The cross-border taskforce reviving housing policy

By Stephen Easton

Monday January 18, 2016

The cost of shelter is too high for a large segment of the Australian public, and there is widespread agreement that a national compact between states, territories and the Commonwealth is the way forward.

A group of bureaucrats has been pulled together from four governments and asked to canvass “innovative ways” to improve the supply, quality and management of affordable housing. They had better move fast; with such a well defined problem, there is already pressure to get on with implementing real solutions as rents continue to rise.

Opposition senator Katy Gallagher criticised the federal government’s “underwhelming decision” to go back over the well-worn ground of affordable housing one more time, after two years without a program to replace those it discontinued.

Carolyn Whitzman
Carolyn Whitzman

Urban planning professor Carolyn Whitzman says a national strategy to address the lack of affordable housing is urgently needed. She adds that “there is a certain sense [governments] need to get on with it” among social services and property developers alike.

The working group includes staff from federal Treasury and the Department of Social Services as well as the New South Wales, Victorian and Western Australian governments. It is to receive terms of reference and release an issues paper by the end of January, and call for proposals from “interested parties” in a public consultation process soon after.

Assistant Treasurer Alex Hawke said the same group would then work with states and territories to implement some of the solutions, which he expected to include “social and affordable models that are ready to be implemented” as well as creative new ideas. Social Services Minister Christian Porter acknowledged affordable housing supply was central to “a great range of social service challenges” and that the Commonwealth needed to work with the states:

“No single level of government can act alone on this issue — it must be collaborative and there must be innovative solutions offered.”

Groundbreaking innovations may not be necessary. According to Whitzman, a lot of experts and stakeholders agree there has been enough talking, and want to see action on a new program to stimulate construction of affordable housing as soon as possible. The sooner that happens, the sooner it can be evaluated and adjusted as necessary.

“I’ve been convening a partnership that’s had representation from the Victorian state government and local governments, from private developers, community housing organisations and investors — all of the key sectors who could be involved in affordable housing — and there’s a surprising degree of consensus that the number one priority is some form of investment program,” Whitzman told The Mandarin.

“That could be a direct investment from the federal government in affordable housing, or it could be indirect through some form of loan guarantee or tax incentive, but that’s absolutely what needs to be done right now as the number one priority for the federal government.”

Replacing axed programs

The Coalition government also gave itself more catching up to do by axing the previous Social Housing Initiative and the National Rental Affordability Scheme shortly after coming to power in 2013.

“The Social Housing Initiative in particular really stepped up the production of affordable housing units that had been languishing for many years — since the 1970s, in fact,” Whitzman said. She says the funding poured into it by the Rudd government was a success, because it led to more social housing being built than in the previous couple of decades, at the same time as playing its part in the wider economic stimulus plan at the time:

“The global financial crisis was the immediate impetus for that program but there’s no reason why it shouldn’t [continue].

“One of the things we’ve learned from the United States is there’s a lot of cost associated with starting that kind of a program — you have to create the investment instruments, the risk profiles on behalf of banks etcetera, but once you continue that program the start-up costs start to fade and the longer it goes on, the longer you have the knowledge and partnerships developing.”

“We were all singing from the same song sheet. The question is, when is there going to be action?”

Billions of dollars from the federal budget are spent on rent assistance payments via Centrelink and forgone through tax concessions around negative gearing, which was supposed to increase rental accommodation and lower rents at the same time as making investment properties more attractive.

“Unfortunately,” the University of Melbourne professor said, “neither of those programs has really worked to increase the amount of housing available to very low and moderate income households.”

She says first home-owner’s grants have likewise done little to help increase the stock of long-term affordable housing, and that the Commonwealth could spend its money in much better ways.

“For years and years snow, researchers in state government and local government have been arguing that if just a small proportion of the money that’s spent annually on those programs went towards a program that’s more specifically geared towards creating more affordable housing stock, then that would have a big impact on the millions of Australian households that are currently unable to find housing close to jobs and services and transport,” she said.

Whitzman says anecdotal evidence suggests big investors fund affordable housing projects in the US, where they enjoy modest but stable returns, but shun the Australian market “because there just aren’t the tax benefit mechanisms available” to make it worthwhile.

The US model of attracting investment in affordable housing projects is by no means the best, but even still it has seen about 3 million units built since the late 1980s.

“So what we need in Australia — and it’s pretty bad when we’re using the US as a model — is some form of stable, sustainable investment in lower income housing that’s retained as lower income housing, either because it’s rental or because there’s some form of community land trust or limited equity resale,” Whitzman explained.

The professor was among those who spoke at the exhaustive Senate affordable housing inquiry, which began in 2013 and finally reported last May.

“We were all singing from the same song sheet,” she said. “The question is, when is there going to be action?”

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