The Federal Government is holding an inquiry into ‘Housing Affordability and Supply’. At first glance this could be our most important inquiry for today. Increasing inequality in our society means that it is vital to provide a safe and secure home for everyone; and the two hot button topics in housing are ‘affordability’ and ‘supply’.
But looks are deceiving. This inquiry is a monumental waste of time and resources and doomed to failure on three grounds.
Firstly, it is covering ground that was exhaustively covered by another federal inquiry 6 years ago: ‘Out of reach? The Australian housing affordability challenge’. You can read their excellent report, which is all this inquiry needs to do, and then act on it, which they won’t.
Affordability in this inquiry means buying a home. The second failure is thus ignoring the third of our population who rent, often from those who own several houses. This results from the inquiry majority (five to three) coming from the Liberal Party, bastion of the free market of home ownership; social housing be damned.
This hatred of the other, the renters, was exemplified by the inquiry chair, Jason Falinski, spraying hard right rhetoric about ‘social housing being housing commission’ and criticising ‘affordable schemes as rent fixing that drive up prices and limit supply’. He was roundly criticised by the Community Housing Industry Association, Homelessness Australia and National Shelter (to name a few) even in the real estate press.
This, from the member for McKellar on the Northern beaches of Sydney, home to hundreds of architect-designed mansions, where an escapee on the run for thirty years handed himself into police, to go back to gaol, as it was better than living homeless in amongst some of Sydney’s spectacularly expensive beaches and houses.
Lastly, this inquiry seems to be held for the sake of holding an inquiry, so that you can say that you've looked into it. Held four months out from an election, it will never complete its work and will go the same way as the ‘Inquiry into Home Ownership’ held just before the 2016 election, which was shut down with no report and no effect. God forbid that it should have any outcomes.
Nevertheless I, along with more than a hundred others, made a submission to the inquiry. The reasons to do so are beautifully set out by Robert Harley, doyen of property writers, in the AFR. And the reasons it is likely futile were summed up in the last paragraph of the submission by the noted economist Saul Eslake: “sadly, there’s no reason to think that political calculus is going to change. Nor, therefore, are the housing policies which have resulted in created (sic) the housing system which Australia has today”.
I plowed on, determined to say my bit. Many of the submissions deal with issues of micro-economics of housing affordability in great detail. I went the other way and tried to challenge the very premise of the inquiry. Instead of looking at why affordability and supply are issues for some, say middle-class first home buyers, why not go reductio ad absurdum, and ask what issues stop everyone from owning a home.
It’s an important idea: could home ownership for all eliminate the need for social housing? Not some specious lefty daydream, but something to tease out where we are at. I first heard it postulated by Ross King, head of the I.B. Fell Housing Research Institute in 1974 and it has intrigued me ever since. This is how I framed my submission (with added images).
Introduction
Every Australian household should own a home. It’s the great Australian dream, and It was a central plank of post WW2 reconstruction. It has been an ideal held by both major parties, to the extent that it is a talisman of being ‘Australian’. We think we have a high level of home ownership, but we don't. At 66% we are 39th in the world. This false mindset blinds us to looking only after the two thirds that own one or more homes, and ignoring the one third of Australian households that don’t. If we are truly interested in providing affordable home ownership, then it is for every household.
Home ownership
Home ownership, affords many benefits, including:
· security - having a permanent and secure place to live,
· amenity – our mental health is better in a home that is ‘ours’
· maintenance – houses that are owned are better cared for than rentals,
· investment - housing is a form of superannuation or pension.
These are all benefits that Australians know so well that has made us a rich country.
Housing for all
Because of these many manifest benefits we need to provide the pathway for every household who wants to buy a house to be able to afford to do so. This will require an equitable redistribution of dwellings within our society. How can we ensure that everybody who wants to own a home can buy one? And how do we look after the 5-6% of households / individuals who, for whatever reason do not want home ownership? Which means we need to turn the 30% of current renters into owners.
The issues
There are four interlinked issues that must be addressed: supply, financing, equity and rentals.
Housing Supply
Our suburbs are a monoculture of huge homes (world's largest) on shrinking sites. But less than 50% of current households are the traditional single nuclear family, so we need a far greater diversity of housing stock to meet those needs, many more alternative dwelling types.
At one end of the spectrum are multi-generational homes (converted from the big houses) and having multiple houses on those sites; at the other is a far wider choice of smaller homes: apartments, manor homes, micro units, even a single room within a share or co-living house. All of which should be able to be ‘owner occupied’, not rented, and legally this should be easily within our grasp given that Australia developed high standards of subdivision via the NSW Strata Title act (considered world’s best practice).
Financing
We have some of the most profitable banks in the world who have grown wealthy on the back of individual home mortgages (developed by the Bank of NSW during Federation). The big four, and more, need to give back to Australia by restructuring how mortgages are structured and secured; changing the form of government guarantee (to promote purchase / discourage investment) and minimizing the risk with insurance; such that they can mortgage lend to everyone to enable the purchase of a dwelling, even those on a social wage.
Equity
The third issue is to promote the ownership of a households’ main home and to discourage multiple home ownership. No Australian should own multiple homes when some don't own one. You shouldn’t eat the buffet whilst some go hungry. You shouldn’t wear furs and pearls whilst some freeze. We should think of housing in the same way. That’s the essence of social democracy.
This requires a reorganization of tax structures to encourage purchase and discourage investment (by the banks as above). Change incentives from multiple homes to the single-family home: remove negative gearing, remove discounts on capital gains and allow tax deductions on the family home only.
Removing the incentive to profit from home speculation has two benefits: it will cool spiraling house prices and redirect wealth into more productive activities: encouraging research and development and promoting industries, particularly those with the triple bottom line.
Rentals
There will always be a need for rental housing for the 5-6% who don’t want ownership (for whatever reason: preference, circumstances or mental or social health issues. Dwellings for them should be better regulated to prevent gouging and extortion. Where homeowners have additional homes, they should only be rented through registered housing providers, not as rent control but for better management, including of renters.
The issue of social rental housing, including providing proper homeless accommodation, is covered detail in a paper I wrote here. Short-term rentals such as B + B (air or non) should be obliged to act as the quasi-hotels they are: with the same obligations for pay, taxes and insurances. Holiday homes should be treated as assets subject to taxes without tax relief; to give back to those who would like to holiday in hotel or B+B rentals.
Households
One key issue is the definition of the household: what is the entity that is entitled to the discounts and incentives outlined above to own their own home. Defining a household is tricky, particularly given fluid families, but a clear definition can be found for the legislation required for equity.
Summary
There are specific issues that can be taken by government to ensure that equitable housing is provided for all. These involve an intervention in the market that clearly is skewed towards those who already have a home, and is penalise those who don’t, but wish they were part of the great Australian dream.
If you made it all the way through to the end of this piece (more than I expect the inquiry will) you’ll be no doubt asking why all that effort if it’s doomed to failure? Because inequality in housing is a looming and increasing disaster.
We have talked sustainability in housing for 40 years, but inequality will dwarf that in importance. It is the other two legs of the triple bottom line: social and financial. Unless we address inequality, we will bankrupt our society and our GDP.
This current government will ignore it, but we need to set out our concerns and solutions because some day a progressive social democratic government will take up the cudgels and address the issue.
Tone Wheeler is principal architect at Environa Studio, Adjunct Professor at UNSW and is President of the Australian Architecture Association. The views expressed here are solely those of the author and are not held or endorsed by A+D, the AAA or UNSW. Tone does not read Instagram, Facebook, Twitter or Linked In. Sanity is preserved by reading and replying only to comments addressed to [email protected].
