Why the next Australian election is a referendum on house prices, by Alan Kohler. After the mining boom, Australia needs either further currency devaluation or a big fall in its domestic cost structure and therefore in house prices. Both parties have a valid but different idea for reducing house prices, and each is fiercely attacking the other side’s idea as an ideological disaster — so we won’t get both ideas implemented.

The Labor Party wants to limit negative gearing to new construction, the Coalition wants to reintroduce the Australian Building and Construction Commission. …

[T]here’s no doubt that being able to deduct property investment losses from one’s salary as if they are a work-related expense, when they are plainly nothing of the sort, is an obvious distortion in the property market and helps drive up the price of land. …

The dividing point between union and non-union construction is three storeys: anything above that height must involve the CFMEU; anything below that can use non-union labour. Research commissioned by Master Builders Australia has found that the difference in labor cost between four storeys and two storeys is 24 per cent. That’s the extra cost of the union.

Neither political party is being plain that their policy is designed to bring down the cost of housing because the ALP doesn’t want to admit that it wants to reduce house prices, and the Coalition doesn’t want to admit that that it’s trying to reduce wages and conditions.