Contributed by Joe Montero

Athony Albanese has announced that Labor will spend $10 billion to build 100,000 new homes across Australia. The centrepiece is homes for new home buyers. Petee Dutton replied that the Coalition will allow first home buyers to deduct mortgage payments from their income taxes.

On the surface it sounds like finally the major parties are taking notice. Think again. There is little here to make much of a difference. Australia is entitled to much better than this when facing the biggest housing crisis in living memory.

At least Labor offers a measure of government involvement in building homes. This is positive, and direct intervention deserves support. The drawback is that everything is based on the illusion that the solution is merely to encourage private market supply, and most of the committed money will go straight into the pockets of property developers, real estate agent companies. And the banks

The real problem is market failure to provide affordable housing. Pandering to the market will not solve the market’s failure to deliver. It has had free reign for a long time, and crisis is what it has ultimately delivered. Market failure can only be corrected through sufficient market government intervention.

Focusing on first home buyers will mostly benefit the cashed up, and they are not the main ones suffering. No account is taken of the millions of Australians who either don’t have a job, are in precarious work, or don’t gat paid enough to take out a mortgage. They are the ones who miss out as Labor pitches to the aspirational middle class. It puts the limit income to qualify at $175,000 a year for singles and $250,000 for couples. Those on the top end will get the biggest handout.

True, there is some prior commitment to what are called social and affordable housing. But not enough to begin turning around the decline in the public housing stock, which is still being cut. Affordable housing, the title to what covers up to 75 percent of market rent payments by tenants, is the main game. This still puts the benefit too far out of reach for many.

The Coalition answer is much worse. It will provide most of the benefit to the wealthy. There is no limit to the size of the mortgage, and this scheme will easily morph into another tax avoidance scam. Here is the Coalition once again pandering to the wealthy at the expense of everyone else. The truth is, Dutton has announced a tax cut for the rich through the back door.

Peter Dutton explicitly said that capital gains tax will not be increased, and negative gearing will stay as it is. Anthony Albanese mentioned neither, despite the evidence that both are significant factors behind the housing cost bubble.

Taking capital gains and negative gearing on would have a quick impact and lower housing prices. But the shared ideology of market fundamentalism decrees that this cannot be. The opportunity for developers, real estate agency companies, and the banks should not be deprived of billions. It is argued that if they are handed over the money they will invest in new housing.

Recent decades have seen a windfall for these companies and the banks. Little of it went to invest in housing, as they concentrated speculating on existing assets. This won’t change without removing the incentive to speculate.

The impact of Labor’s plan will be minimal overall. That of the Coalition will add to the cost of housing, through its inflationary effect.

For those on the borderline of affordability, both schemes will increase the number of Australians falling into the debt trap, when they find they cannot meet their mortgages after all.