- by E Lennon and N Stallon
- The Guardian
- Issue #1961
A recent ABC article reports that the RBA doesn’t see its monetary policy as a solution to increasing house prices.
The institution’s deputy governor Dr Guy Debelle addressed the University of Western Australia’s business school at the end of April.
“[Rising house prices are] an issue that needs to be considered,” Dr Debelle said. “There are a number of tools that can be used to address the issue, but monetary policy is not one of them.”
Dr Debelle stated that rising house prices would have “distributional consequences”. His words minimise the unstable state of Australian housing and related issues many people face as a direct result. Dr Debelle’s comments highlight the RBA’s role as ensuring the stability of capitalism, rather than solving issues which affect people such as the housing crisis and stagnant wages. Instead, Dr Debelle claimed that alleviating house prices is the responsibility of either the Australian Prudential Regulation Authority (APRA), or the state and federal governments.
APRA claimed six weeks ago that alleviating house prices is not its responsibility, but the governments’. However, the various governments have routinely shirked responsibility for house prices, instead blaming those who can’t afford houses for spending irresponsibly, not having a good enough job, or living in a city. What “reforms” are passed, are generally no more than the government giving small amounts of money, acting as guarantor for unaffordable deposits, or allowing people to withdraw from their retirement savings.
This cynical cycle in which the financial institutions pass the buck onto the government, who then passes the buck onto the markets (controlled by themselves and the financial institutions), demonstrates that both the financial institutions and the government serve the interests of capital, rather than the basic needs of citizens.
Instead, Dr Debelle said that rather than tackling affordable housing, the RBA would be maintaining loose monetary policy for years to reach “full employment” by 2024. However, in accordance with Josh Frydenberg and the Treasury, the RBA defines “full employment” as “with a four in front of it” at best.
Jim Standard of the Australia Institute claims that Australia can handle an unemployment rate much lower than four per cent.
“[Because you’ve got so many people on casual and different forms of non-standard employment] I think the unemployment rate could be zero, because you’d still have a large part of the labour force dealing with precarity of one form or another, you’ve still got incredibly repressive rules around collective bargaining, you’ve still got an award system that’s only a safety net rather than a leading force of wage growth.”
Full employment means the constitutional right to work and the absence of involuntary unemployment. Not only is this possible, but achievable, even with a reduction to a 32-hour work week, and before 2024.
Ultimately, this is the government’s responsibility. Secure employment and housing are human rights, which can and must be guaranteed. Rather than deferring to financial institutions concerned solely with facilitating the maintenance of capitalism, the government must accept responsibility. It must push for true full employment and liveable wages. So too, must it build and provide public housing for all Australians. In fact, the two have a symbiotic relationship. A nation-building public housing project would serve as a useful catalyst for the provision of secure employment for all who want it.