The 30 Minute City (part 1): opportunities and challenges

Posted by Chris Martin on August 22nd, 2016 · Cities, Transport, Wellbeing

By Susan Thompson, City Wellbeing Program, City Futures Research Centre.

At a recent mid-winter Planning Institute of Australia breakfast Kerry Robinson, General Manager Blacktown City Council, and I considered the ‘30 minute city’ following the launch of then Prime Minister Malcolm Turnbull’s ‘Smart Cities Plan’ at the National Cities Summit. The 30 minute city is defined as ‘one where, no matter where you live, you can easily access the places you need to visit on a daily basis’. This is a city which provides real equity to its inhabitants. Now that there is a new government in Canberra with Mr Turnbull remaining at the helm, it seems fitting to revisit what we said about the 30 minute city as government moves towards this vision!

We both support the idea. This blog post presents my broad reflection on the 30 minute city, both its opportunities and challenges. In a second post we’ll present Kerry’s thoughts about the City of Blacktown in Sydney’s west and the challenges to deliver a 30 minute city for its residents.

There are some obvious health and wellbeing problems associated with the ‘big city’. Our physical and mental health is being constantly compromised by the way we live in these sprawling metropolitan centres. We get insufficient physical activity from long commutes; we are less connected with each other, spending long times away from neighbourhood communities and families; we don’t eat healthy food because it’s easier to grab take away and let’s face it, many of us are exhausted by the end of the day! Physical inactivity, social isolation and poor eating habits are the result – and each one of these are risk factors for chronic disease – the conditions that plague populations across the globe. Diabetes is of particular concern, and in reflecting on Blacktown, it is disturbing to note that Western Sydney is the diabetes hot spot of the city. Coupled with these health issues, the ‘big city’ poses serious environmental problems, not the least greenhouse gas emissions from car use.

So what would a ‘30 minute city’ mean? Is this just a romantic notion of returning to a former way of life where neighbours looked out for each other and there was more time to smell the roses and enjoy a slower pace of life? For sure there are potential health and wellbeing gains from the thirty minute city. But there are challenges as well. I’d now like to consider what these are.

The 30 minute city is about living closer. This has implications for how we live. We need to be more conscious of others’ needs when they are very close by. How do we negotiate conflict around everyday living practices? Some of the issues that are now problematic – noise, smoking, pet ownership, parking – how do we sort these things out?

The 30 minute city is about sharing. We could start to see much less consumption as we share big things like cars and smaller household items too (with less space, who needs to clutter up their apartment with things that used infrequently. And what might be the implications of less consumption for our economy as it is currently structured? This might herald an evolution from the present individualistic focused culture to a more communally focused way of living. Helping each other more? Across the generations, bringing older and younger closer together; able helping those who are less able, possibly addressing a culture of inequity. Such a scenario could force a shift in thinking about ‘growth’ and how our economy can still serve us well in a sustainable and non-consumerist way. Planners might be interested to have a look at Yvonne Rydin’s book ‘The Future of Planning: Beyond Growth Dependence’ (2013, Policy Press).

The 30 minute city is about public spaces, rather than private spaces. For some this will mean a cultural shift in the Australian way of life, letting go of that fixation on the private spaces of home as THE most important space (in the real estate dominated city of Sydney, this seems like a tall order!). Planning, designing and constructing great inclusive and exciting public spaces for everyone in the community to share will need to be our mantra. So too will be the provision of green open space which is essential for our physical and mental wellbeing. Private space will still be important, of course, but it will take second place to the public realm. There will need to be a new awareness of responsibility for caring just as much for communal space.

The 30 minute city is about using spaces differently. Consider this in relation to the space on the street: we can grow more food in urban agricultural undertakings; we can create spaces to sit and linger… this is about reimagining the streets as places to be in, enjoy and meet with friends and community. Green spaces will be used for recreations, community gardens, dog parks, children’s playgrounds, senior citizens’ outdoor gyms and no doubt other things as well. This will put pressure on this valuable resource. Paths will be much more about active transport and good connections to public transport – to get to the next 30 minute city! And I think that public spaces such as libraries – we may well need 35 libraries for 500,000 people – will become more and more important in this new way of living. Libraries are increasingly used by kids do their homework; are where parents and carers take their children for educational activities and entertainment; and where older folk meet up for groups such as craft and art classes and the health beneficial socialising, as well as get books and other things to borrow. There is every possibility that public libraries will be the community’s central sharing hub in the 30 minute city!

The 30 minute city is about refocussing attention on regional development. Can the development of the 30 minute city refocus our attention on regional cities – how can we develop these as great liveable environments, while connecting them to other cities and the broader national economy? Conversely, does the 30 minute city buck the global trend of movement to urban areas?

So what does all of this mean for planners and their role? What issues will they need to address in helping to create the 30 minute city?

Here are my suggestions as to what planners will need to be doing:

Work alongside the development industry, encouraging developers to be part of the 30 minute city picture by contributing to great public space, lots of green space, providing car share spaces and community hubs like the new libraries.
Really understanding what is important to a community – AND in doing this, bring the community along to embrace the 30 minute city.
Create a denser city that privileges people first, the car last and that has design of great public spaces at its heart (think Jan Gehl!).
Be open to/ flexible about so called ‘unorthodox’ use of space – there will be no orthodoxies!! Be willing to test out ideas – allow pop-ups; temporary installations… and evaluate how they work and then decide about permanency.
Work with the multi-disciplinary evidence that supports the creation of the 30 minute city and communicate that convincingly to the decision makers. A lot of this evidence is outside planning but is central to the way our environments are planned, designed, constructed and managed. Some of it resides in health; some of it in environmental sustainability and low carbon futures.
Challenge silo-ways of thinking and budgeting – if we create an environment that is health supportive, then we need funding from health and an acknowledgment that this will ultimately reduce the costs of health care – and this surplus then needs to come back to planning!
Engage in education – both for others and self. It’s clear, education plays a big role here!

Want to read more about the 30 minute city? A recent article in Sourceable might be of interest! Let us know what you think and whether you can see this vision as a realistic and desirable one.

Art, Literature and the Census

Posted by Chris Martin on August 1st, 2016 · Demographics

By Alison Taylor, Demographer, City Futures Research Centre.

Did you know that the Census has inspired art works and literature?

With the 2016 Census rapidly approaching (just 11 sleeps away, the ABS told me today 29 July), I’ve found myself wondering how did we get here? What is the history of the Census in Australia?

August 9 2016 marks the 17^th national Census of population and housing to be conducted in Australia. The power to run Censuses was granted to the Commonwealth in the Australian Constitution, with the first national Census held in 1911*.

However, prior to this there were ‘musters’ to count convicts and settlers, which eventually became formal state Censuses. The first of these was in NSW in 1828. At that time, the white population numbered 36,598 with 57% free settlers and the remaining 15,728 people convicts.

By 1881, the states had begun to co-ordinate the holding of these Censuses, so that they occurred every ten years in line with Census day across the British Empire. Unfortunately the questions were not consistent so there were difficulties in formulating Australia-wide data.

In 1881, NSW had just over 750,000 people and the Australian population was 2.25 million.

Reflecting a common method of reporting at the time, an illustration titled “The great census of the Empire of Great Britain” was completed by Julian Ashton and published in The Australasian Sketcher on April 23, 1881.

Image from the State Library of Victoria

After 1901, it was intended to run a national Census in Australia every ten years, although the 1930 Census was cancelled due to the Great Depression. In 1933, the Census was re-instituted in recognition of the valuable information it would provide on the impact of the depression (and also for the temporary jobs). For the first time, questions about income included categories for people earning no income or a very low income.

Meanwhile, in the US in 1911, the census was inspiration for a novel. In 1911, Francis Rolt Wheeler published The Boy With the U.S. Census about a young census-taker named Hamilton in Washington, DC. The novel follows Hamilton on his exploits working as an enumerator, the troubles encountered taking a census, the ethnic groups he meets, and his work as a clerk at Census Bureau headquarters where the data were electronically tabulated using Hollerith tabulating machines (from https://www.census.gov/history/). I can’t imagine it getting published today – though maybe it could form the basis of a television reality show.

After the delayed Census of 1933, the next Census was postponed until 1947 due to Australia’s involvement in war. In 1947 when attention returned to domestic matters, the value of Census data was again recognised; this time for its assistance in Australia’s post-war economic reconstruction.

Because of the large gap in Census information due to the war, it was decided to hold a ‘catch-up’ Census in 1954, midway between 1947 and the planned 1961 Census. Given the value of Census data to the Commonwealth, it was considered worth the effort to run this extra Census.

After 1961, an Australian Census was held every five years, something that had been desired by statisticians since Federation. Australia is one of a select group of countries that conducts a national Census every five years, much to the envy of people in countries that don’t.

Funding constraints put pressure on the continuation of this frequency, but ask any planner, statistician, demographer, market researcher or policy analyst and they’ll tell you that Census data is needed every five years – particularly where things change a lot or where big investments are at stake.

Image from the National Library of Australia

The 2016 Census, coming next month is unique in the history of Censuses in Australia. Not only will the questions not change from those asked in 2006 and 2011 giving us a fantastic time series, but this will be the first Census to be largely completed on-line. It is expected that around 24 million people and 10 million dwellings will be counted – the largest numbers ever.

We can all look forward to updating our understanding of who we are, where we live and how we’ve changed – as the Census data becomes available over the next couple of years.

Check out the ABS website for more information including some YouTube videos on what the census is and why we need it, as well as protecting your privacy and how to complete your form.

The next blog in this series will detail how we’ve changed since the first national Census just over a century ago.

* Much of the information on the history of the Census comes from an article by Beth Wright, found on the ABS website.

Ditching Logan’s public-private regeneration sets Queensland back on social and affordable housing

Posted by Chris Martin on July 25th, 2016 · Government

By Hal Pawson, Associate Director, City Futures Research Centre. Originally published at The Conversation.

Four years after its announcement, the Queensland government last week cancelled the central plank in the Logan Renewal Initiative: the overhaul of Logan’s 4,900 public housing dwellings by a community-housing-provider-led consortium.

The initiative is a planned 20-year strategy to reshape Logan, an outer-suburban centre in Brisbane’s southeast. It would have been Australia’s largest and most-ambitious residential urban regeneration project.

Given its flagship status, and the hopes invested in it as a new form of public-private renewal partnership, the project’s abandonment could be a serious setback for Australian housing and urban policy.

So, why – presumably at a very substantial cost in compensation to the spurned regeneration partners – did the Queensland government walk away from the deal?

Why was the project canned?

The Logan area encompasses Queensland’s largest body of public housing. By the early 2000s, the Logan City Council had begun to see the resulting concentration of disadvantage as damaging to the area’s public image and reputation. As well as detracting from residents’ quality of life, high rates of crime and anti-social behaviour had become a perceived barrier to investment.

Partly in response to these concerns, but also building on an existing collaboration between its Labor predecessor and the council, the Newman LNP government began the Logan Renewal Initiative in 2012. From the government’s perspective this was to be just the first instalment of a broader plan to radically recast the state’s public housing system.

In 2014, after three rounds of bids and multiple modifications to the original specification, a consortium involving two NSW-based community-housing providers was revealed as the successful tenderer.

This proposal involved a new place-based management entity, Logan City Community Housing, and pledged the replacement of 1,000 outdated existing public housing units with 2,600 newly built homes – 1,600 of which would be social and affordable dwellings.

In early 2015, Queensland voters threw out the Newman government. But, nearly 18 months and very probably millions of dollars in set-up costs later, Housing Minister Mick de Brenni last week pulled the plug on the project. Instead, he is offering a A$17 million commitment to fund 70 new public homes over the next three years.

At least some of the seeds of the project’s failure were probably sown by the arguably reckless way it was originally rushed forward in 2012. Buttressed by a huge parliamentary majority and impatient to drastically reshape Queensland’s public services, the Newman government gave little priority to building public support for its radical plans – in housing, as in other areas.

Equally, the drawn-out tender process, with its multiple stages and changing requirements, speaks of excessive haste and/or policy over-reach in a state with little previous experience of urban renewal of the scale and complexity envisaged here.

Minister de Brenni claimed:

The previous government’s privatisation plan was risky and unprecedented in scale.

However, he then went much further, declaring the now-doomed plan unacceptable in principle since:

It’s not the policy of this government to privatise essential services and I want to make it very clear that this includes public housing.

Privatisation is an incendiary term in political debate. It may be a technically accurate description for the transfer of public housing to the control of a non-government body in the form of a not-for-profit community housing provider. But whether this really amounts to the kind of deal normally evoked by the term “privatisation” in the public mind is highly debatable.

First, the “assets” concerned were to be retained in government ownership. They would have passed into community housing provider control only on a fixed-term lease. And the additional homes to be developed would also have returned to government ownership and control at the end of the scheme.

Second, since it is not a profit-making body, the acquiring community housing provider is not in this to exploit the opportunity to generate shareholder returns or to squeeze funding for local services.

To the contrary, in canning the Logan project the Queensland government has turned its back on around $800 million of direct investment in social and affordable housing, as well as significant educational and training opportunities for local people.

Third, in terms of its management of the former public housing stock, the would-be new landlord in any housing transfer project of this kind is subject to both contractual obligations and statutory regulation.

Inconsistent with Labor policy elsewhere

Minister de Brenni’s declared interpretation of public housing transfers is also out of line with that of Labor colleagues federally and in some other key states.

In 2013, then-federal housing minister Mark Butler reaffirmed the Labor government’s aim of boosting the community housing sector, recognised the role of public housing transfers in achieving this goal, and expressly favoured transactions involving ownership handover rather than those limited to short-term management outsourcing.

Meanwhile, South Australia’s Labor government is currently progressing a public housing transfer program aimed at levering in additional funding to upgrade the public housing stock. This funding would otherwise have been unavailable.

Also, Labor leader Luke Foley in 2015 challenged the NSW government by advocating a boost to the state’s community housing sector through the title transfer of 20,000 public housing units.

With Australia’s public housing withering on the vine and many estates falling further into social and physical decline, there is an argument that these problems could and should be fixed by governments directly. But, over decades, both federal and state/territory governments have shown themselves unwilling to take that responsibility.

This policy stance has also recently been backed by the mainstream view that the renewal of large estates should build in social and economic diversity through a private/public housing mix.

In any case, by whichever route it is to be achieved, a clear, bipartisan way forward to tackle these problems is urgently needed. Fundamentally, that would mean commitments to quantify the national cost of remedying public housing disrepair, to devise a funded estate upgrade and diversification program, and to fashion a sustainable financial and governance framework to assure the sector’s future.

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Tags: Affordable housing·Social housing

Apartment construction boom: is this the end of the dream?

Posted by Laurence Troy on July 22nd, 2016 · Affordability, Cities, Construction, Housing supply

By Laurence Troy

Australian Construction Insights (ACI) released their latest brief last Monday 18 July and noted that for the first time in Australia, construction starts for multi-unit housing were higher than for detached housing. Of course, there ought to be caution in reading these figures, as any decent geographer will tell you, location and scale plays a big part of this overall picture. That is to say, the local experience is quite varied nationally.

These figures highlight, firstly, the dominance of the three largest cities in these statistical measures. In New South Wales, the detached versus other housing lines crossed in 2012, and there had been virtually a 50/50 split in dwelling starts by type since 2002. In Victoria and Queensland, the trend is similar to national figures, with trend lines crossing sometime in 2015. The remaining metropolitan centres of Australia are following a pattern quite different, and probably much closer to historical trends.

Figure 1: NSW dwelling starts for houses and other dwellings (source: ABS 8752.0 – Building Activity, Australia)

Figure 2: Balance of Australia (excl NSW, Vic, Qld) dwelling starts for houses and other dwellings (source: ABS 8752.0 – Building Activity, Australia)

While this marks a significant milestone nationally and perhaps indicates the shape of things to come in the near future, it is not immediately clear what this actually means for housing in Australia. It perhaps raises more questions about where Australia’s housing is headed and what the future holds for those outside the owner occupied housing market.

Multi-unit housing has been dominated by investors rather the owner occupiers with analysis of 2011 census figures suggesting that between 62% and 67% of flats units and apartments in the three biggest cities owned by investors. These figures are virtually the complete opposite of aggregate levels of home ownership for all housing types. Anecdotal evidence also tells us that the rate of investor ownership is much higher for new apartments. This effectively means that now over half of all new building stock in Australia is being constructed to meet investor demand. This also means that the majority of housing now being built is for people who will never live in these properties.

If this trend holds up, then it is likely we will very soon witness a radical departure from the historical model of housing provision in Australia. Popular politics and policy for housing has predominantly focused on securing a pathway for new households in home ownership. This rhetoric has not changed, despite the reality clearly shifting for an increasing share of younger or new households over the past decade. This has led some to suggest the emergence of ‘Generation Rent’, with a growing body of households who will never afford to make this transition. This observation has all but been confirmed in the release of the latest instalment of the HILDA survey, which also suggests that renters will outnumber owner occupiers by 2017.

Of course owner occupation is not the only answer, with many European countries, for example, having much higher rates of rental. For the most part these new dwellings are available for rent, so it does meet some entrenched housing demand, however the problem in Australia is that unlike these European countries, rental tenancy laws and investment patterns are manifestly inadequate at ensuring long term tenancy options that gives renters the security to occupy dwellings as their own. The balance of power is firmly stacked in favour of landlords to protect the speculative value gains that have been a long characteristic of housing property in Australia. Not only is this unearned increase in value socially unproductive (it does not produce anything of benefit to society) it is now blindingly apparent that it is socially counterproductive. Housings costs for many are extreme.

This failure to recognise the claims of renters as equal citizens with home owners in the housing debate is in part a product of the long history of privileging ownership over rental that has created a policy vacuum in the rental sector. Housing policy needs to shift to recognise housing as a place that people need to live, not as a tool for middle class rent-seeking.

With such a high proportion of demand coming from owners whose motivations are governed by a different set of criteria than those who see these dwellings as long term living option, the relationship between housing and social need has become detached. The economics of the dwelling product is likely to reflect investor desires, which are not necessarily the same as occupiers. The assumption has been that households will trend away from apartments as they have children, but the reality of the current housing markets means this is not guaranteed. The trend between the last two censuses indicates that family households are increasing their share of households in apartments. This underlies the unsuitability of many of the new dwellings for family households and the inflation of houses prices increasingly being detached from wage growth.

So where does this leave us?

The latest figures on dwelling construction all but confirm that these trends will continue in the short term. It is hard to see any radical shifts in the housing policy domain away from privileging investment over occupation in the near future, however something has to give sometime soon. The obscene unaffordability of housing in Sydney in particular, coupled with a housing supply chain that is becoming increasingly detached from housing need or aspiration spells trouble. The rising resentment of younger generations at the stark wealth divide in housing should be cause for concern and ought to be a warning for the political elite who claim to govern in their name. The political voice will only grow louder as the size of this group grows.

It’s not easy being green, especially when affordable help is so hard to find

Posted by Edgar Liu on July 19th, 2016 · Climate change, Wellbeing

This article by Edgar Liu and Bruce Judd was originally published on The Conversation.

The transition to a clean energy future is upon us, as shown by the huge uptake of solar panels and by the Turnbull government’s decision to set up a A$1 billion Clean Energy Innovation Fund. But what about those people who are at risk of being left behind?

Our survey of lower-income households shows that information about low-carbon living is often difficult to access, and that assistance is sometimes misdirected.

As a result, transitioning to low-carbon living is much harder for these households than it should be.

Listening to the people

Between December 2015 and June 2016, we held 23 focus group discussions with 164 lower-income households across eight metropolitan and regional centres in New South Wales, South Australia, Tasmania and the Northern Territory. Our aim was to try to understand the challenges these households face in transitioning to low-carbon living. This was part of a wider study, funded by the Cooperative Research Centre for Low Carbon Living, on finding ways to help poorer households reduce their carbon impact.

Almost everyone we spoke with supported the idea of low-carbon living. However, the ability to afford whiz-bang green technology – from expensive solar panels and battery systems right down to LED lightbulbs – is a big issue for these households.

Significant increases in energy costs since the late 2000s have added to this problem. In some states, bills have more than doubled in just the past six years.

While money is a key problem, it’s not the whole story, and there are ways to help. We have found a range of factors, besides affordability, that limit lower-income households’ ability to transition to low-carbon living.

Finding reliable information

Not everyone is looking for a hand-out; many just want to know how they can help themselves become more energy-efficient.

A major barrier that cropped up time and again in our survey is accessing the “right” information. Many people get good tips about assistance programs through friends and family, or via charities like the Salvation Army (one of our in-kind project partners).

But outside these avenues, information is often only available online, and many of our participants said that they either can’t afford internet access at home or, more importantly, don’t know what to search for.

What little information trickles through is often hard to understand. The Tasmanian government, for instance, offers a range of concessions on power and heating bills for older people or those who need to run medical equipment at home. But the benefits are expressed in cents per day (the current electricity concession, for instance, is 132.557¢ per day), which can make them unnecessarily hard for customers to calculate. Eligibility criteria are also often complicated.

With access to government services increasingly being moved online, the process can become a confusing rigmarole for many people, while others may miss out entirely.

Clean energy: easier for the well-heeled… Source: Bruce Judd

Misdirected assistance

Most of the assistance programs available to lower-income households, such as Centrelink Utilities Allowances, are aimed squarely at providing financial relief.

States and territories also have their own rebate schemes to offer relief from rising energy costs. In NSW, for example, EAPA vouchers are designed to provide emergency and crisis relief.

But with lower-income households less likely to own their homes, they are often precluded from accessing programs to encourage green energy, such as solar panel rebates. This is a classic split incentive – the owner buys the panels (and gets the rebate) but the tenant gets the benefit (lower bills), making the owner less likely to invest.

This leads to the question of why rebates are not offered for using green energy, as well as for installing it.

“Green” criteria already exist in some other assistance programs. For example, the No Interest Loan Scheme, which helps lower-income households buy products such as whitegoods, now requires appliance to meet certain energy-efficiency standards.

The same principle could easily be used to help lower-income renters access electricity from cleaner energy sources.

Giving poorer households free home energy assessments is a good start, but they are focused purely on cutting energy consumption.

… and harder for those who are doing it tougher. Source: Bruce Judd

Removing hurdles

The compounding impacts of energy bill increases mean that many lower-income households are doing it pretty tough. Forgoing comfort in not turning on the heater or air-conditioner is one thing, but skipping meals or medication (as many of our survey respondents do) can have significant impacts on health and well-being.

Unfortunately, lower-income households have been going without life’s essentials for far too long. Setting up assistance programs is a good start, but we need to make sure that those who need help are getting it.

Here are our five suggestions for making it happen:

Get the info out there. It’s important that people get the right information when they need it. Putting information online is great but it cannot be the only way – consideration must be given to those without internet access or who are less computer-literate.
Keep it simple. Information needs to be straightforward and clear. If it’s stuffed with jargon and confusing numbers, it can become self-defeating.
Support the support organisations. Charities like the Salvation Army and the St Vincent de Paul Society serve important roles within our community, but they too need our continued help, especially when funding is not keeping up with needs.
Get value for the public’s money. A billion-dollar public fund may sound like a big deal, but this is small fry compared to Australia’s A$878 billion annual domestic consumption expenditure. Nonetheless, it is a good start in heading towards the right direction. We just need to make sure it helps those who need it most.
Overcome personal pride. Asking for help is never easy, and that’s why so many lower-income families go without. Making sure that incentive programs reach the right people, in the right way, can dramatically improve their willingness to use them. Hopefully, in the long run, fewer families will need to go without.

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Tags: Energy efficiency·Low carbon living·Low income households·Renewable energy

Housing’s back

Posted by Chris Martin on July 12th, 2016 · Affordability, Government, Housing

One week on and the election has produced a government – which, for a while there, didn’t look like a sure thing. However, the more remarkable result of the election campaign was this: one of the major parties campaigned on reforming tax settings to reduce house price speculation and, having grasped what was long supposed to be the third rail of Australian politics, it didn’t die – on the contrary, they got votes.

Labor gained in the face of the property lobby in rampant scaremongering mode: notably the Property Council’s ‘house of cards’ campaign (which combined scaremongering with some unguarded admissions) and the old ‘rents will skyrocket’ theme pushed by the Real Estate Institute. Your correspondent subjects himself (for research purposes) to a lot of property industry communications: election campaign messages included one leading property guru telling her seminar audience flat out ‘for heaven’s sake, vote Liberal’, while another property sage intoned in his newsletter that ‘Labor can suck a fart…. Sorry, property investors and the Labor Party don’t mix’. Last week The Australian reported that the property lobby was calling the campaign a success, with the Property Council observing ‘there is a correlation between electorates with high numbers of investment property owners and a lower than average swing against the government.’

Assuming that’s correct, the property lobby is badly missing the point: if ‘investors’ swung less to Labor, it means the rest of the people swung to them more.

The last time housing played anything like such a prominent part in an election campaign was 2007, when Kevin Rudd proposed to address the affordable housing crisis with tax-preferred home saver accounts, a National Rental Affordability Scheme, and making Commonwealth land available for sale or use in affordable housing schemes – but not tax reform. As it happened, one year after Rudd Labor came to office the GFC hit and, to keep credit and spending going, the Government turned again to house price speculation, stoked with big first home buyer grants – which has proved to be a more enduring legacy than its other housing policies. Housing also had a central, if uncredited, role in the 2004 election, when John Howard campaigned on ‘keeping interest rates low’ – households having just taken on an unprecedented level of housing-related debt, induced by the Howard Government’s capital gain tax discount (introduced 1999), and first home buyer grants (introduced 2000, doubled in 2001).

So what is it about things now that has put housing on the agenda in such a different way? In the last couple of years, our housing system has passed a few psychologically important thresholds: the $1 million median house price in Sydney; more than 50 per cent of home lending going to investors. Interest rates are at record lows, which ought to please people who borrowed under Howard, or Rudd – but it is not enough.

Just how the affordability problem is currently biting would-be owner-occupiers is shown in a recent report by the Australian Institute for Progress on the ‘deposit gap’ – that is, the change over time in the amount of savings required for a deposit for a home loan. The AIP, a conservative outfit with links to the Liberal Party, apparently intended its paper to contribute to the campaign against negative gearing reform – but the pictures tell a different story.

The AIP has graphed the change in the size of the deposit, relative to average earnings, required for a typical home loan, along with the change in typical loan repayments (again, relative to average earnings). The latter has gone down with lower interest rates; the former up with higher prices.

The AIP calculates that ‘Sydney repayments over 25 years are almost 16% more affordable than they were 25 years before, but the deposit is 67% less affordable. If you saved 10% of your after tax income in Sydney each year it would take you 23.8 years to accumulate a 20% deposit.’

In the other capital cities it’s a similar pattern, with lower multiples. In Melbourne, the AIP calculates that would take almost 18 years to save the deposit.

In Brisbane, it’s over 12 years.

Having put its finger on an important aspect of our housing affordability problem, the AIP badly misprescribes the treatment, recommending government-funded deposit grants, using superannuation savings for deposits, and more lending by banks and ‘the bank of mum of dad’. All of which are just more ways of getting first-time owner-occupiers paying more for housing – while those already wealthy in housing still hold the upper hand, because their deposits come from tax-exempt or half-taxed incomes – that is, capital increases from the houses (owner-occupied or rental, respectively) they already own – and because their repayments come from pre-tax incomes, giving them a cashflow advantage – thanks to negative gearing.

Greater affordability comes from being able to pay less, not more, for housing. From it too comes the prospect of better uses for money – and better applications of creditworthiness and promises to repay – in the creation of valuable new goods and services, rather than in merely punting on property. And it looks like more of the electorate is voting for it.

NSW tenancy law review misses on security for tenants

Posted by Chris Martin on June 28th, 2016 · Government, Law, Tenancy

Last week the NSW State Government tabled in Parliament the report of its five-year review of the Residential Tenancies Act 2010.

Its strongest point is a series of recommendations relating to domestic violence, including for provisions for victims to immediately terminate a tenancy because of domestic violence, and avoid being held liable for property damage caused by violent occupants. Its weakest point, however, is a big one: the review badly misses an opportunity to do something about the insecurity of rental housing.

The most useful thing it could do – that is, recommend getting rid of ‘no-grounds’ termination notices by landlords – the report dismisses; instead, it holds out the unhelpful prospect of ‘long fixed term leases’ as the hope of improved security.

It is a false hope. Long fixed term leases are an idea that might receive a bit of enthusiasm in a dinner party conversation but, when anyone really thinks about it, they don’t suit the interests of landlords or tenants – at least, not as their interests are currently shaped by the structures of our rental housing system.

Let’s quickly get clear on what fixed terms, long or short, actually do under our current tenancy laws. Fixed terms are a hangover from the common law, which insisted that leases had to be for a term (and if there was no term, there was no lease), which led to lots of fun case law about what was a term (eg is ‘until the end of the peanut crop‘ a term?). Under the modern residential tenancies legislation, tenancy agreements aren’t required to have a fixed term but, where they do, the landlord cannot give a termination notice on the ground of sale of the premises (they can still sell, but the purchaser takes the property with the tenancy intact), and neither the landlord nor the tenant can give a termination notice without grounds during the fixed term. Generally, a fixed term also prevents the landlord from increasing the rent, but that’s only if the agreement does not specifically provide for an increase.

In practice, most tenancy agreements start with a relatively short fixed term of six or 12 months. There is nothing in the law to prevent landlords or tenants from asking for something longer, but there are reasons why neither party does. The review actually does a good job of summarising them:

Landlords and agents may prefer the greater flexibility under periodic leases for rent increases and for regaining vacant possession of the property for reasons of sale, personal use or for re-letting to a preferred tenant. Tax settings in Australia and the tendency to purchase of property to make a capital gain rather than to collect rental income also contribute to landlords’ reluctance to enter long term leases.

Tenants may not request long fixed term leases, as they may want to keep their housing options open, or may fear being ‘stuck’ with an undesirable landlord…. Indeed the Tenants’ Union has argued that it would caution tenants against entering into a long fixed term tenancy, in case the landlord proves to be difficult or sells to another landlord who is an unknown quantity.

These are the structures (and policy settings underpinning them) that make renting insecure: the speculative holding of rental housing (facilitated by negative gearing) for sale (capital gains taxed at half the rate applying to rental income) to other speculators (again, facilitated by negative gearing and the capital gains tax discount) or owner-occupiers (exempt from capital gains tax, income tax on imputed rent, and land tax) – which means having to be able to readily remove a tenant; this speculative holding being undertaken by small-holding landlords (preferenced by the land tax rate structure) who don’t trade on their reputations as housing managers – which means tenants may need to remove themselves if things turn ugly.

Long fixed terms are an attempt at a legal fix for insecurity that does not fit with the structures of our rental housing system. However, the review tries to press its preferred fix by recommending changes to the Residential Tenancies Act to make long fixed terms ‘more attractive’ – by allowing agreements for a long fixed term to dispense with most of the standard conditions of tenancy agreements, such as the landlord’s obligation to do repairs. Most of these conditions are landlord obligations, so the attraction would be decidedly one-way. The Act already makes such an allowance in relation to agreements for a fixed term of 20 years (the result of a previous round of enthusiasm for long fixed terms); the review recommends extending it to fixed terms of five years. Most landlords might still find this length of fixed term too long for their speculative purposes, but a few might be able to work with it. Whether it would really work for the tenant is doubtful.

Say, for example, that after the usual 12-month fixed term tenancy agreement, the landlord offers the now-settled-in tenant a five-year fixed term, with no obligation to do repairs. There might be a little discount on the rent too – but the rent can still go up each year. And while the tenant might feel settled in their tenancy, this can be used against them too – the ‘fixed term/no repairs’ deal might be presented on a ‘take it or leave’ basis. In trying to make something that is currently useless more ‘attractive’, the review may be creating something that is quite unfair.

Real improvements to tenants’ security must come from tenancy law reforms that work with the present structures of the rental housing system, and from structural reforms that deliver a different type of landlord with a different outlook for their investment.

Getting rid of ‘no grounds’ terminations by landlords would work with the present structures. Landlords could still sell when it suited them – but they could not use a ‘no grounds’ notice for the host of bad reasons for termination – discrimination, retaliation, undue pressure (like the ‘take it or leave’ deal, above) – to which these notices currently give cover. Bad landlords would be at a disadvantage, reasonable landlords hardly affected, and all tenants would have greater peace of mind.

And the different type of landlord we need is one that likes nothing more than receiving a steady trickle of rents (as opposed to flipping properties for capital gains) from a portfolio of multiple properties (so a problem in one tenancy doesn’t derail the enterprise), whose scale of operations means they have a reputation to protect through decent customer service to tenants. And to get this, we need tax settings that don’t reward speculation, that don’t discourage scale, and that make the most valuable thing in the rental housing system a happy, long-term tenant.

Is community housing set to feature in the Waterloo Estate Rebuild?

Posted by Chris Martin on June 2nd, 2016 · urban renewal

By Hal Pawson. Originally published in Inner Sydney Voice.

Triggered by the December 2015 NSW Government announcement of a new station nearby, the Waterloo Estate is set for a huge revamp over coming years. Existing public housing units will be replaced by an equal number of new low rent flats built to modern standards, with all current residents entitled to one of these replacement homes. To pay for this, valuable surplus land freed up on the site will be sold for private housing development so that the rebuilt estate will have a greatly increased number of homes, overall.

The Waterloo project is part of the NSW Government’s state-wide ‘Communities Plus’ estate renewal program. Under this model private developers partner with community housing providers to replace outdated estates with new low rent homes, alongside properties built for market sale. With Waterloo tenants having a ‘right to return’, these ‘returning’ (or remaining) residents are likely to find their new homes managed by a community housing provider rather than by the State Government’s Department of Family and Community Services (FACS). Why would the Government choose to do this and what will it mean for tenants?

What are community housing organisations?

Community housing organisations, or CHOs, are not-for-profit bodies set up to build and manage affordable rental housing. Like public housing, CHO properties are generally rented out at 25% of tenant income (unless that income exceeds an equivalent ‘market rent’ for that property). For landlord and tenant responsibilities, CHO tenancy agreements are also similar to those in public housing.

Important in ensuring CHOs maintain a good standard of service and efficient operation is their supervision through national regulation. Under this system the NSW Registrar of Community Housing keeps a watchful eye on all listed CHOs operating within the state, periodically checking that each organisation is ‘compliant’ with clearly defined minimum standards. This level of external scrutiny is unmatched for public housing.

In NSW around 30,000 tenants rent their homes from CHOs compared with around 110,000 renting a public housing property from FACS. Although there are hundreds of individual CHOs across Australia, most have only a handful of properties. The bulk of CHO tenancies are managed by a few larger organisations. In Sydney, these more significant players include Bridge Housing, St George Community Housing (SGCH) and the Women’s Housing Company.

What happens when public housing tenancies are ‘transferred’ to community housing?

Across NSW, many renting from CHOs are former public housing residents whose tenancies have been ‘transferred’ to a CHO at some time over the past 10 years. When this happens, tenants are normally protected against any loss of existing rights.

For Waterloo tenants who see their current public housing tenancy transferred to a CHO on the rebuilt estate, the State Government has indicated that lease length (unlimited or fixed-term) and other terms and conditions (such as whether pets are allowed) will remain unchanged. Rents will also be set at an equivalent level to what would be charged in public housing, leaving tenants’ net income after rent payment unaffected by the change of landlord.

Why are governments wanting to expand community housing?

Both in NSW and in other states, governments have actively promoted the expansion of community housing over the past 10-20 years. This has happened for several reasons. The most important is the view that CHOs have the potential to provide a more personalised and responsive tenancy management service than public housing providers. The better results achieved by CHOs are reflected in the higher rates of tenant satisfaction recorded by CHOs compared with public housing landlords. In NSW, for example, the latest figures show 79% of CHO tenants ‘satisfied with overall landlord service’ compared with only 65% of public housing tenants.

One reason that CHOs are rated more highly by tenants is that they can afford to spend a bit more on housing services. This is partly because low income CHO tenants are eligible for Commonwealth Rent Assistance (CRA). This is a Centrelink benefit that can be claimed to top up the rent a low income CHO tenant can pay, without any reduction in their net income, as compared with what their situation would be as a public housing tenant. For a CHO, the ability to have tenant rent payments topped up through CRA means the organisation’s rental income can be about 50% higher than what it would be for a public housing provider managing the same estate with the same tenants. This puts a CHO in a better position to keep its housing in a good state of repair and/or to invest in new affordable housing.

As a charitable organisation, a CHO can also benefit from tax concessions such as GST-exemption. This means CHOs can make tenants’ rents go further when it comes to buying in property repairs or other tenant services.

Another reason that some governments have chosen to transfer public housing to CHOs is because, being non-government organisations, CHOs are less bound by restrictions on borrowing funds to invest in new housing that can add to overall affordable housing supply. A local example involved the 6,000 social housing dwellings built by the NSW Government between 2009 and 2012 as part of the Commonwealth Government’s economic stimulus program to counter the risk of recession due to the 2008 Global Financial Crisis. In return for receiving the 6,000 new homes, CHOs committed to taking out debt to build an additional 1,200 affordable rental properties over the following decade.

However, this kind of deal can work only with significant government help – in this case provided by transferring ownership of the 6,000 new properties to CHOs at no charge. Although community housing finances are slightly stronger than those of public housing departments, the difference is nothing like enough to enable CHOs to build new or replacement social or affordable housing properties without additional government support or ‘subsidy’ of some kind.

Unlike public housing departments, there’s a certain amount of competition between larger CHOs looking to be chosen by Government as a partner organisation on estate renewal or other housing development projects. Governments believe competing helps to keep CHOs ‘on their toes’. This connects with a bigger argument that, by moving away from a social housing structure overwhelmingly dominated by a single public housing provider, expanding the number of viable CHOs will benefit tenants and the wider community through a more competitive system.

Differences in powers

There is one significant difference between CHO powers compared with those of a public housing landlord. Although seldom used, CHOs in NSW have the legal authority to end a tenant’s lease without needing to jump through the same legal hoops as the public housing authority. Some have argued that this is an important aid in dealing with serious antisocial behaviour.

A similar difference in powers exists between public (council) housing and not for profit housing in England. English housing associations (the equivalent of our CHOs) likewise have ‘no cause eviction’ powers not available to councils. Although rarely used by English housing associations, the existence of these powers has understandably led to anxieties among English public (council) housing tenants facing possible transfer to housing association management. Recognising these concerns, associations looking to take on former council housing have often contractually guaranteed no use of these powers for transferred estates.

Here in NSW a similar pledge could possibly be offered by any CHO in line to take on ex-public housing tenants in NSW. Alternatively, a similar safeguard could be included in any new legislation the government might enact to underpin future transfers.

Looking to the future

The NSW government has recently announced plans for another batch of public housing transfers to CHOs, state-wide. A decision on whether the low rent part of rebuilt Waterloo estate will be part of these plans should be revealed in coming months.

Might Labor’s negative gearing policy yet save the housing market?

Posted by Chris Martin on May 26th, 2016 · Affordability, Construction, Government, Housing, Housing supply

An array of forces are converging to give the multi-unit house of cards a shove. Over the past couple of years apartment development has boomed. The Australian Bureau of Statistics shows building approvals for new flats, units and apartments reached a huge peak last year. It has stepped down in the most recent quarter, but is still very high.

You can see this development in the skylines of our cities, especially in Sydney, Melbourne, Brisbane and Canberra – and in the RLB Crane Index. RLB counts a total of almost 650 cranes engaged in construction in our capital cities, and says more than 80% of these are on residential projects.

This coming supply is reflected in CoreLogic’s projections for new units hitting the market. It estimates that sales for more than 92,000 new units will be settled in the next 12 months, only slightly less than last year’s total number of sales of new and established units. The year after, a further 139,000 new units sales are due to be settled, substantially more than total sales (new and established) last year.

Dampeners on demand

But for all this supply, it appears there may be much less demand than anticipated, particularly from the foreign investors who did so much to stoke the boom. Evidence for this includes:

Over the last six months the Chinese government has tightened controls over currency exchange by its citizens. This has restricted their capacity to buy – and repay loans to buy – property in Australia and elsewhere. This in turn has led to…
Credit restrictions by Australian banks. Last month each of the Big Four banks restricted how much they’ll lend to foreign buyers (lower loan-to-valuation ratios), with Westpac withdrawing altogether. This month, Macquarie has pulled its horns in.
The Victorian government has doubled the stamp duty payable by foreigners – it’s now 7% of the property purchase price. The NSW government is reported to be considering doing something similar; it is also introducing checks for residency and Foreign Investment Review Board approvals as a condition for conveyance of property titles, and the FIRB is now charging $5,000 for applications.

Foreign demand for new dwellings (as gauged by the NAB’s Quarterly Australian Residential Property Survey) was already down over the first quarter of the year, before the credit restrictions cut in. Now the media are reporting that Chinese demand for apartments has “fallen off dramatically”: Meriton says the number of Chinese buyers of its apartments halved in the last month.

As those cranes in the sky indicate, there’s a lot of people out there – foreign and local – who’ve paid deposits and entered into contracts to pay boom-era prices on completion of their units. When they go to the bank to borrow the balance, they may find that, between lower loan-to-valuation ratios and lower valuations, they are caught short. Some might make up the difference by selling another property, but many of those settlements projected by CoreLogic may not settle at all.

The result: deposits forfeited, unsold units dumped on the market – accelerating the bust – and possibly, at least for buyers who are actually in the jurisdiction, the threat of being sued by developers for the loss of the contracted higher price.

So what might policymakers do?

Faced with such a calamity, why won’t our politicians do something to shore up demand for all these newly constructed rental properties? Oh wait….

This is precisely what Labor’s proposed negative-gearing reform promises do, by allowing rental losses to be set against non-rental income only where the property is newly built. Under Treasurer Bowen, Australia’s dedicated army of negative gearers would be given new direction and purpose, switching from the established dwelling market into the new-built market deserted by foreign buyers. Furthermore, because no-one after the first purchaser can call a dwelling new (and hence get the same preferential treatment on their gearing), they may be inclined to hang on to their properties even as demand looks weak.

We should still expect such a reform to reduce total investor demand for housing, and hence reduce house prices overall. These are both good things. But it may also help cushion what might otherwise be a drastic and painful collapse in the new-build sector.

Both the REIA and the Coalition government talk about Australia’s “transitioning” economy. They should consider negative-gearing reform as a measure for transitioning out of our presently fragile, property-bubble-led economy.

The dust up over density

Posted by Chris Martin on May 24th, 2016 · Cities, Government, Housing supply

The current furore is over the proposed redevelopment of the Waterloo estate in inner Sydney linked to the delivery of a new Metro station, with UrbanGrowth NSW once again under fire. There are clear echoes of the controversy that erupted in 2014 when the White Bay renewal precinct was announced.

These are contested locations with multiple stakeholders and vocal, well-organised local communities. As the debate over urban renewal and high density development reaches new heights, it’s worth stepping back and asking how we got to be in this position.

Artist's impression of planned metro train station at Waterloo.

Artist’s impression of planned metro train station at Waterloo. Photo: Supplied to Fairfax.

Most of us city dwellers understand that change has to happen in urban areas. Density is part of that change. There was a time when progressive urbanists saw the “compact city” as the antidote to urban sprawl. The benefits of “building up rather than out” was an unalloyed Good Thing. The compact city offered a range of unquestionable benefits – environmental, social and economic – that a thousand academic texts and commentaries loudly proclaimed.

A decade of metropolitan strategies in Sydney has clearly flagged that urban renewal is the way the compact city will be delivered, often in the form of higher density residential housing associated with transport infrastructure.

This policy position was justified for a number of reasons, but above all was the over-riding issue of housing supply – density is a way of providing more homes more efficiently in better locations and of a size and price the growing cohort of smaller households can afford. Other co-benefits, such as reactivating town centres, getting people to walk more, reducing car dependency and stimulating the cultural economy, were also linked in.

Density was the solution to many of our problems.

But the spat over Waterloo reveals a new, potentially worrying, development in the evolution of our rationale for density. With prices pumped by the investor-driven price boom, developing highrises has never been more profitable. Encouraged by an increasingly permissive planning and regulatory system, the development industry has made hay while the density sun shines.

But this largesse begs the question of how financial benefits that density has generated are shared. The new phrase on the block is “value capture” – the attempt to return some of the value created by public action, be it a new metro line or rezoning, back to the public purse.

This should be supported. It’s not a new idea – developer levies, voluntary planning agreements and density bonuses being contemporary examples of how governments have tried to recoup some of the value created by planning decisions to provide services and infrastructure new development generates demand for.

But we may be entering new territory with the current value capture debate. While density was justified in terms of the benefits it might bring to urban populations, the logic was clear. But it did not drive the scale of the development itself. However, the rationale for density is shifting.

Density is now becoming an end in itself in order to generate the money to pay for infrastructure that government would prefer not to fund through other means: public debt and taxation. And public land is now the goose that offers to lay the golden egg. The building boom has recapitalised these public assets in a way Treasury finds irresistible. Whether the densities are a good or bad thing is not the point. It’s why we are doing it that matters.

Put simply, there is a danger that greater density is being justified as a mechanism to pay for new infrastructure, rather than primarily to meet the needs of our growing population. One of the reasons the new Metro was routed under Waterloo was that this was an available block of public land that could generate value to be captured. Sydney University could not offer the same benefits.

Government will no doubt say “What’s the problem? We can get the benefits of density and pay for new infrastructure at the same time”. The problem is the value capture tail is in danger of wagging the density dog. We need to tread very carefully along the value capture road if the bonus promised by density to revitalise our cities is not turned into the dystopian overdevelopment many fear.

Bill Randolph is director of the University of NSW City Futures Research Centre and deputy director of the UNSW/UWS AHURI Research Centre.

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