OLIVER FRANKEL AND SUSAN RYAN. Monthly digest on housing affordability and homelessness – Apr/May 2020Jun 4, 2020
The following is the latest instalment of a monthly digest of interesting articles, research reports, policy announcements and other material relevant to housing stress/affordability and homelessness – with hypertext links to the relevant source.
One of the key themes for this instalment is that now is an ideal time – for a range of good reasons – for government at all levels, led by the Federal Government, to facilitate a massive and much overdue investment in social housing.
Why building housing infrastructure after the pandemic can benefit Australia [AHURI Brief, updated 6 May] This AHURI Brief highlights why now is a good time for governments around Australia to invest in social housing infrastructure. First, it would address the huge shortfall in social housing (estimated in 2016 at over 430,000 dwellings, and expected to grow to around 727,000 dwellings by 2036). Just as importantly, it would provide a much-needed government stimulus to kick start the heavily depressed but vitally important construction and related sectors, at a time when private sector investment is in short supply. The benefits of such counter cyclical investment are obvious, as Australia seeks to emerge from the crushing employment and economic impact of the pandemic. The good news is that the cost of government debt has never been cheaper, and that supporting social and affordable housing represents an investment in our long-term social and economic infrastructure. The Brief lays out a range of possible funding options, favouring a capital grant model.
Australian home ownership: past reflections, future directions [AHURI final report, 7 May] While Australia’s overall level of home ownership has remained steady (at around 67% to 68%) since the late 1970s, that is largely attributable to Australia’s ageing population and belies significant variances amongst different age groups. Specifically, those in the 25 to 55 age-bracket, whose rate of home ownership was 60% in 1981, are forecast to see that reduce to not much more than 50% by 2040, and the overall rate is expected to decline to around 63% by then. The reasons for these declines include attributes of the Australian labour market, continued issues of housing affordability, the proliferation of building forms (apartments) that lend themselves to rental, and the growth of the private rental sector. Relevant international comparisons reveal that Australia’s declining rate of home ownership (so far mainly amongst younger age cohorts) is the norm. The trends revealed by this AHURI research report will require governments to focus on how to provide long-term users of private rental with greater security, affordability and liveability, and also how to address the socio-economic implications of the generational and wealth divide between owners and renters – including for Australia’s superannuation and retirement system.
WA government scraps homeless hotel program after participants walk out within days [WA today, 7 May] Despite the superficial attractions of seeing rough sleepers housed in five-star hotels during the current pandemic – mainly to reduce the risk of community transmission – rough sleepers themselves have, unsurprisingly, not all found this a satisfactory solution. WA’s “Hotels with Heart” pilot program has had mixed results “with several participants choosing to leave within the first 48 hours after struggling with drug and alcohol use, family pressures and being confined to their rooms”, and the program has been suspended – not least due to the dramatic reduction in the incidence of new Covid-19 infections in WA. The lack of success of WA’s pilot program demonstrates, yet again, that short-term crisis responses tend not to be sustainable. The WA government is sensibly now seeking to fast-track more permanent affordable housing, with wraparound support services.
Here we go again, sacrificing the soul of our city for more towers of power [SMH, 9 May] Central Place Sydney, a $2.5 billion development on public land adjacent to Sydney’s Central Station, is nearing approval – with not a single subsidised dwelling on offer. Elizabeth Farrelly rightly bemoans the lack of Mandatory Inclusionary Zoning (MIZ) on projects such as this. When imposed, MIZ typically requires that a percentage (often 10% to 30%) of all new residential development be affordable. It is a planning tool used in many cities in the US, the UK and Europe. Farrelly makes the point that development rights are a public asset and that bestowing them cheaply (by not imposing MIZ or a monetary equivalent) is profligate, especially on public land. She also notes: “A government assessment of Brisbane’s Common Ground initiative found in 2015 that housing poor people cost $13,100 less per person per year than the jails and health services demanded by homelessness.” See also: Public land is being sold exactly where thousands on the waiting list need housing[The Conversation, 27 May], which calls on Victorian government to use suitable public land to build public (ie. social) housing, rather than just selling it – particularly when the need for public housing is greater than ever before.
There may be good luck in bad luck for the homeless of NSW [SMH, 11 May] Just like WA (see above), NSW has moved rough sleepers into hotel and motel accommodation, at least during the height of the current pandemic. This article also reinforces the oft-made point that homelessness not only causes a dreadful human toll for those directly affected, but also a drain on a range of government funded services (including health, justice and welfare). Adherents of a “housing first” approach often argue, with some justification, that the cost of providing the homeless with permanent, government-subsidised accommodation, and also helping them overcome their underlying non-housing problems (eg. mental illness, drug and alcohol addiction), would help save the public purse, not to mention be the socially responsible thing to do. See also: “It will save lives”: Most vulnerable to receive free accommodation during coronavirus pandemic [The New Daily, 12 May], which details an initiative to make more than 140 Quest operated serviced apartment buildings across Australia available to provide temporary relief for the homeless, for up to one month free of charge.
Housing stimulus plan: Labor wants super funds, developers to lead [SMH, 12 May] Federal Labor has proposed a National Housing Stimulus Plan to build and repair social housing and affordable properties, partly to protect the approximately one million workers relying on the construction industry, and partly to help address the shortfall in this type of affordable accommodation. Labor wants institutional superannuation funds and the private sector to help drive this investment. Labor’s plan is supported by a range of industry groups, social services organisations and a range of academics. In a parallel initiative, Australia’s peak community housing body (CHIA) and National Shelter launched a campaign in early May calling on the Federal Government to invest $7.7 billion in social housing, mainly to fund the creation of 30,000 new social housing units, but also to fund upgrades of existing properties. See also: Superannuation funds open to Labor’s housing stimulus plan[The New Daily, 12 May]; Why a post-COVID housing investment “makes perfect sense” for governments[ProBono Australia, 13 May]; and Welfare agencies lobby for construction stimulus plan [brisbane times, 14 May]
Coronavirus lays bare 5 big housing system flaws to be fixed [The Conversation, 12 May] The authors of this article articulate five major vulnerabilities laid bare by the Covid-19 crisis, though not necessarily resulting from it. They include (1) a suspected dramatic under-estimate of the number of rough sleepers (relative to what census data indicates), (2) a more than likely substantial increase in the number of people facing rental stress (despite the temporary help afforded through JobKeeper and JobSeeker), (3) a heavily shrunken social housing sector, relative to population, (4) mountainous housing-related debt (which rose from 70% of household disposable income in the early 1990s to a debt to income ratio of 190% in March 2019 – much of that no doubt related to speculative mum and dad investment on investment properties underpinned by generous tax policies such as negative gearing, and (5) an unbalanced housing system, in which residential construction depends almost entirely on private developers building for sale to individual buyers. The authors note that construction normally employs more than 1 million Australians and generates many more jobs through the building materials supply chain as well as in real estate, property management and financial services. They call for a Commonwealth-led, bipartisan, long-term, national housing strategy, a key part of which should be routine social housing construction of up to around 15,00 new dwellings per year – around five times the current number, but still below levels regularly achieved between the mid-1950s and mid-1970s. They also call for tax reform to make our housing system fairer and more efficient.
Housing the homeless now and after the pandemic [ABC’s “Life Matters”, 13 May] ABC’s “Life Matters” host, Michael MacKenzie, interviews, Karyn Walsh (Chair of the Australian Alliance to End Homelessness, and CEO of Brisbane based Micah Projects) and RMIT Professor Guy Johnson. Amongst other solutions, experts advocate a massive boost in permanent forms of affordable housing.
A collapse in house prices won’t necessarily be so bad [SMH, 20 May] SMH economics writer, Jessica Irvine, ponders the true meaning of “essential” and says she’s come to appreciate that one of the most essential things of all is “to have a home in which to ponder such things”. Perhaps, she says, “one of the most enduring things to come out of this [Covid-19] crisis…will be a changed attitude towards our homes”. For those of us fortunate enough to have them, “our homes are our sanctuary…Shelter from both the elements and prying eyes… places where we can grow roots, drop our bundles and just be ourselves”. Irvine sees this pandemic as an ideal opportunity to fix our broken housing tax system – to reduce concessions for negative gearing and capital gains on housing, to abolish stamp duty in favour of a broad-based land tax. To this, she adds that it is an opportunity to re-think the way residential landlords treat renters, making landlords realise that those “squidgy human beings living inside their investments” can’t pay their rent if they lose their job, and that it’s not always easy to find another tenant when lots of people have lost their jobs, as in the current pandemic. As she sits in her cosy home, Irvine wonders “if this crisis will expose the inhumanity in our casino approach to housing: a system in which one set of citizens gets rich by inflating the cost of living for another set of citizens”.