With Opposition Leader Kevin Rudd's pledge to "unlock" federal land for housing, the election campaign has already claimed one policy victim. During the past five years, average house prices have increased by nearly 200 per cent. Over the course of the past year, the ALP has been maintaining that the cause of this was anything but government planning policies preventing land being used for housing.
To acknowledge this as the cause would have meant the federal ALP accepting the blame for excessive house prices on behalf of their state brethren.
Now Rudd has said he would override state restraints and adopt the Liberals' proposal, which involves releasing underutilised Commonwealth-owned land for housing.
The surge in house prices we have witnessed over the past five years, far from bringing increased building, has been accompanied by stagnant housing starts.
Melbourne's present annual building rate of 26,000 houses compares with a 36,000 rate in the late 1990s. In Sydney, new building approvals are now barely half their 1994 level.
The price boom was clearly not caused by increased demand but by inadequate supply. And that supply shortage was not bricks, chippies or surveyors. It was a shortage of government permits for house building.
Evidence that land use approvals are the cause of inflated prices is also apparent in the price of houses in places where there are few such controls. Compared with $340,000 in Melbourne and more than $500,000 in Sydney, in many parts of North America (Houston, Dallas, Atlanta, Pittsburgh, Quebec), the median price of new houses is about $200,000. US cities with Australian-type controls (Los Angeles, New York, Boston) have median house prices comparable with those we see here.
Using Commonwealth land to smash state development restraints is one approach to combating the excessive cost caused by planning controls. But there is no shortage of land that can be developed.
It is easy to see how present planning restrictions cause price increases. An unimproved housing-sized block of farmland worth only $500 can sell for $50,000 to $200,000 once it is approved for housing.
That price increase has to be factored in to the house price to the consumer and it echoes across the metropolitan area.
Though Rudd's statements yesterday offer a welcome policy change, the housing debate remains confused.
Victorian Planning Minister Justin Madden, while saying it is "simplistic" to blame high prices on lethargic land releases and slow processing of applications, has already accused the Commonwealth of causing supercharged house prices by hoarding land it owns. And last week, NSW Premier Morris Iemma finally stepped in to take control of housing, announcing measures that would simultaneously make more land available, accelerate approvals and reduce the often horrendous imposts on new development.
Time will tell how effective the policy shifts are, but they at least signify a greater understanding of the problem.
The ALP is not alone in offering confused messages on housing policy. Last month, Prime Minister John Howard tried to turn high house prices into an advantage when he said in Parliament that, "a true housing crisis in this country is when there is a sustained fall in the value of our homes and in house prices".
The problem with statements like this is that they mean that we cannot have a return to the low housing costs that were a key feature in Australia for 60 years, until the mid-1990s.
Apart from tying up an increasing share of the nation's savings in bloated house prices, there is a risk of creating a two-class society, where wealthier Australians can help their children buy a house; a route not readily available to poorer Australians.
A better way of avoiding such a crisis is to prevent excessive house prices being fuelled by land shortages.
Maintaining house prices at artificially inflated levels will fatten the retirement worth of the incumbent owners but this comes at a cost.
The trick is to reverse the damaging policies of land restraint without causing the economic dislocation that might follow from a sudden and steep collapse in housing land prices.
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