Sunday, April 24, 2022

A social housing fund is bad policy

A social housing fund is a policy idea gaining traction. The ALP has proposed a $10 billion one in their election platform. The Grattan Institute has proposed a $20 billion one.

The basic idea is to sell bonds to the market and use the cash from that sale to buy a range of higher-yielding assets. Because there will be a differential return between the low cost of borrowing and the higher return on assets, this creates a net return from the fund to pay for building new public housing.

It sounds so bland and innocuous that it is easy to miss how economically backwards the policy really is.


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