My interest was piqued recently when reading the letters to the Editor in The Australian newspaper when someone wrote:

The two must haves for young families today, a home and childcare are being kept out of reach of ordinary young Australians by unreasonable profit margins.

The writer (rightfully) bemoaned the fact that a socialist government intervening in the market for housing and the market for childcare inevitably results in subsequent price rises.

It is a flaw in the policies of this Labor government that it thinks it not only knows what’s good for you but that it will impose on you its predictable solution to your problems.

In doing so it will normally ensure that its most generous supporters, the union movement, are looked after. This is certainly the case with childcare.

Whereas in previous generations childcare was largely provided by stay at home mothers this is no longer the case. It seems we now need to ensure that mothers can as quickly as possible get back into the paid workforce and most likely remain or become union members.

Furthermore, the government seems to want to ensure that in order to allow women back into the workforce they should be compelled to send their children to child care centres who are run by unionised childcare staff.

Childcare, however, has been traditionally augmented by the efforts of grandparents, other family members, and friends. But financial support is only given by the government if you send your child to a childcare centre, largely staffed by union members.

Surely it would make better sense for the government to provide childcare assistance to families by direct financial support that they might use however they see fit. This would allow parents to make their own choices rather than be directed by the government to receive the support that is politically convenient for the government!

Most experts in early childcare would agree that a child’s development is enhanced by the care of mothers. But now mothers are demeaned by the economic consideration that they are principally “factors of production” in the broader economy and accordingly must be reinstated to the paid workforce as soon as possible.

When we add up the contributing parts of the economy to calculate Gross Domestic Product (GDP) the efforts of childcare workers are included but the efforts of stay at home mothers are not. Consequently the efforts of stay at home mothers are not only discounted, they are entirely obliterated! How can it be in an enlightened society we might value paid employment over the immeasurably more important role of parenting?

But even beyond parenting considerations, how is it that when a hotel employs someone to clean hotel rooms and make hotel beds their work is seen as contributing to the nation’s GDP, but someone who stays at home and cleans their house and makes their beds is not recognised as making an economic contribution?

It is economic distortions such as these that have led to the undervaluing of such work to the detriment of the nation’s best interests.

But let’s go back and look at the issue of home ownership.

In my youth families were bigger than they typically are today. (Today the natural birth rate is lower than replacement requires so that without immigration our population would be reducing,). Generally those larger families were accommodated in smaller houses than is the case today. So we had larger families living in smaller accommodation. This factor alone ensures that in order to house people nowadays a disproportionately larger  amount of housing is required.

My parents had a two-bedroom house whilst bringing up five offspring. My siblings included the eldest, a girl, and four boys (which included me). My sister, who was the eldest of us, was allocated the second bedroom, but at night we all slept on the generous verandah that occupied two sides our little house.

My wife’s family coped in a similar way. They had an even smaller house (a single bedroom) with a family comprising two girls and two boys.

But today it seems the norm that every child should have its own bedroom. Because housing is expensive this is a large factor in reducing family sizes. People on modest incomes can’t afford to have large families because with such norms they can’t afford to accommodate them.

On top of that, in modern houses, master bedrooms normally come with their own ensuite. As a result most modern houses have at least two bathrooms and two toilets or even more. (Mind you in my advanced years I am grateful to live in such a house!)

Modern housing also provides such luxuries as entertainment centres, multiple garages, outdoor entertainment areas and sometimes swimming pools.

Sensibly, modern houses, unlike those prevalent in my youth, are well insulated and mostly are air-conditioned. By law they are required to have smoke alarms and earth-leakage circuit breakers.

Now there is no doubt that all these things have made our houses more comfortable and somewhat safer, but they have also made them far more expensive!

But home ownership has never been an easy goal for ordinary people. My parents, despite their modest home, only managed to pay off their mortgage in their sixties.

In my early life I lived in company provided accommodation. But is the 1970’s when under a Whitlam Labor government I decided to buy a very modest holiday home I encountered difficulties. To begin with under the profligate Whitlam government with irresponsible fiscal policies I had to cope with a 13% interest rate! Initially I approached the Commonwealth Bank for a loan. When they found out that most of my savings were with the Electricity Credit Union they refused to lend me the money unless I transferred my savings to them.  I was somewhat affronted by this and went back and got a loan from the credit union instead!

Of course the main problem with the cost of housing is that government’s mainly want to deal with it by providing assistance for first home buyers. But this, unfortunately, merely stimulates demand, and with a limited stock of housing, naturally results in a rise in the cost of housing!

What we need is to increase the supply of housing stocks. The government has an ambitious plan to do just that but is failing miserably in reaching its targets. Again the government needs to incentivise the private sector to fill this gap and get out of the way!

So the letter writer to The Australian might have identified issues of real concerns to young families but I would suggest that government responses to these concerns are unlikely to be helpful!

Unfortunately it is hard to envisage a situation where young people can easily acquire a house. But it seems to me that owning a house has always been problematic.

As for childcare there needs to be a change on how we view the economics of stay at home parents (mostly mothers). Instead of policies that seem to compel mothers to return as quickly as possible into the paid workforce we need to provide better options for them, including the option to stay at home and care for children. All the economic stimuli seem to mitigate against this option and our society is the poorer as a result.