Letter from The Cape Episode 16 October 13, 2023 Hello and here is another episode in my Letter from The Cape podcast series, where I apply the principles of Modern Monetary Theory or MMT to practical problems that beset society. The National Housing Supply Council was abolished on November 8, 2013 by the Australian Coalition government along with a number of non-statutory government bodies. The claim was that these bodies were 'no longer needed' or that there wasn't enough funds to keep them going. The National Housing Supply Council had been established in May 2008 with the purpose of monitoring 'housing demand, supply and affordability in Australia, and to highlight current and potential gaps between housing supply and demand' (see https://treasury.gov.au/programs-initiatives-consumers-community/the-national-housing-supply-council). It involved a range of housing experts from academica, urban development, urban planning, construction and several economists. While it was functioning, it regularly published 'estimates, projections, analysis and policy advice in relation to housing supply and demand.' It's annual 'State of Supply Report' became an embarassment to government. The first Report published in 2009, the year after the Council began its work, told of growing shortages in housing supply, declining housing affordability, and low-income families being trapped in the private rental market because they were unable to access adequate social housing. The Report disclosed the growing gap between the demand for social housing, that is, accommodation that is within the financial reach of low-income families, and the supply. By 2011, the Council reported that the shortfall in housing, which was 'both affordable and available to the lowest income households' had reached 539,000 units' (see https://www.acoss.org.au/images/uploads/Housing_paper_summary_March_2015_final.pdf). The Council's last report was published in March 2013 just after the Federal Minister for Housing changed the terms of reference for the Council, as a first step towards its ultimate abolition some 8 months later. The embarassment was because successive governments had abandoned their responsibilities for ensuring there was adequate housing available, particularly for poorer Australians. On January 1, 2023, in the midst of a growing housing crisis in Australia, the new federal Labor government established an 'Interim National Housing Supply and Affordability Council', which had similar goals to the original. A permanent body has now been announced and will commence work in December 2023. The Interim body published one report in July 2023. The change in narrative from those original reports in 2009 to now is stark. The current narrative is replete with analysis of the role of government as an agency to provide 'de-risking' for the market. What does that mean? De-risking is everywhere now. It refers to the process by which governments give handouts or guarantees or other inducements to reduce or eliminate the risk of private corporations investing in large-scale infrastructure projects. So the private investor knows they will profit under all circumstances and the risk remains with the public sector. Last Monday, the Shadow Chancellor in Britain, who in all likelihood will become the next Chancellor - which in Australian terminology is the Treasury Minister, outlined what she claims is a 'bold' plan to revitalise Britain's failing and degraded public infrastructure and she said the central responsibility of government was to create a 'de-risked' environment for private investment. Years of neoliberal neglect, justified on the basis that the government did not have enough money, has seen vital public assets such as water, transport, power and more privatised and become vehicles for private, profit-seeking corporations to bleed dry - short-terminism exemplified. Other assets, that remained in the public sector have been run-down. Now, the solution apparently is more of the same. The same applies in most nations given the global reach of the neoliberal ideology. Leading the 'de-risking' charge has been the so-called Bidenomics in the US, with its central theme of promoting infrastructure development by reducing the risk for private investors. His administration announced billions in extra funding to build new and revitalised public infrastructure after years of neglect. Sounds good. But the funds are being allocated to ensure there is a secure revenue stream for private investors. Ever heard the term 'corporate welfare'! De-risking means that the government, which claims it cannot build an adequate supply of houses or other essential public infrasturcture because it doesn't have the cash, commits to providing all sorts of guarantees, subsidies, grants, and straight out handouts to corporations. The de-risking agenda also promotes further deregulation - the so-called euphemistic 'Regulatory Streamlining' - which reduces accountability and oversight, with the inevitable result that standards slip as even more shonky operators enter the construction sector. And, of course, the Public-Private Partnerships are touted as ways in which the government can shift the risk of large projects onto the 'market' - except in the case of essential infrastructure such as hospitals, transport, utilities etc - the risk can never shift. The government is always ultimately responsible for the supply of the services in these areas. So all that happens is that there is a massive transfer of public money to private profiteering corporations, usually with a diminished quality and scope of service as cost cutting becomes the norm. The problem is that national infrastructure planning becomes subjugated to what private corporations consider is profitable rather than what the nation actually needs. We are going to see a lot of this in the policy development seeking to address climate change. And given the massive housing shortage, particularly for lower income families, the 'market' is poised to reap dramatic profits from government handouts and in return Australia will get poorly built, energy inefficient fields of roofs and concrete. It is no surprise that the Australian Labor Government appointed the CEO of a major construction company as the chair of the Interim National Housing and Affordability Council. The starting point in responding to this neoliberal narrative lies in rejecting the fiction that the government cannot afford to fund the construction of public infrastructure and public housing. In the 1950s and beyond that is the way the nation was built and it provided first-class public infrastructure and adequate housing for those in need. We now have a shortage of some 800,000 social housing units because of government neglect, justified by the fiction they didn't have the cash. The federal government has all the cash it needs to build those houses and the only issue is the availability of productive resources. But, given it plans to 'de-risk' the 'market' to build more houses, then the resources will be there. Why should private corporations reap massive profits from government handouts when the same outcome - more houses - can be built at resource cost, without the leakage to the top-end-of-town? I will be back next time and until then ... see ya later.