City Futures Blog

News and research in housing and urban policy, from Australia’s leading urban policy research centre.

City Futures Blog random header image

Ready for growth? Has Australia’s affordable housing industry got what it takes?

Posted by on April 20th, 2017 · Affordable housing, Finance, Government, Housing, Social housing

By Vivienne Milligan and Hal Pawson, City Futures Research Centre.

With a shortfall of affordable rental homes that reached 271,000 in 2011 and a crumbling public housing system, it’s encouraging to note Scott Morrison’s recent recognition that private investment in low cost rental provision must be stepped up and that government can help to make this happen. Albeit amid many contradictory housing policy signals from Canberra, hopes are rising that the May budget could include meaningful steps towards making this a reality.

But any new framework for stepped-up private investment in low-cost rental provision will likely re-awaken questions about the capacity of Australia’s affordable housing industry to provide an effective delivery vehicle for such a push.

The past decade has, in fact, seen our not-for-profit (NFP) housing sector experiencing rapid growth and somewhat greater public visibility. But by comparison with international benchmarks, the sector remains relatively small and asset-poor. And longstanding questions about the NFP sector’s ability to further expand its role – such as through taking responsibility for restoring public housing at scale – were restated only in 2016 by the Treasurer’s Affordable Housing Working Group report. With such concerns in mind, AHURI-funded researchers (led by UNSW and also involving Swinburne University, RMIT, the University of Tasmania and the University of Queensland) have been investigating the affordable housing industry’s capacity to take on such challenges and looking to identify the ways that governments and industry players can best assist in overcoming existing constraints.

What is the affordable housing industry?

The affordable housing industry can be thought of as a government-enabled system providing for low to moderate income households inadequately served by the mainstream market. Importantly, this system-wide conception of the industry broadens the gaze beyond the organisations directly responsible for providing low-cost rental accommodation (mainly NFP community and Indigenous housing providers, but also a few for-profit firms) to also include the supporting entities and institutions that assist providers in their effective operation. Involved in this way are a wide variety of service delivery partners, lenders, professional support services, specialist trainers and peak and trade bodies. Importantly, this ‘supporting cast’ also encompasses government players including policymakers, program managers and regulators.

Critically, as our preliminary 2016 report contends, since the industry exists to provide non-market products and services, it can do so only to the extent that official policy, resourcing and regulatory frameworks enable its work. At its broadest, therefore, these frameworks are part and parcel of the affordable housing industry itself.

What is capacity?

Capacity, as we define it, is the industry’s ability to perform the work and achieve the goals that governments and industry stakeholders envisage for it. Capacity questions concern various aspects. Often first to mind would be whether provider organisations have the governance, people skills and business systems to fulfil their current responsibilities and, ideally, to expand their role.

Under our conception of the ‘affordable housing industry’, capacity within government is another highly relevant dimension. Here we are talking about not only the political leadership and stability needed to champion and foster a new industry (think renewable energy or disability services) but also the enduring administrative capacity to carry through reforms and successfully implement and regulate intended policy directions.

Also in play is the ability of the industry as a whole to operate cohesively in promoting its goals, in developing industry skills and capacity, and in maintaining effective influence with an ever-changing cast of politicians and higher order policymakers.

For a subsidised industry like affordable housing, however, perhaps the foremost issue is the adequacy of the policy and resourcing framework. The standard business model is built on blending private finance (debt and equity) with public subsidies (in various forms) to produce long term housing affordable for lower income households. The adequacy and surety of the government subsidy component therefore, is central to the industry’s prospects.

Current capacity shortcomings

As detailed in our newly-published final report, the greatest capacity constraints lie in four areas.

Firstly, and above all, Australia lacks any enumerated and resourced plan for expanding affordable housing. Recent growth opportunities in this industry have largely been small-scale, fragmented and ad hoc. As a result, providers have been highly constrained in their ability to predict and plan for growth. This has disrupted capacity-building and undermined capacity-retention.

Secondly, albeit in common with some other areas of government, housing policy has suffered a major erosion of policymaker expertise over the past 10-20 years. Partly associated with this problem has been the disappointing failure to fulfill the 2010 aspiration for consistent national industry regulation. Following the collapse of Commonwealth leadership here, many of the foreshadowed benefits (such as a single national market and standardised performance data) have failed to materialise.

Thirdly, there is a need for much stronger and more enduring government and industry leadership On the provider side, the industry has yet to recover from the 2014 de-funding of its national peak body. Recent leadership has been fragmented and representations by the industry have not had the necessary power and influence to shape future directions. Across governments, political and bureaucratic leadership in this policy realm has been at best sporadic and, at worst, absent.

Last, but by no means least, is the necessity to address capacity issues affecting the Indigenous housing sector. With low rates of home ownership, Indigenous households rely disproportionately on the provision of forms of affordable housing. Hundreds of Indigenous organisations (IHOs) play important roles within the industry – e.g. by acting as a gateway to the broader housing system for Indigenous clients, as well as providing culturally appropriate housing. Support for this segment of the industry has generally lagged behind that for mainstream providers and many IHOs are small and face an uncertain future.

Implications for Australia’s affordable housing industry development

Underpinned by extensive research evidence, we advocate industry development directions including:

  • The Council of Australian Governments (COAG) should recognise affordable housing as a long-term national policy goal
  • National regulation of affordable housing providers should be completed and revitalised as a matter of urgency
  • A joint government-industry Affordable Housing Industry Council should be established to direct and oversee industry development
  • A national strategy for transforming the public housing system should be developed
  • A public co-financing strategy to attract private investment into affordable housing supply at scale should be developed and instituted
  • Future commitment to addressing Indigenous needs for affordable housing should acknowledge the centrality of Indigenous-controlled and culturally appropriate service models.

Growth and development of industry capacity go hand-in-hand. Thus market expansion and further capacity-building can be expected to follow from establishing a clearly defined role and purpose for the industry, along with national and state governments committing to firm targets that will enable steady growth in the supply of affordable housing.

Australia’s leading affordable housing providers are, in our judgement, ready for further growth. This would more fully exploit what is, for at least some organisations, under-utilised internal capacity. With the right leadership, resourcing and regulatory accountability, they have what it takes to deliver and manage significantly expanded portfolios. Government direction and impetus for growth are the essential ingredients now required to enable this emerging industry to progressively expand the affordable housing provision that the country manifestly needs.

Health infrastructure is what planners do!

Posted by on April 11th, 2017 · Planning, Sydney, Wellbeing

By Susan Thompson, City Futures Research Centre, and Peter McCue, NSW Office of Sport. This is an edited version of the authors’ column in New Planner.

When we think about health infrastructure we generally focus on hospitals, ambulance stations, the flying doctor (in regional and remote centres), clinics and medical centres – the facilities that are essential for getting us through illness and accidents, making us well again.  It’s somewhat ironic that the major focus of the ‘health’ sector is sick care, rather than preventing illness in the first place.

So it’s not too much of a stretch to declare that what many planners do is health infrastructure!  Providing the spaces and places that support good health and wellbeing as part of everyday life.  This is the infrastructure that helps to keep people physically active, socially connected to each other, and able to access fresh, nutritious and culturally appropriate food in environmentally sustainable ways.  As regular readers of our column are well aware, such behaviour builds the foundations for good health, reducing the risk factors for the chronic diseases that plague modern society.

The GreenWay is a fabulous piece of green infrastructure for healthy and environmentally sustainable living.  Recently identified in the Central Sydney District Plan as the number one priority for Sydney’s Green Grid, the GreenWay connects two of Sydney’s most important waterways – the Parramatta and Cooks Rivers – via a 5 kilometre light rail, active transport and urban environmental corridor in the city’s Inner West.  It was originally an initiative involving four adjoining local councils, bringing local government professionals from disparate disciplinary backgrounds together to work collaboratively with the community and intermittently, state government.  Today the GreenWay is a work in progress.  The next four years will see its completion with the construction of a further 3.2 kilometres using $20 million of funding committed by local and state governments.  The green corridor follows the route of Sydney’s newest completed light rail service from Rozelle to Dulwich Hill (converted from the former freight rail line), integrating cycling, walking and public transport.  It is a significant community hub for the arts and bushcare, as well as connecting to significant recreational facilities including outdoor gyms, sporting fields, children’s playgrounds, a dog park with café, and picnic areas.

The GreenWay serves as a local outdoor classroom modelling urban sustainability for school and university students.  An extensive educational program of resources, developed for primary schools, is now recommended as best practice for geography studies by the NSW Department of Education.  UNSW and UTS run multi-disciplinary classes involving students from the built environment and health.  They research different aspects of the GreenWay, experiencing complex, real-world, urban sustainability and health issues in holistic and integrated ways.  Over the last few years, students have put a raft of different issues under the microscope, making recommendations about light rail accessibility, pedestrian safety, disabled access, lighting, and shared walking and cycling paths.  The projects are presented to GreenWay council officers and accompanying posters displayed at the annual GreenWay Art Exhibition.

Although an example of urban infrastructure, many of the features of the GreenWay and the activities that occur along its length and immediate vicinity have relevance for regional locations.  The GreenWay demonstrates how green corridors with shared cycling and walking paths can encourage much more than just physical activity.  Community members from different generations, socio-economic backgrounds and cultures are connected in a sustainable environmental setting which is supportive of their physical and mental health.

Unpacking Urban Renewal in Australia: politics, policies…and polarisation?

Posted by on April 5th, 2017 · Government, Housing, Planning, Sydney, urban renewal

By Laura Crommelin, City Futures Research Centre.

A trio of new research papers from the City Futures team are now available online, each of which sheds light on a different aspect of the complex process of urban renewal. Together the papers identify the politics that drive urban renewal, examine the policies used to implement it, and explore the prospects for residents excluded from the high value inner city areas undergoing renewal. It is clear from this research that higher-density urban renewal is reshaping our cities in profound ways – both in neighbourhoods undergoing or destined for redevelopment, and those feeling the flow-on effects of urban renewal’s impact on housing market dynamics.

In Urban Studies, Laurence Troy examines the drivers behind the renewal of the inner-city Sydney suburb of Pyrmont-Ultimo during the 1990s and 2000s. Laurence argues that flexible planning regulations, coupled with a focus on design rather than equity, resulted in a range of outcomes driving new forms of inequality. On one hand, high-end developers produced expensive, high-quality apartments for owner-occupiers, eventually gaining approval for far taller towers than originally planned. On the other, budget developers produced more affordable apartments by sacrificing build quality and selling them to investors to rent out. In both cases, the regulatory approach adopted allowed developers’ profit agendas to shape the outcomes far more than the needs of the area’s 14,000 new residents. This tension between profit and amenity still informs urban renewal outcomes today, despite subsequent interventions like SEPP 65.

Stepping back to the metropolitan scale, the second paper identifies similar tensions underpinning the push to make Sydney and Perth more compact cities, including through higher density urban renewal. Writing for International Planning Studies, the Planning in a Market Economy research team identifies an eclectic mix of policy tools used to achieve higher density development, including metro strategies, transport plans, and development corporations. Despite some notable differences between Sydney and Perth’s governance and policy frameworks, there are also significant similarities in the way these policies are reshaping the two places. In both cases the push for more compact cities has coincided with increasingly contentious development control debates, growing executive power, greater government engagement with industry lobby groups, and increased inequality. The team concludes that if compact city planning is to remain the model for Australia’s cities, governments must find more equitable and efficient ways to implement urban renewal.

The issue of urban inequality is also the focus of a third new paper, which examines the impact of disadvantaged areas on residents’ future prospects. In Urban Policy and Research, Hal Pawson and Shanaka Herath (a former City Futures colleague) draw on their research for AHURI to contemplate whether disadvantaged neighbourhoods act as ‘flypaper’, trapping residents in poor socio-economic circumstances, or as ‘springboards’, with affordable options providing a stepping stone to improved housing outcomes.  Importantly, the paper suggests that these neighbourhoods are “substantially integrated with wider housing markets”, and can therefore act as springboards – although this effect may not extend to the poorest residents (particularly private renters). Furthermore, Hal and Shanaka note how these neighbourhood dynamics are linked to the outcomes of compact city planning, as renewal of inner-city areas contributes to the suburbanisation of disadvantage in Australia’s cities. As the market pushes affordable neighbourhoods further away from transport and jobs, policy responses need to prevent these areas from becoming traps for an increasing number of disadvantaged residents.

I’m forever blowing bubbles: Has the Sydney apartment market finally burst?

Posted by on March 30th, 2017 · Affordability, Construction, Housing, Housing supply, Sydney

By Bill Randolph, Director, City Futures Research Centre. Originally published in Around the House, newsletter of Shelter NSW.

Much speculation in the property press in recent months has centred on the question of the supposed ‘housing bubble’ (is there one?) and, if so, what is its likely trajectory (will it burst?).  Pundits have vied for position on this, presenting copious charts and tables to divine the truth in the entrails – sceptics denying the very idea of a property bubble while others anticipate its imminent demise.  The impact on property prices – if not affordability – is an over-riding concern.  And its the high-density apartment market that is the focus of most concern particularly central city locations in Brisbane, Melbourne and Sydney.  So has the development industry overshot in its ‘dash for density’, and if so, how far would the market fall?  And will this have an impact on affordability?

That property markets have cycles of boom and bust is hardly news.  It’s the nature of the beast.  In many respects, we should expect there to be a down turn if supply over-reaches demand or economic or political circumstance change to the detriment of profitability.  Successful developers, like successful surfers, have to judge when to get into and out of the property wave – the trick is to judge when to take the drop and then when to bail.

However, in the case of the Australian apartment market, we may be in uncharted waters.  Once upon a time, building and selling homes was pretty straightforward.  You found a field, got a development approval, cleared the cows away, built a line of houses and sold them to local buyers.  The market was susceptible to the vagaries of interest rates, employment trends or policy interventions by government.  But it was a market which responded to local and national demand and supply factors.

The problem is that the contemporary high density apartment market in Australia simply does not work like the old style suburban house market.  The overwhelming impact of investor buying has re-written the rulebook, which means that it is becoming more difficult to spot the obvious movements in demand and supply patterns.  In fact, the apartment market has always been dominated by investors – the strata laws brought in during the early 1960s were explicitly tailored to allow investors to buy single apartments, rather than having to buy a whole block.  But the contemporary apartment market has now entered an altogether different phase.

Why is this?  Well, apartments have become the new Krugerrands – objects of pure speculative desire.  With the yields on competing investments at historic lows, property, and the capital gains that can be made from owning it, has become an accepted form of personal wealth creation.  There is no need to rehearse the debates about why this is – forests have been felled rehashing the argument for and against the current tax and subsidy incentives for investors and the financial circumstances driving their behaviour.  But importantly, this is no longer a solely domestic matter.  The conditions driving investment in rental property are now global, drawing in increasing amounts of money from overseas to take advantage of the spectacular property price values that have become the norm in Australia cities.

But here’s where it gets interesting.  Usually in speculative bubbles, the investment frenzy feeds on itself and then, eventually, something triggers a reverse with an inevitable price correction (think tulips in 17th century Holland).  But the signs of a price reversal in the Sydney apartment market are not altogether evident just yet, despite the record breaking supply levels.  When the Federal Reserve Bank moved to restrict funding to domestic investors and developers in mid-2015, the apartment market paused a little, but then continued apace, at least in the twin epicentres of the market – Sydney and Melbourne. Someone, or something, was pushing it forward.  While evidence as to exactly who/what is responsible is hotly contested, all the data point to the residential investor, especially given the historic low proportion of first homebuyers now entering the market.  Traditional ‘mums and dads’ as well as self-managed pension funds – the Boomers who are stealing their children’s housing – have played their part.   On the other side of the equation, finance for apartment development, once dominated by the big banks, has now become highly fluid, with a wide range of secondary banks and private equity funders now putting money into the sector.

But arguably, the big kicker in recent years has been the rise of the overseas investment.  This has powered the Australian apartment market on both the consumer and the developer sides.  The entry into the Australian housing market by the overseas development sector seeking more stable conditions to undertake their business, supported by a relaxed foreign investment policies and our increasingly permissive planning framework, is a new addition to our housing market.  They come already cashed up and with access to substantial funds able to outbid even local developers.  This further bids up land values and final costs.  While the Chinese government has moved to control the transfer of funds overseas for property speculation, this is a growing source of new funding on the development side.  One recent estimate puts Chinese companies buying 75% of all development sites in Melbourne in the last half of 2016.  But the Chinese are joined by a roster of other nationalities – Malaysia, Singapore and others – all cashing in on our property markets.

On the demand side, the imposition of higher stamp duties and other restrictions on overseas buyers may have lessened the immediate appeal of Australian property, but there are few signs yet that this demand is faltering.  With foreign buyers accounting for 11 percent all homes purchased in NSW between July and September last year, the majority from Asia and the sub-continent , this is clearly a very active market.  In the process, they raised $115 million in stamp duty.  With this kind of pay-off, there is little reason to believe State Treasuries will want to turn off this particular revenue tap too quickly.  And with Alibaba, the Chinese owned global e-commerce platform, now talking about marketing Australian apartments, there is likely to be no let-up in the pressure from this quarter.  There is little doubt, however, that demand from investors from all directions – home and abroad – is at an unprecedented high in the Sydney apartment market.  By the 4th quarter 2016, NSW alone accounted for half of all national investor finance for housing consumption, the vast majority focused on Sydney.

Everyone, it seems, wants a slice of the action.  The extent to which this market is also driven by ‘hot’ money – property is as good, if not better, a way of laundering illicit money than gambling – is, of course another matter.  Interestingly, the Mayor of London, Sadiq Khan, has just announced a major enquiry into the foreign speculative apartment market in London in order to get to the bottom of where all this money is coming from.  But this will be a difficult task.  With multiple global influences, the financial flows coming into our apartment market are becoming too complex to be easily identified, shielded by convoluted company structures and off-shore tax havens.  No one can be entirely sure where the money is coming from.

So is there an oversupply of apartments in Sydney?  Probably not, so long as off-the-plan overseas investors sales can be maintained, although what contribution these are making to meet domestic housing demand is another matter.  As for local investors, the data suggest the party is still in full swing (Figure 2).  While investor lending dipped for existing property after the Reserve Bank tightened controls in mid-2015, lending for new build powered ahead.

Figure 1: Lending for Rental Properties – NSW

Source:  Source: HIA Residential Construction Outlook – NSW (2017). 

But there are signs the market itself is starting to pull back from the brink.  Latest data from the Housing Industry Association suggest we are approaching peak supply of apartments in NSW (Figure 2).  Why there will be a downturn is difficult to say, given the continued strength of the investment market.  Capacity issues may be part of the answer – just how many flats can the Sydney housing industry build when output is already at an all-time high?  There may well be a shortage of sites – unless major releases are about to happen on the fringe or the large renewal areas.  But then there’s the age-old way the development industry carefully manages the development of their land banks or sites on which they have development options to better control prices.  Or the figures could reflect the need for the industry to make out that supply will fall off in order to maintain pressure on government not to act on the tax and other arrangements that have created the boom in the first place.

Figure 2: NSW Housing Starts Forecast to 2018/19

Source: HIA Residential Construction Outlook – NSW(2017). 

Given the almost complete disregard that property prices have paid to housing supply trends in the recent past (see Figure 3), there is no easy way to predict the outcome of a falling apartment supply pipeline in this market.  Perhaps the least likely outcome is a widespread return for more affordable homes – the market simply does not seem to have a capacity to do this on current settings.

Figure 3: House prices (RHS) and dwelling completions (LHS), Greater Sydney 1991 – 2015

Source:  Inga Ting, SMH 5 Sept 2016.

So, has the Sydney apartment boom – or bubble – about to burst?  The Australian housing market has been almost alone among comparable economies in not witnessing a major residential property price correction over the last twenty years.  But given historically high – and some say unsustainable – personal debt levels and an unquestionably unaffordable housing market that is eating away at domestic demand, can the investors keep the party going?  After you with the crystal ball!

Who’ll get hit by ‘one strike’ and ‘three strikes’ in public housing?

Posted by on March 27th, 2017 · Law, Social housing, Tenancy

There’s ‘evidence-based policy’, and there’s ‘sports-metaphor-based policy’. New South Wales is the latest Australian jurisdiction to adopt ‘three strikes’ and ‘one strike’ policies for evicting social housing tenants on grounds of criminal offending and anti-social behaviour.

The New South Wales approach is, however, different: whereas in other States ‘strikes’ policies apply to social housing landlords and guide their decisions about taking termination proceedings against tenants, in New South Wales ‘one strike’ and ‘three strikes’ are now part of the Residential Tenancies Act 2010, and the provisions operate to restrict what the NSW Civil and Administrative Tribunal can consider, and what decisions it can make, when it deals with social housing termination proceedings.

In a recent article for Alternative Law Journal, I reviewed the legislation and previous Tribunal decisions to see who may be affected.

The ‘three strikes’ provisions allow social housing landlords to give a ‘strike notice’ where they consider a tenant to be in breach of their tenancy agreement. After a third strike notice, in any termination proceedings the Tribunal must regard the matters stated in the strike notices as proven – it is not allowed to hear evidence from the tenant that contradicts the strike notices. There is an exception to this where the tenant makes a written objection within 21 days of the strike notice; in these circumstances, the Tribunal can hear the tenant’s evidence, but the onus of proof is on the tenant to disprove the matters in the strike notice.

This means that the crucial factor in the operation of the ‘three strikes’ provisions is whether a tenant has the ability to write a timely submission. This is a strange and unfair point for proceedings to turn on; the Tribunal should be able to hear all the evidence, regardless of the tenant’s literacy.

The ‘one strike’ provisions work differently: they restrict the Tribunal’s ability to decline to make termination orders where the tenant – or another person on the premises – is found to have engaged in certain sorts of misconduct, such as using the premises for an illegal purpose, or causing an injury to a neighbour, or harassing a housing officer. The ‘one strike’ provisions are complex, with the restriction applying with different degrees of severity in different circumstances; also, because of a late amendment to the provisions, the restriction does not apply in cases involving children, people with disability, and persons protected by apprehended violence orders.

To see the types of cases in which the ‘one strike’ provisions can be expected to make a difference on the outcome, I looked back over 88 prior Tribunal decisions. In 65 of them, there was evidence of at least one of those exclusion factors (children, disability or AVOs), so ‘one strike’ would not have applied to them. Of the remaining 23 cases, four involved the Tribunal refusing to terminate the tenancy because it thought it would be unfair to do so in the circumstances. It is in cases like these that ‘one strike’ would make a difference.

The four cases are similar: all of them involve a female tenant and misconduct by some other person. In one case it’s a drug offence by the tenant’s spouse; in two cases, a drug offence by an adult child; in the fourth, it’s possession of stolen goods by the tenant’s teenaged children. In all cases there was no charge against the tenant.

The ‘one strike’ provisions restrict the Tribunal from doing justice according to the circumstances of the case. More generally, the review of the cases raises troubling questions about the way in which tenancy law makes tenants – particularly female tenants – liable for the misconduct of family members and other persons, with harsh consequences: the loss of a family’s home.

City Futures is commencing further research in this area. Our research project, ‘Family impacts of social housing legal responses to occupier misconduct‘, will investigate the use of termination proceedings by social housing landlords in four Australian jurisdictions, and consider whether laws, policies and practices appropriately deal with women and children, Indigenous families, and families with drug and alcohol problems. The project is part of the ‘Inquiry into Integrated Housing Assistance for Vulnerable Families’ commissioned by AHURI and conducted by researchers from the Social Policy Research Centre, City Futures Research Centre and the Faculty of Law (UNSW) and the University of Tasmania. Watch the blog for updates on the research.

Flying into uncertainty: Western Sydney’s ‘aerotropolis’ poses more questions than answers

Posted by on March 23rd, 2017 · Cities, Government, Guest appearance, Planning, Sydney, Transport
Image 20170306 931 1cgik38
The uncertainties about the new Badgerys Creek airport in Western Sydney are raising many questions that only good governance can resolve.

By Robert Freestone, UNSW

While Melburnians sombrely reflect on the risks of intensive commercial development near airport runways, Sydneysiders are enthusiastically scoping the development spin-offs that will come with their new airport in the city’s west. The Conversation

Critical uncertainties still cloud this prospect. Will Sydney Airport Group take up its extraordinary “first right of refusal” option? The enticing early prospect of securing a virtual monopoly on Sydney’s airspace is now clouded by the reality of huge upfront development costs before any planes land or take off for the first time in the mid-2020s.

If Sydney Airport Group pulls out, what happens next? Will the opportunity be opened up to other development companies? Or will the government commit more public money to doing the job itself and then on-selling the airport to the private sector?

The federal government presents its case for the Western Sydney airport development.

Will there be rail access from day one, as seems utterly critical to its early success? If so, which option will be preferred – a very fast train or an ambling suburban service? This is the subject of a major transport study with a further dilemma looming: who will build and pay for it?

What type of airport will it be? Current thinking is to have it quickly assume the scale of the current Gold Coast or Adelaide airports with 6-7 million passengers per year.

But who will fly here? Will it be a hub airport for a major airline/s? Will it have direct international services? Will it specialise in freight services?

A great many considerations affect the “business case” for the new airport.

A bustling ‘third city’?

Even larger questions relate to co-ordinated land use development around the airport. This is recognised as important, with the New South Wales government delineating an extensive “priority growth area”. The Greater Sydney Commission chaired by Lucy Turnbull envisages a whole new western urban complex around the airport – the so-called “third city” after Eastern Sydney and Parramatta.

The organising device for making sense of this so far is the “aerotropolis”. This is a model for orderly airport-centric large-scale metropolitan development. It’s exemplified by Dallas Fort Worth, Singapore and Hong Kong. The core is a bustling airport city at the epicentre of road and rail networks knitting together a bustling job-rich region.

The case for the ‘aerotropolis’, from the aviation industry’s perspective.

Through other lenses, this aviation-dependent urban form is variously a greenhouse horror story and noise machine. The concentration of critical infrastructure is seen as creating a possible security nightmare. There is now a well-organised global anti-aerotropolis network highlighting the environmental and ecological downsides of aviation mega-projects.

The guileless boosterism attached to many schemes makes them a sitting duck for devastating critiques by the likes of British critic Will Self. He has taken apart their conventional first world premises as “slumbering on the redeye flight to apocalypse”.

The naysayers and the true believers

All such heretical thoughts were scripted out of a recent industry summit on the Western Sydney Aerotropolis. The registration cost could have paid for a few days’ comparative fieldwork at Dubai Aviation City or Incheon/Songdo in South Korea.

Chairman David Borger, of the Western Sydney Business Chamber, smoothly chaired two days’ worth of proceedings that were generally dismissive of naysayers finding different and ineffectual ways of saying no – no airport, no curfew, no jobs.

This was a room of largely true believers, starting with the federal infrastructure minister, Paul Fletcher, and NSW’s minister for Western Sydney, Stewart Ayers. All were upbeat spruikers for the cause.

Yet despite the palpable goodwill – and there’s no doubt Sydney has the chance to pull off something world-leading – many questions again surfaced about how this area might best be planned and governed.

Something for everyone

How massive a jobs generator will the airport be? How vulnerable is a sustainable economic strategy for Western Sydney based around an airport that will have to go head-to-head with the established and profitable Kingsford-Smith Airport?

On a trip to Sydney in 2015, Professor John Kasarda, who has almost trademarked the “aerotropolis” label, made the disruptive suggestion that Kingsford-Smith might best be closed. The old airport could then be transformed into a lucrative urban renewal site to ensure the success of the new airport.

Exploring the multimodal infrastructure, commercial, and residential aspects of Dr John Kasarda’s Aerotropolis model.

Sub-regional governance is the major concern: how best to orchestrate infrastructure, timing, type and location of development within special stakeholder-friendly administrative arrangements.

An “aerotropolis delivery authority” was mooted. But in what form isn’t clear. Local governments and a chafing-at-the-bit development sector respectively need sensibilities assuaged and aspirations equitably managed.

Dealing with developers large and small, private and institutional, looms as a major challenge. The aerotropolis promotes land dreams because it offers something for everyone – business parks, retail centres, residential estates, innovation districts, medical complexes and university campuses. Advanced planning for a science park at Luddenham is the bellwether.

A thoughtful approach

The aerotropolis notion works best as a reminder of the need for integrated regional planning. What is lacking is a human-scaled approach that values liveability alongside productivity.

These issues surfaced at the summit and require more attention. How do we promote a healthful metropolis on the back of an airport? The rival paradigm of “airport urbanism” has some utility in stressing small-scale community gains.

So, there are many questions about how this will pan out. Spatial planning needs to be advanced to develop a clearer vision for the airport. That now should be linked to an implementation model for the wider region that co-ordinates all the public and private players jockeying for a piece of the action.

As Borger stressed at the summit’s end: so many issues keep coming back to the importance of getting the governance right. Constructing the airport alone will be a demanding engineering project. But the real challenge will be choreographing the mix of old and new city that will surround it.

Robert Freestone, Professor of Planning, Faculty of Built Environment, UNSW

This article was originally published on The Conversation. Read the original article.

By far and away the biggest (housing) tax reform prize on offer?

Posted by on March 20th, 2017 · Affordability, Government, Housing, Social housing, Tax

By Hal Pawson, Associate Director, City Futures Research Centre.

Weekend reports suggest that an exchange of land tax for stamp duty might be, at last, under genuine government consideration. The potential significance of such a change – one we’ve previously backed – is hard to overstate. Cited in the Sydney Morning Herald, Grattan Institute economics guru John Daley describes it as ‘far and away the biggest [tax reform] prize on offer’.

The pitch is far from new. Perhaps the last time it got a serious airing was in Ken Henry’s 2010 tax review. At the time it was remarked that such a package already commanded wide support across economics advice agencies (i.e. Treasury and the Productivity Commission), as well backing from radical experts. But this Henry proposal fared no better than most of his other recommendations – famously disowned by Kevin Rudd and Wayne Swan before the report’s ink was even dry.

Now, apparently thanks to the active encouragement of Scott Morrison and the interest of the NSW and Victorian governments, it’s claimed that the package is back in contention. It’s being put forward mainly as an aid to housing affordability through re-profiling home buyers’ property tax obligations. Instead of raising revenue by charging what some see as an upfront home ownership entry fee, governments would generate the same quantum of income by charging an annual levy based on property value. Existing homeowners whose property purchase had already incurred stamp duty would be given a credit against the new tax or an exemption for a period of time.

As we’ve previously noted, the notion that just axing stamp duty will, by itself, improve housing affordability is highly dubious. Economic theory suggests that while the legal obligation to pay stamp is on the purchaser, the economic incidence falls on the vendor, who receives less of the purchase price they would otherwise receive. Furthermore, the research evidence indicates that higher rates of stamp duty result in lower prices generally.  However, stamp duties do impose costs on households in other ways, namely by discouraging owner-occupiers from moving house when it would make sense for them to do so (for example, for a new job, or because of changing household circumstances).

The advantage of a broad-based land tax is that by imposing a cost on holding property, it encourages owners make best use of it. While land tax is already paid by investor landlords, expanding it to other landowners (including owner occupiers, who comprise about 60 per cent of the tax base) would deter speculative holding generally, and instead bring under-utilised land and housing to the market. In this way, land tax helps drive the housing supply response that governments are so keen to trumpet as their main unaffordability solution. Greater use of land tax may also mean less need for the potentially cumbersome and difficult to police arrangements now being contemplated – e.g. in Victoria – for empty property taxes.

A broad-based land tax would also have significant benefits well beyond the realm of housing affordability. Importantly, these include the creation of a simple value capture mechanism to enable the whole community to benefit from asset values boosted by public investment. The most obvious case in point is new transport infrastructure. However, the argument also applies to publicly-funded upgrading of facilities such as social housing estates – a form of outlay which AHURI research has shown to enrich surrounding private home owners and from which, therefore, the wider community should reap a share to offset government expenditure.

Other AHURI research which modelled the spatial and distributional impacts of exchanging stamp duty for land tax also showed that this would be likely to shift the incidence of property tax towards better-off localities. More broadly, as something akin to a wealth levy, land tax has significant redistributive qualities. In a world where there is strong popular support for a Buffet rule mandating specified tax rates for the well-off, that could evoke wider public backing for the proposed reform.

Contested spaces: living next door to Alice (and Anh and Abdullah)

Posted by on March 14th, 2017 · Cities, Demographics, Guest appearance, Housing, Wellbeing
Image 20170310 3700 1neyndl
How is apartment living changing the way we get to know our increasingly diverse neighbourhoods?

Edgar Liu, UNSW; Christina Ho, University of Technology Sydney, and Hazel Easthope, UNSW. Originally published on The Conversation.

Ethnic conflict is on the rise in Australia, with regular reports of racist abuse in public spaces, including transport, streets and shopping centres. But what about our more immediate domestic environments such as apartment buildings?

Our research shows that ethnic tensions can also play out within these buildings, where growing numbers of city dwellers now live.

As increasing diversity and density come to characterise our cities, how can we build harmonious communities within apartment complexes? Community relations programs have traditionally focused on neighbourhoods, local associations, sport and recreation activities, or schools. But as more and more of us move into apartments, we need to pay more attention to these super-local residential interactions.

Apartment complexes are microcosms of society, but living so close to strangers can increase the likelihood of tension. The flashpoints range from complaints about noise and garbage to disputes about levies and budgets. Cultural and language differences can exacerbate these conflicts.

What can we do with our closest neighbours to combat growing cultural tensions in society and improve community harmony? Here, drawing on our research, we reveal some top tips on how to build an inclusive and harmonious community in your apartment building.

Know thy neighbours

Social commentary on the loss of community abounds. As we become busier and more mobile, we are less and less likely to know our neighbours and our local community. However, a recent book highlighted the benefits of talking to strangers. This includes cementing relationships in the places where you live, work and play.

In our increasingly isolated societies, these local relationships are important. The same goes for our most immediate neighbours.

In addition to getting to know them face to face, you could ask your strata committee to do a quick survey of residents to get a better picture of the diversity among your neighbours. If many families of particular cultural groups live in your building, this knowledge can help you plan communication and events accordingly.

It may be that you have important notices translated, or arrange for neighbours to act as translators at meetings and relay information to others who may not speak English well. Or you can plan communal activities around festivities such as Christmas, Chinese New Year, Diwali or Eid.

Be a social butterfly

Doing things together is by far the most effective way to getting to know people. Invite your neighbours over for a cup of tea or, if all of you prefer, a glass of wine. But, remember, while sharing food can help you get to know one another, be considerate of people’s food choices, whether it’s for religious, ethical or other reasons; a barbecue of just pork sausages many not win many friends.

Invite neighbours to form working bees to do up the garden or decorate the hallways. But be culturally sensitive in your approach to building aesthetics. Don’t just put up decorations for Christmas or Easter; include other cultural events your neighbours celebrate. Or, if your building has a “no decorations” rule, make sure this applies universally and not just to Chinese New Year or Diwali ornaments.

Some apartment residents have successfully used social media such as Facebook groups or WhatsApp group chat to encourage communication in their buildings. This may be an easier method of communication for those with poor spoken English. Your residents survey may reveal other preferred forms of communication.

Singling out is never the right thing to do

While translating important documents will help your neighbours who may not have a good command of English, singling out specific language and cultural groups as potential wrongdoers (such as by translating “Do not do this” signage into one language only) may not only cause offence, but may be pointing the finger at the wrong party.

And leaving notes like the one below without first trying to find the culprit and speak with them about it may also damage relationships with your neighbours.

These are just some tips on how to start making your apartment building more harmonious and inclusive. Our project webpage has a longer list of these tips.

Help is also often at hand from other sources. The City of Sydney, for example, regularly holds workshops on how to live well in apartments for all parties. Likewise, peak bodies such as Strata Community Australia (NSW) produce fact sheets that not only update you on changes in regulations but also on ways to make your meetings run more smoothly.

Apartment living provides many opportunities to foster intercultural understanding, as residents increasingly share a domestic environment and work together to maintain their buildings. However, such close proximity can also amplify intercultural tension and hostility.

Fostering harmonious relations within high-density living is becoming increasingly important in creating socially cohesive, multicultural cities. We need to pay more attention to ideas and strategies for achieving this goal.

You can find other pieces published in the series here.

Edgar Liu, Research Fellow at City Futures Research Centre, UNSW; Christina Ho, Senior Lecturer & Discipline Coordinator, Social & Political Sciences, University of Technology Sydney, and Hazel Easthope, Senior Research Fellow, City Futures Research Centre, UNSW

This article was originally published on The Conversation. Read the original article.

Value sharing for affordable housing

Posted by on March 7th, 2017 · Affordability, Affordable housing, Cities, Government, Housing supply, Planning, Sydney

By Bill Randolph, Director, City Futures Research Centre. Originally published in New Planner.

The recent inclusion of Inclusionary Zoning (IZ) in the draft District Pans for Metropolitan Sydney marks a turning point in the debates – and hopefully the policies – on the possibility of accessing some of the value generated by property development to generate new affordable housing in New South Wales.

Already several Sydney councils have or are actively considering adopting firm IZ targets for affordable housing in their new local planning arrangements.  The Inner West Council’s draft Affordable Housing Policy, released in early December 2016, includes a well-argued 15 – 30% IZ target for new residential development[i].  This beats the draft District Plans proposed 5 – 10% IZ target range by some margin.

IZ is, in reality, just another form of value capture – or ‘value sharing’, as the more sanitised version of the process is now being termed.  The requirement for a developer to factor in a proportion of a new development as affordable housing (i.e. priced at below market) is simply another way of saying that part of the value gain achieved through rezoning should be used to support lower cost housing outcomes.

Developers have been fully attuned to the process of value uplift for decades, of course.  The stroke of a pen from a publically accountable planning authority can result in an immediate substantial private gain by any land owner able to effect the change though a spot rezoning or simply by being in the right place at the right time.  As a result, a remorseless process of up-zoning is reconfiguring our urban space and, in the process, creating substantial value.  In addition, major new pubic investment in infrastructure can also generate substantial financial benefit for land owners through better accessibility and amenity.

The question obviously arises is a simple one: given that this value is created by the decision of a publically accountable planning authority or from public investment, then shouldn’t some of that value accrue to the public purse?  Of course, value sharing in one form or another has been around for many years – land taxes and rates, Section 149 contributions, special development levies and voluntary planning agreements are all forms of value sharing.

However, the emergence of IZ for affordable housing as a further possible value sharing component raises additional issues.  Not surprisingly, development industry lobby groups have rapidly hit back claiming that IZ will impact on housing costs and supply.  But they are willing to negotiate.  ‘We’ll sign up for IZ, but only if you give us additional density to compensate’ is their response.  In other words, if you want affordable housing, you are going to have to provide more value uplift to pay for it.

The key issues are therefore how much value is created, how much should be fairly shared between public and private stakeholders, and whether affordable housing should be included in the calculation.

Taking the last issue first, in fact, there’s a very good and longstanding case for affordable housing to be seen as a key economic infrastructure.  As such, it should be treated in the same way as the other infrastructure that benefit from value sharing mechanisms.  The housing market, however well it might work for the majority, does not work at all well for those on lower incomes who struggle to get into either affordable or appropriate housing.   The 60-odd thousand on the NSW public housing waiting lists are just a small part of this demand.  The growing sector of the working poor – the ‘precariat’ – on low, insecure, part-time and essentially limited incomes, are now a structural feature of the workforce.  They also need decent homes in the right places at an affordable price.  Yet our housing industry completely ignores these people, being more inclined to target investors.  But the private rental market imposes unacceptably unaffordable rents for low income workers regardless of where they live in the city.

Displacing the working poor to the outer suburbs to the cheapest housing simply leads to sub-optimum labour market outcomes and indeed may create areas of low productivity that act as a drag on overall growth.  Affordable housing should be considered as essential infrastructure for a modern, well-functioning and productive city.  Value sharing should play its role in helping to pay for this much needed infrastructure.

Sydney is not the only place where these kinds of issues have come to the fore.  London provides a more advanced example of how this has played out in practice – and in policy.  Faced with a similar investor fuelled ‘dash to density’ across that city, and spurred on by a growing community backlash against the practices of developers to effectively get out of providing the affordable housing required under the London Plan, the new London Mayor, Sadiq Khan, has drawn up an Affordable Homes Program.  This proposes that all new developments need to show how they achieve 35% “genuinely affordable” homes without subsidy – i.e. derived entirely through a value sharing arrangement.  If they do, they get a speedy decision.  If not, then a team of valuation experts will tease over the developers’ feasibility assessments to see if they really can’t afford to provide the required amount of affordable homes.  The chances are if they can’t, the proposal will be rejected.

This approach goes to the heart of the value sharing argument.  The debate should be about the price developers’ pay for the land they want to build on and how much of the resulting uplift is deemed ‘reasonable’ profit, not about demanding more density.  Once enacted, IZ will act to force land prices down to provide the feasibility leeway needed for the affordable homes.  Moreover, developers should be required to expose their feasibilities to public scrutiny if they want to obtain planning approval to ensure there is a transparent understanding of just how much value is being delivered through the permission to develop.  This would inform any ensuing negotiation as to what proportion should reasonably be shared for affordable housing.  Such an approach needs to be incorporated in the revised District Plans to allow a fair proportion of the value generated through the granting of development approval to be retained for essential public infrastructure provision, of which affordable housing is a key component.

Capturing some of the value created through mandatory IZ provisions for affordable housing is therefore both justifiable and feasible.  While we can all agree that value sharing is not a “magic pudding”, it is nevertheless a rich pudding that needs more equitable distribution.


Metropolitan plans and metaphors: potential problems with Greater Sydney’s ‘three cities’

Posted by on February 28th, 2017 · Government, Planning, Wellbeing

By Dr Greg Paine, City Futures Research Centre.

The Greater Sydney Commission is currently exhibiting its proposed district (ie. sub-regional) plans. Concurrently, though with less publicity, it is exhibiting its vision for the metropolitan area itself: Towards Our Greater Sydney 2056, a set of proposed amendments to the current metropolitan strategy A Plan for Growing Sydney (2014).

Sydney has never been short of metropolitan planning documents. It has, though, always had a problem taking on the metro view when it comes to actually delivering for its population. In the documents currently on exhibition we can now judge to some extent the promise of the Commission as a much-needed fresh perspective on planning for Sydney – as a whole not just as a set of geographical and sectorial parts that has long hindered the oft-cited aspiration of a liveable city. Key is the Commission’s conceptualisation of Sydney as three cities: an ‘eastern’ city based on the current Sydney-North Sydney CBD, a ‘central’ city based on Parramatta as eventually an equivalent CBD in itself, and a ‘western’ city based on the expansion of various existing centres and an ‘aerotropolis’ around the new second city airport (which will yet again gobble up, seemingly without any regrets, precious food-growing land, here more fertile and moist than most).

The three cities approach initially sounds good. Sydney has for too-long suffered from its western sector being a blind-spot amongst planning authorities and service providers (and planners themselves) with jobs, transport and services playing perpetual catch-up with its massive population increases. Equally deficient has been a de-valuing of the cultural and intellectual resources that population possesses.

But is the ‘three cities’ conceptualisation the right one? A few years ago the Urban Research Centre at the Western Sydney University, reporting for the Penrith Business Alliance, pointed out the ‘power’ of such ‘spatial metaphors’ – and consequent limitations if your part of the city happens to not be included in its vision. In that case the concern was with the ‘global arc’, a key platform of recent metro plans and stretching from the Norwest Business Park and Macquarie University, through Epping and Chatswood and the North Sydney-Sydney CBDs to the new start-up ‘creative’ precincts of Surry Hills, Alexandria and Zetland and Sydney airport. And where, it was calculated, Sydney’s future globally-connected economy would be based. Its current iteration in A Plan for Growing Sydney includes ‘extensions’ to Parramatta and Port Botany. But what about us?, Penrith asked. And the rest of southern and western Sydney that seemed to be excluded from this overriding vision of where the principal drivers of Sydney’s future lay.

The concerns expressed then seem all too real now with the recent publicity by the Greater Sydney Commission’s Economic Commissioner of yet another metaphor – the ‘latte line’ roughly dissecting the metro area from north-west to south-east and signally a disturbing disparity in jobs, income and opportunities between those to the north of the ‘line’ (holding the ‘good life’) and those to the south (who do not). Instructively, the ‘latte line’ has a remarkable parity with the alignment of the global arc.

Should the ‘three cities’ conceptualisation be reviewed in the light of such experience? On one level it suggests a lingering difficulty with seeing Sydney as a whole.  More critically, one could ask whether ‘three cities’ has a similar potential, as with the global arc, for exclusion. Resulting in a Sydney characterised yet again by a separateness and distain for the other (of which, in Sydney, we know only too well) rather than a necessary joining-together? The risk seems all too real.

Not that such conceptualisations are inherently bad. We now know that what best captures our minds, influences our thinking and generates the necessary enthusiasm for action are feelings and seductive images, not hard data and abstract reports. Metaphors are important catalysts. But we need to choose wisely and adopt only those which are inherently comprehensive and promote connection and inclusion. So what might take the place of ‘three cities’? Fortunately we already have a home-grown example in the ‘city of cities’ model from recent metro strategies and continued also (as ‘an equitable and polycentric city’) as one of nine ‘metropolitan priorities’ proposed in Towards Our Greater Sydney 2056.

It holds the dual promise of Sydney as a single cohesive entity and at the same time polycentric; with those centres existing at different scales and, although hierarchical, closely connected and supportive in function. Each offering its own attractive nucleus surrounded by a rich variety of residential and employment land uses. Each familiar and identifiable as ‘theirs’ by those who live and work there. And collectively resulting in a metropolitan structure conducive to a ’30 minute’ accessible city (another current ‘metropolitan priority’). In a word, Sydney as networked.

It is rather like how Londoners see their huge metropolis as a series of neighbourhoods having their own character and all connected by an intricate public transport system, roughly equivalent in their case to the various villages and townships progressively subsumed in Greater London’s growth. And with the ‘Le Cinq Paris’ project from the 1990s which looked to the establishment of five interactive centres acting as growth points but with a concurrent parallel project, ‘La Mission Banlieues ‘89’ – a process of suburban renewal aimed at diffusing the long-standing and increasingly damaging privilege of central Paris. The ‘Mission’ included small-scale catalyst projects able to achieve composite goals in key localities. It was informed by detailed cognitive and functional mapping aimed at identifying those localities that were key to local identity and wellbeing – and which warrant support and if necessary ‘repair’.  Critical was the underlying conceptualisation: the need for a ‘qualitative urbanism’ to replace the quantitative analyses and zoning principles that characterise usual practice, and an understanding of the city as actually lived – as a continuous interactive spectrum of scale from the metropolis to the street corner tabac kiosk.

It is also consistent, here in Sydney, with some of the proposals arising from Joanne Jakovich’s SOUP (‘Strategic Open Urbanism Platform’) ‘innovation lab’ commissioned a few years ago by UrbanGrowth NSW to ascertain and tap into the aspirations and advices of Sydney’s younger citizens on housing in what will be (and is) after all their city. Active, interesting neighbourhoods around transit points comprising centres in their own right throughout the metropolitan area and providing affordable spaces was a key theme, possibly at odds with our current predilection for massive, centralised ‘growth corridors’.

We now know that a city that is not inclusive cannot maximise its prosperity, and liveability. In generating these goals the efficacy of the ‘three cities’ conceptualisation relative to a renewed primacy to the ‘city of cities’ approach, networked and polycentric, would seem to be worth rigorous consideration as part of the finalisation of the current draft metropolitan strategies.