For anyone who actually cares about our housing crisis, it is intensely depressing to watch the parade of speeches, reports and editorials blathering about the problem while ignoring a core element of its cause and solution.
From the Reserve Bank governor to the National Housing Finance and Investment Corporation, from Sydney Morning Herald editorials to both major political parties, the blatherers either wilfully or through ignorance continue to waffle their way through real estate industry talking points while ignoring the bleeding obvious – the crime of governments neglecting their public housing responsibilities has come home to roost.
Decades of bipartisan support for ‘the market’ to provide necessary housing locked Australians into a system dependent on extraordinary housing inflation to sustain itself until it became unsustainable.
It has delivered the present catastrophe of soaring rents, unaffordable prices and insufficient building just as population growth is taking off again.
The last time Australia was in a similar situation of a housing shortage and rapidly growing population, no less a figure than Sir Robert Menzies knew ‘the market’ could not be left to deal with the problem; that it required large-scale government involvement to make housing affordable.
Dr Cameron Murray – one of the minority of economists thinking outside the real estate lobby’s square – has published a timely reminder that it was public housing that created the Australian Dream.
It wasn’t the free market that boosted home ownership from 46 per cent to 72 per cent between 1947 and 1966 but direct government intervention.
Menzies had a grand political plan in turbo-charging housing. He saw home owners as more likely to vote conservative and thus transparently skewed federal funding towards helping people buy.
Dr Murray quotes a 1949 Menzies campaign speech:
“Except in relation to the Territories and War Service Homes, the direct responsibility for housing is with the state governments. But the Commonwealth must accept large obligations of assistance. There is already a Commonwealth-States Housing Agreement. We will seek its amendment so as to permit and aid ‘little capitalists’ to own their own homes.”
That mentality became perverted by Menzies’ successors into wanting legions of little (and not-so-little) capitalists to own other people’s homes – to develop a base of landlords at the expense of home ownership and allowing public housing to stagnate.
From then-prime minister John Howard declaring he didn’t have people complaining about the increase in the value of their homes to then-prime minister Malcolm Turnbull campaigning hard for the landlord vote that just got him over the line in 2016, public housing went nowhere. And it did little or no better under Labor prime ministers and state premiers of either stripe.
By comparison, then-prime minister Robert Menzies went hard and long via the public route, as Dr Murray explains:
“The way Menzies got the huge boost to home ownership he desired was by pouring federal money into building a lot of homes and providing people with discounted ways of buying them.
“Predominantly, this was through the purchase of housing commission dwellings and funding for state-run housing developers who sold only to first-home buyers at discounted prices. He didn’t rely on the market, nor think that up-zoning or fancy tax tricks would get high home ownership. He knew that governments had to operate on the supply side of the market and provide access to those homes below the market price.
“In those years, 15 per cent of new dwellings were built by public housing agencies.
“To translate that period to today’s numbers, 15 per cent of all new housing would be about 25,000 to 30,000 new public dwellings per year. Another boost of 20 percentage points in home ownership, like those post-war decades, would get us from 66 per cent to 86 per cent home ownership, near Singapore’s level, and take over two million households out of the rental market.”
It was not all public housing for purchase – it was a period when rented public housing also kept pace.
“The legacy of high home ownership from that era has lasted generations,” Dr Murray writes.
“Public housing agencies today have also inherited hundreds of billions of dollars of property assets from these 70-year-old programs. But for some reason, despite ongoing debates and concerns about the high price of housing for young and low-income households, we seem to do our best to ignore our own past and ignore the policies that created the Great Australian Dream in the first place.”
Typical of mainstream hand-wringing was a Sydney Morning Herald editorial last week on the rental crisis:
“The rental crisis is going to deepen but reform is needed urgently. That will require a willingness on all sides to look at the issue from the widest perspective and consider all aspects including previously avoided questions of equity, lending policies, capital gains, negative gearing, rental freezes and the factors that help keep vacant 10 per cent of Australian private dwellings.”
D’oh – naming everything except the obvious factor that has the potential to achieve the most the quickest.
That editorial followed a National Housing Finance and Investment Corporation report that forecast a shortage of 106,000 dwellings in four years and blamed high interest rates, soaring immigration and community opposition to new homes.
The five-member NHFIC board features a former Liberal MP, a current director of Mirvac, a life member of the developers’ lobby, the Urban Development Institute of Australia, and the former CEO of two of Australia’s largest residential building companies. The fifth is a former taxation lawyer.
RBA governor Lowe last week underlined how renters are doing it tough and will do it tougher, but subsequently went no further than mentioning the usual developer lobby priorities of zoning, planning and such.
The Housing Industry Association and the Real Estate Institute also are warning of a worsening housing shortfall but pull up short of the obvious recommendation to government: Fill the decline in private building with direct government housing.
As reported in this space numerous times, the Albanese government’s election gimmick Housing Australia Future Fund will barely touch the sides, a mere fig leaf that doesn’t even cover the social housing being lost through the winding up of the National Rental Affordability Scheme.
And the Liberal Party – what Liberal Party? It may as well not exist on housing, unable to crawl above last year’s execrable housing taxation report chaired by Jason Falinski, the failed MP with an avowed dislike of “housos”.
There are some sane voices in the housing policy wilderness. The Grattan Institute fights the good fight for more public housing and Monday’s Sydney Morning Herald carried a fine article by Tone Wheeler, president of the Australian Architecture Association.
“Traditionally, public housing has been provided by the states and built with federal taxes,” Mr Wheeler wrote.
“When poverty increases – after wars and crises – most countries increase public housing, but not in Australia, where those opportunities have been missed, or misused, time and again.
“These failures reveal three salient issues for the current debate about federal Labor’s housing policy: We premiate home ownership, we rarely build enough public housing, and when we do, we are all too prone to sell it off.”
The great irony is that Prime Minister Albanese and Housing Minister Julie Collins both trade on having grown up in public housing – but now their deficient policies mean many won’t have that opportunity.
