Australia has a new federal Housing Minister, Clare O’Neil, who is by all accounts energetic and open to new ideas.

That’s good because we are in the midst of a housing crisis along with most of the developed world, and the high price/cost of housing is leading to a general cost-of-living crunch and generational inequality.

So I have prepared a “to do” list for her. If you could pass it on to her, that would be great.

Some of the things on the list are state responsibilities, but this is a national problem, so there should be national uniformity, best achieved through a COAG process led by the Commonwealth.

What can be done

Here it is:

• Rethink/reduce zoning windfall taxes
• Create a uniform national infrastructure levy on new housing that equals half the cost of the infrastructure
• Consider a temporary GST holiday for affordable housing construction
• Impose uniform national tax on developers sitting on approved projects
• Remove stamp duty surcharges on foreign investors in housing
• Remove stamp duty for downsizers buying their last home
• Increase depreciation allowance for residential buildings
• Reconsider changes to the National Construction Code
• Make it easier for migrant tradespeople to work here
• Remove 3 per cent Covid buffer for bank loans (APRA)
• Create Aussie “Fannie Mae” for 30-year fixed-rate mortgages
• Publish immigration data with housing approvals
• Reduce capital gains discount to 25 per cent
• Allow negative gearing on new dwellings only
• Impose uniform national levy on short-term rentals
• Allow Housing Australia to issue government-backed bonds to boost the Housing Australia Future Fund
• Give NHSAC a budget for staff to study and report on housing demand/supply
• Create a uniform national tenancy code that includes 10-year leases.

Demand and supply equation

It’s a big hotch-potch of ideas, but they are connected by a conviction that to make housing more affordable requires dealing with both sides of the ledger – demand plus supply – as well as the psychology of it.

It would be better if there was a stated policy aim, preferably to reduce the ratio of house prices to incomes to what it was 25 years ago (three to four times versus the current seven to eight times), but I accept that would be politically difficult; no one wants to hear that housing wealth should be reduced. Better to just talk about buildi more houses and cutting taxes.

At a recent public forum, the head of the Property Council of Australia, Cath Evans, estimated that the taxation embedded in the cost of a new dwelling is between 30 and 40 per cent.

As I observed to Victorian Treasurer Tim Pallas at the same forum, that’s the sort of taxation that’s imposed on something the government is trying to discourage, like smoking.

Infrastructure burden

Governments used to build and pay for the infrastructure for new suburbs – roads, water, public transport, energy – but that cost has been progressively shifted to developers.

At the same time the principle of “value capture” has been applied to windfall gains that developers and land owners get when their property is rezoned – that is, a levy is imposed to capture some or all of that value for the state.

These two taxes are perfectly reasonable in theory, but in recent years on top of rising material and labour costs, the result has been to make a marginal business more marginal and contributed to the shortage of housing

We’re now in a situation where more housing is desperately needed, so it would make sense to, at least temporarily, shift at least some of the cost back onto taxpayers. Likewise, a temporary GST holiday on new dwellings.

On the other side of that coin, developers should be penalised if they withhold approved projects to improve the price.

Stamp duty, depreciation

In recent years the governments of Victoria, NSW and Queensland have imposed stamp duty surcharges on foreign investors in residential property, in response to some xenophobic complaints that foreigners were leaving houses empty, which wasn’t true. They also saw it as a way to raise some easy cash.

The result has been that foreign capital has deserted residential construction, including institutions that would otherwise be interested in build-to-rent projects. It wouldn’t even cost much money because it never raised much.

Another thing to encourage domestic capital into residential projects, in particular build-to-rent, would be faster depreciation. The depreciation on BTR projects was increased from 2.5 to 4 per cent last year, but that doesn’t seem to be enough.

The National Construction Code was recently amended to require all new buildings to be NDIS compliant via the silver level Liveable Housing Australia design requirement.

The global construction consultant, Rider Levett Bucknall estimates that this adds up to $49,500 to the cost of a dwelling – it’s basically another tax, further reducing the margin to developers and builders and increasing the cost to home buyers.

Encourage workers, borrowing

One of the reasons there is a worldwide housing crisis, if not the main one, is that immigration is booming everywhere, but very few migrants work in construction.

In Australia the percentage of permanent and temporary migrants who are building workers is 0.6 per cent.

We make it worse by not recognising the trade certificates of most of the countries from which migrants come. This needs to change, so that a higher proportion of migrants can help build the places needed to house them.

The 3 per cent notional buffer that banks were required during the pandemic to use when assessing borrowers (that is borrowers have to be able to service a loan with interest that’s 3 per cent more than reality) is still in place. It’s not needed any more and just makes it harder for first-home buyers.

Also, we should have 30-year mortgages like the US, which are supported by government-backed mortgage institutions, Fannie Mae and Freddie Mac. Why haven’t we got an Aussie Fannie Mae?

Action on investment taxes

Reducing the capital gains discount and confining negative gearing to new buildings only, as proposed by Labor in 2016 (when it almost won) and 2019, would not only help reduce demand a bit, but more importantly help change the psychology of housing from being a tax-advantaged wealth generator instead of just a place to live.

In Australia the tax system boosts demand and reduces supply.

The Housing Australia Future Fund is an excellent initiative, but its $10 billion corpus from which the income is distributed to worthwhile projects by Housing Australia isn’t enough. HA should issue government-backed bonds to super funds to boost HAFF.

And finally more and better data on housing supply and demand is needed. The new National Housing Affordability and Supply Council got off to a good start with its report in May, but it should be given a budget for staff to do that work constantly, and independently.

House prices will probably never return to the old ratio to incomes unless there’s an unlikely and disastrous 50 per cent housing crash – stopping the ratio from blowing out further will likely have to do.

So that means more people will have to rent for their whole lives, and for that reason the balance of power between tenants and landlords should be addressed. Some states are starting to do that, but it should be national, and should include the option of long leases.

Alan Kohler writes weekly for The New Daily. He is finance presenter on the ABC News and also writes for Intelligent Investor.