In 2024, public hospitals in New South Wales received nearly $51 million from parking fees. That was more than the $30.02 million in 2023. As per RMIT University’s senior faculty members Lisa Farrell and Meg Elkins, while the move may have sounded tempting for health infrastructures to exploit a captive market, the reality is much more complex, if one brings disciplines like economics, finance, and behavioural business into play.

Mismatch between supply and demand

Price is the means by which supply and demand are balanced, according to basic economics. This price is referred to as the equilibrium price. When supply cannot keep up with demand, prices increase.

“Due to the limited number of parking spots, urban hospitals face market conditions that, predictably, result in higher prices. In certain situations, however, suppliers may charge more than the equilibrium price if there is still a need for parking despite the cost, according to economics. In short, this ‘inelastic demand’ implies that a captive audience can be charged more,” said Farrell and Elkins.

“Hospital visitors and patients could be considered a captive audience. Although public transportation is well-served by many hospitals, patients and visitors are frequently too ill or time-constrained to utilise it. They are therefore forced to pay for parking. Visitors must drive because public transportation is either non-existent or very limited in rural hospitals. Do hospitals have a reason for charging such high prices, or are they price gouging, setting prices above what is deemed fair or reasonable, or are they exploiting the inelastic demand for parking?” asked the duo.

Hospital parking lots in desirable areas attract not only patients and visitors but also city workers and tourists seeking convenient parking. Parking spaces are kept available for hospital users by discouraging these users with high fees. High costs discourage overstaying in hospitals. Because of this, they are unable to engage in non-hospital activities (like shopping) following their hospital visit or appointment and before getting back to their cars.

Hospitals also charge high prices to raise revenue for health care. NSW Health said in a statement to the ABC earlier this year that additional funds generated from parking are used to fund medical facilities and services.

Makes sense to encourage visitors

“However, it might be a false economy to increase parking fees in order to fund hospital budgets. We are aware that hospital visitors play a significant part in patients’ recuperation. Therefore, extended hospital stays for their loved ones may result if high parking fees discourage guests or caregivers. More visits could result from less expensive parking, which would cut down on hospital stays and save a lot of money per patient,” remarked Farrell and Elkins.

Lisa witnessed this firsthand when her father, who has dementia, was admitted to the hospital.

“The hospital provided free hospital parking and round-the-clock visitor access for caregivers, like my mother, in this instance. For dementia patients, who frequently become confused while in the hospital, access should be available around the clock. Known as sundowning, this disorientation usually gets worse in the evening. The presence of carers allowed staff to concentrate on medical concerns. It made it easier to visit during off-peak hours, when parking is less of a problem and dementia patients usually require additional assistance,” she noted.

The high demand for a limited number of parking spots, which are rationed to those with the most money, is reflected in the high parking prices. Rationing based on need, or improving patient well-being, is a better option. Charging different users different prices is the economic solution.

By making concessions, the majority of hospitals have already accomplished this. However, concessions may vary by state or hospital. It can be difficult for some people to determine whether they qualify for concession-rate parking, and not everyone is aware that it is available.

“Therefore, before parking at a hospital, be aware of the fees and any available discounts if you are worried about the cost. The websites of most hospitals have this information. At the moment, most concessions are determined by income, including having a concession card. However, we must make a bigger change to offer need-based concession rates. For instance, accommodations are needed for long-stay patients to promote their well-being. Hospital parking fees for regular users should be capped nationwide, according to the media campaign,” Farrell and Elkins observed.

Although most parking lots have a daily cap, frequent visitors may soon accrue substantial bills from hospital visits for weeks or months. Many patients incur yearly parking expenses, especially those who need frequent treatments like dialysis.

Concession rates for hospital visitors should be granted based on need rather than just income. Patient welfare and the value of visitors to the healing process should guide needs. Proper rules are required towards this direction, especially for those who use the hospital parking lot, to streamline the procedure.

Considerations for long-term solutions, such as relocating hospitals away from desirable locations, are important when building new facilities or expanding existing ones. This approach could reduce the appeal of parking for individuals who do not use hospitals. Healthcare systems face the challenge of balancing the ethical principles of access and equity, which are vital for providing essential care, with the operational necessity of cost recovery.

“Meanwhile, with 1,190 parking spaces, Blackpool Victoria Hospital was ranked seventh in the UK. Costing £2.70 per car for two hours of parking, the car park can earn a potential revenue of £3,213 within two hours at maximum car park occupancy. This placed Blackpool Victoria, after Salford Royal, Darent Valley, Furness General, and Poole, as the fifth cheapest hospital in the UK to park at,” said Farrell and Elkins.

Moreover, there are 3,388 parking spaces at Manchester Royal Infirmary, which has the most parking spaces and could make over £10,000. Because it serves a large area and has a high volume of patients, staff, and visitors, this Manchester hospital, one of the biggest in the UK, needs a sizable parking facility. At £7.00 for two hours, Chelsea and Westminster Hospital has the highest parking fee. Given that the hospital is situated in one of London’s wealthiest neighbourhoods, the cost of parking there might be a reflection of both the area’s high parking demand and the hospital’s location.

Hospital parking fees, while justified as revenue sources, can impose emotional and financial burdens on vulnerable families. A shift to need-based concessions and ethical pricing is urgently needed.

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Is it happening all over again?

The Victorian economy is in trouble, according to business leaders quoted in a piece published in December 2024 as part of a series on the state by the Australian Financial Review.

The most recent unemployment statistics were cited as evidence. Victoria has the highest unemployment rate in the nation at 4%, having increased over the past year. Stunting home prices and an increase in business failures were also mentioned.

One article in the Financial Review looked at the decline in conferences, while another earlier in the month highlighted data indicating a declining rate of Victorian business start-ups. All this was referred to as evidence of a state struggling under the weight of $8.6 billion in levies imposed in the Labour Party’s 2023 budget to curb a mountain of state debt that is forecast to reach $188 billion by 2028.

The same themes were echoed in a feature on Victoria that was published by The Australian.

“What the hell has gone wrong with Victoria?” was the question posed to the readers. Taxation and public debt were major contributors to the impending economic disaster. The Australian deemed the state to be at best, trapped in stagnation, forcing it to cover falling private investment and expenditure with ever greater public largesse. And at worst as the spending and debt build-up sets off the alarms, a vicious spiral is triggered until the whole Ponzi scheme collapses.

However, are things really that bad? What is the real picture of the economy?

Some positive signs

Indeed, Victoria’s unemployment rate is high when compared to the rest of the nation and is on the rise. However, it has remained steady for the past four months, which is indicative of the effects of interest rate hikes over the preceding two years.

In addition, the increase over the past 40 years has come from a very low base and is still at a historically low level, far below the 1990s highs.

The population in the labour force is still increasing at a steady rate. Now, the participation rate is at its highest level ever. In seasonally adjusted terms, the labour force grew by 20,000 last month, and nearly all the new hires found work.

There has been a noticeable increase in employment since the pandemic ended. In seasonally adjusted terms, employment has grown by 268,000, or 8%, since January 2023. This growth represents 37% of the total number of jobs created in Australia during that period.

Although the percentage of jobs created is declining, it still exceeds the population share of the state and is based on an incredibly high starting point. In July, Victoria accounted for 55% of all jobs created nationally.

According to the Australian Financial Review, the most recent employment figures were “unexpectedly strong.”

What about business insolvencies?

Insolvencies in Victoria have increased, rising 61% in September over the same month the previous year. In Australia, however, they are also growing at a faster rate, with the national number increasing by 70%.

We cannot determine whether the number of conferences in Victoria is increasing or decreasing because there is no reliable database to make that determination.

Furthermore, although Victoria may have lagged behind other states in terms of the number of new start-ups per 1,000 businesses, the total number of businesses has grown by over 31,000, or 3%, since the year started.

How are house prices and rents holding up?

Indeed, the cost of homes is falling. Several new property taxes included in the 2023–2024 state budget to help pay for pandemic-related debt are at least partially to blame for the fact that they are currently about 20% below their peak during the pandemic.

High interest rates have made housing more affordable than ever before, which is good news for those who are eager to purchase their first home. This decline in home values contrasts with a rise in rental income during the same time frame.

The median rents in Victoria have risen by 13.3% in the past 12 months and by 4.3% in the following quarter. Perhaps helping those who believe that the economy is in trouble, the rental stock dropped for the first time in the March quarter.

However, that decline only amounted to 2.7% of the stock, or hardly 10,000 homes. Someone had to buy those properties, and most of them were probably sold to first-time purchasers who had no overall impact on the rental market due to their changing tenure. Such a wealth redistribution might not be a bad thing.

Debt is high – but so is infrastructure spending

Victoria’s economy, like the rest of the nation, has undoubtedly been slowing down. When it raised interest rates last year, the Reserve Bank aimed for precisely that result. However, there is scant evidence that Victoria is reverting to the catastrophic course of the early 1990s.

Because of a severe recession at the time, state debt increased alarmingly. This time, the state’s debt has increased significantly, primarily to finance a pipeline project of a magnitude never before seen in the state.

Spending on infrastructure has increased fivefold in the last ten years, reaching $25 billion annually. Many jobs are included in those figures, and soon, a large portion of that infrastructure will be operational, increasing the state’s economic potential.

The surprisingly strong economy of Victoria is influenced by several factors. One key element is the return of international students, which has contributed to a net increase in international migration of 152,000 people in the year ending March 2024. This figure represents nearly 30% of the total population growth in Australia.

However, some people argue that Victoria has become a “poor state” due to rapid population growth driven by migration, a lack of output growth, and a long-term decline in household income per capita.

To address these issues, Treasurer Tim Pallas is hopeful that the increased investment in debt-funded infrastructure will provide the necessary boost in productivity.

While various indicators show that the economy of Victoria is slowing, this trend is consistent with a national pattern. A closer examination of the data reveals some growth indicators, suggesting that there is no immediate cause for concern.

The post Is Victoria struggling with unemployment? appeared first on International Finance.

The decision follows a raft of actions since 2023 to end COVID-era concessions for foreign students and workers in Australia that helped businesses recruit staff locally while strict border controls kept overseas workers out.

Concerns over immigration

“There are about 10% more international students in our universities today than before the pandemic and about 50% more in our private vocational and training providers,” Education Minister Jason Clare told a press conference, while adding, “The reforms are designed to make the international student sector better and fairer, and this will set it up on a more sustainable footing going forward.”

International education is one of Australia’s largest export industries and was worth A$36.4 billion ($24.7 billion) to the economy in the 2022-2023 financial year. However, polls have shown voters’ concerns about large influxes of foreign students and workers putting excess pressure on the housing market, making immigration one of the potential major battlegrounds in an election less than a year away.

Net immigration hit a record high in the year to September 30, 2023, surging 60% to a record 548,800, higher than the 518,000 people in the year ending June 2023. Australia boosted its annual migration numbers in 2022 to help businesses recruit staff to fill shortages after the COVID-19 pandemic brought strict border controls, and kept foreign students and workers out for nearly two years.

However, a new report asserts that there is no basis for blaming international students for an undersupply of housing or rising rental fees in Australia. Research commissioned by the Student Accommodation Council, a peak body for the country’s purpose-built student accommodation sector (PBSA), found no alignment between the return of international students to Australia and rents increasing.

Instead, the report mentions, “Rents began rising in 2020, when there was no international student migration and most students had returned home. Between 2019 and 2023, median weekly rent increased by 30%. Over the same period, student visa arrivals decreased by 13%.”

The research further found that international students make up only 4% of all renters in Australia. Domestic students compose 6.2%, and the remainder are non-students. Also, the majority of international students do not live in the houses. Only 3% live in detached houses suitable for couples or families, while 74% live in PBSA (Purpose Built Student Accommodation) close to universities.

The Student Accommodation Council attributed the housing crisis in Australia to “a complex web of supply and demand drivers, including the rise of smaller and solo-person households, intrastate migration, rising construction costs, planning delays and a trend to re-purposing second bedrooms into home offices, amongst others.”

The study has pointed out a great need for increasing the supply of PBSAs, since vacancy rates in major Australian cities are currently around 1%, and rental prices have been climbing for months.

The Student Accommodation Council also mentioned that looking at the pipeline of new PBSA currently (7,770 new beds), there will not be enough supply to ease pressure on the rental market from international students by 2026. That would only be accomplished if there were 84,000 beds ready by that time.

Provinces feel the pinch

New data has revealed that the province of Victoria is grappling with an unprecedented property crisis, with more people in housing stress than any other part of Australia. Housing advocates have urged the government to urgently act on social housing, pointing out that the state needs over 6,000 new homes each year for the next decade.

The Australian Institute of Health and Welfare reported that “the top 10 months on record for people in housing stress visiting specialist homelessness services all belong to Victoria.”

“Victoria’s numbers are critical, with approximately 30% more individuals in housing stress and seeking assistance compared to New South Wales or Queensland. This is the face of Victoria having the lowest amount of social housing as a proportion of total housing stock in Australia, with just 2.9% of dwellings being public or community housing,” CityHub reported.

“These unprecedented levels of housing stress will increase homelessness unless we act urgently to build more social housing,” Council to Homeless Persons CEO Deborah Di Natale told the media.

Post-COVID housing stress has been especially intense in Queensland. Brisbane property prices have climbed by 65% since the beginning of the pandemic, almost doubling the Australian capital city average (34%).

According to new data released by CoreLogic in June 2024, Brisbane now has the second-most expensive housing in the country, behind Sydney. Prices rose by 1.4% in May, with the median property price hitting $843,231. Across the state, new tenancy rents have gone up by 45% in just four years. Adjusted for inflation, that’s a 23% increase in real terms, much more than the residents’ income growth.

Soaring rents have squeezed people on lower incomes particularly hard. As per the City Futures Research Centre, UNSW Sydney, the share of new lettings at rents low-income households can afford has slumped from 23% to 10% of all private tenancies since 2020. And less than 1% of available Queensland rentals in March 2024 were affordable to a single person earning minimum wage or a pensioner couple. These conditions are pushing some people into homelessness, with “tent cities” appearing across Brisbane.

To combat this, the provincial government has started a flurry of constructive housing policymaking. Queensland has begun to reverse a long-term decline in its social housing stock, apart from boosting homelessness funding and services. However, the sector called “Social Housing” has been in a long-term decline across Australia. Investment has been minimal since the 1990s. By 2021, social housing was down to barely 3% of all occupied dwellings in Queensland.

However, in the past five years, due to the increasing state investments, the number of social housing dwellings has begun to grow. The Queensland government pledged in early 2024 to add 53,500 social housing units by 2046, expanding the stock of public and community housing by 73%.

Compatible with this target, a medium-term goal is to expand annual output to 2,000 units by 2027-28, a fourfold increase in the late 2010s. Adding 2,000 social housing units a year by the late 2020s would reverse the sector’s historic decline. If sustained over time, it would begin to expand social housing back towards 5% of all housing, where it once was.

All eyes on policymakers

The 2024-25 Federal Budget has unveiled a series of initiatives aimed at bolstering housing supply and supporting the construction sector. The government will collaborate with states, territories, and local governments to introduce reforms enhancing housing supply and affordability as part of the National Housing Accord over the next six months.

Key measures to incentivise housing supply include reducing the withholding tax rate for eligible managed investment trust fund payments attributed to newly constructed properties. Additionally, the capital works tax deduction (depreciation) rate for newly constructed build-to-rent developments will increase from 2.5-4% per year, potentially unlocking 150,000 new rental properties over the next decade.

The National Housing Finance and Investment Corporation’s liability cap will be raised by $2 billion, facilitating more lending to community housing providers for social and affordable housing projects. Furthermore, $350 million over five years has been committed under the National Housing Accord to support the delivery of 10,000 affordable homes by states and territories.

The government is also in discussion with states and territories to make an additional 300,000 TAFE and vocational training places fee-free, focusing on industries like construction to develop a skilled workforce.

The Anthony Albanese-led government’s task is straightforward: To deliver “1.2 million new, well-located homes” and to achieve this target, the authorities need to build 240,000 new homes each year, or 20,000 a month. However, the last time Australia got even close to building 240,000 new homes in a single year was 2017, when the country built 223,563 housing units.

As per property analyst Cameron Kusher, in 2017, the interest rate back was a pleasant 1.5%. In 2024, the same ratio stands at 4.5%. Even though new homes get built at a rapid pace, who will buy them in a high interest rate regime? Plus, construction companies, especially the mid-tier types that build medium-density apartment buildings, are shutting down their shops. By March 2024, according to ASIC, 1,913 construction companies had so far gone bust, three times as many as at the comparable point in 2021/22.

Banks aren’t financing these companies the way they used to. Some of these ventures also got involved in fixed-price projects during COVID, and now can’t afford to implement them. Also, due to the high interest rate regime, building materials have become about a third more expensive than they were before the pandemic. There is a significant shortage of tradies, partly due to a decrease in apprenticeships. In 2012, there were 376,800 apprenticeships, but by 2020, that number had fallen to just 134,800. Additionally, Australia’s tradie workforce is ageing and overworked.

Poorest Australians hit hardest

The 2023 Rental Affordability Snapshot by Anglicare surveyed 45,895 rental listings, only to find affordability crashing to record lows. The social advocacy organisation is now calling for more social housing to end the shortfall of 640,000 homes, apart from advocating for better protections for renters, including an end to no-cause evictions and limits on unfair rent increases, and tax reforms to make housing more affordable.

Although post-COVID factors like Aussies’ preference for more space, the return of international migrants, and rising interest rates, can be blamed for the above-mentioned distressing trend, for Rachel Ong ViforJ, ARC Future Fellow & Professor of Economics, Curtin University, the rental affordability crisis pre-dates COVID, as affordability has been steadily declining for decades, with successive governments failing to make shelter more affordable for low-to-moderate income Australians.

“At the lower end of the rental sector, the growth in the supply of social housing persistently lags behind demand, trending at under one-third the rate of population growth. This has forced growing numbers of low-income Australians to seek shelter in the private rental sector, where they face intense competition from higher-income renters. At the upper end, more and more aspiring home buyers are getting locked out of home ownership,” Ong ViforJ noted.

As per another study, more Aussie households with higher incomes are now renting out their spaces. Households earning $140,000 a year or more (in 2021 dollars) accounted for just 8% of private renters in 1996. By 2021, this tripled to 24%.

According to Ong ViforJ, this trend is crowding out lower-income households who are now facing a shortage of affordable homes to rent.

While current policies focus on supply, more work is needed including fixing labour shortages and providing greater stock diversity. However, the housing affordability challenge is not solely a supply problem. There is also a need to respond to the supercharged demand in the property market.

“An overheated market will undoubtedly place intense pressure on the rental sector because aspiring first home buyers are forced to rent for longer, as house prices soar at a rate unmatched by their wages. Yet, governments continue to resist calls for winding back the generous tax concessions enjoyed by multi-property owners,” Ong ViforJ commented.

The main help available to low-income private renters, the Commonwealth Rent Assistance scheme, has been poorly targeted with nearly one in five low-income renters who are in rental stress deemed ineligible, while another one in four receive it despite not being in rental stress.

Experts are pitching the theory of filtering: A market-based process by which the supply of new dwellings in more expensive segments creates an additional supply of dwellings for low-income households as high-income earners vacate their former dwellings.

Proponents of filtering argue building more housing anywhere, even in wealthier ends of the property market, will eventually improve affordability across the board because lower-priced housing will trickle down to the poorest households. However, the persistent affordability crisis faced by low-income households and the rise in homelessness are crucial signs of filtering not working well as a parameter to produce lower-cost housing.

As per Leith van Onselen, Chief Economist at the MB Fund and MB Super, Australia has one of the largest construction workforces in the world relative to its population. Citing independent economist Tarric Brooker, Onselen stated that Australia completes more homes per capita than almost anywhere in the developed world. However, when the population is constantly growing at such a large rate, “even a world-beating level of construction still can’t keep up.”

Australia’s structural housing shortage has more to do with demand, and excessive levels of population growth, than an inability to build housing. To prove his point, Onselen cited the massive rise in Australia’s net overseas migration (NOM) from the mid-2000s. In the 15 years to 2004, Australia’s NOM averaged 91,000 a year. But in the 15 years to 2019, Australia’s NOM averaged 220,500 a year, representing a 142% increase in annual NOM.

Even over the last four calendar years (2020–2023), Australia’s NOM has averaged 245,500 per year. Population growth across the major cities has been extreme, with Melbourne (1.7 million) and Sydney (1.35 million) experiencing the strongest growth in numbers terms and Brisbane (60%) and Perth (59%) recording the strongest growth in percentage terms.

According to Australian Bureau of Statistics (ABS) projections, Australia’s population will grow to 43.9 million people by 2071, representing an increase of around 16.5 million from the current population of 27.4 million. As per Onselen, this is the equivalent of adding another Sydney, Melbourne, Brisbane, Perth, Hobart, and Canberra to Australia’s current population in only 48 years.

“It would also require the construction of at least 7.5 million homes accounting for demolitions to accommodate the projected population surge. It is also worth pointing out that it took Australia 212 years to reach a population of 19 million people in 2000. Yet, the population is officially projected to grow by another 24.9 million people in only 71 years! Melbourne (9.5 million) and Sydney (8.4 million) are projected to have larger populations than Australia’s entire population in 1950,” he noted further, while concluding that the country will never be able to build enough homes as long as its population grows like “an out-of-control science experiment.”

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