn and Canberra? What if in Melbourne you could commute much more quickly to Shepparton, Morwell, Bendigo or Ballarat? "I have no doubt that the much lower cost of housing in these areas and the fact that housing is available on larger lot sizes than new housing in the capital cities would see many choose to move to these areas," Mr Kusher argues, noting the approach would also require greater investment in new housing and infrastructure in regional areas. He says that an increase in the supply of housing could bring house prices down and could be facilitated in several ways. "This would include relaxing zoning restrictions and upzoning more sites for development, limiting heritage listing of properties, making the development application process more streamlined, speeding up the development approval process and investing in key infrastructure to enable more housing development," he says. Despite home ownership rates continuing to trend lower due to rising house prices, Mr Kusher argues that the issue of housing affordability is problematic for governments and policy makers.
ABC News
6 days ago
- Business
- ABC News
Australia's housing market would crash if these factors aligned
An Australian property market crash may be laughable, but it's conceivable. Housing is politically sensitive because access to it influences our lives enormously. The Albanese government is attempting to ramp-up housing supply, and is offering shared equity schemes to make housing more affordable. "That's part of the issue is politically it is very difficult to introduce [new] big bang policies that may actually have some sort of impact on house prices because a lot of people are going lose out," Ben Phillips, an associate professor from ANU's Centre for Social Policy Research, says. A property price crash, of course, would make many millions of homes more affordable. But is that realistic, or even possible? Australian property prices have faced three major speed bumps over the past four decades. The share market crashed in October 1987, leading to an economic downturn, which saw the unemployment rate rise to 10.8 per cent. It hurt asset prices including property. Australia's two largest cities saw the biggest falls, with house prices falling 10 per cent in Melbourne, and roughly 9 per cent in Sydney between 1989 and 1991. In the global financial crisis of 2008, Australia's median property price fell by around 8.5 per cent over an 11-month period, according to CoreLogic. The COVID-19 pandemic, decades later, saw the unemployment rate reach 7.4 per cent in July 2020. Phillips says that "didn't really have much impact". What would likely lead to a property market correction, and potentially a crash, analysts say, is a spike in Australia's unemployment rate. The latest official data from the US shows a shock slowdown in American bosses hiring new candidates. A spike in the unemployment rate here in Australian is not inconceivable. "I think you'd need to have some sort of an event — and I don't quite know what that would be — that would lead to a lot of people losing their jobs, who are professionals and who own houses," Phillips says. Independent economist Saul Eslake has a clearer picture of what that "event" would look like. "So if, for example, Australia were to be hit by some external shock emanating, for example, from the United States or China, that prompted unemployment to rise significantly," Eslake says. Cotality's head of research, Eliza Owen, agrees. "So the unemployment rate is probably the thing that's holding [the property market] together," Owen says. "If we saw a big blowout in the unemployment rate, that's when mortgage serviceability becomes less stable, less certain. "You might have more forced sales and that would add to supply and contribute to a blowout in falling home values." While not putting any numbers around what would cause an Australian property market crash she says: "It would have to be a combination of demand shock and a large increase in unemployment." "So that probably comes from a severe economic downturn." Eslake adds that a combination of interest rate hikes and a severe cut to the migration intake would be necessary for a "demand shock" to the property market. The bottom line is that any economic or financial event would need to be deep and long-lasting, economists say, to produce a property market correction or crash. But Phillips notes that many home owners are well ahead in their mortgage repayments and have managed their finances to help ride out a financial storm. "Most people in Australia are pretty wealthy and if you're a home owner, and those are most of the people who are buying and selling houses are actually home owners — they have large amounts of equity, they've got large redraw facilities to survive during any sort of challenging financial times," he says. Phillips says this, and a chronic shortage of housing, has made Australia's housing market virtually indestructible. "And I think particularly through an environment where you've got quite low interest rates and you've got effectively a fairly fixed level of housing supply and certainly in the short term, that's probably why it's then house prices stay as strong as they have or increase increased quite strongly." Eslake argues the government and the Reserve Bank stand at the ready to respond to any economic event which poses a threat to financial markets. "I think the Reserve Bank would cut interest rates significantly," he says. In addition, he argues, the big four banks, in the event of a big endogenous economic shock, would fall over themselves to help mortgage borrowers avoid foreclosure. "Most banks will, if a mortgage customer loses his or her job, comes forward quickly enough and the bank's persuaded that there's a reasonable prospect that that person will find a job in the next six months, [the bank will] go to considerable lengths to help those customers," Eslake says. "The banks certainly don't like to have mortgagee and possession signs going up in front of their customers houses." So, is a property market crash possible? Of course. Is a correction more realistic? Yes. But you would need some combination of a drastic cut to migration, interest rate hikes, and a significant and long-term jump in white-collar unemployment with little government support. It's a tall order.
The Guardian
26-07-2025
- Business
- The Guardian
If the economics of broadening or lifting Australia's GST are challenging, the politics are horrendous
When Jim Chalmers declared we needed a national debate on reforming the economy to drive the next generation of prosperity, he scolded the media for its penchant for playing the rule-in-rule-out game. The irony is that from his high horse, the treasurer had almost certainly ruled out one major change: lifting or broadening the GST. If Chalmers is being disingenuous when he suggests nothing is off the table at next month's talkfest – and he absolutely is – then he should have ruled out changes to the consumption tax from the very start. Many economists argue that lifting or broadening the GST is an essential ingredient in any reform package that fundamentally improves the efficiency of the tax system. More GST revenue can pay for cuts to income and company tax rates, for example. This shift provides a structurally more stable tax revenue base, and sharpens incentives to work and invest. Labor as a party, however, is fundamentally opposed to changing the tax on consumption on the basis that it hurts poorer Australians. Sign up: AU Breaking News email And the worry about fairness is real. New analysis by the ANU's Ben Phillips shows that the GST is 'highly regressive'. Phillips' modelling shows the bottom fifth of income earners pay 5.4% of their income on consumption taxes. That's more than twice as much as the top 20% of households, where GST accounts for 2.6% of disposable income. Broadening the GST to include the things currently excluded – such as fresh food and education – makes the tax even more regressive. Phillips finds consumption taxes as a share of household budgets climbs to 7.9% for the lowest incomes, and 3.5% for those at the top. 'I think equity concerns are spot on,' Phillips says. 'There would have to be a complicated new approach to compensation for lower and middle income workers to make it politically feasible. 'We would be relying on there being some substantial economic gains from increasing the GST, and they are probably relatively modest.' If the economics of broadening or lifting the GST are challenging, the politics are horrendous. The first hurdle is the most obvious: the states get the revenue, while the commonwealth cops the heat. Even if the Albanese government could agree with its state and territory counterparts to share the proceeds, there is also the issue that the GST distribution system has been fundamentally undermined by the obscenely generous deal with Western Australia, the country's richest state. As such, a bigger GST pile without getting rid of this distortion would simply exacerbate what Saul Eslake has called 'possibly the worst public policy decision of the 21st century'. Which begs the question: can we get meaningful tax reform without lifting the GST? Ken Henry, who authored a major tax paper in 2010 and is considered the country's high priest of reform, argues that 'tax reform cannot be done piecemeal; a big package will be required'. He recently told The Conversation's Michelle Grattan 'it would be better not to constrain the reform process by ruling out the GST'. 'Having said that, I do think it's possible to achieve major reform of the Australian taxation system without necessarily increasing the rate or extending the base of the GST.' Such reforms could be paid for via higher taxes on natural resources, and on wealth and savings – both on capital gains and income from that capital (think property investments and superannuation). Chalmers' narrative for the reform roundtable apparently leans into Henry's view around some kind of tax 'grand bargain'. But again, the treasurer's ambition is much more narrow. He has famously described his approach to reform as 'bite-sized chunks', and defended his policy initiatives since coming to power as 'modest but meaningful'. In fact, the most obvious next steps for Labor when it comes to tax is reforming the treatment of family trusts, and introducing a road user charge to replace dwindling fuel excise revenue. Whether we need another roundtable to get there is an open question. Viva Hammer, who played a key role in designing America's immense Tax Cuts and Jobs Act of 2017, had some advice for policymakers. Speaking at a tax roundtable organised by the independent MP Allegra Spender, Hammer said the ambition should be 'to think about doing something better, and not something perfect, because perfection is for the angels'. Breaking it down to the lowest common denominator, the independent economist Chris Richardson's advice is 'let's just stop doing dumb things'. Speaking at the same event in Parliament House on Friday, Richardson said his number one 'dumb thing' is how we tax gas through the petroleum rent resources tax (PRRT). Australia over recent years has become a gas superpower. And yet, incredibly, the tax take has not changed at all, Richardson says. Labor's tweaks to the PRRT have not changed this reality – as Richardson says, the forecasts for revenue from this tax are a 'big fat nothing' in future years. 'Some people say you can't change because there would be some 'sovereign risk',' he said, referring to the claims that altering these rules puts off foreign investors and can choke off funding for the industry. 'Sovereign risk is where one side gets next to nothing across a long period of time, and our own stupidity has got us there, and we should do better.' Richardson believes we are also not charging banks enough for the implicit 'too big to fail' insurance provided by taxpayers. The two suggestions, he said, could raise $5-6bn a year.
CTV News
07-07-2025
- Politics
- CTV News
Saint John council set for final vote on Spruce Lake Industrial Park future
After passing the first and second readings of a proposed industrial park expansion on the city's western outskirts, Saint John City Council will have its third and final vote on the plan Monday night. In mid-June, councillors unanimously passed the first two readings that would see 1,500 acres of land in the community of Lorneville rezoned for heavy industry. The proposed expansion has been a highly debated topic since Lorneville residents were first given a letter about the plans in July 2024. The idea has been met with heavy resistance from much of the community. 'It's been, first and foremost, on our minds for over a year,' says Lorneville resident Chris Watson. 'The industrial park was basically thrust upon us out of the blue.' City staff held several meetings with the community, but Lorneville residents who attended those meetings have previously said they did not feel heard and the meetings felt more like a formality. Major concerns include the idea of heavy industry located in close proximity to people's properties, and the destruction of provincially significant wetlands. Watson also recently discovered a red spruce tree in an area of the forest under threat that is believed to be more than 400 years old, making it one of the oldest trees in all of New Brunswick. Acadian Forest Dendrochronology Lab lead at Mount Allison University Ben Phillips said the forest is the third-oldest age forest in the province based on the 20 oldest trees in the area. 'We're resoundingly against this,' Watson says. 'We will continue to fight and stand up for our community, and we're not we're not backing down.' The community still has many questions they say council has not yet answered regarding the proposed park expansion. The 71 total questions include what the business plan is, what will happen to the area's clean drinking water, and what is the plan for compensating any wetlands destroyed by the project. In late June, the Caribou Club – a land-based treaty education and recreation facility located about a half hour outside Fredericton – walked through the old growth forest. An invitation for the walk was extended to the mayor and members of city council but a letter directed to members of council states no one attended. The letter goes on to say the land is already developed with an old growth forest, and urged council to rethink the expansion idea on the property. 'You have considered the economic value but not the cultural or spiritual value of this forest,' the letter reads. 'Decisions about land use cannot be made in isolation; they must be based in a shared understand of the historical and contemporary significance of the land to all of us.' Watson says the land up for expansion is Crown land, and indigenous partners should be consulted as much as anyone. When asked about her decision to not attend the walk led by the indigenous group, Mayor Donna Reardon told CTV News Atlantic she had toured the forest ahead of the public hearings beginning in May. When asked for comment ahead of the final vote, the mayor said the 'appropriate approach would be to all the EIA (Environmental Impact Assessment) to be completed and formulate any required plans once there is a definitive report available.' Lorneville residents are hopeful the EIA will back their argument and save the old growth forest. Watson says residents have asked to speak with both the province's Environment Department and Natural Resources Minister John Herron on the file but have not heard back. There is no clear timeline for when the EIA will be completed. Lorneville A wetland in Lorneville, N.B., is pictured. (Source: Avery MacRae/CTV News Atlantic) For more New Brunswick news, visit our dedicated provincial page.
The Australian
30-06-2025
- Business
- The Australian
Explorers Podcast: Norfolk Metals
Stockhead's 'Garimpeiro' columnist Barry FitzGerald is back in the studio for another instalment of The Explorers Podcast. In this edition, Barry chats with Ben Phillips, executive chairman of Norfolk Metals (ASX:NFL), as the company prepares to drill its Carmen copper project in Chile's Atacama region. Having met all conditions of its earn-in agreement, Norfolk will now move to Stage 1, aiming to earn a 70% stake in Transcendentia by spending $3 million over three years. With permitting underway and a 5,100m drill program planned for Q3, the company is targeting a shallow copper oxide resource with potential for a low-cost, high-margin heap leach operation. Listen to hear the latest. This podcast was developed in collaboration with Norfolk Metals, a Stockhead advertiser at the time of publishing. The interviews and discussions in this podcast are opinions only and not financial or investment advice. Listeners should obtain independent advice based on their own circumstances before making any financial decisions.
