Secret RBA notes reveal harsh judgment of Labor’s housing policies

Reserve Bank officials judged that Labor’s first-term housing agenda did little to improve supply and possibly raised prices, directly linking migration to affordability as Labor battles to prove the budget will increase the availability of homes.

Internal notes from the bank, which it initially sought to keep secret, described Labor’s first three years of housing policies as “relatively modest”. The documents obtained under freedom of information laws were prepared for a meeting of RBA board members in May last year, the same month as the federal election.

The bank documents show its policy experts were critical of policies such as Labor’s Help to Buy share equity initiative and an expansion of a scheme allowing people to buy a house with a 5 per cent deposit.

“In recent years, many policies that subsidise [first home buyers] – are just demand side measures, pull fwd purchases; many of the view this just translates into higher prices,” they wrote. “Being characterised as a demand side measures to bridge the gap until supply is online.”

Treasurer Jim Chalmers moved on Monday to counter doubts about whether scrapping investor concessions would boost supply, releasing an estimate suggesting that $25 billion that would have been spent on investments may be diverted to new houses, which can still be negatively geared.

Core to Labor’s budget bet on housing affordability was a claim that its policies, including a $2 billion fund for housing infrastructure, will offset a projected drop-off of 35,000 new homes by an extra 65,000.

Bank officials note that key levers at the government’s disposal, the “main way the [government] influences” housing, had “not changed” as a result of Labor’s first-term housing agenda.

Those areas including “migration policy”, according to the internal talking points. The analysis comes from a policy issues meeting, typically held 10 days before a board meeting so members can discuss economic conditions.

The extent to which Australia’s migration rates have exacerbated the housing crisis has become a top-order political issue. The Coalition, under pressure from One Nation, has committed to explicitly link the migration rate to construction rates.

Net migration was running at record highs last term as people re-entered the country after the pandemic. It’s since dropped considerably.

The other ways the government could change the equation on housing, according to the meeting talking points, include regulations that contribute to undersupply, such as zoning and land-use laws, and tax settings.

This term, Labor has moved to overh