Equity and health: supporting everyone to be healthy and well

Posted by Chris Martin on May 6th, 2019 · Cities, Government, Housing, Public space, Sustainability, Transport, Wellbeing

By Susan Thompson, Professor of Planning, City Futures Research Centre.

What’s good health got to do with equity?

Good health depends on both our individual physical characteristics and how we live our lives. Genetics, age, ethnicity and gender are things we cannot simply decide to change. Our lifestyle is different – we can choose to live in a particular way – or can we? Is it really that simple to decide to live a healthy life? What if you can only afford to buy or rent a home located on a busy, noisy road? What if this neighbourhood has no footpaths or places to safely ride a bicycle? What if public transport is infrequent and unreliable and you can only get to school, the shops and to visit your friends by car? What if there are no parks nearby and you don’t feel safe walking along your street? Will that influence how healthy and well you are now and into the future?

Enjoying good health from birth to old age is dependent on a complex set of issues, many of which are outside of an individual’s control. These are known as the social determinants of health – the conditions into which people are born, live, work and grow old (WHO, 2018). These determinants are more important than medical care for the general health and well-being of the population (Wilkinson and Marmot, 2003). People who have low incomes, do not (or cannot, due to family circumstances) stay on at school, and (often) as a consequence of low educational levels, are unable to get long-term, secure employment are much more likely to die younger and suffer greater rates of illness, compared to those who are wealthier, better educated and in rewarding and lucrative jobs.

It is in everyone’s interests to address these disparities. Poor health for the individual results in greater health care costs for everyone. Inequities also have significant implications for the strength of the broader economy, as well as social life and community cohesion (Friel, 2016).

Health in Australia and its relationship to equity

In many respects, Australians are healthy. The nation enjoys one of the highest life expectancies in the world. For boys born in 2016, the Australian Institute of Health and Welfare estimates that they will live to be at least 80 years, and for girls, the estimate is almost 85 years (AIHW, 2018). However, these estimates don’t tell the full picture because many of us will live with a physical or mental disability, or chronic illness for those final years of life. These figures are also silent on the unevenness of good health across the nation. In particular, Indigenous Australians, residents in rural and remote areas, and those from poor socio-economic backgrounds tend to have a lower life expectancy, higher rates of sickness and more risk factors for illness than other Australians. For example, people in regional and remote areas are more likely than their city counterparts to smoke daily [22% compared with 15%], be overweight or obese [70% compared with 60%] and have high blood cholesterol [37% compared with 31%] (AIHW, 2014). Aboriginal and Torres Strait Islanders have lower life expectancies than non-Indigenous Australians. In 2010-12, for males this was nearly 11 years less and for women it was just under ten years (AIHW 2016a). Psychological distress was much higher in these communities, as were related rates of suicide. In general terms, those with wealth and power have much better health outcomes than those in poor and deprived situations.

Addressing health and equity

To improve the health of all population groups, we need to address the social, political and economic inequities of access to health supportive conditions. The Settlement Health Map is a useful way of conceptualising what these are and how they are inter-related. Based on theories of the social determinants of health, environmental sustainability and urban planning, the Settlement Health Map brings together the socio-political, economic and environmental factors to explain the complex web of influences on human health (Barton, 2017; Barton and Grant, 2006). People are at the centre of the Map which, as a whole, is situated within the global ecosystem upon which all life is ultimately dependent.

Source: Barton and Grant, 2006.

Let’s consider some of these conditions and how they impact upon equitable access to a long and healthy life. The evidence from both built environment and health research and practice shows how much our health depends on the environments where we live, work and play and HOW we interact and use those environments – from global ecosystem to our local neighbourhoods; across physical and socio-cultural factors.

Where and how people live

Good health starts at home. This is the place that provides shelter for us to undertake our personal care needs – sleeping, eating and bathing. This is also the place where social and emotional needs should be met. People with reasonable, reliable incomes are in a better position to afford well-designed and robustly constructed accommodation that meets these requirements. For those struggling financially, costly housing is a significant burden. If accommodation can be obtained, paying for it will often mean not being able to afford other necessities, sometimes as basic as food, medicines or clothing. Turning off heaters in the cold and air-conditioners when it is hot, is another cost cutting measure often endured by low income households so that they can meet rental or mortgage payments. These deprivations can all have adverse impacts on health.

Housing design and construction have health implications. Poorly constructed housing can put occupants at risk of an accident, as well as being susceptible to weather extremes – rain, cold and heat.

Housing location can also impact upon health. Residential areas that adjoin noisy roadways or are under airport flight paths expose families to noise and air pollution which can lead to sleep deprivation and stress, both risk factors for many chronic diseases. More spread out neighbourhoods, particularly those on the fringes of our cities, are arguably not as healthy. This is where houses and apartments may be cheaper, but often require those living there to endure long commutes to get to work. Sitting for many hours in a car takes away from time to be physically activity (something we all need to do on a daily basis to keep healthy), as well as time with children and communities. These negatives for health can, to a certain extent, be offset with expansive backyards for independent children’s play and gardening, including growing fruit and veggies and keeping chickens. These are important food sources and for those struggling to make ends meet, can mean the difference between an affordable nutritious meal every night of the week, rather than on the odd occasion. Pets, which have numerous benefits for physical and mental health, are also a positive aspect of suburban life.

For those who can afford to live closer to work and all the services needed each day, chances are it will be easier to incorporate some physical activity, such as walking or cycling, to get around. And because distances are shorter, there will be more time to enjoy recreation and stress-free time with loved ones. But there can be a downside. These are the localities where we find higher residential densities with neighbours separated by a wall or floor. Poor apartment construction can result in noise nuisance from one household to the other, and in some housing complexes, there are restrictive rules which can impinge on personal autonomy, giving rise to psychological anxiety and stress.

How people get around

The transport we regularly use is another key factor in keeping us healthy. Sedentary and car dependent lifestyles make it difficult to be physically active – one of the most important ways of protecting people from chronic illness, such as heart disease and stroke, diabetes, and colon and breast cancers. Physical activity also lessens the impact of clinical depression and anxiety. The most disadvantaged Australians tend to do insufficient physical activity and as well, they are more likely to be obese compared to people living in wealthier areas (AIHW 2018). These trends are directly related to higher rates of disease as shown in the following charts.

The first chart shows the burden of disease and physical activity rates broken down for socio-economic area and gender (source: AIHW, 2018, p191). This is expressed as a ‘DALY’ which means ‘disability adjusted life years’. This is an measured estimate of the years of healthy living lost due to disability and mortality.

The second chart shows the burden of disease associated with obesity and socio-economic status (source: AIHW, 2018, p189).

Active travel gets people moving – both from place to place and in terms of their own physical activity. Public transport use, walking and cycling – either on their own or in combination – are forms of active transport. Those living in areas that are well serviced by regular, safe and affordable public transport have the best opportunity to be active. It has even been found that catching public transport connects communities, improving social interaction and cohesion (Allen and Allen, 2015). Inevitably, places well served by public transport are expensive. In far flung cheaper suburbs, buses tend to be infrequent and many localities do not have a train or tram line. This is where long commuting distances in cars are the norm. This is also where there are less people out and about, making it unsafe, especially at night. This then reinforces people’s hesitancy to go for a walk or bicycle ride – either for transport or recreation. Walking and cycling infrastructure is increasingly found across our cities, but if not well maintained, near to desired locations, and complimented with amenities such as shading in summer, lighting at night, easy-to-read signage, water fountains and public toilets, then the chances of it being regularly used for transport or enjoyment are diminished.

Further exacerbating the inequities of access to health supportive active transport, are the health risks associated with car dominated areas. These are principally air and noise pollution, and traffic accidents. On average, poorer communities experience higher concentrations of air pollution and greater exposure to noisy traffic than their wealthier counterparts. It has also been found that traffic accidents have a greater adverse impact on deprived populations (Allen and Allen, 2015).

The provision of green open space

Regular access to quality and well-maintained green open space is critical for good health. There is a raft of international evidence that definitively demonstrates how important this is for both physical and mental health across the life course (Townsend et al, 2015). It is therefore disturbing to see Australian research that shows areas with a higher percentage of low income residents have less green space than those areas where wealthier people live (Astell-Burt et al., 2014). Town planning policy has a strong focus on the provision of green open space, but as cities density and become home to more and more people, the pressure on land prices increases. This makes it difficult to provide sufficient open space easily accessible to everyone. In Sydney, for example, there has been an emphasis on ensuring access to the beautiful Harbour is not only available to the rich. However, while public access to the Harbour foreshore is a great initiative, those living in close proximity tend to be the prime beneficiaries on a daily basis.

Social connection

A healthy built environment is one that supports a sense of community and belonging. This fosters perceptions of personal security, confidence and comfort. In turn these feelings can encourage people to be physically active in their local neighbourhood – irrespective of its proximity to the city centre and independent of their socioeconomic status. A lively street increases the chance of incidental social interaction, enhancing possibilities for human connection and caring. This reduces feelings of loneliness and isolation, benefiting mental health. The built environment can also support community creation by providing opportunities for street activities. Things such as food and bush gardens, seating overlooking natural vistas, local playgrounds for children and their carers, and neighbourhood meeting places. But these facilities must be implemented with an appreciation of the diverse characteristics and needs of the locals. Without this, and community involvement in these initiatives, they can flounder. Community gardens can be a great way to bring culturally diverse communities together, irrespective of income levels, providing healthy opportunities for being physically active, socially connected and having access to healthy and cheap fresh food (Bartolomei et al 2003).

Getting healthy food every day

Access to fresh and nutritious food is critical for health. Below recommended levels of fruit and vegetable consumption (see Australian Dietary Guidelines: https://www.eatforhealth.gov.au/guidelines) is associated with obesity, a key risk factor for many chronic diseases. There is evidence that links low incomes and deprived neighbourhoods to ready access healthy food. Correlations have also been found between low income areas and the availability of fast food outlets (Allen and Allen, 2015). In an Australian study of healthy food availability in Sydney supermarkets, it was found that prices were reasonably even across the socio-economic divide, but the quality and variety of produce – both fruit and vegetables – varied. In underprivileged locations, the quality was poorer and there was less choice compared to wealthier suburbs (Crawford et al., 2017).

How can we ensure that everyone has an equal chance of being healthy?

While it is a complex picture, the places and spaces where people live their lives, together with the social, cultural and political environments, directly impact physical and mental health. The impacts – both positive and negative – are unevenly distributed – with those at the bottom end of the socio-economic scale experiencing much poorer health on every level than wealthier communities. We need to ensure that there is good urban planning as well as governance systems in place that champion equity to ensure a fair go for everyone – from birth to old age.

The most effective health interventions will be tailored to place and those residing there, respecting that individuals of different genders, ages, socioeconomic status and cultural backgrounds will have varying responses to interventions. Built environments are therefore not only implicated but vital in shaping better health outcomes. (Thompson and Kent, 2016, p92)

References

Allen, M. & Allen, J. 2015, ‘Health inequalities and the role of the physical and social environment’, Chapter 7 in Barton, H., Thompson, S., Grant, M., & Burgess S. (eds), 2015, The Routledge Handbook of Planning for Health and Well-Being: Shaping a sustainable and healthy future, Routledge: London: 89-107.

Australian Institute of Health and Welfare, 2014, Australia’s health 2014, Australia’s health series no. 14. Cat. no. AUS 178. Canberra: AIHW.

Australian Institute of Health and Welfare, 2016, Australia’s health 2016, Australia’s health series no. 15. Cat. no. AUS 199. Canberra: AIHW.

Australian Institute of Health and Welfare, 2018, Australia’s health 2018, Australia’s health series no. 16. AUS 221. Canberra: AIHW.

Bartolomei L.A., Judd B.H., Thompson S.M. & Corkery L.F., 2003, A Bountiful Harvest: Community Gardens and Neighbourhood renewal in Waterloo, NSW Government, New South Wales.

Barton, H. 2017, City of Well-Being: A Radical Guide to Planning, Routledge: Milton Park.

Barton, H. & Grant, M. 2006, ‘A health map for the local human habitat’, Journal of the Royal Society for the Promotion of Health, 126(6): 252–253.

Crawford, B., Byun, R. Mitchell, E. Thompson, S. Jalaludin, B. Torvaldsen, S. 2017, ‘Socioeconomic differences in the cost, availability and quality of healthy food in Sydney’, Australian & New Zealand Journal of Public Health, 41(6): 567-571.

Friel, S. 2016 ‘Social determinants – how class and wealth affect our health’, The Conversation, September 1, 2016: https://theconversation.com/social-determinants-how-class-and-wealth-affect-our-health-64442

Thompson, S.M. & Kent, J.L. 2016, ‘Healthy Planning: The Australian Landscape’, Built Environment, 42(1): 90-106.

World Health Organization, 2018, Social determinants of health. World Health Organization, Geneva, http://www.who.int/social_determinants/sdh_definition/en/

Wilkinson, R. & Marmot, M. (eds), 2003, The Solid Facts: Social Determinants of Health, WHO, Europe: http://www.euro.who.int/__data/assets/pdf_file/0005/98438/e81384.pdf

Cutting through the negative gearing reform debate

Posted by Chris Martin on April 30th, 2019 · Affordability, Government, Housing, Housing supply

By Hal Pawson, City Futures Research Centre.

Since our last comment on the subject and, of course, boosted by another election campaign, the debate on negative gearing reform has hotted up still further. And, especially because so many highly questionable claims are made on the subject, we felt the time was right for another quick foray into this territory to re-ground the discussion triggered by Labor’s reiteration of 2016 reform proposals.

The point of principle

The point of principle about the negative gearing rules as these apply in Australia is that revenue losses on rental property can be used as a tax shelter for other earned income – an internationally unusual (although not unheard of) practice. It is that aspect of the existing rules that is controversial – partly because it means that higher salary investors in higher tax bands inevitably corner greater benefits.

Also, as a tax provision supposed to encourage risk-taking business investment the current rules are arguably much too generous for rental investors compared with those who invest in more productive forms of business that are also far more risky – and therefore have to stomach much higher borrowing rates than banks are willing to allow on housing lending (because this is considered a relatively low risk kind of enterprise).

What is Labor proposing?

As in its 2016 election pitch, Labor proposes restricting the NG concession to newly-built property to encourage aspiring rental investors to preference acquisition of new, instead of existing, housing. This is consistent with the politically uncontroversial idea that maximising new housing supply is an important component of any sensible strategy to ease housing unaffordability. It’s also consistent with the longstanding rules on Australian residential property acquisition by foreign investors – again, a policy accepted across the political spectrum, and recently copied by New Zealand.

Labor also pledges to halve the Capital Gains Tax discount (from 50% to 25%) for investors acquiring rental properties after the new system start date.

All existing rental investments would be grandfathered – these would continue to be subject to the current rules.

Who gains the most from the existing system?

The Grattan Institute’s Danielle Wood says: ‘despite all the talk about negatively geared nurses and property baron police officers, 90 per cent of taxpayers do not use it’. The professions who do use it most are those at the top end of the income scale. This is reflected in the fact that half of the value of NG concessions goes to the top 20% of income earners, while for the CGT discount 80% goes to the top 10%.

Because they disproportionately benefit higher income earners these tax subsidies are regressive and fuel inequality – already a growing problem in Australia, and one that government policy should be seeking to moderate, not exacerbate.

What will be the housing market and budgetary effects of Labor’s plan?

Under the reformed tax rules pitched by Labor, property values will run 1-2% below the level at which they would otherwise have sat (says Grattan). This will be a situation where – in effect – investors lose some of the advantage they have enjoyed in bidding at auction against aspiring First Home Buyers for existing properties.

The Federal Government’s budget bottom line is expected to be enhanced by $32 billion over a decade under the proposed changes (Parliamentary Budget Office), although only by relatively small amounts in early years because of grandfathering.

Apart from costing an estimated $11.7 billion p.a., current NG and CGT discount subsidies do nothing to encourage investment in rental properties that will help to ease housing unaffordability by being made available at rents affordable to low income earners.

Over time, the proposed plan would enable the Federal Government to redirect support to genuine good quality affordable rental housing through Labor’s plan to incentivise the construction of 250,000 discounted rent units by 2030 (at a cost of $6.6 billion over the period covered by the forward estimates).

The 2016 election campaign seemed to give the lie to the previous conventional wisdom that any suggested alteration of existing landlord tax concessions was politically taboo. Whether that revised assessment was right is now being tested once more.

On housing, there’s clear blue water between the main parties

Posted by Chris Martin on April 12th, 2019 · Affordability, Government, Housing, Housing supply

By Hal Pawson and Bill Randolph. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Labor’s bold stance on housing tax reform and investment makes this one of the likely policy flashpoints in the coming election campaign. How does the Coalition government’s housing record stand up to scrutiny? What would be in prospect in a third Liberal-National term? And exactly what is Labor’s alternative pitch?

The Coalition record

Under the Abbott-Turnbull-Morrison governments we’ve seen a housing market featuring both rampant inflation and damaging volatility. Despite recent falls in some cities, late 2018 prices remained 29% up on 2013 across the country – 42% in Sydney.

While first home buyer numbers grew in 2018, the total remained well below 2007 (pre-GFC) levels. Unless this changes the rate of young adult home ownership is likely to drift still lower.

During this term of government, official action to moderate housing market instability has been left almost entirely to the Reserve Bank of Australia and the Australian Prudential Regulation Authority, through their influence on the cost and accessibility of housing finance.

The government has mostly turned a blind eye to more far-reaching reforms that could squarely address Australia’s boom-and-bust housing dynamic. The prime source of recent volatility has been the erratic behaviour of landlord investors, as the chart below shows. They are responsible for around 35% of residential transactions across the country.

Australia’s unusually favourable tax settings on negative gearing and capital gains tax discount compound investors’ speculative instincts. Calls for reform have been growing, from sources as diverse as a Liberal state government minister and the Reserve Bank. And the annual cost to the public purse has been rising – most recently estimated at A$11.7 billion. Despite this, federal Coalition ministers have resisted any paring back of these concessions.

The Labor alternative

The ALP enters this election campaign restating its 2016 policy to restrict current negative gearing entitlement to newly-built properties and to halve the CGT discount for all newly-purchased rental homes.

While sectional interests have echoed government claims of damaging market impacts, mainstream economists view the policy as a necessary structural reform that will slightly moderate house price inflation over the longer term. However, with all existing investments exempt from proposed changes, the budgetary pay-off would be modest at first.

Labor also advocates rebalancing the tax treatment of large-scale institutional investment in rental housing. According to industry proponents, resulting “build to rent” development could help to diversify the housing market and provide a better quality tenancy offer. It would also have the benefit of introducing a counter-cyclical component to residential construction.

Housing stress on the rise

The Coalition government has also presided over intensifying stress at the lower end of the housing market since 2013. Homelessness has been increasing by 2.8% a year. The proportion of low-income tenants facing unaffordable rents rose by four percentage points in the four years to 2015-16.

At least in part, these trends reflect Coalition government disinterest. While slightly moderated under the Turnbull-Morrison administrations, the die was cast with the incoming government’s 2013 decision to abolish the post of housing minister and by the Abbott inclination to re-emphasise a minimalist vision of Federal government responsibilities. The new government was quick to abandon Kevin Rudd’s 2008 commitment to halve homelessness by 2020.

To the credit of the Turnbull-Morrison governments, a project begun in 2016, when Morrison was treasurer, has created a new institution to open up access to cheaper, longer-term finance for community housing providers.

Through its first bond, issued only last month, the National Housing Finance and Investment Corporation (NHFIC) has enabled six of these providers to secure debt finance on much-improved terms. This will boost recipient organisations’ financial “headroom”. A worthwhile – but modest and one-time-only – addition to affordable housing stock may result.

Subsidies needed to restore supply

Importantly, though, the cheaper debt finance made available through the NHFIC only narrows – rather than bridges – the gap between the cost of delivering social housing and the rents that low-income Australians can afford.

A major social housing investment program will require a complementary government subsidy. The treasurer’s own advisory working group has unambiguously stated the need for such provision.

Curiously, the government has yet to give any sign it intends to finish what it started here. Without the necessary gap-filling subsidy, there must be a danger that – perhaps after exhausting the potential for refinancing community housing providers – the NHFIC could become a white elephant.

Indeed, the Coalition’s most significant action on affordable rental housing supply was its 2014 cancellation of the Rudd government’s National Rental Affordability Scheme. Mainly targeted at low-income workers, the NRAS generated 38,000 discount-to-market rental units (against an original target of 50,000).

The ALP is now promising to re-establish a large-scale supply program. As well as restricting landlord investor tax concessions to new-build properties, Labor’s 2019 pitch includes a program similar to NRAS with the aim of generating 250,000 new affordable rental homes over a decade. A shorter-term target of 20,000 dwellings during the next term of government would equal the Rudd government’s 2009-12 social housing stimulus, which helped to stave off the GFC.

Supported through subsidy in the form of annual investor incentive payments of $8,500 for 15 years, the program would be mainly targeted at “key workers” and “lower-income families”. Tenants would pay rents of 20-25% below market levels. Beyond this, the program could help more disadvantaged Australians, but only with matching financial assistance or other subsidies from states and territories, which would enable rents to be even lower.

The Coalition’s current offer

Other than its push-back on Labor proposals, the Coalition has – as yet – said little about its election policy on housing. Last week’s budget offered nothing to suggest that, beyond a defence of the policy status quo, housing initiatives are front of mind for the Treasurer or Prime Minister.

The government will maintain the NHFIC, one of its really positive recent moves. The complementary – and overdue – review of social housing regulation will also continue. We can probably expect more City Deals, which may even, as in the recent Hobart announcement, include some provision for affordable housing.

The budget’s infrastructure program, including fast urban rail, might have implications for housing accessibility and affordability. But, if so, these aspects don’t feature prominently in the announcements.

But beyond continuing existing policy directions, nothing much seems likely to be added to the Coalition’s 2019-22 offer on housing. It isn’t proposing any action on the imbalanced tax settings that fuel housing market volatility, let alone any policy to boost affordable housing supply directly. Neither is there any sign of support for the build-to-rent sector, which promises much but appears as yet still-born.

It seems fear of change continues to dominate Coalition thinking on housing. The overriding priority remains to support existing property values, rather than to act on unaffordability – a Boomer protection racket par excellence! Recent ministerial statements offer little indication that a re-elected Coalition government would make a serious effort to fix Australia’s increasingly under-performing housing system.

Housing policy reset is overdue, and not only in Australia

Posted by Chris Martin on March 15th, 2019 · Affordability, Economy, Government, Guest appearance, Housing, Housing supply, International, Law, Productivity, Tenancy

Duncan Maclennan, University of Glasgow and Hal Pawson, UNSW. This article is republished from The Conversation under a Creative Commons license. Read the original article .

Federal and state elections in coming weeks provide a timely moment for Australians to reflect on the increasingly obvious failure of governments to manage the triple crises of inflated property prices, lack of affordable housing for people on low to moderate incomes, and property market volatility. The likely prominence of housing in the federal poll at least, if not in New South Wales, perhaps signals welcome political recognition that decades of complacency and inaction are to blame for housing system under-performance. And it’s costing the country dearly.

There’s a growing sense that core aspects of the governmental mindset that have underpinned housing policy since the 1980s are long overdue for a rethink. And not just in Australia. Our recent knowledge exchange project, involving academics, policymakers and professionals in Australia, Britain and Canada (the “ABC countries”), tapped into these debates.

A misplaced faith in markets

Our Shaping Futures report identifies important common housing features across the ABC countries. These include their overarching “liberal market” approach (for example, relatively light regulation of private rental housing) and the challenges of managing population-driven growth in cities.

In all three countries, a similar set of foundational beliefs has dominated housing policy for decades. One is an increasingly misplaced faith that housing markets are well-functioning systems. Another is that issues of poor housing and high housing costs are seen purely in terms of redistributive welfare. The impacts on growth and productivity are largely ignored.

Governments of the ABC countries have increasingly delegated responsibilities for coping with national and global pressures on housing. At the same time, they have provided little more autonomy and limited resources for cities and regions to respond to these pressures.

All three nations have seen falling home ownership rates for young adults and long-term declines in home ownership affordability – among the most severe in the OECD. Household debt rates are close to the highest in the OECD.

Inflated demand is increasing stress in private rental markets. It’s coming from growing numbers of frustrated middle-income aspirant homebuyers and from low-income tenants denied access to social housing by a proportionately smaller supply.

In Sydney in 2017, moderate-earning and low-earning tenants paid, on average, more than A$6,000 a year in rent over and above 30% of their incomes. And that still didn’t spare them the growing costs and lost productivity of commutes commonly exceeding 90 minutes.

Research in Sydney, Vancouver and London demonstrates that to quantify the real burdens of city housing shortages we need integrated analysis of housing and transport outcomes.

Housing failures have broader consequences

Housing outcomes, including quality, price and location, have significant impacts on the “big goals” of governments.

Regressive subsidies (such as tax concessions for property owners) have worsened rather than offset the effects of rising rents and house prices on income inequality and wealth distribution. In all three countries inequality indices have increased over the last two decades. And in the UK, at least, social mobility is lower than in other developed countries. Housing systems have been at the heart of these changes.

We should aim to boost economic productivity by enhancing human capital – that is, maximising people’s opportunities and capabilities. Instead, there is an emerging sense that growth dividends have been sunk into raising housing and land prices, through investor speculation. This rentier-driven, rather than entrepreneur-led, economic growth has reduced the housing market’s resilience to cyclical instability.

Piecemeal policies aren’t enough

At least until very recently, longstanding systemic housing problems have generally failed to evoke major policy responses. When interventions have been considered necessary, these have tended to be restricted to homelessness and to helping marginal homebuyers. This has often been done in ways that have proved counterproductive by pumping up demand.

With the possible exception of the UK devolved nations, government housing policymaking capacity has been largely emasculated across all three ABC countries over the past 10-20 years. Housing ministries and agencies have been abolished or “integrated” into human services departments.

Likewise, Shaping Futures stakeholders were unimpressed with recycled policy proposals. One example is suggestions that income allowances for individuals should replace direct supports for housing supply. Another is that planning is the prime cause of supply-side “stickiness” that holds up the delivery of new housing.

One response would be to join some of our academic colleagues in attributing such shortcomings to a misguided faith in managed markets. We might even echo calls to restore pre-1980s housing policy instruments such as big public housing, deep rent controls, tied subsidies and the like.

However, the reality is that markets are likely to remain a preferred basis for our housing systems. The above diagnoses and prescriptions also overlook the possibility that some post-1980s innovations have produced significant policy progress. The emergence – particularly in the UK – of regulated not-for-profit organisational models is an important case in point.

Nevertheless, minor tinkering will resolve none of the major housing system problems that have become all too apparent in the ABC countries since the turn of the century, and especially since the GFC.

Key features of a solution

As well as a commitment to housing as a higher priority for government spending, a new understanding of how housing systems operate and what housing outcomes achieve is urgently needed. In particular:

The housing sector needs to make stronger economic cases for support, while treasury and finance ministries must improve their comprehension of housing markets. Advocates need to voice the productivity case for housing; policymakers need to take it seriously.
As failed economic thinking for housing policies has generated unstable and expensive housing outcomes, the conventional wisdom finds easy scapegoats in the regulatory planning system. Yes, unduly tight regulation will hinder supply, but no more so than failure to invest adequately in infrastructure and, indeed, shortages of construction labour and materials. Again, the challenge for treasuries is to resist the simplistic “economics 101” analysis that fails to recognise the special qualities of housing and land markets.

Far from further downgrading its influence, planning needs to be cast in a more central role to extract infrastructure-and-planning-induced gains. Critical here is the recognition that “inclusionary zoning” essentially taxes “scarcity rents”. And – unlike tax-funded housing expenditure – it creates no drag on growth and productivity.
Governments in Australia and Canada need to fully recognise the potential of non-profits to deliver not just low-income housing but mixes of renting, owning and shared ownership. This creates opportunities for younger households as well as better neighbourhoods.
Governments must reshape young adult routes into home ownership. At the same time, they must avoid over-reliance on crudely designed central bank policies on deposit limits and lending ratios uniformly applied across diverse local housing markets.

Reforms to ensure better housing outcomes in the ABC countries are possible. Significant modernisation of private rental regulation in Scotland, Victoria and British Columbia provides recent cases in point.

Most such steps will depend, however, on governments providing additional or redirected resources. Even more, they require housing systems to be administered at regional and local level with evidence-based understanding and commitment.

Many of the housing problems that distress urban communities across the ABC countries stem from “a veil of ignorance”. There’s an official disregard for evidence and mistaken adherence to simplistic narratives that play down significant market failures.

Households, communities and cities deserve better futures. Shaping them is feasible.

A convincing pitch to do so could well prove critical in swinging young voters’ allegiance and, as a result, the results of Australia’s imminent elections.

Add a Comment
Email to friend
Stay updated
Tags: Affordable housing·Planning·Social housing

Build social and affordable housing to get us off the boom-and-bust roller coaster

Posted by Chris Martin on March 15th, 2019 · Affordability, Construction, Economy, Government, Guest appearance, Housing, Housing supply

By Laurence Troy, UNSW; Bill Randolph, UNSW, and Ryan van den Nouwelant, Western Sydney University. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Not long ago Australia’s housing boom was in full swing. Investors were betting on rising property values, which rose by 13% in Sydney and 15% in Melbourne in the year to mid-2017. Now the withdrawal of overseas buyers and prudential restrictions on loose lending to local investors have revealed how hollow the boom was.

Throughout the boom, politicians and property pundits consistently claimed the supply being delivered would improve affordability. As we are now seeing, when the price a property can fetch drops, so too does the desire to build it. It was rampant price growth that underpinned developers’ pleas to add supply, not a desire to make housing more affordable.

We are now seeing rapid declines in approvals and building starts as speculative investor demand, and the money it brought to the market, has fallen away.

Ironically, falling prices will not improve affordability for people locked out of the market. Banks are tightening lending practices and stagnant wage growth limits the buying capacity of those trapped in the low-income economy. True, falling prices are welcome for some first home buyers who now find a purchase possible. But the rapid inflation of house prices long ago far outstripped the capacity of most lower-income households to buy a home.

Our analysis for the NSW Community Housing Industry Association (CHIA NSW) and Homelessness NSW, building on recent AHURI research, shows that the market cannot meet around 12% of all households’ needs. Only one-third of those are housed outside the market in public or community housing. The rest are in overcrowded homes, rental stress or even homeless.

In the face of a housing market downturn, those same property pundits are now sternly warning against action that would further dampen speculative investment in housing. However, this is precisely the moment to tackle the problems that have been building over many years and to set the dynamics of the housing system on a more affordable track.

Winding back speculative activity by cutting negative gearing and capital gains tax discounts, cracking down on inappropriate lending practices, and increasing regulation on unacceptable building practices should all be followed through in earnest across all levels of government.

Delivering the housing we need

The bigger question that remains then is: what is the future of the housing supply system across Australia?

History has shown us private sector investment alone cannot provide the needed housing, especially for the most vulnerable. Neither can it produce consistent supply through its boom-and-bust cycles. So now is also the moment for a renewed conversation about how to deliver the housing that’s most needed, and who ought to do it, especially for those facing chronic rental stress.

Markets have never delivered housing affordable to those on low incomes without subsidy from governments. In fact, a mountain of subsidies and tax breaks have been thrown at the private market to support such an aim. These range from Commonwealth Rent Assistance to support private rental and grants to first time buyers, to negative gearing and capital gains tax relief for investors and home owners, but have had no discernible effect on affordability.

Faith in the markets has prevailed for the past 30 years. As a result, alternatives have been ruled out of play.

To cover the backlog of unmet need and future need, our new research commissioned by CHIA NSW and Homelessness NSW predicts that, over the next 20 years, two in ten new homes would need to be for social housing and a further one in ten for affordable housing. Just shifting this third of construction to not-for-profit housing providers, either the community sector or government, would reduce delivery costs – by losing the 20% developer markup at a stroke.

More broadly, the funds needed to support a sustainable affordable housing program could easily be offset by the savings from scrapping current inefficient and inflationary tax subsidises to private investors.

The challenge of such a task cannot be underestimated. Yet this presents a considerable opportunity to resolve a range of interrelated problems with how housing is provided in Australia. Here are four of the biggest.

1. Stabilise the construction labour market

Social and affordable housing development would underwrite the construction industry with a steady stream of funding for building homes over the long term. Building industries mobilise considerable workforces. Stable streams of work would smooth out the dramatic drop in employment that comes with housing downturns.

Recent reports have noted the accelerated decline in the construction industry. The Reserve Bank is warning that shocks to wages and employment present a threat to the economy.

2. Support planning for a predictable supply

The planning system would benefit from having a large portion of projected housing needs met and supplied more predictably. The uncertainty of boom-bust housing cycles makes it near impossible to plan sensibly for population growth and implement strategic planning objectives across our cities and regions.

Planning for major infrastructure, such as hospitals, schools and transport, relies on new housing arriving in a timely manner. Blanket inclusionary zoning policies and discounted public land sales to support land supply for affordable homes need to be prerequisites.

3. The benefit of investing in affordable housing

If government spending on housing can be invested in the assets themselves (for example, through an equity share in the development), the expenditure will be retained both for an enduring social purpose and as a positive contribution to the accumulated asset base of government.

A properly designed, large-scale, not-for-profit program could mean investing in new housing becomes a positive for state and national balance sheets. This requires a shift in behaviour and mindsets of some Treasury officials who often see social housing as a liability.

4. Drive broad productivity dividends

Other recent research for CHIA NSW shows investment in suitably located social and affordable housing has much wider economic benefits. These include travel time savings for lower-income workers currently pushed into the outer suburbs, as well as human capital uplift resulting from long-term positive impacts on household incomes.

In short, the evidence-based economic case for government investment in social and affordable housing is strong. Given the impending fallout of a property bust following the largest property boom in Australian history, now is the time to act and reshape the nation’s housing system for the long term.

But do we have governments capable of conceiving of the necessary policy shifts or with the courage to enact them? Time, and the next election, will tell.

Add a Comment
Email to friend
Stay updated
Tags: Affordable housing·Planning·Social housing·Tax

What if autonomous vehicles actually make us more dependent on cars?

Posted by Chris Martin on February 19th, 2019 · Cities, Guest appearance, International, Smart cities, Sustainability, Transport

File 20180618 85840 119d7mc.jpg?ixlib=rb 1.1 — Shutterstock.

By Mark Kleinman, Professor of Public Policy, King’s College London and Charlene Rohr, Senior Research Fellow, King’s College London. This article is republished from The Conversation under a Creative Commons license. Read the original article. Mark Kleinman is visiting City Futures Research Centre as part of the PLuS Alliance.

Cities across Europe are taking steps to become increasingly car free. London Mayor Sadiq Khan is aiming for 80% of all trips to be made on foot, by cycle or using public transport by 2041, while Copenhagen authorities are aiming for three quarters of all trips to be made in these ways by 2025. Policymakers in Paris want to halve the number of private cars in the city centre, and Madrid will ban all non-resident vehicles except zero-emission delivery vehicles, taxis and public transport from its city centre in November 2018. In Helsinki, the aim is to phase out the use of private cars by 2050, by providing on-demand, affordable public transport.

Alongside reducing congestion and improving urban mobility, city leaders are expected to promote sustainable economic growth, improve air quality and respond to concerns from residents – all within tight budgets. In a world where talent and investment are increasingly mobile, city leaders know they must compete in terms of economic dynamism and quality of life – and transport planning is one way to do that.

Boon or burden?

But car makers and tech giants are looking to a very different type of future, where private car ownership, human control and petrol and diesel engines are replaced by shared, electric and autonomous – or self-driving – vehicles. Many of these changes could be positive for society, compared to current transport systems. It is likely that autonomous vehicles will eventually be better drivers than humans, which would reduce the number of road accidents and fatalities. They may also provide much needed accessibility to elderly and disabled people, which would be beneficial not only to them, but the economy at large.

Without the need to drive, people will be able to be more productive while travelling. If people are able to call up a car at the touch of a smart phone, car ownership will drop, which will free up the substantial tracts of urban land that are currently used to park vehicles. And, with the right incentives, travellers could be encouraged to use the most efficient vehicle for each journey taken, with substantial reductions in emissions and pollution. There would also be benefits for freight deliveries, which may be able to be undertaken at night, when there is more available road capacity.

Paris: quieter by night.
Luc Mercelis, CC BY-NC-ND

But some changes may be negative. Self-driving cars are likely to increase – rather than decrease – car travel, as people succumb to the allure of convenience and switch from public transport, or make more journeys. Autonomous vehicles may be able to park themselves away from urban centres, but they still need to be parked – and make return journeys to collect passengers, adding empty cars to the roads and contributing to congestion and air pollution.

And there are lots of unanswered questions about how urban systems will work with the introduction of self-driving vehicles. For example, it’s not clear how self-driving vehicles will co-exist with pedestrians and cyclists. If they are programmed to stop whenever a pedestrian or cyclist gets in their way, there will be pressure to further separate vehicles, pedestrians and cyclists. The vision of future cities in the 2050s may then start to look more and more like the vision of the 1950s, with futuristic new models dominating the foreground, while human activities such as walking and cycling are relegated to concrete overpasses and gloomy subways.

Back to the future

History shows that decisions made by policy makers have long-lasting effects. For example, when automobiles first arrived in cities, policymakers in different countries took different approaches to the issue of mixing of vehicles and pedestrians. In the United States, policymakers invented the concept of “jaywalking” and introduced stringent laws to separate vehicles and pedestrians, in order to “protect pedestrian safety”. The UK, on the other hand, took a more relaxed approach, introducing no such laws.

At the other extreme, policymakers in The Netherlands have taken the view that shared spaces – where streets are designed specifically to allow interaction between vehicles, pedestrians and cyclists – improve safety for all, as well as the liveability of cities more generally. These decisions have had long-lasting impacts on how cities in these countries look and feel today.

The way we think think about the future for autonomous vehicles seems divorced from the wider issues of city transport strategy and economic and social sustainability. It is time to put this right. Mayors, supported by their officials and planners, should start leading a debate now about how self-driving vehicles can best serve the needs of residents and visitors, and help deliver wider goals for their cities. They must develop the policies needed to deliver these benefits – well before self-driving vehicles arrive on the streets.

Stay cool with revised house construction codes

Posted by Chris Martin on February 15th, 2019 · Climate change, Construction, Government, Guest appearance, Housing, Housing conditions, Sustainability, Sydney, Wellbeing

By Professor Mat Santamouris, Built Environment, UNSW Sydney. This article was first published by the Sydney Morning Herald.

For many Australian households, summer’s debilitating heatwaves will be felt well into autumn as the steep costs of airconditioning show up on household power bills. We shouldn’t have to live like this.

Much of the punitive cost of cooling is not down to power prices but to cheap and thoughtless construction and design. What’s most exasperating is we already have the materials, knowledge and skills we need to better protect ourselves from climatic extremes, without boosting electricity demand and costs.

Take, for example, ‘Josh’s House’ in Perth, a zero-carbon home of ABC TV’s Gardening Australia fame. In late January the outdoor temperature was hovering around 40 degrees, inside it was a comfortable 24 degrees. This 10-star energy efficient ‘living laboratory’ was not using airconditioning, so no additional energy was needed. Its excellent thermal performance was simply down to good passive solar design.

By contrast, on hot days in Sydney’s west, electricity demand for cooling doubles and the health, comfort and wellbeing of residents is at risk. Our recent research across this large expanse of Sydney suburbs that lies beyond the reach of moderating coastal breezes, found indoor temperatures of up to 35 degrees in poorly constructed homes.

To put this in context, consider the ‘thermal comfort zone’. That is, the narrow temperature range in which humans can operate productively without being distracted, overwhelmed or suffering physical ill effects. Commercial buildings in Australia, for example, usually stipulate indoor comfort be maintained at between 21 and 24 degrees. So, it is not surprising so many Australians have reported sleeping poorly for months, due to the recent intense heat.

We know Australian houses get too hot for relatively simple reasons. Yet we continue to use black or dark roofs, even though the excess heat this traps is well understood. We skimp on insulation in our walls, roofs and windows and pay the price in discomfort or higher energy bills. We continue to pave the surrounding roads with black asphalt that, likewise, acts as a heat sink, And, in many locations, we forego the cooling benefits of trees, parks and open green space to maximise the numbers of dwellings we can squeeze onto a site.

Working in Parramatta with Sydney Water, we recently assessed the potential of cool, reflective materials, planting trees and vegetation and the use of recycled water in features like spray mists and fountains. We found outdoor temperatures could be reduced by 2.5 degrees and, with further work, by up to 4 degrees. Even a 2.5-degree cut would reduce cooling energy costs by 35 per cent and reduce peak electricity demand by 5 per cent, the equivalent of taking 200,000 cars off the road. These are important and encouraging results.

But there is a limit to what can be done to turn the temperature down outside. We must also urgently modify the codes and regulations that dictate the performance of Australian buildings.

A recent study, Built to Perform, found even modest changes in building regulations could reduce Australian household power bills by $900 a year. Some could come at no additional cost, like choosing a light coloured roof over black. Others – including improved insulation, double-glazed windows, better air tightness, outdoor shading and wider eaves, ceiling fans and more efficient airconditioning, lighting and hot water systems -would cost between about $6800 for an apartment to $14,000 for a free standing house. These upfront costs would be more than offset by savings on power bills, the study, funded by the CRC for Low Carbon Living, found.

The COAG Energy Council this month acknowledged our National Construction Code was ‘not set at an optimal level’ and announced a new ‘trajectory’ towards tighter standards. This is a step in the right direction. But we need to move now. Business as usual presents many risks, particularly the opening of a social divide as temperate extremes intensify – between the haves (aircon) and have-nots.

As the federal election approaches, there will be plenty of political finger-pointing over power prices. But we need a more sophisticated debate. Our buildings use 20 per cent of our energy and rapid growth in airconditioning as temperatures rise is a major contributor to peak power demand. We have a major opportunity in better buildings. We need politicians and industries to seize it now.

Is social housing essential infrastructure? How we think about it does matter

Posted by Chris Martin on February 6th, 2019 · Finance, Government, Guest appearance, Housing, Productivity

By Kathleen Flanagan, University of Tasmania; Chris Martin, UNSW Sydney; Julie Lawson, RMIT University, and Keith Jacobs, University of Tasmania. This article is republished from The Conversation under a Creative Commons license. Read the original article.

We know that safe, adequate, affordable and appropriate housing is essential for our health, well-being and social and economic security. However, even as house prices subside from recent record highs, many Australians struggle to obtain the housing they need to be as healthy, well and secure as they could be. An unacceptable number of Australians have no home at all.

How Australian governments meet such housing challenges has changed over time. Decades ago, direct investment in publicly owned housing was the core of their response. In the 1950s, state housing authorities built more than 100,000 dwellings — one in eight of all new homes at the time.

Over time, however, social housing has been recast as a welfare service. Political support has dwindled. Social housing is starved of funds, stigmatised and residualised.

Could changing how we think about social housing serve as a starting point for a renaissance? Policy advocates like the Australian Council of Social Service (ACOSS) argue that social housing is actually a form of essential infrastructure. This is because it supports economic productivity and a range of other non-shelter outcomes.

Our research has examined whether changing how we think about social housing to see it as infrastructure might provide a pathway to increased investment.

What’s the evidence for this approach?

Conceptually, we found a link between social housing and infrastructure: both operate as forms of spatially fixed, durable capital that enable economies and societies to work better. Governments need to be involved in providing infrastructure to realise its full benefits — because of the scale of investment needed and because effects are spread across the community. In the same way, realising all the benefits of social housing requires government involvement.

When we look at history, there is compelling evidence for this. For example, during Australia’s post-war public housing construction boom, governments recognised their investment as necessary to enhance economic productivity, improve public health, and support families to thrive.

Across [Europe], especially in Finland, Austria and Scotland, we see social housing investment today undertaken in support of energy sustainability, economic stability, and social cohesion.

However, if social housing is to be considered as infrastructure, then proponents need to be more conversant with the practices and policies that sustain infrastructure investment. This includes developing credible, costed arguments to demonstrate the benefits of social housing relative to its cost. This isn’t easy — much that is relevant to the purpose of social housing and the people who live in it cannot be quantified or monetised.

Public infrastructure and private finance

An even more fundamental challenge arises from prevailing ideas about how infrastructure should be financed and funded.

In infrastructure-speak, “financing” is the provision of money to build and maintain an infrastructure asset, and “funding” is the means of paying the costs of finance. Even as governments pay more attention to infrastructure policy, the prevailing view is that it should be privately financed by institutional investors like banks or super funds. The role of governments, according to this view, should be limited to funding investments where user charges won’t deliver enough return to the investor.

This prevailing view comes from a deep-seated belief within Australian governments and the wider community that governments are always fiscally constrained and that the mark of a “good” government is a budget surplus.

These are not just surface beliefs — the norms and practices associated with them are embedded in the way bureaucracies and governments prepare and manage their budgets.

When there is not enough government money to go around, even with a rigorous, costed business case establishing beyond doubt the value of investment in social housing, it might not be recognised as high enough priority for any meaningful level of funding to result.

To change this belief, we need to do more than make a case for social housing as infrastructure. We need to make the case for social housing.

A vision for social housing

To make the case, we must confront the politics of housing. The prevailing narratives have benefited powerful interest groups and produced mounting debt and inequality.

But we can draw on the historical precedents of policies that created public wealth through public investment in rental housing and expanded opportunities for ownership. We need to make the case for government to take a stronger, more direct role in infrastructure investment by embracing its role as a patient investor and a deliberate co-creator and shaper of markets for specified public purposes.

Direct public investment is also the cheapest, most effective way to generate affordable housing supply that meets community needs and delivers vital economic and social benefits.

Engaging with this vision, and what it implies about the role of government in Australia today, offers us the chance to think differently enough about social housing to make not properly investing in it unthinkable.

AHURI is presenting the inaugural Discussion Series event, “Is social housing infrastructure?”, at the State Library Victoria, Melbourne, on Monday, February 11 2019. A second event examining the same research topic will be held in Brisbane in March. More details are available here.

The big lesson from Opal Tower is that badly built apartments aren’t only an issue for residents

Posted by Chris Martin on January 17th, 2019 · Cities, Construction, Government, Guest appearance, Housing, Housing conditions, Strata, Sydney

By Laura Crommelin, Bill Randolph and Hazel Easthope (City Futures Research Centre), and Martin Loosemore (Built Environment, UNSW Sydney). Originally published on The Conversation.

The saga of Opal Tower, the 36-storey Sydney apartment building evacuated on Christmas Eve after frightening cracking, has helped to expose the deep cracks in Australia’s approach to building apartments.

An interim engineering assessment released yesterday indicates concrete panels cracked due to their manufacture and assembly deviating from the original design. Though the building is structurally sound and in no danger of collapse, repairing the faults will be costly, slow and disruptive to residents.

The tower’s size, age (it is less than six months old) and the timing of its cracks might have made it particularly newsworthy, but badly built apartment blocks are far from unusual. Right now across Australia’s cities many buildings have significant leaks, cracks and fire safety failings.

So we can’t just address faults in individual developments. We need to identify the systemic flaws in how “compact city” policies have been planned and implemented.

Cracks in the compact city

The consequences of these flaws increasingly affect us all.

As the population of Australia’s capital cities grows, more of us are living in apartments. Governments have been promoting greater housing density as an alternative to sprawl for decades. But they haven’t always ensured this density has been done well, including in terms of building quality.

In the aftermath of the Opal Tower saga, experts have pointed to many reasons why building defects can occur.

These include the fact that developers owe buyers few legal obligations once the apartments are sold, which limits their risk if they get things wrong. There are also significant market pressures, particularly in boom times, to build quickly and cheaply. And there are gaps in how the construction process is overseen, meaning errors go unnoticed.

These are not new observations, but getting regulations in place to address them has proven challenging. A case in point is NSW’s new defects bond, requiring developers to put aside 2% of the building value to fix defects down the track. The bond’s introduction was delayed for years, and it will be a few more years yet before we know if it works.

Scoping the problem

So just how severe is the situation? Right now, we don’t know for sure.

In 2012 a City Futures Research Centre project surveyed apartment owners in NSW. Out of more than 1,000 respondents, 72% knew of defects in their strata-title complex. Among those whose apartments had been built since 2000, the percentage was 85%.

That project only looked at building defects as one of a number of issues facing apartment owners, however, so it didn’t document the issue in detail.

Our new research project will examine just how prevalent building defects are, the reasons they occur, and how strata-titled housing can be improved.

While the research will focus on Sydney, we hope it is a step towards changing planning and development policies to ensure better quality apartment buildings nation-wide.

Increasing inequality

A system allowing defective apartment buildings not only creates huge financial and emotional stress for residents but much wider economic and social risks.

Poor building practices undermine confidence in the multibillion-dollar construction industry, the strata management industry and in the planning system.

They also contribute to inequality. This is because apartment residents are more likely to be younger, renting, on lower incomes, and from non-English speaking backgrounds.

Amid growing concerns about the widening gap between housing “haves” and “have nots”, there is renewed political interest in housing policy. Certainly this is a crucial issue for governments to tackle, but it goes beyond a focus on housing supply and prices. Addressing quality must also be a priority.

At the same time, we also need to step back and reconsider how we do compact-city planning more broadly – including the roles governments and the private market play. With two-thirds of us now calling our biggest cities home, we need to have a serious public conversation about what we want our cities to be and how we can best achieve those goals.

We can’t afford to ignore the growing evidence that our cities are cracking under the strain. Because like the Opal Tower owners, we’re all going to bear the cost when things go wrong, and we’ll all have to live amid the wreckage.

There are lessons to be drawn from the cracks that appeared in Sydney’s Opal Tower, but they extend beyond building certification

Posted by Chris Martin on January 11th, 2019 · Construction, Government, Guest appearance, Housing conditions, Sydney

By Geoff Hanmer, Adjunct Lecturer in Architecture, Univeristy of NSW, Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.

The reasons for the cracked concrete that triggered the evacuation – twice – of residents from Sydney’s Opal Tower over Christmas and the New Year are unknown and will take time to properly establish. Many commentators are jumping to the conclusion (yes that includes you, Senator Carr) that the problem is the result of the privatisation of building certification. Instead of being done by government or council inspectors, certification is now done by private contractors engaged by the developer.

It might well be a contributing factor, but what went wrong at Opal Tower is is much more complex than that. Making certification a government responsibility again won’t solve it.

Opal is unusual. Very few residential buildings in Australia have ever been evacuated due to construction defects, and fewer still because of structural cracking. The vast majority of construction defects in multi-unit residential buildings are waterproofing failures. Rather than creating short-term alarm, they create long-term misery. Because misery does not generate headlines, the problem of quality in multi-unit housing continues to be ignored by governments.

Most strata buildings are defective

Strata title allows each resident to own the space in which they live as well as a share of the common property including pipes and walls. It’s the way apartments are usually sold after they are developed.

We don’t have definitive, current data on the extent of defects in strata title buildings. Researchers from UNSW’s City Futures Research Centre have begun collecting the information for Sydney. But there are clear indications that defects are significant and widespread.

A 2012 study by City Futures surveyed 1,020 strata owners across NSW, and found 72% of all respondents (85% in buildings built since 2000) knew of at least one significant defect in their complex.

In 2017 a City of Sydney survey identified defects and maintenance as the top concern of owner occupiers of apartments, along with short-term letting through organisations such as Airbnb.

Unfortunately for those keen to leap to conclusions about certification, studies showed the same thing back in the early 1990s when certification was largely in the hands of local governments. In fact, studies have found the same thing ever since speculative housing became common in Australia, from the end of World War One.

In fact, ever since speculative housing development and investment has become common (after World War I in Australia), residential construction defects have been a concern both here and overseas.

The market for residential buildings is extremely competitive, and controlling the cost of construction is one of the key factors in making a profit. Sometimes, the urge to maximise profit dominates to the extent that both short and long-term construction failures are inevitable.

It’s the consequence of cost control

There are, of course, reputable developers and builders, but reputation usually finishes last, undercut by less-reputable players who produce buildings that are slightly cheaper.

Defects in single-storey speculative houses with pitched roofs are probably just as common as defects in multi-unit dwellings with flat roofs, but they are much easier to fix because the houses are close to the ground and no strata committee is involved.

They are also much easier to find; a competent building inspection initiated by a purchaser is normally enough to protect the buyer. On the other hand, a building inspection of a single unit in a multi-unit development is highly unlikely to find defects which are located elsewhere in the common property of a building.

There are 653 apartments in the Meriton-developed Regis Towers, for example, which was the subject of a long-running legal action for defects.

Intervening at certification is too late

The only practical way to make multi-unit dwellings a good investment for the residents and a decent place to live is for government to take a pro-active role in driving quality throughout the design and construction process, not just at the end when the building is certified for occupation, or at the beginning when it gets a development approval.

It is a simple reality that no other actor in the construction process has the capacity to take this role. It is also simpler and cheaper to build in quality than to rectify defects.

Often, a $1 detail realised for fifty cents will cause endless grief and cost thousands of dollars to fix.

Reducing the amount of rectification required will improve sustainability outcomes by containing the amount of embodied carbon incorporated in the building.

If the building performs well, it will have a longer life and that will reduce the need to eventually replace it with a new building; again saving materials and improving the outcome for embodied carbon. It is worth remembering that 20 million tonnes of construction and demolition waste are produced in Australia each year.

Governments have been reluctant to intervene early

Governments have as good as ignored the problem of defects in multi-unit residential construction even though they have been aware of it for years.

This is particularly concerning because the state governments in NSW and Victoria have been busy spruiking this type of accommodation as the solution to the pressures of rising populations in Sydney and Melbourne. Given this, the protections for apartment owners under existing legislation are ludicrously slight.

Unfortunately, compliance with the National Construction Code (NCC) in its current form is no guarantee. There are so many ambiguities and grey areas in the NCC and in the way that it is applied that it is a guarantee of almost nothing, particularly when it comes to waterproofing.

A simple example is the construction of balconies with flat slabs, which is perfectly acceptable under the NCC. The floor slab is constructed as a single plane from the interior to the exterior of the building with the waterproof barrier at the balcony being provided by a masonry wall or a concrete ridge on top of the slab.

This design almost always leaks within a few years. The reliable solution is to cast the slab with a step, but this is more expensive and as a consequence is rare. Cut-price membranes under tiled terraces are also common, causing leaks, mould and misery, despite arguably complying with the provisions of the NCC.

Fortunately, there is plenty that government could do to improve quality of multi-unit construction without affecting prices much.

Five stars. Information could drive standards

One clear way forward is to make the construction quality of a building more transparent to buyers.

This could be achieved by introducing a similar sort of quality assurance scheme to the one government runs to improve safety in cars; a five-star rating.

People are free to buy a two-star car, but for obvious reasons, not many do, even if they are cheap. Similarly, it is unlikely that many people would buy a two-star unit.

It would be perfectly possible to star rate multi-unit housing for construction quality using an independent assessment body against a transparent set of criteria.

It’s been tried before

Such a quality assurance scheme was introduced by the now defunct Building and Construction Council (BACC) in NSW during the 1990s, but unfortunately foundered due to a lack of funding and will from Bob Carr’s government. This was a pity, as the scheme was designed to drive quality through the whole of the building process, from design to completion.

It still provides a perfectly valid model for a policy that would actually do something to improve multi-unit construction quality at a cost which is minimal in relation to the value of the benefits produced. If a building is built correctly in the first place, then owners will not need to rely on shonky fly-by-night builders and developers for rectification works nor need to claim against complex insurance policies.

If the NSW and Victorian governments are serious about having a greater proportion of people live in multi-unit developments, they have a responsibility to do something about their quality before we are left with a overhang of misery, leaks and failures. Just ask the residents and owners of Opal Tower.

City Futures Blog

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