Modern Family
When it comes to big ideas, this election campaign has been disappointing. I had hoped that behind closed doors some serious policy thinking was underway – it turns out a shop-a-docket fuel discount was the best they could do. The willingness to abandon or water down key commitments suggests that policy is being developed along the lines of popularity, not principle. Perhaps the most concerning revelation is the degree to which we have become so clearly out of touch with modern family life.
Listed among the Liberal Party’s shared values is “The importance of the family”. More than any other party, we understand that thriving families are the foundation on which a prosperous society is built. But it’s not enough to simply espouse this value and hope people will vote for us – we need policies that help to build stronger families, and to do that we need to start with a deep understanding of the way family life is different today than it was even a decade ago.
Firstly, the financial burden of raising children has become much greater, and this has far-reaching implications. It means people are waiting longer to have children, and when they do they are likely to need a double income to make ends meet. The struggle of juggling work and parenting – once an opt-in choice for all but single parents – is now the only option for almost all families. In this situation flexibility is paramount, and our policies should be aimed at extending and protecting flexible work arrangements including work from home.
Families are also much more likely to be renting, given the ever-increasing skew of home ownership towards older age groups. While providing help to renters to buy their first home is a good idea, the prospect is so far off for so many families that we must also supplement these initiatives with policies that make renting better for families. In a previous blog post I’ve made suggestions for how we can make renting ‘just as good as owning’. I’ve also previously suggested making rent and home loan interest tax deductible, which more justly accounts for the financial advantage enjoyed by mortgage-free owner-occupiers.
During the Howard years, the family tax benefit was introduced to recognise the extra financial burden faced by families with children. Although the policy was derided as “middle class welfare”, the rationale was sound, and in fact stronger now than ever. And this is where we come to the ideological crux of the matter: many on the left will naturally oppose any measures to support child raising because they hold the view that the human race is a fundamentally parasitic and destructive species, that the world is hopelessly doomed, and bringing children into it is morally dubious. Call me old fashioned, but I find this to be a completely odious worldview that we should challenge – not least because it is factually incorrect, as Hans Rosling showed in his excellent book Factfulness. We need to come up with bold policies that make having two or three kids viable for most families. Labor’s answer is to make childcare free, but there’s more to life than work, and the $30bn per year spent could instead pay for a $10,000 per year tax break for all medium and low-income households with children. This is the scale of assistance families need - it would only just cover the difference in rent families must pay to have an extra bedroom.
An aging population is one of the great challenges this generation faces, and the effects are already being felt in unexpected ways. What happens when there are fewer working age tradespeople and more asset rich retirees commissioning home renovations? The price of building goes up. The idea that we can build our way out of the housing crisis is a lie: building has simply become too expensive. Trying to build more will only drive the price up further. Both parties have completely missed the point in their proposed solutions to the housing crisis: Buying with a 5% deposit is pointless if you can’t afford repayments on the 95%. Tax deductible mortgage repayments are pointless if you can’t even save a deposit.
What families really need is help saving a big deposit while they are renting, and especially to not be starting at minus $50k due to stamp duty. One idea would be to introduce a voluntary saving account, similar to superannuation, that families can make tax deductible contributions to. This account can then be used to pay for a deposit on a house.
Critics argue that all such measures simply increase house prices but they miss the crucial point: a family home now costs half a million just to build. If we really want to increase supply, we need to make a $700k house and land package affordable for the average family, which will only be the case if they can save a big deposit.
We know what low birthrates do to a society – we need only look at South Korea, an economically prosperous place where the playgrounds are empty and the suicide rate is highest in the world. It’s time we took a real stand on the side of families, not with sugar hit handouts but with meaningful reform that makes starting a family more viable in modern Australia. The economic and social benefits will be immense.