Priority actions for the next federal housing minister

Apr 29, 2022
Housing market
Housing unaffordability is only one aspect of the housing policy challenge. Image: Flickr / Images Money

Housing is yet again up there as a major concern in this year’s federal election debate. Given the rising cost of putting a roof over your head in today’s Australia, that’s hardly surprising. Buying a home will now set you back 30% more than at the start of the Morrison government’s current term in office. Meanwhile, rent increases have escalated to their highest levels for more than a decade.

The Prime Minister is defending a housing policy record that is decidedly patchy when it comes to tackling such challenges. His government’s focus has been almost exclusively devoted to promoting home ownership. Most creditable during the current parliamentary term has been the Coalition’s new national scheme enabling aspiring first home buyers to access low deposit mortgages.

More contentious was the 2020-21 HomeBuilder program. This gifted homebuyers and renovators $2.5 billion in public funds, in the process compounding house price inflation, further aggravating wealth inequality, while also failing to deliver any improved quality or performance outcomes.

But no such Morrison largesse has cushioned lower income Australians doing it tough in our latterly overheating rental market. On the contrary, people in this position have been recently insulted by the Prime Minister’s suggestion the best solution to rental stress is to buy your house – a remark aptly described by my UNSW colleague Dr Chris Martin as a veritable ‘let them eat cake moment’.

So, given a clean slate by the coming election, what should an incoming housing minister prioritise for Federal action in the coming term of government? In addressing this question, let’s assume for the sake of argument that the poll results in a balance of power situation where the new minister’s options are unconstrained by the narrow housing commitments pledged by the ALP and the Coalition election platforms.Before we get to the actual priorities, though, it’s important to recognise that housing unaffordability is only one aspect of the housing policy challenge that any responsible national government should be confronting.

The physical condition of our housing stock is one huge and neglected area of concern, especially when it comes to energy consumption. Only a  ‘negligible proportion’ of new homes are being built to an ‘optimal [energy] performance standard’, leaving Australia as an international laggard. And the highly energy inefficient state of our existing residential building stock presents a huge obstacle in achieving professed net zero ambitions.

A more specific worry is the ongoing deterioration of Australia’s investment-starved public housing system, a direct government responsibility. The inadequate scale of low cost housing provision is rightly a campaigning focus. But, although the precise dimensions of the issue remain largely concealed, the declining condition of our social housing stock must also be addressed.

Measure the problem
So, underpinned by an official acknowledgement that none of these policy challenges can be effectively tackled without Commonwealth Government leadership, I would argue that the first commitment for an incoming federal housing minister should be to quantify these concerns through a comprehensive housing system review, headed by a respected heavyweight player.

Associated institutional reforms would be part of this, perhaps including the re-establishment of the Rudd Government’s National Housing Supply Council, scrapped by Tony Abbott in 2014. Or, better still, inclusion of NHSC functions within a new national housing agency. Creating a permanent body of ‘domain expertise’ at arms length from Ministers would also serve the wider purpose of helping to rebuild badly eroded housing policymaking and analytical capacity within government.

Factoring in realistic population growth expectations, the Review must emulate the NHSC’s role in setting overall new housing construction targets. Crucially, though, it must extend beyond that remit by specifically calibrating the unmet need for low-cost rental housing. Not only how much more social and affordable housing we need, but also of what types and in what places.

Partly as a key contribution to a meaningful national climate action plan, the review must also assess the condition and environmental performance of our existing housing stock – not least in terms of the negative health and well-being impacts that result. A more detailed analysis of social housing property condition will also be needed to estimate the cost of upgrading to an acceptable standard. Here, Australia would do well to emulate the US Federal Government’s recent equivalent commitment.

The body of published evidence generated by the Housing System Review will make it harder for current and future governments (state and territory, as well as Commonwealth) to downplay or deny housing policy challenges in familiar fashion. It could even provide a basis for ‘holy grail’ bipartisan reform commitments of the kind recently seen in New Zealand.

Redirect government support for housing
A second commitment by an incoming federal housing minister should be to shape longer-term reforms on the basis of progressively re-directing existing public funding. The national exchequer, in fact, , already underpins Australia’s housing system on a huge scale. Tax concessions to owner occupiers and private landlords total in the region of $100 billion per year, more than ten times the Commonwealth Government’s annual spend on social housing, homelessness and Rent Assistance.

Not only are these policy settings highly regressive in effect – disproportionately benefiting the already wealthy – but they also distort our housing market in resource-inefficient ways by encouraging over-investment in what is a relatively unproductive asset. Given that such support is effectively capitalised into house prices, of course, it also contributes to housing unaffordability.

What’s needed is a gradually phased long-term shift in the balance of support away from, say, private landlord tax handouts to increased investment in low cost rental housing and higher rates of rent assistance better matched to the actual cost of renting.

Establish a national housing strategy
Building on the first two commitments, and a realistic goal for the coming parliamentary term, the third priority pledge for our new housing minister should be to publish a national housing strategy. . As in any strategy worth the name, this must analyse the problems to be tackled, set measurable goals, identify actions to achieve those goals, and a present a plan for mobilising resources to implement essential actions within given timescales.

This process will of course demand the meaningful involvement of numerous stakeholders – including state and territory governments as well as multiple industry and consumer interests. A crucial initial step in the process, involving all relevant players, should be to determine overarching strategy objectives of the kind we have proposed elsewhere.

Naturally, none of this should be to the exclusion of immediate Ministerial actions to address the most pressing housing challenges faced by the incoming government. But, if blue skies thinking were allowed, the broader objective for the next parliamentary term should be to chart Australia’s long-term course towards a more equitable and sustainable housing future.

Read more in our series of If I was a federal minister.

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