No joy from Budget 2018. Governments do have the resources to tackle affordable housing shortfalls. They just don’t have the will to accord it the requisite priority. In so failing, they ignore not only the deep and lasting social costs of such neglect, but also the strong economic case for addressing housing affordability.
On Budget day 2017, I was in Brooklyn enthusing over an affordable housing development constructed on underutilised hospital land close to the subway, funded by tax credits, city council and state grants and private finance, and occupied by 146 formerly homeless households and 60 families earning less than 60% of the area median income, in a city with a 10 year housing strategy that included mandatory inclusionary zoning and preservation of existing low cost rental homes. Putting aside for one moment their recent presidential election NYC didn’t look too bad a place to be part of the affordable housing industry.
Back in Australia, Budget 2017 was greeted by the industry with tempered optimism. We applauded the National Housing Finance and Investment Corporation and the commitment to negotiate a new National Housing and Homelessness Agreement focused on increasing supply. But we worried about the lack of dollars to bridge the funding gap between what it costs to build and run affordable housing and how much comes in from rental payments. Fast forward to May 2018 and those concerns are writ large with virtually zilch for housing in Budget 2018.
The shortfall in affordable housing
So why don’t we tackle affordable housing shortfalls? Perhaps we aren’t sure how many are needed? Sure, Australia may not do robust housing needs assessments but estimates exist – Dr Judy Yates analysed ABS and AIHW data to arrive at 500,000 additional affordable homes needed by 2026. Maybe the figure is just too scary? Where would all the dollars be found? True it won’t be cheap. Industry Super estimated in 2017 that just building enough social housing to stand still (without tackling the backlog or building housing for lower income workers) would cost $20 billion over ten years. But the costs can be shared, and the sources layered. Borrowing by community housing providers, grants and below-market-value land from the States and Commonwealth, value capture and inclusionary zoning and cross subsidisation from market for sale. We can do it.
Government spending priorities
And Governments do have resources and are spending them. In this Federal budget an additional $24.5 billion was found for transport infrastructure. In NSW the infrastructure budget is $80 billion over four years. More to the point, thanks to the property boom of the past few years our state government has enjoyed an enormous windfall through stamp duty income. Since 2011/12, such revenue has amounted to a bonanza of no less than $18.25 billion above what might have been expected, had the stamp duty income received in that base year continued at the same level. And yet none of this gain has been designated to expand social and affordable supply for the many lower income earners placed under additional stress by increasingly unaffordable housing.
So is it about the priority attached to affordable housing relative to transport, roads, education and health? Don’t we recognise the impact an accessible, secure, affordable good quality home can have on the development of human capital? Just one example, I recently worked with the Federation’s Aboriginal members on our Closing the Gap submission, arguing that housing ought to be one of the targets. We found substantial evidence to demonstrate the link between overcrowded, poor quality housing and slower childhood development and lower school performance.
Don’t forget the economic case
And if social grounds alone aren’t sufficiently compelling then what about some economic ones? What do rising rents and stagnating incomes mean for spending in the rest of the economy, how do long commutes from far flung cheaper housing impact productivity and if more people retire as renters what does this mean for spending on aged care and health services?
Inspiration from overseas
But let’s finish by being optimistic again. Scotland has More Homes Scotland to deliver at least 50,000 affordable homes by March 2021, Canada has A Place to Call Home a 10-year, C$40-billion plan to address its affordability problems and NZ plans to sort out street homelessness in four weeks. With a Federal election coming up what a great opportunity for all the political parties to show how Australia will join the affordable housing battlers. And, finally, if anyone is still unconvinced about the power of affordable housing to make a difference, watch this.
Download the PDF of Making Housing Affordable articles posted in 2017.
Wendy Hayhurst is CEO of the NSW Federation of Housing Associations.