A changing political landscape and what it means for property

Less posturing and more advocacy to build shareholder value is the blunt advice for business leaders from Peta Credlin, political advisor and former chief of staff to a prime minister.

Credlin (pictured), who will be headlining The Property Congress in October, is now a Sky News anchor and News Corp Sunday columnist. She says the biggest issue facing Australia at the moment is energy security.

“For many Australians, and small business in particular, the rising cost of power is crippling,” she says.

Electricity is “not a discretionary spend” in Australia, but with very little wage growth over the past few years, energy inflation, costs of living pressures and soaring house prices “it is no wonder people are saying they feel worse off today than they have in recent years.”

Credlin says a high wage economy like Australia can never compete with its neighbours on labour costs, but “we’ve always had a natural advantage when it comes to energy – plentiful supply, affordable and reliable”.

This is now under threat, Credlin says, listing over-commitments to renewable power and a subsidy regime as policies that have made “more stable baseload options unaffordable while costing taxpayers billions”.

“It’s estimated we are set to spend $60 billion by 2030 on renewable subsidies. Imagine the sort of national infrastructure we could deliver if we spent this on economic assets rather than subsidies for wind generators, the majority of which are foreign owned?”

Beyond energy, Credlin says the vulnerability of the federal budget is a “significant issue”.

“While spending programmes that continue in perpetuity, like the NDIS, are worthwhile, they are demand-driven and set to rise exponentially.

“I don’t believe either side of politics is prepared to have the tough conversation with Australians about what government support they will accept being wound back. But without that happening, our $600 billion debt will only increase to unsustainable levels especially as baby boomers retire.”

Australia’s ageing infrastructure continues to challenge public spending, Credlin warns.

“I’ve always supported great focus on infrastructure because at the very least it is economic spending rather than increasing the burden of welfare or other costs that are merely program spending with no economic payoff.”

Business needs to “step into the debate” and argue for policy that is in the national interest, Credlin says.

“Business has been vocal on social issues, environmental issues and indeed cultural issues, but have not spoken up on economic issues impacting their bottom line.”

While housing affordability remains a hot-button issue around Australia, Credlin says government must be careful about how it intervenes in the housing market.

“If policy is poorly designed, it can make a bad situation worse.”

She points to Labor’s proposed changes to negative gearing, which “risks severely impacting the rental market by reducing the pool of available property stock”.

By limiting negative gearing to new build properties, Labor’s planned change would push investors into the same type of housing that has traditionally been the entry point for first home buyers, “making it even harder for them”.

“As always, the market works best when the market is left to work without the undue influence of government.”

Property and construction employs more than 1.3 million people – more than mining and manufacturing combined. Yet, there are “low levels of trust” in the property industry, Credlin observes.

“This shouldn’t be the case, as Australia’s property industry builds 3,000 new homes a week – and countless first-rate shopping centres, offices and other commercial buildings.

“Housing and construction have also contributed strongly to growth and helped Australia avoid recessions at a time when other economies have succumbed.”

Countering the critics, particularly what Credlin calls the “professional NIMBY industry” remains one of the industry’s great challenges.

The tax contribution that property makes to state and federal government coffers “isn’t sold well enough”, she says.

“Other sectors, like the banks, have been slow to demonstrate their worth to the economy or their broader community value. They have now entered that debate but there’s already a lot of negative perceptions to overcome.

“It’s always far better to have a continual conversation with key stakeholders rather than only ramp things up when there’s an immediate issue.”

Join Peta Credlin at The Property Congress in Cairns from 18-20 October. A limited number of tickets are left. Don’t miss out!