The ALP’s announcement yesterday that it will build 100,000 new homes over 10 years from 2026-27 for first-home buyers is something we at The Australia Institute have been arguing in favour of for a long while. Everyone in Australia knows that housing is a good investment… except it seems most governments, who instead have put in a myriad of policies to help private-sector investors.

The Australian Government can currently borrow money at an interest rate of 4.4%; by comparison home loans are around 6.2%. It makes sense for the government to borrow at a lower rate, build homes for people who need them – either to rent, rent to buy or to sell.

And governments used to this. If the ALP’s plan succeeds it would average 10,000 new homes each year. Up to the early 1990s that was the lower limit of public housing construction. Unfortunately for the past 30 years, government have departed the field and left housing construction to the private sector. Not surprisingly this has led to higher house prices – especially when combined with the tax incentives of negative gearing and the 50% capital gains tax discount.

10,000 homes a year is not radical, nor should it be beyond the capacity of our construction sector. We used to do it all the time. In fact, it was so common a certain Prime Minister grew up in public housing. It should be as common again.