Dan Carton | Forget a super tax, Defence Housing Australia already has the solution for Australia's housing crisis

They commissioned Oxford Economics to do the analysis and their report assumed "a permanent 40 per cent tax on excess profits" on mining projects and non-mining companies with over $100 million annual turnover, which would apply to about 0.3 per cent of companies in Australia. It would be interesting to know how many people are employed by this "top 0.3 per cent of companies". I would wager it is not 0.3 per cent of the working population.

The proposal involves the collection of extra money by the government, that is clear. But what is to stop tax collected from just going into consolidated revenue and being used for other purposes? Who can guarantee it will all go to housing? And to what housing? And how?

Demonising companies for making profits is good politics but economically a road to nowhere. Companies make profits (and losses). They also invest and create jobs.

Decades of virtually uninterrupted economic growth have increased the risk that enough of us have forgotten that jobs are valuable and when they become scarce life gets a lot tougher for a lot of people.

But companies behave badly and are greedy you might argue? Yes, sometimes. Regulatory mechanisms and the law are there to capture and address that bad behaviour.

Have a tax regime and let it be that. Where that money is allocated is a government decision on an ongoing basis.

Profits today are, among many things, a function of investment decisions made in the past. And those investment decisions are based on, again among many things, the tax settings in the relevant jurisdiction.

Introducing special taxes for special purposes on an ad hoc basis creates uncertainty.

This uncertainty will distort or delay investment decisions which will have flow through impacts to jobs and productivity in the future. For example, companies may take investment off-shore removing those future jobs from Australia.

Want to solve the housing problem with federal dollars? The federal government should allocate more money like the proposed but imperfect Housing Australia Future Fund. And/or fund the building of more public housing. And in pursuing the latter, do it in a way that: does not flood the market and drive-up land and construction prices; is transparently about investing in the asset and not providing funding that can be eaten up by bureaucracy, consultants and "experts", and; incentivises state and local governments where they can release more land or approve more land faster.

MORE OPINION:

Why not leverage the experience of Defence Housing Australia to build affordable separate housing and ring fence it from the Defence member properties? The subsidy the Commonwealth pays to enable affordable rents for Defence members could for example be applied to a wider cohort of people.

This model of federally funded affordable housing is established, the organisation is there doing the job day in day out, why not expand its remit or copy the model? Section 51 of the Constitution may limit the ability to do this but let's get creative people with a legal bent doing creative legal things to come up with innovative solutions.

Another option to consider is the HouseMate proposal advocated by Dr Cameron Murray. Dr Murray is a Research Fellow in the Henry Halloran Trust at The University of Sydney who also runs the insightful podcast and substack Fresh Economic Thinking.

Modelled on the Singapore public housing model, HouseMate effectively runs a housing market parallel to the mainstream housing market where those eligible (based on income) sell in and sell out, to grossly simplify it, at the cost of construction (i.e. with the valuation of the land effectively removed).

Could the federal government, in concert with the states, get behind such a model?

The "housing crisis industry" certainly keeps the issue in the media and rightly so. Collectively though we all need to do more to identify, develop and actually implement innovative solutions with tangible outcomes.