Investment in public housing has collapsed in NSW and Victoria, with both states taking advantage of stimulus-era funding to pull back on their own investment in housing.

ABS data on housing approvals shows that, after the Rudd government’s investment in social housing as part of its financial crisis stimulus packages concluded, the national level of investment in social housing reached an all-time low in the second half of 2011 and remains there. The result is just 172 publicly funded dwelling units were approved nationwide in March.

The social housing stimulus package reverses a decades-long decline in public investment in housing that stabilised around 2003. This is the proportion of public sector dwelling unit approvals to total dwelling unit approvals:

And the data shows who has cut back on spending: NSW and Victoria. In NSW this year, just 31 public housing units have been approved for commencement. There were just 511 in all of 2011, compared to 927 in 2007, before the financial crisis, and 4736 in 2010, when the stimulus package work was in full swing.

It’s a similar story in Victoria, except that the Victorian government spent its social housing funding over a longer period, and was still rolling out units in 2011: 39 units have been approved this year, and just four in March.

In Queensland, in contrast, while the stimulus-spike is long over — like NSW, Queensland had the bulk of its social housing investment rolled out by 2010 — social housing investment is much stronger with 57 starts this year. In South Australia there has been 210 starts this year; in WA, which also had a slower stimulus rollout, 134 starts this year.

The numbers from (particularly) NSW and Victoria suggest that the level of investment in social housing has not merely returned to the long-run trend, but worsened. That is, the NSW and Victorian governments have pulled back on social housing investment following the stimulus packages.

This is the time-honoured state government practice of cost-shifting — moving state funding out of any activity for which the Commonwealth provides additional funding, in effect negating the benefits of any additional Commonwealth investment. In relation to the highly successful BER stimulus package, the Commonwealth made funding conditional on the states not reducing their own capital expenditure in schools.

However, that doesn’t stop governments in the future from cutting back on later investment. That’s what NSW and Victoria, the two biggest housing markets, have done on social housing. The result is that our national level of public housing construction has sunk to an all-time low.

It also means that taxpayers from other states end up picking up the tab for what the NSW and Victorian governments, and their citizens, should be paying for.

Peter Fray

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