A maximum 3 per cent interest rate for all home loans,for the next five years
Dr Janine Dickson,a senior research fellow at Victoria University’s centre of policy studies,says low interest rates have helped lift property prices in Australia,making it difficult for first home buyers to get into the market.
“Tackling negative gearing,which tilts the market in favour of property investors at the expense of owner-occupiers,would be more effective,” she says. “Policies which create more housing supply are what is required.”
Hutley says limiting interest rate rises would increase demand,which would,in turn,push house prices higher.
She points out it would be extremely difficult for the federal government to control rates set by private banks,so the only likely way for this policy to work would be if the government subsidised interest rates.
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“It’s as if there is absolutely no rational thought behind this policy,” she says.
Introduce a 15 per cent levy on the export of iron ore and use the revenue to pay down government debt
Nicholas Gruen,chief executive of Lateral Economics,says the iron ore tax is the “most intriguing” of the three policies,but not one he would suggest.
“Out of an economic textbook,it’s something that could generate short-term benefits and,if it was done with sufficient diplomatic intelligence,it might generate longer-term benefits,but it’s not the kind of thing that we do,” he says.
Gruen says it is an unusual policy for Palmer to propose. Palmer,who made his fortune through mining,previouslycampaigned against a mining tax and in 2014 sided with the Coalition torepeal the resource rent tax.
It would be difficult to get such a tax past powerful mining industry interests,Dickson says,and it would probably suffer the same fate as previous mining taxes.
Hutley has no problem with the 15 per cent levy but notes the federal government is already reaping the rewards of higher commodities prices.
Her main issue with the idea is that it’s limited to iron ore,and it appears companies would pay the levy regardless of their earnings.
“What happens if iron ore prices do fall back down very low? Then that doesn’t make any sense,” Hutley says.
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Make Australian super funds invest a set proportion of their assets exclusively in Australian products and businesses
Palmer says Australian super funds have about $3.5 trillion under management,but invest mostly in North America and Europe. He would make them bring “at least $1 trillion” back to Australia to be invested locally.
But all the economists say it doesn’t make sense to force super funds to invest more than they already do in Australian assets.
Gruen says it’s worth thinking about how super is invested,but this policy probably isn’t the right way to go about it. Giving super holders more power to decide where their funds are invested would be a way of tinkering around the edges,he says,as would examining super fees.
Hutley says the policy is going after the wrong issue.
“If there were economically rational investments to be made,they’d be being made,” she says.
“It basically is just saying everyone could have lower returns for their superannuation. And given we have a problem already with too many people who don’t have enough superannuation,that doesn’t seem to be a rational choice.”
Jacqueline Maley cuts through the noise of the federal election campaign with news,views and expert analysis. Sign up to our Australia Votes 2022 newsletterhere.