Dolly Parton and a $3 billion property collapse taught me the same lesson this week: even sharp opinions can be wrong. So before deciding whether Anthony Albanese’s housing reforms deserve praise or blame, it pays to ask the hardest question of all: could I be wrong?
One of the great values someone like me gets from studying and teaching at the highest levels, such as my time at the University of New South Wales as both a student and lecturer, is that you have to ask: “Could I be wrong?” And it means every time I question the policy decisions of the likes of Anthony Albanese, Jim Chalmers, Michele Bullock and even Donald Trump, I need to be as objective as possible.
These honest revelations came to me spontaneously as I processed another big builder ‘biting the dust’ in Sydney and the US legendary singer Dolly Parton passing away overnight at age 80.
As a young man, Dolly was always seen as attractive, but she was a country singer and I would’ve rated her as “not worth listening to”, which was like Johnny Farnham at the time, who hit number one on the charts with Sadie the Cleaning Lady. What was that? And who was buying records then?
However, over time, both Dolly and Johnny (who later became John) proved to me that you have to remain objective, if you want to be a credible and helpful commentator. Personally, I can’t stand ‘experts’ who always land on the left or the right on every subject.
That said, I do read both sides, in case they see something I missed in striving to be objective.
The builder in question is the Bathia Group, started by Bart Bhushan, who has, wait for it, 15,000 properties on the go and over $3 billion worth of debt. The business has been placed into voluntary administration. This means the company might be salvageable or sellable and those customers and creditors who are owed properties or money might get some kind of recompense.
To be a business of this size, it must have once had a good track record, which meant lenders were prepared to give Bart money, some of which went into sponsoring the Western Sydney Wanderers soccer team.
So, what went wrong? This is what the founder and his CEO have pinpointed:
- Softer sales.
- The May Budget’s impact.
- Falling property prices.
- Consumer confidence in key markets.
- Higher construction costs.
Clearly, while you can’t rule out management incompetence, this company, started by an ex-taxi driver, has been a success story and you don’t get the backing to have 15,000 properties under construction without real form on the board.
What Bathia and other businesses in the property market are facing is a “perfect storm” and the PM and his Treasurer, as well as the RBA Governor, have contributed to biggest threats to a once successful business. The Budget and rising interest rates were introduced into a slowing economy, not only challenged by global inflation, but some inept policies from both the Albanese Government and the RBA.
Remember, ahead of the 2025 election, as I pointed out yesterday, the Government ran with these demand-raising policies with inflation so high that the RBA had to change course from cutting rates in 2025 to raising rates in 2026.
Those unhelpful policies to add to inflation were:
- Tax cuts to middle and low income Australians.
- Support for higher wages.
- Backing employees’ desire to work from home.
- Promises to cut HECS debt, where 3 million Australians saw a 20% cut to what they owed.
- There was the $8.5 billion to be provided to increase bulkbilling, which GPs loved!
- Re-commitment to build 1.2 million new homes.
- $572 million to improve women’s health services.
These policies either pushed up demand or hurt productivity, that in turn hits inflation.
While I could add the Government’s renewable energy policies, which might be socially and environmentally, supportable by many, these imposts raise costs to businesses and lower profits. A company like the Bathia Group would have experienced the backwash of these types of policies.
What I think our economy and country needs are politicians who are flexible and not possessed by their ideology. There was a time to reform imbalances in the housing market, but May this year was terrible timing to take investors out of the market.
Recently, the PM lauded his policies claiming that they are “giving first home buyers a crack”. This is what news.com.au reported him saying as he held up a piece of paper: “Right now, first-home buyers are facing less competition from investors and importantly more investors are taking out loans to build new homes than ever before, with a 27 per cent increase in loans for new builds. We’re fixing a broken housing system, finally giving first-home buyers a crack and boosting housing supply.”
This left industry expert, Tom Panos, nearly speechless, but he did get this out: “I really don’t know what’s on the piece of paper he’s showing.”
Panos pointed to ABS lending indicators for the June quarter, which showed the number of first-home buyer loans fell 2.9% over the quarter and the number of investor loans fell 8.6% during the quarter, with the value of the investor lending falling by 10.2%.
While the failure of Bathia Group could be related to many business challenges from rising interest rates, to a slowing economy to higher wage/employing costs, as well as more aggressive taxation of businesses at both federal and state levels, at the end of the day, the Prime Minister and Treasurer of this great country have to cop the praise and the bagging when they get things right and wrong.
Right now, there are too many things going wrong for business, which the Business Council of Australia told the PM yesterday ahead of his address to the group’s annual dinner.
As an Australian, I want the country’s leader to have a turnaround of John Farnham after his Whispering Jack album proportions, and Dolly after her movie 9 to 5 and the related song, but at this stage Albo is looking like a self-deluded lost cause.
Objectively, while his housing reforms have some merit, the timing of these changes looks like amateur hour on steroids!
