Canberra was once in a position to show how ordinary working Australians could get into the housing market at a fair price. That fair price, in today’s terms, was about a third of current prices.
The National Capital Development Commission – the trustee of the land of the ACT – developed planned land – serviced blocks, streets and whole suburbs – and released it to the government at its rough assessment of demand over the year ahead. Another agency was involved in organising the sale of these blocks, whether over-the-counter at the list price, or at auction. People buying for the first time bid in a special market, but not so in a way as to greatly distort land values, because of the range and types of blocks available.
In any new suburb – and there were times in the early 1970s where a suburb a month, generally then in Belconnen or Tuggeranong, was being released there were attractive blocks, views and sizes fetching higher prices. An estimate of a price was made, those who secured a block (at least until the Gorton government ruined the scheme in 1970) had to pay down only five per cent of the list price, plus any premium set at the auction.
Canberra was growing fast, and the public activity in the land market was not only a result of conscious decisions at federation but of involuntary transfers of young public servants to the national capital from across the nation. These people required accommodation if they had families, or after they paired off and began families, they wanted houses but needed help in getting into the market.
Cheap land was buttressed by housing schemes resembling the ones by which a generation of Australians and British had first acquired secured accommodation – via a public housing list. For many, the first movement into housing was into public housing – a “guvvy” of two, three or four bedrooms, according to the size of the family.
These were rented at proportions of salary, but in such a way that the overall scheme was commercial; in due course, tenants would be able to buy the houses if they wanted. A special housing loan scheme – with some means-testing – provided first mortgages. There were permanent building societies and credit unions, as well as the banks, topping up first mortgages.
Every day The Canberra Times would announce that three-bedroom guvvies were being allocated today to people who went on the list on a particular date (say two years ago). Two-bedroom houses were going to those who enrolled on another date.
Within that scheme, government was also allocating priority housing to some classes of public servants, or to welfare cases. The average guvvy was about 115 square metres – about half the size of a modern separate dwelling.
But the guvvie was designed to be extendable, particularly on then generous blocks. Nowadays, a more average 200 square metre dwelling looks ridiculous on blocks half the size, unable to provide either recreational space or environmental amenity. The over-building contrasts with ever declining family sizes, and with reduced numbers of people in households.
During the slow-down of Canberra growth ordered by Malcolm Fraser in 1976, the allocation of government housing was sharply wound back, until it was largely confined to housing for people in need of welfare assistance, including single mothers, victims of sexual violence, and people with drug and mental health problems.
At first, these were scattered throughout the community – in the plush suburbs as much as in the poor ones. Increasingly, however, policy was to concentrate such folk (inevitably much magnifying the social problems involved).
In more modern times, policy, particularly from the Labor Party has focused on selling off public housing in older, wealthier suburbs, and sending public tenants to the edge of the city – often ten kilometres from familiar services and friends. This is justified with the pretence that inner-city land is more valuable, and that, thus, the sale of such land allows more social housing to be constructed elsewhere. This is largely a furphy, one which, however, permits the now vacant land to be sold at premiums to yuppies – most of whom are not first home buyers.
Those who won’t inherit and can never open the door to housing are trapped in poverty. Addressing this with housing help is cheaper than leaving them houseless; and even then they will not be getting the public subsidies housed Australians are getting.
Over time, a substantial proportion of those frozen, when young, out of the market will inherit houses from their parents – if generally at a time when they hardly need the financial help. The typical age of inheriting a house is now over 60.
The better-off will have already paid off their own home, and soon have another fully paid-for. But a significant proportion will not inherit, because the generation above, and above that, were frozen out of the market. These are the people – mostly identifiable now, trapped in long-term generational poverty. Dealing with the problems this causes is cheaper than leaving them houseless; even then they will not be getting the public subsidies housed Australians are getting.
It is now commonplace to observe that the biggest single thing government can do to lift a family out of poverty is to help people into secure housing. The front-on cost may be high; the down cost of having people ever out of the market is many times greater.
But it is clear that older Australians – those comfortable and secure in their own homes – are not willing to sacrifice, through taxation, any of their advantages – including steadily increasing real land prices.
The wealthier may subsidise their own children, thus compounding the inequities. Subsidy and grants schemes drive up prices but do not help any more than “encouraging” banks to lend against small deposits, poor credit records or insecure income. Solutions cannot start or end in this quarter.
What can be done? Talk of plans to increase the amount of “social housing” built is welcome, and at the base of reducing systemic inequality. But it must be a continuous investment, not one seeded with an initial grant and an expectation of internal funding.
Voters also have cause to doubt the bona fides of Labor governments, given the role of state and territory Labor administrations in diminishing and running down social housing supplies, as well as manipulating the land market.
I do not think that politicians will dare change the tax-free status of the family home, or set out to dent the modern expectation that houses will be passed, tax-free, to the next generation. The best that we could hope for is modest land taxes (at levels incorporating rates and municipal payments but at, say twice present levels).
In progressive territories, such as the ACT, the take from such taxes is already hypothecated to pay for lower stamp duties and the abolition of payroll taxes. But it would be good to imagine that such sums, along with the “profits” of government land speculation, could be used to reform the land market for modern and future families.
I do not think that we can re-invent or go back to the past. Even less can we expect to drive down the price of land in any significant way. Yet there are possibilities, with echoes of the past, allowing a focus on need, and dignity and choice. It involves making the community – probably government itself – a substantial partner with families in building new houses – even in refurbishing old ones. The co-investment could operate somewhat like a rent-purchase scheme, with repayments being ploughed back into the system.
Indeed it could borrow from some modern-day Australian economic concepts such as HECs-style schemes. Even if it worked on a budget far greater than current social housing, first-home grants or subsidies, their scope is for private sector participation in funding through housing bonds.