It is sickening to witness the posturing of state premiers against the Reserve Bank in the wake of the latest rise in interest rates. It is these premiers who have left the heavy lifting on housing to the private market, abdicating any responsibility for social housing for decades.
Equally sickening is what David Heilpern pointed out (Echo, 3 May) in context of the housing crisis: ‘The obsession is exclusively with supply’. As he said, it is a ‘song so well sung’. It successfully avoids looking any further as to why we are where we are.
But supply isn’t as significant as is finance that continues to be the root cause of the housing crisis.
Deregulation of the banking system 30–40 years ago set in train what we have today, namely turning dwellings into financial products. This has been fuelled by the longitudinal profile of lowering interest rates and ready access to credit. Australia’s banks have become the most profitable in the world and currently hold over $2.047 trillion in mortgages as assets on their balance sheets.
The transfer of wealth in Australia that was already in progress has recently been fuelled by embracing quantitative easing, which saw the official interest rate and that on deposits plummet. Access to virtually ‘free money’ meant inflation moved into equities and realty.
And in all of this the Reserve Bank’s position is there is no link between monetary policy and the housing crisis. People have made choices while the Reserve Bank pulls the levers on interest rates. The result is outright home ownership is falling and mortgage debt and renting are ballooning.
So, while I witness the political circus of the premiers, all I see is failure in leadership and a determination by governments at state and federal level not to challenge the banking lobby and move to separate retail banking from investment banking. In the meantime, they are content to shore up political favours in the electorate with ‘sticking plaster’ solutions to the housing crisis.
For four decades The Echo has printed the stories some people loved, some people hated, and some pretended not to read. If you want us to keep telling the truth, the real truth, not the sugar-coated version. We’ll need your support to keep the presses rolling. 
