Joe Hockey uses the good old ‘look, there’s a foreigner’ stunt

At the end of a week that saw the unemployment rate rise to 6.3 per cent and the Reserve Bank shave 25 points or so off the budget’s growth forecast for this year – not to mention more bad opinion polls for the government, speculation resurfacing about the Liberal leadership, and the lingering stench of politicians’ entitlements – Treasurer Joe Hockey called a media conference on Saturday.

Did the Treasurer feel an urge to address the nation on the unemployment rise, or how an economic growth downgrade would affect deficit reduction, or anything at all really about the Australian economy?

Looks suspiciously like a case of never mind all the trouble we’re in, look over there! A foreigner!

No, the media conference was to talk about six homes that will have to be sold some time in the next 12 months because their owners volunteered to the government that they had not complied or no longer complied with Australia’s foreign investment rules. Yes, the six homes are owned by foreigners.

Treasurer Joe Hockey announced on Saturday that six homes will have to be sold some time in the next 12 months because the owners may not be complying with foreign investment rules.Treasurer Joe Hockey announced on Saturday that six homes will have to be sold some time in the next 12 months because the owners may not be complying with foreign investment rules. Photo: Alex Ellinghausen

Saturday, except for the sport, was a quiet day – therefore perhaps a good day to whip up a little distraction to get the minds off all that other stuff.

Let’s put the big news about those six homes in perspective: there were 848 homes scheduled for auction just in Sydney on Saturday. We’re building about 17,000 homes each month. There are the better part of 10 million dwellings in Australia – but Joe Hockey called a press conference to announce six of them will be sold.

Looks suspiciously like a case of never mind all the trouble we’re in, look over there! A foreigner!

Illustration: John Spooner.Illustration: John Spooner.

Hockey also made a show of 462 cases his team of 50 investigators are checking on. Hopefully the reasons for suspicion are better than Joe’s effort in dobbing in a Hunters Hill neighbour who turned out to meet the Foreign Investment Review Board’s requirements.

But even if, say, 400 prove to be dodgy, it’s worth remembering that forcing the sale of the properties will do nothing for housing affordability in the grander scheme of things. It’s just easier to make a little song and dance about it in an attempt to look like you’re doing something.

Really doing something would be much harder politically. For example, the recommendation by the Reserve Bank and others to even consider reviewing the impact of concessional capital gains tax and negative gearing is so difficult that Hockey has already ruled it out, whatever his tax discussion paper might come up with.

Dropping federal weights on state and local government planning barriers, inconsistencies and delays also would be very hard. Getting the NIMBY horde offside risks votes.

So instead, it’s much easier to point a finger at a relatively few foreigners. If Hockey read the Reserve Bank’s submission to the housing ownership inquiry, he would find it’s all rather more complicated than that.

And it looks like it could be getting more complicated. The Law of Unintended Consequences is at work on APRA’s attempts to take the edge off the wilder excesses of investor borrowing.

Two weeks ago, the Property Council of Australia’s Property Week carried a prescient story on banks tightening the finance available to developers, not just investors. Last week the story broke that the Commonwealth Bank was indeed getting tougher on developers in light of the investor measures.

At the Victorian state conference of the Australian Property Institute on Friday, one property valuer told me developers were in a state of panic about the finance outlook.

With the economy remaining heavily dependent on dwelling construction while non-mining business investment stalls, there’s a danger that APRA could be too successful in cooling the market.

While the RBA’s latest statement on monetary policy is suggesting lower population growth is the key factor in the unemployment rate not getting much worse, it’s still projecting population growth of 1.5 per cent annually.

And that forecast doesn’t quite gel with a graph in the RBA’s housing ownership submission that suggests another big surge in foreign student numbers is under way.

That surge will require more housing be built if a further squeeze on supply is to be avoided. Otherwise, once again, those wanting a distraction from bigger issues might pull stunts that boil down to “Look! A foreigner!”

At a stretch, therein could lie the one justification for Saturday’s media stunt. If publicising the crackdown on foreigners improperly purchasing existing housing builds faith in the system, if it defuses the xenophobic edge to much of the “Asians buying housing” chatter, it would be worthwhile.

But chances are the opposite is the case. The tone of the discussion fuels the idea that Asian buyers are to blame for the state of Sydney’s housing market, that they have been flouting the rules in a huge way.

I spoke to an Australian of Asian birth last week, someone reporting on the property business. He said he feels a little uncomfortable attending auctions. That’s not the way the nation should be. It would be a terrible thing if your politicians fuelled it as a distraction from more important issues.

Besides, suddenly talking about lower income tax rates works so well.

 

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