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Why social housing stimulus is a measure Morrison cannot ignore

Posted by on September 29th, 2020 · Uncategorized

By Hal Pawson (UNSW City Futures Research Centre). This post originally appeared on John Menadue’s ‘Pearls and Irritations’ site. Read the original story here.

‘Top economists back boosts to JobSeeker and social housing over tax cuts in pre-budget poll’ declared The Conversation’s Monday headline this week. But not only was social housing (followed by higher jobless payments) the most popular urgent investment choice of 49 top economists, it was far and away more widely favoured than accelerated income tax reductions. While the former was a top four pick from 13 options for 54% of those involved, only 20% chose the latter.

This is not to say that income tax cuts are supported by only a fifth of Conversation panellists. The point is that few leading economic thinkers are convinced by ministerial claims that this is a credible priority when it comes to boosting national recovery. Social housing, by contrast, is backed as the number one stimulus pitch.

Unlike tax cuts, all of the funds invested in social housing construction are directly absorbed in creating a ‘nation building’ asset. Unlike major infrastructure projects, development of this type can be rapidly rolled out in a geographically diverse program with near-instant employment effects. More than 6,000 units could be initiated within six months, using ‘shovel ready’ sites already-identified by not-for-profit community housing providers and state/territory governments.

Modelling by highly respected consultancy, SGS, shows that the 4-year program to build 30,000 social housing units advocated by affordable housing industry bodies would create on average up to 18,000 full-time equivalent jobs annually. And the employment effect would be focused on one of the very sectors likely to be hardest hit by the pandemic – thanks to currently collapsing demand for market housing.

But this not only a matter of an effective ‘bang for buck’ on employment creation, it’s a chance to make a start in redressing a social housing famine that has seen effective supply cut in half since the 1990s. The 52,000 public and community housing lettings made in 1991 equated to 30 for every 10,000 Australians. The 35,000 lettings in 2017 amounted to 14 per 10,000.

For decades after World War 2, public housing made up around one dwelling in every six constructed in Australia. In most years since John Howard effectively ended the national program in 1996, social housebuilding has barely exceeded one in 50 units built.

And the private sector has not stepped in to provide the low cost rental housing needed by millions of low earning Australians. Far from it: the national deficit in private rental units affordable to low income renters has ballooned from 138,000 to 212,000 since 2006. Is it any wonder that homelessness rose by 30% in the past 10 years?

As in its stellar pandemic management, Australia should look to New Zealand for inspiration on how to take decisive action here. In her 2020 budget Jacinda Ardern pledged investment in 8,000 social housing dwellings – a number which might sound modest on the face of it, but scaled to population would imply a program of 40,000 for this country.

An initiative on this scale would make at least modest inroads into our huge backlog of accumulated unmet housing need. The next advocacy challenge would be making the case for the value of an ongoing social housebuilding program as an economic stabiliser and generator of a social good – not just an emergency employment-creating lever to be pulled at a time of national crisis.

But, in the current crisis situation, the Conversation Economist Panel’s stimulus spending priorities are not just an ‘expert perspective’. As revealed by recent polling evidence the public’s economic recovery preferences appear uncannily close to those of the panellists in this respect.

Last week’s Essential Media report showed that ‘building more affordable housing’ was likewise the most popular measure among a range of stimulus options posed by the pollster to a cross-section of Australian voters. Asked to choose their top three Federal Budget priorities, 56% (54% of Coalition backers) opted for ‘build more affordable housing’, while ‘fast track tax cuts for higher income earners’ was supported by just 21%.

Given our Prime Minister’s famously well-honed skill of tapping into the public mood, as well as his claims to an economically hard-headed approach to policymaking, you would surely expect a social housing stimulus to be front and centre of his upcoming financial plan. If it isn’t, the ever-expanding coalition of social housing stimulus backers will need to ratchet up the argument still further.

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