LIONEL ORCHARD. Housing Policy: a social democratic response

May 11, 2017

The missing element in current debates about Australian housing policy is consideration of the social democratic case for building a genuine mixed economy in the housing system respecting the different purposes of the sectors involved – public, private and household. Given the demand and supply problems currently making effective housing access very difficult, the case for much more direct public intervention and investment in the Australian housing system is strong.  

‘The collapse of housing affordability – both buying and rental – in capital city Australia represents the single greatest failure of policy in the post-social-democratic era. . . . Put simply, state and federal governments all concluded that it was not their business to ensure that people had decent housing that did not make them slaves to a mortgage or landlord for years on end . . .’ Guy Rundle

The Australian housing system is at an impasse and the question is how to respond. There is currently no end of analysis and policy advocacy in the housing debate all of which is reaching some sort of crescendo. What is missing is an understanding the social democratic case for building a genuine mixed economy in our housing system.

Everyone seems to agree that there is a need for a better mix of sectors and interests in building new responses to the problems. But they all err in giving precedence to private interests in driving change. The public and government role is understood as playing a supportive and largely secondary role – primarily centering on better (or different) regulation and taxation of private housing and land markets, and building more ambitious public-private partnerships to support the growth of social and affordable housing drawing on the now large pool of institutional superannuation savings in Australia.

In response, it is worth highlighting what the idea of ‘genuine’ has meant in social democratic thinking about how to mix a mixed economy. The key idea is that the different purposes, roles and principles guiding the public, private and household sectors should be respected through strong separation between them. Expressed another way, a mixed system should build a robust public economy with public enterprises to compete with and counter the power of the private capitalist economy while acknowledging the contribution of the unpaid work and activity which goes on in the household sector. The values that underpinned the case for strong separation are important. For the private sector, those values centre on the virtues of choice, efficiency, competition and profit understood in market terms. For the public sector, they centre on the virtues of decommodification removing important (merit) areas of economic and social life from the market justified through public conceptions of choice and competition standing against private interests and motives. For the household sector, the key has been to acknowledge the value of the mainly unpaid work and activity taking place there.

What has been lost amid the noise of the current housing debates is this social democratic understanding. The influence of neo-liberal thinking with its emphasis on individualism, privatisation, deregulation and limiting the public and government role has been central to the loss. At the same time, social democrats have given up on seeing the mixed economy in these terms through their embrace of communitarian and civil society critiques of government. They have also fallen prey to governance arguments that partnership between public, private and civic sectors is needed in public policy. Rather than counter and compete with private markets in housing, partnership models argue that, in these times, the best government can do is to draw in private investment to pursue social purposes. Consensus on private sector terms shapes the ambition not the idea that the public and private sectors have rival and conflicting objectives requiring the maintenance of clear boundaries between them.

Australia has never had a strong social democratic approach to housing provision even if social democratic themes about separation between the sectors and the role of public enterprise competing with private enterprise shaped housing policy of earlier times. Public housing enterprises in the various states played a central role in times past in ways that helped keep housing supply ahead of demand as Saul Eslake reminds us. The growth of home ownership through the 1950s and 1960s better reconciled the use value of activities in the household sector with private home ownership as a vehicle for investment and asset accumulation. We are now in an era when social democratic themes are almost entirely absent from discussion to a point where the housing system has become dysfunctional given private investment distortions, house price inflation, runaway demand, and supply limits and imbalances.

Some might say that social democratic ideas are of little relevance in these times. Given the dominance of neo-liberal and governance ideas, and the declining capacities of national government, the best progressive public policy can do is to address the sharper edges in the housing outcomes and hope for the best. This is the dominant theme running through current prescriptions in Australian housing policy. Many argue that rampant house price inflation driven by excessive private demand for housing as an investment good is best addressed by changes to taxation arrangements – in particular, removing or curtailing negative gearing and capital gains provisions. Others argue that limits of private and social housing supply are best addressed through removing constraints on development supposedly imposed by urban planning and related regulations. And for many, the growth of the social housing sector depends on abandoning old public housing models and embrace partnership models aggregating public and private finance on terms favourable to private interests to grow the social housing system.

While many of these proposals have merit, they mostly assume the virtues of private housing provision and private initiative in underpinning the social housing system. If we are to restore a more balanced approach, we should not lose sight of the need to reassert views about the public interest and values in housing policy – decommodification, cost management and direct public investment in housing supply – and build new public institutions and enterprises to take them forward. The interests of those at the bottom end of the housing market depend on it. We need to better acknowledge the role that social democratic governing has played in the Australian housing system in the past and, with some creativity in the design of new public institutions and enterprises, could do so again.

Lionel Orchard was Associate Professor of Public Policy at Flinders University. With Chris Miller, he co-edited Australian Public Policy: Progressive Ideas in the Neoliberal Ascendancy, Policy Press, Bristol, 2014 which includes his essay ‘Loose moorings: debate and directions in Australian housing policy’.

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