Michael Pascoe: Australia developing a national hopeless housing plan

Social housing needs direct government action more than ever, Michael Pascoe writes.

Social housing needs direct government action more than ever, Michael Pascoe writes. Photo: TND/Getty

The federal government is developing a National Housing and Homelessness Plan. All indications are that a “National Hopeless Housing Plan” will be a more fitting title.

With a clutch of policies at least wanting to be seen to do something about the housing crisis – and certainly doing more than the totally missing-in-action Coalition – state and federal governments are still either ignoring or don’t grasp the extent of the problem, continuing to bring a knife to a gunfight. Make that a knife to an artillery battle.

Add up all the governments’ claims, all their “multibillion dollar” announcements, and you still won’t make a dint on the affordable and social housing shortage. They are announcing hard just to stand still in the inadequate proportion of public and affordable housing in this rich country.

Our governments are still running with the real estate industry’s thinking, still primarily relying on private investment that has no interest in fixing our failed market.

TND colleague Kohler here, in his Quarterly Essay and elsewhere has written about the bleak political reality of governments not being able to tackle the housing affordability crisis that is undermining our social cohesion and increasing inequality.

Alan would like the Albanese government to invest its political capital in resurrecting Bill Shorten’s 2016 and 2019 capital gains tax and negative gearing policies to solve the affordability problem.

That would help a bit, but I don’t think it would solve the problem. (I also don’t think Alan is correct to blame Bob Menzies for the demise of public housing. I’ll come back to that.)

“Everyone” agrees there are multiple factors in creating the present disaster. The Howard government halving the CGT rate certainly accelerated the problem, but it would not have had the dramatic impact it did without coinciding with the shrinkage in the proportion of public and social housing available.

Without simultaneously increasing demand for private rentals, the CGT gift for investors would not have looked as sweet.

The corollary is that seriously lifting the proportion (not just increasing the present number) of public and social dwellings would be the best way of taking the heat out of the market.

Large-scale direct government investment is the only policy that would be guaranteed to both increase supply (the Holy Grail) and reduce demand (the ignored flipside) for private housing.

If governments were agile (silly me), the timing is fortuitous right now as building approvals are around their lowest level in a decade. As the current level of completions roll off and interest rates continue to bite, there is spare capacity looming.

And with so many building companies in trouble, sent broke by fixed-price contracts, and banks wary of lending to builders, there should be a sizeable body of tradies who would be happy to work for something as secure as a government.

It’s not easy to find a definitive figure for the extent of the public and social housing decline or for the level of unmet demand for it.

Former executive officer of National Shelter, Adrian Pisarski, nominated 1991 as the peak of our social housing levels – 7.1 per cent of all households, according to the Australian Housing and Urban Research Institute.

AHURI’s latest figure is from the 2021 Census – 3.8 per cent – and it will have fallen further in the past two years as public and social housing starts have failed to keep pace with other housing growth. It’s a safe bet that our proportion of social housing dwellings has halved since 1991 and is still falling.

That 3.8 per cent figure in 2021 had Australia way down the list of advanced countries providing shelter.

To be back to 7 per cent would mean having, roughly, 360,000 more public and social dwellings than we do now.

Hal Pawson, Professor of Housing Research and Policy at UNSW’s City Futures Research Centre, reckons the current unmet need for social housing equates to 437,000 households.

Pull that many households out of the private rental market, guess what? Rents fall, housing becomes less attractive as an investment, owner-occupiers have less competition from investors at auctions, housing prices stabilise.

The need and the scale necessary to make a difference compares with the federal government’s housing policy centrepiece, the Housing Australia Future Fund fig leaf.

It is promising to subsidise 30,000 community housing units over the next five years – and that’s all. An average of just 6000 a year for five years and then the promised $500 million a year from the fund just becomes an ongoing subsidy of those same units.

The extra and immediate $2 billion for public housing that the Greens leveraged out of Labor is going to provide about 4000 dwellings.

It might sound like a lot of money, but it’s actually still peanuts, it’s still not making a dint in the problem given population growth.

Professor Pawson counted a 3.2 per cent increase in social housing in the 2012-2022 decade while our population grew by 14.3 per cent. Yes, government policy failed to keep pace with government responsibility during the Lost Decade.

And it continues. The latest dwelling building approvals (October)  counted just 164 public housing approvals out of a total of 14,223 – a miserable 1.15 per cent.

Don’t look too hard at what politicians say, look at what they get done.

Every government that has tried to look like it was doing something by giving money under one scheme or another to private buyers has contributed to making the problem worse, instead of trying to solve it.

The scale of direct government investment required to be serious is about the difference between a fleet of reliable non-nuclear-powered submarines and the cost of our AUKUS nuclear fleet. We can be bothered to spend on stationing subs in the South China Sea but not fixing our biggest domestic problem.

In 2021, Tone Wheeler, adjunct professor at UNSW and Australian Architecture Association president, published a short history of our public housing disaster. He wrote that the public housing share of dwelling completions fell from an average of 16 per cent from 1945 to 1972, to nine per cent over the 1980s, to five per cent in the 1990s, to almost none this century.

“Our obsession with providing houses for ownership has blinded governments to the need for social housing for the poorest 20 per cent, but at the same time they have failed in their mission to provide home ownership. Lose-lose,” Professor Wheeler wrote.

“Australia has not had a coherent housing policy, ever. The likelihood of a conservative government developing one is about equal to teaching a kangaroo to do the macarena.

“But we cannot despair. We need to plan big for the day when we have a government in Canberra that has a social agenda as well as an economic one – one that includes social housing.”

We’re still waiting.

And as for blaming Bob Menzies, no, the figures above don’t support it. The founder of the Liberal Party did indeed champion “little capitalists” owning their own homes, preferring that to Labor policy of prioritising public housing rentals, but that astute political aim still came with increased public housing.

Menzies knew he couldn’t leave the “Australian Dream” to the market. It needed direct government action.

And every government since has pretended otherwise.

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