Housing is a tough policy area, and its politics are even more fraught…. That’s why we’re going to up the pressure on the Greens to pass the HAFF. Wayne Swan, Labor Party President, in a message to supporters soliciting money.
National Cabinet is meeting in Brisbane on Wednesday. According to the PM’s press release: “Our key priority for this meeting is increasing housing supply and affordability across Australia”. That’s so wrong it doesn’t augur well for the meeting. Here’s a primer on the real issues.
Australia doesn’t have a housing supply problem: 12m dwellings and only 11m households. We have an equitable distribution problem. One third of households own two houses (on average). One third are buying their house. And one third rent, mostly from the first third. That’s the root cause of our increasing inequality in wealth.
Australia doesn’t have a housing affordability problem; that’s about buying houses. We have a shortage of affordable housing. Very different. The key issue is looking after the renters, not the rich. Those renters are not one homogeneous group, so there is no one silver bullet solution.
We used to build public housing for the poorest and most vulnerable in our community. Sixty years ago 7% of all dwellings were under state ownership. Both sides of politics sold off or privatised the housing built by earlier generations; now less than 3% nationally. The need is about 10%, particularly given Labor’s refusal to meaningfully increase social incomes. So we need massive investments in public housing,
It can’t be like the post WW2 programs of mass housing in high rises or outer suburbs. It should follow the 5 S’s for social housing: size - modest in numbers not to create ghettoes; scale - modest in height, high rises are hurtful; spread - in every suburb; sensible - sensitive to the surroundings and tradition (not untried experiments); and provide ‘wrap-around’ services that many socially dependent people need.
Ideally this new public housing will be all through the ‘missing middle’ suburbs. It might drive the NIMBYs crazy, but these long-term investments are crucial in a caring social democracy, as low-income tenants cannot be expected to repay the building costs, at least not in the short-term. The rents will have to be subsidised.
There is no way around it: public housing is expensive to build and costly to run, but the investment is in society not in bricks and mortar. Once done, it must remain in public ownership forever. Never again should we sell off past investments to pay down today’s balance sheet. If we had kept all the state’s public housing we would not be in today’s predicament.
If it helps, call it ‘social housing’ to get away from the ‘public housing’ stigma, but either way we need 10% of all dwellings to be built, held and the rent subsidised by the government. We can’t continue to rely on ‘not-for-profits’ to do the heavy lifting in social housing. That way lies Trump’s America and massive homelessness.
A different group of renters that need help are low income and ‘working poor’ households. Housing groups, such as Shelter, say that a dwelling should cost no more than 30% of a household’s after-tax income, a number so low it is unachievable for at least another ten percent of households. In the current unregulated private market landlords are gouging tenants because they can.
These tenants need ‘affordable housing’, a little different to ‘social housing’. Often affordable housing is advocated as a part of a larger scheme: setting aside a percentage of an apartment or townhouse development for lower rents. Typically the numbers are 15% of dwellings, with a rental discount of 20%, being managed by a ‘Community Housing Provider’, or CHP. Arbitrary numbers, with little evidence, further undermined by the affordable housing being transferred back to the market, sometimes after as little as 15 years.
Much stronger controls are needed for such Public/Private Partnerships, or PPP. Rent should be income based, subsidised as part of ‘rental assistance’ by the government. Similar to social housing it should obey the first four of the five S’s specification (less need for warp-around services), and forget the PPP hand-back; it must be retained as affordable housing forever.
The final third is renting in the market, by choice or whilst saving for a purchase deposit,. They need better protections from the owners, who not only want big capital gains upon sale (with less tax), but unearned profits along the way (assisted by negative gearing). The market is so tilted in the owners’ favour that a redress in legislation and enforcement is necessary.
A total re-write of the rules is needed, and there is good precedent. In the early 60s, when Dick Dusseldorp’s Lendlease couldn’t sell Blues Point Tower’s apartments by the then process of company title, he sent lawyers around the world on research for the best sales mechanism. In one year they wrote, and had passed, the ‘Strata Title Act’, now considered world’s best practice. The cabinet should consider doing the same for all renters.
The irony is this National Cabinet meeting on housing only came about as a result of the exigencies of the Greens, who won’t be represented there. It’s progress on the vital issue, even if Wayne Swan, the old Labor warhorse, is trying to raise money on the back of a hatred of the Greens, saying in a flyer this week: “And (we) could be doing so much more if it wasn’t for an unholy alliance between the Greens political party, the Coalition and One Nation…Chip in and send the Greens a message.” It’s a national problem, and it’s time that Labor got the message and treated it as such.
Tone Wheeler is an architect / the views expressed are his.
A housing primer for the Federal Cabinet. Tone on Tuesday 175. 15 August 2023 (week 33).
Long columns are Tone on Tuesday. Short shots are in A&D Another Thing every Friday.
You can contact TW at [email protected]
