Updated ,first published
Western Australia will not be able to build itself out of a housing crisis and should reconsider a sovereign wealth fund with which to guard itself from economic shock in resource downturns.
These are the messages former Citibank trader and ‘the people’s economist’ Gary Stevenson will relay to a Perth crowd on Monday night as part of the West Australian leg of his Down Under tour on March 2.
Stevenson’s Youtube channel has amassed more than 200 million views and 1.5 million subscribers since the start of the pandemic for his simplified and sometimes blunt explanations of economic trends, particularly the explosion in global inequality since COVID-19, driven by stimulus packages.
WAtoday put questions about WA’s economy, particularly the state’s housing crisis, to Stevenson, who became a multi-millionaire while working for Citibank, ahead of his show on Monday.
Stevenson said WA’s housing affordability issues were not unique to this state and were the result of a global asset price boom.
“Every single person in the entire world thinks the global asset price crisis, including the gold price, including the price of stocks, is caused by their local mayor,” he said.
“The context is important, because what you have is clearly a global macroeconomic problem, and everybody is trying to fix it by tinkering around with the rules around housing. This is what drives me a little bit mad here.
“We could talk about negative gearing, which is obviously not going to help, we could talk about 5 per cent mortgages, which is obviously not going to help. But at the end of the day, somebody has to step back and say, why are the prices of all assets going up?”
Stevenson pins that on trillions in global stimulus packages, including packages like jobseeker here in Australia, trickling through the economy until eventually ending up in the accounts of the wealthy who then sought to invest that cash in assets.
He said that unless global asset prices came down somewhere, Perth would not be able to build enough houses to escape the problem.
He warned that continued building of homes on the urban fringe would turn Perth into a slum.
“Every country that has tried to build its way out of housing crises without dealing with the underlying problem of inequality and distribution has built a slum,” he said.
“The whole world is filled with these places that have had no restrictions on housing, and they built a massive shanty town outside of their city.
“And you think that can’t happen in a country like Australia. I grew up in Ilford, which is a poor suburb of East London…it was a poor suburb for working-class families, and it is now a slum. It’s as simple as that.
“All respect to the people that live there, is a place of desperate poverty, and those family homes are now expanded backwards, expanded upwards, and rented out by the room.
Australia is a bit behind on this, but you’re going in the same direction. You will build a super luxury centre surrounded by extremely low-quality slums.”
On WA’s resources endowments Stevenson revised the age-old argument that WA should follow the lead of Norway and its sovereign wealth fund, which holds nearly AUD $3 trillion in assets.
“That natural resource wealth, it doesn’t last forever and that’s your inheritance,” he said.
“I understand that wages have been good for a lot of people in Perth and in Western Australia because of the mining boom.
“Once that’s gone, that’s gone. Are you giving up your inheritance for 10, 15, 20 years of good living, and do you have a plan for what happens afterwards?
“You would not be the first country in the world to squander a great natural resource fortune and not have it benefit the people in the long run.”
Stevenson will be on stage at the Regal Theatre in Subiaco on Monday night.
Hamish Hastie is WAtoday’s state political reporter and the winner of five WA Media Awards, including the 2023 Beck Prize for best political journalism.Connect via X or email.
