By Hal Pawson, City Futures Research Centre. Originally published in The Guardian.

Housing once again looks set to form a major bone of contention in the coming general election. That much was clear from the ALP’s recent budget response. Labor had already backed the Coalition’s first homeowner initiatives. But opposition leader Anthony Albanese’s budget reply pledge to ramp up social and affordable housebuilding marked a clear point of difference from the government.

This was not difficult to achieve. Despite ongoing increases in housing affordability stress over the past decade in many cities and regions, successive Liberal National governments have presided over a continuing dearth of non-market housebuilding. In his stock response to calls for post-Covid social housing stimulus, housing minister Michael Sukkar has time and again washed his hands of the issue by declaring it purely a state and territory responsibility.

So what exactly does federal Labor have in mind? At an estimated cost of $10bn, its proposed social and affordable construction program would generate 30,000 homes over five years. This would equate to somewhere around a fourfold increase on recent build rates – certainly a welcome prospect for a sector that has effectively contracted by a third since the 1990s (from 6% to 4% of all housing).

Albanese’s housing supply pledge follows the Victorian government’s groundbreaking 2020 announcement of its $5.4bn Big Housing Build initiative, as a key part of the state’s post-pandemic recovery plan. Under the BHB, Victoria will see more than 10,000 new social and affordable homes added to its housing stock over four years. An important difference of course is that this is a plan and not – as in the Albanese statement – only a proposal.

Following a decade of social housing inactivity, both plan and proposal deserve applause. But neither represents a commitment of gamechanging scale. Victoria’s scheme would see social and affordable construction boosted from 0.5% of all housebuilding in the state to about 5% – dramatic, but far short of the 16% seen across Australia 1945-70.

As for the ALP’s proposed scheme, this would expand current annual lettings of public and community housing by a worthwhile but modest 18%. In its contribution to national social housing stock, the scheme’s annual output of 6,000 homes would fall far short of the 15,000 needed to just to keep pace with rising population (and need).

While most Australians are well-housed and many have reaped huge financial windfalls from the housing market, substantial and growing numbers are badly served by our current system. About 200,000 households are registered on social housing waiting lists and census-informed evidence suggests that well over double that number are either homeless or living in unaffordable or otherwise unsuitable housing.

So do Australian governments simply need to face up to a need to spend more on housing? Many of us would say no. The public finances are, in fact, already supporting huge but ill-targeted housing expenditures. The most notorious of these are the negative gearing and capital gains tax discount concessions that advantage private landlords. The highly regressive nature of these can be gauged from the Grattan Institute estimate that 80% of CGT discounts flow to the top 10% of income earners.

Also counting in the generous tax concessions allowed to homeowners as well as direct assistance such as direct lending, we have calculated that the public purse is already effectively pumping more than $100bn into our housing system each and every year. Yet only about $8bn of this is specifically targeted to lower income earners through social housing subsidies, homelessness support and rent assistance.

This imbalance is not only socially unjust, but it also hugely distorts our whole housing system. It provides far too strong an incentive to over-invest in a market inherently restricted in its ability to quickly respond. The result is all too familiar: high and rising house prices.

Expanded social housing programs are, without doubt, an essential part of Australia’s better housing future. Reversing social rental sector decline would be beneficial in any circumstances. A defensible long-term target would be expanding provision to the OECD average – 7.1% of all housing.

But only through more fundamental reform can Australia really get to grips with wider housing unaffordability. We have to re-balance a system that overly benefits existing homeowners and landlords at the expense of tenants, especially lower income renters. We have to break away from a pathway that is increasingly restricting young adults’ opportunity for homeownership to those with access to family wealth.

Are the kinds of measures that would be needed to move in that direction just pie in the sky? Maybe, but progressive housing tax and legislative reform is not impossible. The New South Wales government recently pledged to emulate ACT’s phased replacement of stamp duty by land tax. And only a matter of weeks ago, the Victorian Government significantly strengthened renters’ rights.

Further afield, and on a much larger scale, the UK saw the elimination of owner-occupier mortgage interest tax relief in the 1990s, and sharply reduced tax concessions for investor landlords in the 2010s. Both of these initiatives were enacted under Conservative governments. Perhaps more remarkably, in what has been described as “a step toward a more-equitable tax system”, the US government in 2017 significantly scaled back two of the main homeowner subsidies available to affluent Americans.

What is needed above all in Australia is unequivocal ownership of the housing affordability challenge by our national government as well as by states and territories. Only then could the country set a course towards a more balanced and equitable housing system to the benefit of all.

Hal Pawson, Professor of Housing Research and Policy, and Associate Director, City Futures Research Centre, UNSW. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Opposition Leader Anthony Albanese’s budget reply speech last night highlighted Australia’s huge unnmet need for social and affordable housing. It’s once again shaping up as a major election issue. Labor is proposing a A$10 billion program to build 30,000 social and affordable homes over five years.

The immediate backdrop for the pledge is a post-COVID house price boom, and a continuing dearth of Commonwealth investment in new non-market housing. That is, rentals affordable to low-income Australians and provided by government agencies or non-profit community housing organisations.

Amid the many new spending plans revealed in Tuesday’s budget, Treasurer Josh Frydenberg maintained the government’s resistance to an ever-wider coalition of voices calling for social housing stimulus.

Just how big is the problem?

With borders largely closed since March last year, it’s true that sharply reduced migration has temporarily dampened rental housing demand over the past 15 months. That in turn has generally subdued increases in rents. However, that national norm masks the rapidly rising rents seen in many regional markets during 2020-21.

And despite some local price reductions, Anglicare’s recent survey of 74,000 “lease ready” property listings identified only three (0.004%) affordable to a single person on the JobSeeker payment. More strikingly, for every household income type included in the survey, Anglicare found the availability of affordable lets even lower in early 2021 than a year earlier.

The broader and longer-term picture in the private rental market has been one of shrinking numbers of tenancies that low-income Australians can afford to rent. Specifically, we saw a 50% increase in the national deficit in private lets affordable to low-income renters (in the bottom 20% of incomes) in the decade to 2016.

A decade of negligible investment in social housing construction has only made this situation worse. The result has been a continued decline in availability as public and community housing has dwindled from 6% to only 4% of all housing since the 1990s. In fact, proportionate to population, social rental lettings have halved over this period.

A clear point of difference, but not a game-changer

Tuesday’s budget marked a continuation of the Morrison government’s near-exclusive housing focus on efforts to assist aspirational first-home buyers. Most significantly, this policy stance inspired the $2.1 billion HomeBuilder program as an economic recovery measure during 2020-21.

The ALP has pointedly backed both HomeBuilder and the smaller measures to assist first-home buyers announced on Tuesday. But Albanese’s new announcement seemingly extends Labor’s housing pitch beyond the Coalition’s comfort zone. https://www.youtube.com/embed/fyIWxgKQzBs?wmode=transparent&start=0 Anthony Albanese pledges $10 billion to build social housing in budget reply speech.

So is this the “major initiative” hailed by some headline writers? A “fix for house prices” it certainly is not. If unwisely attempted purely through public spending, the funding required to get into that territory would need to be many times as great.

Opposition housing spokesperson Jason Clare more defensibly describes the ALP pitch as “a significant start” in tackling Australia’s “housing crisis”.

The current national stock of social and affordable rental housing totals just over 400,000. In recent years annual additions have amounted to only 2,000-3,000. That’s barely enough even to offset continuing sales and demolitions. In these terms, Albanese’s pledge to expand the supply by 6,000 a year would indeed be significant.

At the same time, as our previous research has shown, a net increase of 15,000 units a year is needed just to keep pace with “normal” population growth – that is, to halt the decline in social rental as a share of all housing. Even under a post-pandemic scenario where migration rules are tightened as far as imaginable, that figure would not be substantially smaller.

So, like the Victorian government’s recently launched social housing stimulus, the ALP’s proposed national program would mark a promising break with the recent past, and a platform for further measures. But it would be hard to describe it as a game-changer.

While greatly expanded social housing provision would be an essential part of any credible package to seriously address Australia’s housing affordability challenge, a far wider program of action is needed. Most importantly, such a program must also tackle our grossly unbalanced housing tax settings, boost renters’ rights and diversify the available choice of housing.

What the country needs above all is a Commonwealth commitment to assembling the national housing strategy that is so long overdue.

By Hal Pawson and Vivienne Milligan. First published by The Fifth Estate.

The NSW government’s new 20-year housing strategy gives a broad nod to issues at play while offering few actionable solutions.

With a transition from stamp duty to land tax flagged in Treasurer Dominic Perrottet’s 2020 NSW budget it appeared that the state could be on the brink of major housing system reform. Compounding this impression, was this week’s release of the Government’s Housing 2041 strategy and 2021-22 Action Plan. 

The state’s first ever long-sighted housing strategy (emulating Western Australia and the ACT) is a welcome recognition of housing as both a major continuing challenge and a core policy responsibility of state and territory governments. 

In its scope and aspirations the document refreshingly recognises the range of agencies, powers and policy actions available to state governments to achieve a better functioning and fairer housing system. As well as mooting the stamp duty reform, for example, it contemplates amending planning guidelines to promote housing diversity and sustainability, stronger consumer protection and support for tenants, “maximising the impact of government-owned land to achieve the housing vision”, and “rejuvenating” social housing.

Despite acknowledging the urgency for significant policy change, the strongest underlying message from the Housing 2041 documents is the Government’s desire to buy more time.

Another positive inclusion is new governance and coordination arrangements – including an expert housing advisory panel and a housing strategy implementation unit. These could help to confront the policymaking challenge posed by housing as a many-faceted issue badly served by silo government. 

These strengths apart, though, how convincing are the documents as a genuine strategy? Qualities fundamental to the credibility of any meaningful strategy include: analysis of the problems to be tackled, setting clear and measurable goals, identifying actions to achieve those goals, and a plan for mobilising resources to implement the specified actions.

Regrettably, few of those features appear in the Housing 2041 documents.

First, they include no precise analysis of current housing market conditions, nor any quantification of existing unmet housing needs and housing system performance challenges.

Second, detailed modelling of demographic forecasts, population structure and inter/intra-regional migration is absent. Such projections are essential in planning housing supply targets, and never more so following the disruption caused by the COVID 19 pandemic.

Third, lacking concrete analysis as its foundation, stated strategy goals are extremely high-level in nature. This is revealed by a motherhood vision for NSW to “have housing that supports security, comfort, independence and choice for all people at all stages of their lives”  to be achieved via one-word “pillars”: supply, diversity, affordability and resilience.

Under these headlines, there is little or nothing in the way of definitive targets and progressive milestones that would be needed to calibrate outcomes on any of these fronts.  

While there are numerous stated aspirations for “more” or “improved” levels of activity, these are empty pledges without specifying (a) more than what, (b) how much more, and (c) by when the increased or enhanced activity will be achieved.

Only if defined as such would it be possible to assess future policy impact. For example, what is the current level of affordable and social housing supply across the system against which improvements will be judged?

What proportion of such housing falls short of acceptable standards and how much will this cost to fix? What is the target for reducing social housing waiting lists?  How many first home buyers will government aim to assist? 

Similarly, there are few numbers for current or required government housing expenditure cited in the documents. Admittedly, these could instead be provided in annual state budgets. But as the November 2020 Budget disclosed, relatively little additional direct expenditure in this area is currently envisaged.

At a moment when a long overdue expansion of social and affordable housing could supercharge economic recovery, the best the government could come up with on this front was $400 million for additional new provision (most of the $900 million pledged in this area being for renovation rather than construction).

This sits in stark contrast to the Victorian government’s Big Housing Build – an all-time record investment of $5.4 billion over four years to achieve over 12,000 additional social and affordable housing dwellings – as announced late last year.

Not only is the NSW equivalent action pale by comparison, a systemic financial deficit of nearly $1 billion annually for the efficient and effective upkeep of existing social housing (as quantified in 2017 by the Independent Pricing and Regulatory Tribunal) remains unaddressed in the strategy.  

What is signalled instead is the NSW government’s ongoing enthusiasm to sell off public land and houses to help finance social rental modernisation and replacement. This, unfortunately, is a short-sighted approach, which will result in further loss of public assets and more widespread disruption and displacement for existing tenants in areas attractive to developers.   

Despite acknowledging the urgency for significant policy change, the strongest underlying message from the Housing 2041 documents is the government’s desire to buy more time. Actions specified for the immediate future are predominantly policy reviews, new administrative processes, and evidence-building through data development and research; the kinds of activities often rightly dubbed “busy work“. 

One timely exception is government support, previously announced, for a new build-to rent-product that offers potential to both improve consumer housing choices and the functioning of the housing system – respectively, by offering longer-term rentals and by diversifying developer options (and thereby reducing reliance on a build-to-sell model).

NSW government advocacy on this topic was also in evidence only last week in minister Stokes’s pointed call for complementary tax reforming action from the Commonwealth.

The promise of an effective long-term housing strategy for NSW has not been fulfilled… yet. For now, it appears that citizens will have to wait at least two more years (and until after the next election) to discover whether this state can develop a credible housing strategy. That would be one offering the scale and scope of reform necessary to reverse the renewed trend of worsening housing affordability; and one with meaningful and measurable goals as well as detailed plans and budgets to achieve them.