Time to nationalise the banks and invest in public housing!
Thousands of people face losing their homes in Australia, with more than a million households living in ‘housing stress’. This combined with the worst-ever house affordability figures and soaring rents points towards a serious housing crisis in Australia.
Other figures released last month say that youth homelessness has doubled in the past 20 years. If this is the best capitalism can offer us during a ‘boom’ time what will it be like when a recession hits?
The four interest rate rises in the past nine months have added about $210 to the monthly repayments on an average home loan. It is estimated that 300,000 households are suffering severe levels of mortgage stress, and face a high chance of defaulting on their home loan. On average households owe banks 161 percent of their disposable income, this compares to 134 percent in the US.
Repossession orders have tripled over the past four years in some parts of the country and if you included people who have been forced to quit their loans and leave their houses before receiving a court order that figure may be even four times higher.
Renters are also affected by the rising interest rates and the increases in rents. It is estimated that on average in Australia renters spend almost 25 percent of their income on their rental payments. Average rents have risen by over 80 percent since 1996 and it is forecast that rents will increase further by another 28 percent before the end of this decade. There is a severe shortage of rental accommodation in most parts of the country, especially in inner city areas.
Rudd’s ‘solution’ to the current crisis is to give private developers incentives to build new homes. He plans to hand over millions of dollars of tax payer’s money to investors who will be offered tax credits for each house that is built and rented out below the market rental price.
These ‘market’ solutions are really no solution at all. The current housing crisis really stems from the market and the fact that private profiteers have been allowed to run riot in the housing sector for years. Investment in public housing has steadily declined in favour of Public Private Partnerships (PPPs) and we now have a situation where over 200,000 people are on the public housing waiting list.
Access to public housing should be a basic right. We argue that no money should be given to private profiteers and significant investment should occur in the area of public housing. This would not only create thousands of jobs but it would help push down the high private rents.
We have a situation now where most working people can not afford the deposit for a new home. Those that do scrape together the deposit are hit hard by rising interest rates. The Reserve Bank of Australia has now set official interest rate figures at 7.25 percent. This is the 12th rise since 2004!
The major banks have not helped the situation by increasing their interest rates by even more than the Reserve Banks figure. This is nothing more than corporate greed and the making of profits out of ordinary people’s misery.
The big banks are now some of the most hated companies in Australia. Not only have they gone through a process of closing branches, sacking staff and increasing fees, but now they are contributing to the financial pain of almost every Australian worker.
People like Wayne Swan tell us that if we don’t like the deal we are getting we should just shop around and change banks. For most of us this is not a realistic option as changing banks is an extremely time consuming and expensive process. Some banks can charge up to $2000 in fees to withdraw from your mortgage.
The only real way of ensuring that the banks can no longer rip us off is to remove the profit making motive from the equation and nationalise the entire banking industry. All of the big banks should be merged into one nationalised bank and be publicly controlled by elected representatives including bank workers and members of the community.
The fact of the matter remains, you can not control what you don’t own. When you leave it up to market mechanisms basics things like having a roof over your head can become out of reach. The Socialist Party will continue to argue the case for public ownership of the banks and for investment in public housing as part of a democratic plan for society. These demands will get even more support as capitalism proves to people that it is not capable of solving people’s basic needs.
Editorial from the May 2008 edition of The Socialist newspaper