It’s probably poor form to quote from one of my own speeches, but I will anyway:
We have a crisis in the public housing sector, we have a crisis in the number of people able to afford private rental and we have a crisis in the affordability of buying a home.
I made that comment in the Senate on 21 October 2002. That same day Laura Tingle, writing in The Financial Review about the growing problems with housing affordability, noted that part of the problem was that there is no “holistic approach” at the federal level to housing policy and that “the growing political issue of housing affordability at the federal level remains largely unaddressed.”
Nearly five years later, nothing much has changed, except the crisis in housing affordability and availability has got much worse and far more people are hurting as a consequence. Indeed, it’s got so bad that both major parties need to look like they are thinking of doing something about it.
The problems have become so severe that they risk becoming permanently entrenched, along with the major wealth and opportunity gaps that go with it.
Part of the problem with addressing housing affordability is that there is no simple answer. The multi-faceted nature of the problem means that any individual action aimed at dealing with it might help one group of people, but can have flow-on consequences which will hurt others. It must also be emphasised that some of the areas with the most severe housing crises at the moment are in regional and remote parts of the country, and sometimes it is availability as much as price that is the problem. An isolated initiative that might help with the housing or rental market in Brisbane may make things worse in a city like Mackay.
Raising the First Home Owners grant might just raise prices. Raising rent assistance might just raise rents. Cutting negative gearing might reduce private rental stock. Increasing supply might deflate prices in some areas, which can be a serious problem for people who have borrowed on the basis of equity which has lost value. Cutting stamp duties might advantage speculators and investors over home buyers and push the overall price up.
That doesn’t mean none of these things should be done, but rather that there needs to be a comprehensive holistic approach based on good solid data that allows reasonable guesses to be made about what the impacts will be.
Another problem is that there is not always a lot of good data around to properly see what the real impact of a particular measure would be. For example, the First Home Owners grant costs over a billion dollars a year and negative gearing provides tax breaks worth over two billion dollars a year to investors, yet we don’t know as much as we should about where this money is spent and how much it is applied on what could be seen as affordable housing, rather than the higher end of the market.
So the bad news is that it is complicated and politically fraught to fix. Which brings us back to the real problem – there is no holistic national housing strategy or policy. The current federal government, despite being the most centralised and interventionist in our country’s history, has vacated the field on overall housing policy – building on a trend, it has to be said, started under the previous Labor government.
That doesn’t mean the feds have to ‘take over’ housing the way they’ve tried to take over workplace relations. Fixing housing affordability needs cooperation, not just having a different level of government incompetently mismanaging the issue.
The good news is that the problem may well not need an overall increase in government spending to fix it, just a reprioritisation of existing spending, combined with other non-expenditure measures.
The even better news is that while governments and political parties have been blaming each other and passing the buck, community based housing groups, developers, real estate and finance sectors, unions, local councils and academic experts have all been working together and holding summits as part of developing priorities and ideas for a national housing affordability agreement.
All it needs now is for the federal government to show some leadership and take responsibility for once. The state and territory governments would have no choice to come on board (and would probably be happy to), and we can get moving.