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Lack of information on apartment defects leaves whole market on shaky footings

Posted by on November 21st, 2019 · Construction, Data, Government, Guest appearance, Housing, Housing conditions

By Martin Loosemore (University of Technology Sydney); Bill Randolph, Caitlin Buckle, Hazel Easthope, and Laura Crommelin (City Futures Research Centre, UNSW Sydney). This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

The litany of defects, poor building standards and regulatory failures has serious implications for apartment owners, occupiers and buyers alike. Fears of a loss of confidence in the sector have unfortunately come true. Our research suggests a lack of reliable information about building defects is a critical factor in the crisis.

About a year ago, we started a research project with six industry partners in New South Wales entitled Cracks in the Compact City: Tackling Defects in Multi-Unit Strata Housing. The context is compact city planning policies and a rapid shift towards apartment living in Australian cities.

The urban development strategies of NSW and other states rely on higher-density cities with many more multi-unit strata title dwellings. The human and economic impacts of the building defects crisis could undermine these strategies.

Even with our resources, obtaining data on the extent and nature of defects in NSW apartment buildings has been a challenge. Individual buyers and owners must face even greater obstacles.

This lack of access to information poses a clear challenge to the principle of “buyer beware” that underpins property sales. The imbalance it creates between buyers and sellers is a prime example of what economists call “information asymmetry”.

 

Why does this matter for the whole apartment market?

Nobel laureate George Akerlof explained how the price and quality of goods traded in a market affected by information asymmetries tend to gradually reduce to the point where only lowest-cost “lemons” remain. When buyers can’t tell the difference between products of good and bad quality, they typically prefer the cheapest available. This forces higher-quality products out of the market.

Sellers can also exploit this situation to hide poor-quality products from consumers. They might even charge the same as competitors selling higher-quality products.

While some unscrupulous sellers might profit in the short term, overall profits fall for everyone as confidence and links between price and quality are undermined. Ultimately, the entire market can collapse.

The risks are highest in markets with these two features:

  • sellers are not rewarded for delivering information to buyers or cannot disclose it effectively
  • buyers cannot discriminate between the quality of different products, as is often the case in apartment developments.

These problems are more likely when buyers cannot easily inspect products at the time of sale – as with apartment units bought off the plan.

When a vendor sells a product to multiple buyers, again typical in apartment developments, that can multiply the impact of information asymmetries.

The buyer of a standalone house might be able to make the sale conditional on an independent inspection of the entire building. But such clauses are very difficult to negotiate in off-the-plan sales for apartments in multi-unit buildings.

It would also be too costly for each buyer to commission such an inspection. Buyers are unable to organise a joint inspection of the building until after they have settled, which greatly increases their risk. While NSW’s new defects bond scheme does require an inspection, it happens after ownership is transferred.

The negative impacts for buyers have spill-over effects as information asymmetries mean risks are perceived to increase across the entire apartment housing sector. Negative publicity, such as the flammable cladding and defects scandals, can cause values to fall market-wide, regardless of the quality of individual developments. At the same time, finance and insurance costs increase.

The issue persists for subsequent buyers too. Information about defects is often unavailable due to poor record-keeping or confidentiality agreements. Ironically, this adds to the information asymmetries that contributed to the problem in the first place.

 

What can we do about the problem?

To reduce information asymmetries, sellers and buyers tend to engage in two main types of behaviour: signalling and screening.

Signalling involves sellers flagging the higher quality of their products to buyers indirectly. For example, a reputable developer may use warranties and brands or quality marks, certificates and awards as a sign of their high-quality work. Buyers may well be prepared to pay more for higher-quality products that won’t cost more in the longer term.

Crucially, signalling only works if the signal is credible. At present, there are no construction-specific quality certifications and warranties, only generic standards such as the international ISO 9001: 2015. And the administrative burden and costs of independent third-party certification make it unviable for many small companies. So instruments like ISO 9001 are likely of very limited value for effective signalling in the apartment sector.

The NSW Building Commissioner is supporting an industry rating system that will enable better signalling. Data mining will be used to identify risky players and phoenix operators. It should take effect in the apartment sector by 2021.

Screening involves buyers investing time and resources to uncover the likelihood of defects. This includes examining available records and the behaviours of sellers and their representatives. But this adds to buyers’ costs, which disadvantages them in the marketplace.

Stakeholders in the building development process should be compelled to release this information. NSW’s new law on off-the-plan contract sales will increase sellers’ disclosure obligations and provide stronger protections for buyers. Importantly, sellers will have to identify material changes made during the development process at least 21 days before settlement.

A similar requirement involving an independent expert building inspection would help buyers better understand the risk of defects before they finalise their purchase.

Another positive move is the requirement in the new Design and Building Practitioners Bill for declared designs and as-built drawings to be lodged with the government. The Building Commissioner has said these will be made available on an easy-to-access platform.

This would enable buyers to check information as the development progresses, before the crucial building handover. It’s a step towards creating a “digital twin” for everyone licensed to perform construction work, making it easier for the public to check their record.

While the devil is likely to be in the detail, the NSW government is on the right track in tackling the information asymmetry problem. However, the various information gatekeepers will still have to be persuaded – or required – to release information they have long withheld in their own interests.The Conversation

 

 

 

 

Greening for a resilient 21st century

Posted by on November 19th, 2019 · Cities, Government, Planning, Sustainability, Wellbeing

By Susan Thompson, City Futures Research Centre. Originally published in New Planner, the journal of the New South Wales planning profession, published by the Planning Institute of Australia.

The great green city of the future is ecologically and economically resilient; it’s made up of healthy, livable neighborhoods where the benefits of nature are available to all people (Mittermaier, 2018)

The importance of natural green places in our ever expanding and densifying cities cannot be overstated. Green is a foundation of planning policies and practices for a resilient 21st Century.

 Having worked at the interface of urban planning and public health since the early 2000s, I have witnessed a growing focus on greening environments for wellbeing – both for human health and that of the planet. And while it’s not the entire picture, green plays a central role in resilience – it cools a warming globe and offers opportunities for individuals to reduce their risks for chronic disease. Green environments support physical activity, fresh and nutritious food access, as well as social connectivity. These activities underpin personal resilience and community strength – key pillars of the Resilient Sydney Strategy. Green is a powerful tool for planners assisting communities responding to, and preparing for the environmental and socio-cultural challenges encountered daily, as well as those that lie ahead.

Defining green

So, what is ‘green’ in the context of resilience? Multiple and wide-ranging definitions exist. From ‘vegetated urban spaces’, such as street trees and grassy roadsides, to parks (big and small), children’s playgrounds and inter-connected green corridors. And then there’s ‘green infrastructure’ which typically implies purposeful planning and ongoing maintenance of initiatives such as green roof tops and walls, forested urban precincts, community gardens and wetland regeneration.

Planners can convincingly argue the case for the preservation of existing green spaces and advocate for extra green infrastructure by pointing out the broad and well documented benefits. The evidence is compelling. Just being in a green space can be calming and restorative, providing health benefits from reduced blood pressure and stress, to improving physical activity participation rates and facilitating faster recovery from illness. Benefits are available across the life course and enhance the natural and built environments, as well as bolstering the local economy. These multiple outcomes of greening, or co-benefits, provide additional weight for a strong planning case. A raft of resources are available to assist, including the NSW Government Architect’s draft Greener Places Policy, Active Living’s Urban Cooling with Green Infrastructure and AECOM’s Green Infrastructure.

But of course, there are complexities. Attention to equity is one. Ironically, if we make places green and lush to improve health conditions and build resilience in areas of low socio-economic status, this can price the community being targeted for assistance out of those localities (Wolch, et al, 2014). And why should a local council allocate funding to improve health if the resulting economic gains subsequently flow to another level of government? Responsiveness to differing cultural and social needs are also challenging. But this is where planners shine with their local knowledge and appreciation of the myriad qualities and characteristics of the people for whom they plan.

Personal resilience

Green places also play a vital role in our own personal lives. Not only do they nurture the resilience we need to adjust to a rapidly changing world, immersion in a range of green experiences brings a deeper appreciation of their importance – for ourselves and others. We will reap benefits for our physical and mental health through being active and participating in urban agriculture. Quiet gardens and forest bathing offer opportunities for psychological restoration and peaceful reflection in nature. So, take some time to lie on the grass and look up at the sky – feel the textures, breathe the smells and hear the sounds around you. Be IN green and remember, a green environment is the foundation for a resilient and healthy planet. As we were recently and starkly reminded in the Intergovernmental Science-Policy Platform for Biodiversity and Ecosystem Services,  our very existence depends on it.

The First Home Loan Deposit Scheme: Housing affordability action – or just more busy work?

Posted by on October 31st, 2019 · Affordability, Finance, Government, Housing

By Hal Pawson, City Futures Research Centre.

The Australian Government has this week revealed the policy details for the First Home Loan Deposit Scheme (FHLDS). From 1 January qualifying first home buyers (FHBs) become eligible for a government guarantee that will enable them to access a mortgage with a 5% deposit rather than the normal 20%, at no extra cost to the borrower.

The FHLDS originates from a Prime Ministerial eleventh hour election campaign pledge, which – beyond personal tax cuts – was almost the only ‘new policy commitment’ of the Coalition’s entire 2019 pitch. For the third election of the last five, housing featured as an important part of the campaign – after decades of being a near-invisible issue – suggesting housing concerns have a high political salience.

Government was responding to public perceptions that home ownership is slipping further out of reach for growing numbers of young people. Young adult home ownership declined from 51% to 40% over the past 20 years. Back in the early 1980s it was 60%.

We’ve entered an era when home ownership is inaccessible across huge swathes of our major cities unless you’re a very high income earner and/or you have access to a well-endowed bank of Mum and Dad. For example, in 2005 there were still seven (of 81) postcodes within 10km of Sydney CBD that were ‘affordable’ for typical FHB households. In 2015 there were none. Other than for high earners or those with family wealth, this entire area is out of bounds for aspiring home-owners.

Current situation

In Sydney, median house prices are currently running at $905,000, down around 14% on the 2017 peak. However, lower quartile prices have fallen by only 8%. Moreover, despite the recent reduction median prices are still over 50% higher than in 2011. Because wages haven’t increased by anything like this amount, the ratio of housing prices to incomes has increased.

A major reason for house price increases has been interest rate reductions that have bumped up borrowing capacity. Typical mortgage interest rates have fallen from 7.8% in 2011 to only 5.3% by the end of last year and now lower still. This has made it possible for people to borrow larger and larger amounts for a given household income. So although prices have been rising much faster than wages the cost of home ownership measured in this way hasn’t increased as much.

BUT falling interest rates don’t make it any easier to save for a deposit. That’s the part of the house purchase price you have to contribute in cash – the 20% bank normally won’t lend you. Where banks accept a deposit less than this benchmark, they require the borrower to pay for lenders mortgage insurance. According to the Grattan Institute, it will take a typical FHB 10 years to save a 20% deposit for a typical house now, compared with only 6 years in the 1990s. So a rising wealth barrier has appeared.

From ABS survey data we know that, across Australia, there are about 127,000 renter households aged 25-34 with wealth equating to 5-20% of low price homes in their area. This is the government’s target group for the FHLD scheme, although many won’t be earning enough to sustain the repayments on a 95% mortgage – so enabling them to avoid the full 20% down-payment won’t help.

History

While this effort to aid marginal home buyers takes a novel form, it covers familiar territory for policymakers. There’s a long history of publicly-funded FHB assistance schemes. For example, some state and territory governments have for many years provided affordable housing finance to low- and moderate-income home buyers through small-scale direct lending programs and shared equity products.

And, since 2000 a variety of FHB grant schemes and stamp duty relief initiatives (sometimes limited to newly-built homes) have been funded by both main levels of government. As part of the post-GFC stimulus package, for example, FHBs could land grants of as much as $35,000. In more normal times such grants are often worth $10-20,000. In NSW the current grant – available for any FHB buying a newly-built property at below $750,000 – is $10,000.

Stamp duty relief is often more generous. In NSW, for example, this is available on homes priced at up to $800,000 (full exemption on properties priced at up to $650,000). The value of this exemption for a FHB buying a $650,000 property is $21,000.

Morrison’s new package

Under the FLHDS someone may access home ownership with only 5% deposit payable. In Sydney, a lower quartile priced property now costs you $570,000. A 20% deposit on that would be $114,000. If you can get a mortgage with a deposit of only 5% that’s less than $30,000 – a far lower amount you’d need to save. This would cut waiting time: perhaps 2-3 years for the average FHB, not 10 years. It also saves FHBs money they’d otherwise pay on mortgage insurance: about $24,000 over the life of a mortgage if the bank is willing to grant your loan on these terms.

But the new scheme is only guaranteeing part of your loan, not paying for it. You still need to be able to meet the repayments on a 95% loan for your entry level home. Only a household earning substantially above the national median income would be able to afford this.

Weaknesses

FHLDS has been criticised on several counts:

  • Maximum eligible incomes are quite high – couples earning up to $200,000 (more than double the national median household income) will be eligible – on this basis it could be criticised as a largely untargeted policy – or, less politely, ‘middle class welfare’. The NZ scheme cuts out at $130,000 for a couple.
  • The scheme is very small – capped at 10,000 guarantees awarded per year, this equates to only around 1 in 10 FHB loans issued per year.
  • For many or most of those benefiting the result will be to bring forward home ownership rather than to enable access to home ownership for people otherwise excluded. For that reason, the scheme will not increase home ownership significantly over the longer term.

A bigger failing is that this is a scheme which simply enhances capacity to buy – for a relatively small number – it does nothing to address the causes of housing unaffordability. It could well be more of a palliative – a convenient (and quite inexpensive) form of ‘busy work’ – rather than serious and responsible action. To tackle the problem in any fundamental way there is a need to dampen housing demand and/or enhance supply such as through:

  • Phasing out the tax settings that encourage over-investment in housing – in the language of economics, problematically distorting investment choices. Most prominently, negative gearing and Capital Gains Tax (CGT) concessions for landlord investors have been estimated as costing at least $10 billion per year.
  • Boosting supply by investing in transport infrastructure that adds to Australia’s stock of well-located land – in this way helping to slightly soften land prices.
  • Directly investing in affordable rental housing that can help to stabilise the housebuilding industry as well as directly benefiting lower income households with no prospect of home ownership.

And beyond the above points, we have to question the judgement of a government whose only housing affordability initiative targets a constituency (potential FHBs with modest savings) that is only around a fifth of the number of Australians pushed into poverty due to unaffordable rents.

Growing numbers of renters are trapped for years in homes they can’t afford

Posted by on October 21st, 2019 · Affordability, Government, Housing, Law, Private rental, Social housing, Tenancy

By Hal Pawson, City Futures Research Centre. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Low-income tenants in Australia are increasingly likely to be trapped in rental stress for years. New evidence from the Productivity Commission shows almost half of such “rent-burdened” private tenants are likely to remain stuck in this situation for at least half a decade.

Rental stress is where a low-income tenant faces housing costs that leave them without enough income for food, clothing and other essentials. The scale of the problem – commonly defined as when rent eats up more than 30% of income – is usually presented as a “point in time” or snapshot statistic.

As the Productivity Commission report reveals, the snapshot number in this situation has increased from 48% of low-income renters in 1995 to 54% in 2018. That’s around 1.5 million people pushed into poverty by high housing costs.

For some, of course, this will be only a temporary problem. On this basis, it is sometimes argued that concerns over Australia’s high rate of rental stress are overstated.

However, the Productivity Commission report, Vulnerable Private Renters: Evidence and Options, highlights longitudinal survey evidence showing that a low-income tenant’s experience of rental stress is increasingly likely to be long-term – not a passing problem. As the commission notes:

[…] a growing number of households find themselves stuck in rental stress.

What is the evidence for this?

This conclusion stems from a comparison of two different tenant cohorts experiencing rental stress as revealed by survey data for 2001 and 2013. Less than a third (31%) of the 2001 cohort remained in stress five years later. But almost half (46%) of the 2013 cohort were.

While many people exit rental stress quickly, the proportion of private low-income renters in long-term rental stress has increased significantly. Vulnerable Private Renters: Evidence and Options, Productivity Commission, CC BY

 

So, it’s not just that more low-income earners are paying unaffordable rents at a particular point in time. This is increasingly a situation that affected private tenants cannot escape.

Beyond the obvious welfare impacts, recent work argues that excessive rent burdens may also damage human capital and, as a result, reduce economic productivity.

The commission’s findings seem to suggest the ongoing restructuring of Australia’s labour market and housing system is eroding socioeconomic and/or housing mobility. The report notes the significant fall in the numbers who manage to move from renting to owning – from 13.6% of renters in the period 2001-04 to 10.0% from 2013-16.

Perhaps slightly more surprising is the commission’s explanation for the rising rate of (point in time) rental stress for all low-income tenants. According to the report, this results not from increasing unaffordability for the private renter cohort specifically, but from the growing dominance of private rental housing as the tenure in which low-income households live.

The number of private renters has grown as the proportions of owner occupiers and public housing tenants have fallen.
Vulnerable Private Renters: Evidence and Options, Productivity Commission, CC BY

 

This, of course, results from the post-1990s failure of Australian governments to expand the supply of social housing to match population growth. By 2018, well over two-thirds (71%) of low-income tenants were renting in the (relatively expensive) private market – rather than from a (rent-limiting) social landlord. Back in 1996, barely half (52%) of them were renting privately.

What does this mean for policy?

The report presents some useful discussion of possible policy directions.

For example, while dismissing rent control as liable to advantage existing tenants at the expense of potential tenants, the report is implicitly critical of residential tenancy laws in most states and territories.

The report advances the broad case that tenancy law reforms, “if well designed”, can enhance tenant welfare “without substantially increasing the cost of renting”. Longer notice periods are particularly favoured because these will “provid[e] vulnerable families more time to find new accommodation and prepare for the move”.

Slightly more controversially, the commission strongly hints at support for outlawing no grounds evictions. The landlord power to end a tenancy without any need to justify the move persists across most states and territories. Discussing this power the report states:

It increases the bargaining power of landlords […] and decreases that of tenants. Landlords’ incentives to carry out obligations, such as repairs and maintenance, decrease when no grounds evictions are available, since this provides them with an avenue to terminate leases in the event of a dispute.

However, having highlighted a private rental affordability problem that is both growing in scale and becoming demonstrably more entrenched, the report is timid on solutions beyond modestly improving tenancy conditions.

It argues in general terms for an increase in Commonwealth Rent Assistance but – beyond tentatively floating a 10% rise in maximum payments – advances no specific proposal.

Expanding the social housing stock as part of the broad-ranging housing strategy Australia badly needs is scorned as “an expensive option”. This is a reference to the narrowly scoped analysis in the commission’s 2017 Human Services report. It favoured market solutions to provide low-income housing – on efficiency grounds.

The “expensive option” assertion is out of line with the more broadly framed analysis of the Productivity Commission’s predecessor, the Industry Commission. The latter concluded:

Public housing and headleasing [when social housing providers sublease private rental properties] are assessed to be more cost-effective than cash payments and housing allowances.

While the Industry Commission report admittedly dates from 1993, the subsequent failure of overwhelmingly private provision for low-income renters surely presents compelling reasons to revisit the investment case for social housing.

 

Towards a Shared Accommodation Act: City Futures’ submission to the review of the Boarding Houses Act 2012 (NSW)

Posted by on October 17th, 2019 · Government, Housing, Law, Marginal rental

By Chris Martin, City Futures Research Centre. This is an edited extract from City Futures’ submission to the review of the Boarding Houses Act 2012 (NSW). Read the full submission here.

The Boarding Houses Act 2012 was landmark legislation. Its introduction of a central, state-wide Boarding Houses Register increased visibility and knowledge of the sector, and helped put boarding houses back on the radar of local councils. The Act created for the first time in New South Wales a legislated regime of housing rights – the occupancy principles – and accessible dispute resolution for lodgers. And its provisions regarding assisted boarding houses replaced a dysfunctional licensing regime with an effective system of standards, monitoring and compliance that has improved conditions for vulnerable residents in those places.

We characterise the Act as a ‘landmark’ deliberately, because we think it should be seen not as a final legislative destination, but as indicating the way towards a more comprehensive, effective and sophisticated regulatory regime for diverse forms of shared accommodation. We submit that shared accommodation – that is, where a person does not get to choose with whom they share the intimate spaces of their housing – and the particular risks that shared accommodation involves, is really the proper object of regulation. This is what makes the Boarding Houses Act important – as far as it goes. Shared accommodation includes, but is not limited to, boarding houses; other forms include lodgements in private dwellings; student accommodation; and refuge and crisis accommodation. The key objective is to address shared accommodation, whatever the particular land use designation of the premises where it takes place. We therefore submit that the Boarding Houses Act should be replaced by a ‘Shared Accommodation Act’ that builds on the elements of the former Act.

The precise definition should be settled by consultation with all the stakeholders, but we suggest, as a starting point, that ‘shared accommodation’ is an arrangement where a resident is granted, for value, a right to occupy premises but shares sleeping space, or kitchen and bathroom space, with the grantor of the right, or with one or more other residents occupying by separate grant. Compared with housing arrangements where there is no sharing beyond any other members of the individual’s household (i.e. a mainstream residential tenancy), we submit that in shared accommodation occupation rights ought to be more readily terminated (including, for example, because of breakdown in personal relations between grantor and resident, which should never be sufficient grounds for a grantor to terminate a tenancy). By the same token, we also submit that in all forms of shared accommodation arrangement (not limited to registered boarding houses, as at present) both the premises and the proprietors themselves ought to be subject to more comprehensive standards and monitoring by public authorities than are mainstream rental premises and landlords.

Looking at the Boarding Houses Act as a model for a wider regulatory regime for shared accommodation, we submit that some elements– in particular, the occupancy principles and access to dispute resolution – should apply to all forms of shared accommodation, while other elements – such as registration – should apply to some and not others, and where they apply they should do so differently, according to the particular characteristics and risks presented by different forms of shared accommodation. This sort of differential application is already a feature of elements of the Boarding Houses Act, although the potential of it is not fully realised.

Implementing a wider, more comprehensive regime would also be an opportunity to address the definitional confusion the currently affects the boarding house sector, both in relation to other forms of shared accommodation, and in relation to other forms of housing. It can be difficult to say if a person is a tenant or a lodger, and if the premises they live in are a shared private dwelling, or one of several dwellings in a residential flat building, or a boarding house. We submit that a clear definition and regulatory regime for shared accommodation is the key to clarifying this wider confusion in planning and tenancy laws, to the benefit of individual persons and housing policy-makers.

Read the submission here.

Siloed construction industry reform will fail: We need systems thinking

Posted by on October 11th, 2019 · Uncategorized

By Prof Martin Loosemore, UNSW

First published in the Fifth Estate. Read the original article here.

What is interesting about Dame Judith Hackitt’s final report that was commissioned by the UK government following the Grenfell Tower disaster is that it didn’t pin the blame on the cladding, but identified a wider systemic problem in the way the UK construction industry operates.

Dame Judith Hackitt, a chemical engineer by profession, described an industry and regulatory system that’s now unfit for purpose, which does not learn from its mistakes or from other sectors.

According to Hackitt, the key issues underpinning systemic failure in the UK construction industry include widespread ignorance and misunderstanding of regulations, indifference to quality and safety in preference for cheapness and speed, a risk transfer culture that obscures clarity about roles and responsibilities, and a high level of fragmentation and inadequate regulatory oversight and enforcement.

What is the relevance of this report for Australia and the current building defects crisis?

Hackitt points to the same problems in Australia, drawing on a report published by the Building Products Innovation Council in Australia in 2018.

This report prophetically concluded that “Australia’s building and construction industry is facing a problem of national significance that has adverse implications for the industry’s competitiveness, and potentially, for the health and safety of the community”.

The Australian construction industry was characterised as having a buck-passing culture driven by a low-cost mentality, where speed and volume take priority over clear oversight, accountability and visibility for quality and defects.

The industry is also described as highly fragmented, needlessly complex and underpinned by a regulatory framework that’s increasingly incapable of dealing with modern industry issues and rapid changes in the design and procurement of buildings and building products.

Both reviews broadly call for the same reforms: clearer responsibilities for the client, designer, contractor and owner for the delivery and maintenance of fit-for-purpose, reliable and safe buildings, simplified outcomes-based rather than prescriptive regulatory frameworks, a more rigorous risk-based approach to oversight and enforcement with real powers to drive improved behaviours and greater transparency of information, traceability and quality assurance through the life cycle of a building project. They also both acknowledge that this will come with a cost of the need for legislative change.

However, most fundamentally, both reports advocate a systems thinking approach to construction industry reform. Industry and government will need to think differently about their own organisations as part of a wider integrated system that cuts across all stages of a building’s life cycle – through planning, design, construction and operations.

So what is systems thinking?

In helping the construction sector understand what is meant by a systems approach to industry reform, it is useful to refer to the work of the late Donella Meadows.

Meadows was a scientist whose formative book The Limits to Growth is credited with highlighting the planet’s limited capacity to support life in the face of continual growth in population and consumption. This work critically informed the Brundtland Report, which laid down the foundations of the Sustainable Development movement, noting the interdependence of nations in the search for a sustainable development path.

In her posthumous book Thinking in Systems, edited by Diana Wright, systems thinking is described as a critical tool for thinking about an increasingly complex and rapidly changing world.

According to Meadows, a system is “a set of things — people, cells, molecules, or whatever — interconnected in such a way that they produce their own pattern of behaviour over time”.

A system is seen as being surrounded, buffeted, constricted, triggered and driven by outside forces that are largely beyond its control. Critically to systems thinking, the way that a system responds to these forces is seen as a function of the system itself rather than of the nature of the outside forces.

In other words, one change in an external environment may result in different consequences for different systems within it. Furthermore, the failure of any one system cannot be blamed on outside events but on the characteristics of the system itself.

Applying systems thinking to the construction industry

Taking the construction industry as one system that exists alongside other systems (industries) in a wider economic, cultural, social, environmental and political environment, a systems perspective tells us that the problems faced in construction must reside in the characteristics of the industry itself rather than in the external environment that surrounds it.

Indeed, systems thinking tells us that it’s only through understanding the industry’s problems as part of a larger set of influences that one can begin to address them.

Of course, there is something deeply disconcerting for us in the construction industry to start thinking in this way. Not only is it natural human behaviour to blame external forces for our problems, but the construction industry’s risk transfer culture exacerbates this type of thinking.

Furthermore, as an industry largely driven by an engineering mindset, its reductionist thinking causes it to solve problems by splitting them into smaller parts and by controlling the world around it rather than seeing the system as a whole.

As Meadows, states “psychologically and politically we would much rather assume that the cause of a problem is ‘out there’, rather than ‘in here’. It’s almost irresistible to blame something or someone else, to shift responsibility away from ourselves, and to look for the control knob, the product, the pill, the technical fix that will make a problem go away.”

The history of construction industry reform in Australia and overseas shows that it has been widely afflicted by this type of reductionist thinking. While there have been some laudable attempts to promote integrated procurement and bring stakeholders together to drive reform, these have largely failed.

The preference, especially in recent years, has been to fall back into our professional silos and political corners. Consequently, industry reform in Australia has been too long characterised by conflict and division, and construction has failed to effectively respond to the technological and social changes that have been so readily embraced as an opportunity to drive productivity, corporate citizenship and positive public image in many other industries.

So not surprisingly, the problems we see today, rooted in the internal structure of the industry’s complex and outdated systems, have refused to go away and now seem to have reached a crisis point where the community has suddenly lost faith in our ability to deliver safe, reliable and secure buildings that are free from liability and defects.

The sooner we recognise that the problems the industry face are problems of systems (undesirable behaviours characteristic of the system structures that produce them), the sooner we will stop casting blame and find the courage and wisdom to restructure it.

At a time when the world is getting messier, more crowded, more interconnected, more interdependent, and changing more rapidly than ever before, we need another way of thinking about how the Australian construction industry can embrace the many opportunities which surround it.

Martin Loosemore is Professor of Construction Management in the Faculty of the Built Environment at the University of NSW, Sydney. He is a visiting professor at the University of Loughborough, UK, a Fellow of the Royal Institution of Chartered Surveyors, and a Fellow of the Chartered Institute of Building.

Another stolen generation looms unless Indigenous women fleeing violence can find safe housing

Posted by on September 20th, 2019 · Government, Guest appearance, Housing, Indigenous, Law, Social housing, Wellbeing

By Kyllie Cripps, Scientia Felllow and Senior Lecturer, Faculty of Law UNSW Sydney, and Daphne Habibis, Associate Professor, University of Tasmania. This article is republished from The Conversation under a Creative Commons license. Read the original article.

In Western Australia more than half the children placed in state care are Aboriginal. The state government committed this month to reducing this over-representation, in a move that parallels the Closing the Gap Refresh draft target nationally. Despite concerns about another stolen generation, Australia has yet to act on a root cause – the difficulty Indigenous women escaping family violence face in finding safe housing.

Our research shows domestic violence and housing are linked as a cause of child removal.

Every year governments spend millions addressing Indigenous intergenerational trauma. Child removal is an important cause of this trauma.

Care for children is a cornerstone of Aboriginal cultures. Child removal often has severe mental and physical health effects, with risks of substance use, homelessness and incarceration.

Consequences are similar for children, who also suffer from cultural dislocation. Yet Indigenous children are admitted to out-of-home care at 11 times the rate for non-Indigenous children. Far from declining, rates are increasing – by 21% between 2012 and 2017.

This issue is not primarily one of isolated remote communities. The rate of Indigenous children in out-of-home care is highest in our major cities.

Child protection Australia 2017-18, AIHW (2019), Author provided

Why are children removed?

Contrary to public discourse, sexual abuse accounts for only a tiny percentage of substantiated notifications. Proportions are below those for non-Indigenous children (see chart below).

Emotional abuse, which includes the child’s exposure to family violence, accounts for most notifications. The second-most-common type is neglect. This occurs at more than double the non-Indigenous rate and includes inadequate, insecure or unsafe housing.

AIHW 2019, Author provided

Mothers have nowhere to go

In situations of family violence many Aboriginal woman face an impossible situation when trying to protect their children. If they stay with the perpetrator they risk notification for emotional abuse. If they leave but cannot find suitable housing, they risk allegations of neglect.

This dilemma applies to all low-income women, but it is most acute for Aboriginal women. The combination of discrimination and low income means few find private rental housing. Crisis services are often full. The bottlenecks in the homelessness system result in long waits for transitional accommodation.

Waiting times for scarce public housing are long. Many also face delays in being added to priority wait lists due to housing debt – even though this is often a result of their partner’s financial abuse.

These women are often trapped in a revolving door between crisis centres, homelessness and returning to an unsafe home. This is a factor in their high rates of injury and early death.

Delays in being appropriately housed can prevent children from ever being returned to their parents. Child protection timelines generally allow only 12 months before removal can become permanent.

Data sourced from Child protection Australia 2017–18, AIHW (2019)
Cripps and Habibis (2019), Author provided

A policy blind spot

Housing’s critical role at the intersection of child protection and domestic violence has yet to be recognised in public policy. The national Fourth Action Plan to reduce violence against women and their children refers to “inadequate housing and overcrowding” as a factor in Aboriginal family violence. Despite this, it offers no specific guidelines or strategies to overcome these problems.

The Closing the Gap policy focus on housing is limited to reducing overcrowding. While critical, this misses the relationship between housing shortages and family violence and its impact on mums being separated from their children. And the Refresh targets are uncertain and underdeveloped.

Without specific housing targets, it is hard to see how the other targets to reduce violence and overrepresentation in out-of-home care will be met.

As Indigenous policy is realigned under the Closing The Gap Refresh the Australian government must act on this missing link. It should increase the number of crisis beds and consider targets to reduce the numbers of Aboriginal women and children turned away from crisis accommodation.

Programs should support timely access to secure housing. This is especially important for women seeking to reunify with children in state care.

Within the Safe at Home program, special funds should be made available for housing safety upgrades so Aboriginal women can remain in their own homes.

Beyond this, what’s needed are holistic solutions that work with the whole family, including the perpetrator. These solutions need to be developed and delivered in partnership with Aboriginal people, communities and services, building on the strengths of individuals and communities to overcome the impacts of violence and intergenerational trauma.

The short-term nature of funding is also a problem. Investment needs to go beyond political cycles. Current short-term funding arrangements undermine trust in services and greatly reduce their capacity and potential effectiveness.

Given the long-term intergenerational costs of child removal and domestic violence, such measures should prove cost-effective. More importantly, they would reduce violence against women and the over-representation of Aboriginal children in out-of-home care.The Conversation

 

Affordable housing lessons from Sydney, Hong Kong and Singapore: 3 keys to getting the policy mix right

Posted by on September 19th, 2019 · Affordability, Guest appearance, Housing, International, Transport, Wellbeing
Image: Bill Roque/Shutterstock

By Youqing Fan, Western Sydney University; Bingqin Li, UNSW, and Chyi Lin Lee, UNSW. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Affordable housing is a critical problem for Australia’s biggest housing markets. Five Australian cities are in the top 25 with “severely unaffordable” housing in a 2019 Demographia survey of 91 major metropolitan markets. Sydney was ranked the third least affordable of the 91.

The average age of first-time buyers in Sydney has reached 38. And, on average, tenants spend more than 30% of their income on rent. Those who entered the Sydney market 10-15 years ago are more likely to find their housing affordable.

Cities with housing affordability issues have introduced various policy packages in response. This article compares the policies of Singapore, where housing is relatively affordable, Hong Kong (the world’s least affordable private housing market) and Sydney. Our review shows a need for coherent and coordinated housing policies – a synergistic approach that multiplies the impacts of individual policies.

Housing has direct impacts on people’s well-being. A housing market that works well may also enhance the economic productivity of a city. If not handled properly, housing affordability issues may trigger economic and political crises.

Our review covers several aspects.

A balance of renters and owners

First, an affordable housing system needs to be about both the rental and ownership sectors.

In Singapore, public housing provided by the Housing and Development Board makes up 73% of Singapore’s total housing stock, which includes public rental and subsidised ownership. HDB flats house over 80% of Singapore’s resident population, with about 90% owning their homes. The average waiting time to get public housing is three to four years.

Public housing is also important, although to a lesser extent, in Hong Kong. In this city, 44.7% of the population live in public housing. The average waiting time is three to five years, depending on household type.

In both cities, subsidised rental and subsidised ownership are an integral part of the public housing system, which aims to improve housing affordability.

Sydney takes a very different approach. Social rental housing provides only 5.56% of housing and covers only low-income households in “priority need”. The average waiting time to get into social housing is five to ten years.

Although there are other policy measures to support home buying and rental (such as the National Rental Affordability Scheme), these are not integrated with the public housing system in Sydney. Rather, the goal of these policies is to support the private housing market.

It’s not just about housing supply

Second, housing affordability needs to be backed up by demand-side policies – i.e. policies to help tenants and owners to develop financial capacity.

Despite its heavy state intervention, Singapore’s public housing stresses the responsibility of individuals. The Housing Provident Fund is a form of forced savings for housing, retirement, health and education, among other things. It is integrated with the pension system to enhance the efficiency of savings.

Forced savings are not available in Hong Kong and Sydney for housing purposes. Since 2017 first home buyers in Australia have been able to draw on their voluntary superannuation contributions for a deposit.

Work-life balance matters

Third, action on housing affordability needs to take employment and its location into account.

Ultimately, the reason people find it hard to afford housing in certain locations is because they need to achieve a work-life balance. Both Hong Kong and Singapore have developed extensive public transport systems. These offer affordable options for people to travel efficiently to and from work.

In Hong Kong, the average daily commuting time by public transport is 73 minutes. Some 21% of the residents have to travel for more than two hours a day. In Singapore, average commuting time is 84 minutes, with 25% exceeding two hours.

In Sydney, the average time is 82 minutes, but 31% take more than two hours. This means a significantly larger proportion of Sydney residents spend more time on public transport. Among the worst-affected are white-collar workers from the city’s west and southwest.

Lessons from the 3 cities

So, what we can learn from these cities’ experiences with housing affordability?

Cities take very different approaches to these issues. Each approach has its own merits and issues.

A key argument against public housing has been that it might give the tenants less incentive to save for housing. It might also not be popular with mainstream voters because of the cost to taxpayers.

Singapore’s approach seems to be a midway solution. The government plays a bigger role in providing housing, but does not waive individual responsibilities. Providing public housing and at the same time demanding individuals and employers contribute can send a strong signal: people are encouraged to join the labour force.

So far, Singapore faces the least housing affordability issues. Hong Kong and Sydney are much more liberal in their approaches to housing.

In Sydney, only the poorest benefit from the public housing system. The younger generation is struggling to get on the housing ladder.

In Hong Kong, people are forced to buy housing in the commercial market if their income is even just above the eligibility line for public housing. The severe unaffordability of private housing in Hong Kong, even for young professionals, brews social discontent.

Combining these three perspectives, Sydney’s housing, savings and public transport systems are far from well synergised to offer a competitive package of affordable housing. The 30-minute city plan prepared by the Greater Sydney Commission might improve the situation. However, similar to Hong Kong, current policies are weak in building the capacity of young people to own homes.

 

 

The rise and fall of converted housing in urban China

Posted by on September 9th, 2019 · Guest appearance, Housing, Housing conditions, Housing supply, International
By Jin Zhu, PhD candidate, City Futures Research Centre; Bingqin Li, Social Policy Research Centre, UNSW Sydney; and Hal Pawson, City Futures Research Centre. Originally published at East Asia Forum.
Internationally, commercial-to-residential conversion is useful for addressing housing shortages and for making the best use of urban space. Over the past 10–15 years, commercial property converted apartments (CPCAs) have emerged in China as a popular low-cost route into homeownership, providing units at much lower prices than purpose-built flats and carrying fewer purchasing restrictions.

But recently China’s CPCA boom has run into trouble. After more than a decade of growing conversion activity, an official drive to reverse the process has triggered large-scale public protest.

Dissent erupted in Shanghai in June 2017 in response to an order for the short-notice dismantling of residential modifications to buildings initially constructed for commercial use in two districts singled out to pilot a ‘reconversion’ process. Facing the possible loss of their homes as well as substantial financial costs, many owners of the associated CPCAs took to the streets in revolt.

Given that CPCAs have come to account for a large share of primary housing transactions in China’s megacities, these developments are likely to be viewed with alarm by CPCA owners and real estate industry stakeholders across the country.

CPCAs first emerged in the early 2000s and became popular in migrant-receiving cities, especially in response to official efforts to limit speculative housing development. For some developers, the relatively permissive planning regime for commercial buildings, together with an expectation of tolerance for residential conversion, presented an opportunity.

Naturally, the recent government crackdown has focused attention on the conversion process. In many cases these conversions were not formally authorised.

How did this situation come about? Research into the Shanghai CPCA story highlights the role of policy ambiguity on the part of governing authorities. It is well-known that China’s modern market reforms have contained an evolutionary aspect. In land-use planning, there have been many instances of rules left vague or policy change inspired by the need to legitimise formerly ‘illegal’ activities. Policy tinkering and even reversal have not been uncommon. Early ambiguity can be helpful for revision or reinterpretation later. But this also means that market players, like developers and CPCA purchasers, may anticipate that unclear rules will be likely clarified in their favour in the future.

From the local government perspective, the CPCA conversion process indeed helped solve the problem of commercial building oversupply, especially in newly-built towns. Authorities benefited from leasing land to developers, ostensibly for business development. But over time accumulating a surplus of such buildings had the potential to be seen as a failure of government planning.

The market came up with a solution to utilise unused buildings as CPCAs. For the local governments, this was seen as a cure for multiple headaches. Apart from making better use of the empty structures, it also offered a form of ‘affordable housing’, in the sense of dwellings available at a price below the standard market rate.

For consumers, CPCAs were attractive not only on cost grounds but also because they could be purchased by migrants otherwise ineligible for homeownership. CPCAs quickly gained popularity. After the initial commercial building stock ran out, new developments progressed on land designated for commercial use but with a conversion intent. While local governments did not endorse CPCAs, neither did they end developer activities, giving proponents of the scheme an impression that such activity was tolerated and could be legalised later.

Over time, municipal authorities have published a series of regulations or notices on such conversions, showing they had been fully aware of the phenomenon since 2008. But regulations were not enforced.

The ambiguous attitude of local governments towards CPCAs sent signals to market players. Many buyers bought apartments either ignorant of the risk that the dwelling could be declared illegal or in the expectation that the government might change its mind. After all, wisdom says that the law would not punish numerous offenders.

Overwhelming policy enforcement in 2017 came as a shock. It came at a time when China’s central government was wanting to strengthen its rule by law. It also reflected a municipal government push to tighten migration control where the Beijing and Shanghai governments were required to cap total migrant populations.

Perhaps fearing widespread social unrest, the Shanghai government called off the forceful implementation of reconversion after the 2017 protests. Alternative solutions, such as turning CPCAs into public rental houses and turning the owners into long-term tenants, were devised to ease tension.

An unwillingness to legalise rule-breaking market activities may reflect disagreement at the national level, where it is not as easy for the government to adapt to market changes. It is for this reason that the authority’s willingness to remain ambiguous in their policy stance at the municipal level may undermine trust in the government nationally.

Healthy built environments – considerations for Aboriginal and Torres Strait Islander people

Posted by on August 21st, 2019 · Indigenous, Planning, Wellbeing

By Professor Susan Thompson, City Futures Research Centre. Originally published in New Planner – the journal of the New South Wales planning profession – published by the Planning Institute of Australia. 

For over 60,000 years, Aboriginal and Torres Strait Islander peoples enjoyed a remarkably harmonious relationship with the natural environment that provided all their physical and spiritual needs, keeping them healthy, happy and well. This was abruptly and forcefully destroyed when the colonialists invaded Australia in 1788. The legacy of this dispossession continues today with significant gaps between the health status and life expectancy of Aboriginal and Torres Strait Islander peoples compared to other Australians.

And while this is a complex situation, with differences in health status across urban and rural communities, chronic disease rates are problematic for all Australians. Accordingly, planners have a role to play in addressing specific risk factors for chronic disease – especially obesity, lack of sufficient exercise, access to nutritious foods and social isolation.

Understanding needs and priorities

In an attempt to understand how these risk factors affect Aboriginal and Torres Strait Islander peoples, the needs and aspirations of the Awabakal community in NSW’s Hunter Region were investigated in a collaborative consultative exercise. The outcomes were written up in a report entitled ‘Healthy Country Healthy Mob’ (McGuinness, et al, 2011). While the outcomes are specific to the Awabakal people, the report is useful for planners collaborating with other Indigenous communities to create health supportive environments.

In relation to accessing healthy food, the study found that for many it was often difficult to consume the daily recommended amounts of fruit and vegetables to meet basic health requirements. These challenges were exacerbated by the high cost and poor quality of fresh produce. Consulted participants suggested that the development of, and support for, community gardens would be one positive way to help alleviate some of these issues.

Achieving at least 30 minutes of physical activity every day was also challenging for a large percentage of respondents. Improvements to the quality of footpaths, their connectivity, and the provision of shading and attractive features, were nominated to help encourage regular walking. Similarly, with cycling, participation rates would increase with more continuous off-road bike paths and lanes.

Findings around community belonging, neighbourliness and connection with the environment were also interesting. There was a strong sense of neighbourhood attachment, especially for families with young children. Volunteer rates tended to surpass those of the non-Indigenous population. Nevertheless, connections across the generations – the very young and the elders – needed improving, with suggestions for culturally appropriate events, as well as providing suitable public meeting spaces (McGuinness, et al, 2011). The location of new roads needs to be carefully assessed by planners to ensure that existing communities are not isolated or separated from easily accessible meeting and gathering spaces. Acknowledgement of traditional owners, incorporation of Aboriginal art in the region, and the protection of significant sites – be they natural or built environments – were all identified as ways of improving community connection and respect for everyone in the Hunter.

Positive visions for change

 The work undertaken in the Hunter demonstrates a positive vision for change through a collaborative and respectful process, which planners can emulate elsewhere. Another example  is the Yuwaya Ngarra-li partnership based in Walgett in western NSW. This is a community-led, rights-based, strengths-focused and holistic project where academics, from a range of UNSW faculties, have joined with the Dharriwaa Elders Group (DEG) to bring evidence-based solutions to real world challenges to improve health and well-being for Aboriginal people in Walgett. Built Environment Faculty colleagues, led by landscape architect Sara Padgett Kjaersgaard, are investigating a range of projects with the DEG, including specific healthy planning initiatives, to support community food gardens and conduct a healthy built environment audit of the town. We are excited and honoured to be part of this partnership.

 

Note on article image: Indigenous art is a powerful way of expressing connection to Country and community – this  mural has been completed along Sydney’s inner west GreenWay to celebrate the traditional owners of this land. The location of the mural is often referred to as the boundary between the lands of the Gadigal and Wangal people of the Eora Nation. Artists: Uncle Kev, Tim Phibs (lead), J.P. Simon.

Reference

McGuinness, R., Miller, K., Bromley, M., Neal, S., Eastwood, L., O’Sullivan, E., Townsend, D., Licata, M., (2011) Healthy Country Healthy Mob: Summary Report of the Awabakal Aboriginal and Torres Strait Islander Consultation for the Newcastle and Lake Macquarie Liveable Communities Assessments. Awabakal Local Aboriginal Land Council and Awabakal Newcastle Aboriginal Cooperative, Newcastle.