It is an unfortunate reality that modern Australian government has become an enterprise in search of instant political self-gratification; in delivering reams of announcements and volumes of spending while producing very little in the way of sustainable positive outcomes.

The bleak state of housing, where too many Australians are experiencing a genuine rental and accommodation crisis, is borne not of a lack of government action, but rather consistently wrong action and of decades of bad policy across all tiers of government. This is a situation that cannot be quickly remedied, especially through yet another cash-splash.

Following the recent agreement between the Albanese government and the Australian Greens to pass the Housing Australia Future Fund (HAFF) legislation, Greens leader Adam Bandt said that ‘the Greens are the party of renters’. Bandt is more correct than he realises because this policy and the concessions extracted, will lead to ever more Australians being locked out of home ownership and trapped into perpetual renting.

Eminent US economist Thomas Sowell frequently counselled that there are no solutions and only trade-offs. This is advice Australian governments consistently refuse to heed, regularly announcing new policies with accompanying billions in spending, all while failing to properly account for the associated costs and consequences. This latest housing announcement, coupled with Prime Minister Albanese’s earlier New Homes Bonus (NHB) announcement just demonstrates that our political leaders are prepared do anything to address Australia’s housing and rental crisis – anything except undertaking the necessary reforms to address underlying causes.

A significant driver of Australia’s housing problems is a policy-driven supply squeeze caused by a toxic cocktail of bad planning, tax, energy and industrial relations policies. It should not surprise that a political and bureaucratic ecosystem driven by ‘announceables’ and not results has increased the cost of housing for Australians. The effects of this toxic policy cocktail is further exacerbated by the Commonwealth’s large immigration intake.

Australians experiencing housing price stress should genuinely question whether they will be better off following all the recent announcements.

As a case in point, the most recent $3billion committed by the government to mollify the Greens to pass the HAFF legislation and the earlier $3bn for the NHB to provide ‘performance-based funding for states and territories’ will need to be funded from somewhere. And that somewhere will be from taxes imposed, directly and indirectly, on those these policies claim to benefit. All these claimed supply enhancement announcements are however more reflective of an episode of Yes, Minister with the government proposing to increase housing supply by destroying housing supply. Invariably, the principal beneficiaries of these new schemes will be the public servants hired to administer them.

The most recent Commonwealth budget papers that showed that over the past thirty years, inflation-adjusted per capita Commonwealth spending has nearly doubled, and taxing has more than doubled. Our governments have taken ever more from Australians, including by borrowing from the future, and given it back less a ‘handling’ fee, all while asking to be thanked.

Not satisfied with the economic damage caused by the current policy mix, the Greens have indicated that they will continue to fight for ‘a freeze and cap on rent increases’. This is the bedrock of the Greens housing policy and they even produced analysis suggesting that, were a rental freeze implemented last year, two million renting households could have saved $3.1bn in 2022-23 and $4.9bn in 2023-24.

Such a rent freeze would just result in a temporary transfer of economic pain from one group to another. According to Treasury’s most recent Tax Expenditures and Insights Statement, almost half the 2.6m taxpayers who claimed rental deductions in 2022 experienced rental tax losses. These losses summed to $10.2bn and provided $3.6bn of negative gearing offsets. These losses were before interest rates started rising and before inflation driven increases on council rates, insurance and property maintenance set in. A rental freeze would just further increase the pain on landlords and the Commonwealth budget, a pain that will ultimately be transferred back to renters including via higher taxes for longer.

Landlords would also likely respond by either selling, withdrawing rental stock, or reducing maintenance, and the Commonwealth would just need to collect more taxes from other sectors of the economy. The net effect would be further harm to renters and the broader economy.

The Greens even equated their rental cap proposal to the gas price cap agreed to by National cabinet. However, gas industry expert Saul Kavonic noted that the price cap is already being unwound and that, ‘It will go down as one of the most anti-market, poorly planned and economically damaging policies Australia has seen in recent memory, with no discernible benefit to show for it.’ Kavonic added that, ‘The goal of the (gas price cap) policy, to lower prices for end users, has not been achieved. Unfortunately, even with the policy now being walked back, the economic harm may prove lasting.’

To address Australia’s housing and rental issues requires not a cash splash but rather a comprehensive productivity and supply side reform program including through reduced government spending, taxing, and regulation.

Some 150 years ago, Leo Tolstoy wrote describing the Russian government of his day. This description could aptly describe contemporary Australian government: ‘I sit on a man’s back, choking him and making him carry me, and yet assure myself and others that I am very sorry for him and wish to ease his lot by all possible means – except by getting off his back.’

If Australian policymakers want to ease the economic pain of Australians, whether in housing or general cost of living, they should first get off our backs.