Housing was a key issue in the May election, but that was so two months ago. We’re back to fudging it now, Michael Pascoe writes.
There was absolutely nothing new in the accidentally dropped hints of Treasury’s advice to Jim Chalmers on housing this week. It was spelt out in last year’s budget that the Government’s housing target was a pipedream, and nothing has improved since then.
Why Treasurer Chalmers persists in claiming Albanese’s 1.2 million new homes target is achievable is beyond me. At the next election, it will be what the promise of lower energy bills was at the last one.
Governments, state and federal, still overwhelmingly think “the market” will solve Australia’s housing crisis – the same crisis that leaving it to “the market” created,
with just a little social housing fiddling around the edges.
There remains a shortage of adequately trained people for building, just when a boom in data centre construction is about to provide more competition for labour.
No easy fix
While the usual suspects quibble about local government restrictions and tax policy, the main game goes unplayed. Instead of facing up to the need for governments to do at scale what the private sector won’t, the most dispiriting part of the ABC’s Treasury briefing scoop was that the mandarins think further subsidising landlords is a priority.
That, effectively, is what our massive Commonwealth Rent Assistance (CRA) program does. The ABC reports that increasing the subsidy is one of the ideas Treasury has for the Housing Minister.
For context, the reason rent increases have slowed is not because supply and demand are in better balance, but because tenants are reaching the limit of what they can afford to pay. You can only squeeze a lemon so far.
At the bottom of the rental ladder are the million or so renters receiving CRA, people who have no prospect of owning their own home and not much more chance of securing rare public or social housing.
Their ability to rent in the private market is subsidised by the CRA. If they did not receive the $6 billion a year from the Federal Government, they would either go hungrier or could not afford to pay higher rent.
What happens in the real world is that any increase in CRA is quickly absorbed by landlords. The poor tenants are still left with baked beans on toast for special occasions.
The housing crisis we didn’t have to have, and how to fix it
One million tenants
The scale of the scandal – a million tenants – is such that the private landlords depend on squeezing the CRA out of people with no shelter security. It does little to lessen actual rental stress.
Proposals to increase CRA payments just mean private landlords could and would charge higher rent. The welfare lobby pushing for higher payments is meaning but misguided. It would not increase supply, it would only improve landlords’ returns and solve nothing.
As a sidelight, the CRA is a key reason for state governments outsourcing public housing to charities, alias “community housing”. Public housing tenants don’t qualify for CRA payments. Correctly structured community housing tenants do, with the community housing organisations grabbing those payments.
If a policy is not directly increasing supply, it is not really helping. When the market fails, it is up to the government to directly intervene, but that is expensive, and there’s no political will to do much more than maintain the status quo.
When the Coalition’s policy has been to make housing availability worse, it hasn’t been necessary to be radical in reversing the erosion of social housing over the past three decades.
Hurdles to building
And then there are the immediate hurdles to building. No, not zoning and local government, the usual whipping boys beloved by the developer lobby, but simple availability of serviced land.
A simple reality is that there is little gap between local government building applications and approvals. Yes, it would be nice if some councils were quicker and easier to deal but that wouldn’t solve the crisis.
At the extreme is Western Australia, where government distractions, such as low-deposit loans for modular housing, mean nothing because the land simply isn’t available in the massive state to plonk them on.
While the commentariat is caught up in medium and high-rise housing issues, the suburban block is still core to Australian housing,
and that’s where infrastructure is delaying supply and keeping prices high.
Private housing analyst Michael Matusik earlier this month compiled the figures on what he termed the “lot drought”. In the WA example, in the year to the end of March, Matusik counted 11,200 sales of blocks under 1,000 square metres in Perth. Right now, there are just 600 titled lots for sale there – a mere three weeks’ supply.
South-east Queensland isn’t much better. Based on the 10,900 land sales in the March year, the present 1,850 lots for sale represent nine weeks’ supply.
Melbourne, where housing prices are cooling, has nearly a year’s supply, but Sydney has 24 weeks and Adelaide 23. That’s not enough to cool warming markets.
“For mine, Perth’s three-week supply is a canary in the coal mine with most major urban areas flirting with empty shelves,” says Matusik.
“Experienced developers are locking in sites now. Those who hesitate may have to swallow tomorrow’s premium.
“Unless the governments speed up titling and loosen regulations, plus change how infrastructure charges are levied, then affordability will keep sliding.”
Treasury’s lame proposals merely underline how out of touch the mandarins are with the problem,
how muddling through has replaced any idea of actually achieving major progress.
And the irony, as I’ve written before, is that it was Robert Menzies who seriously drove direct government action into creating the Australian housing dream.
Also, as I’ve written before, Albo is proud of his log cabin story, growing up in public housing. Too bad it’s practically unavailable now.
The motel time forgot. How the housing crisis hits our most vulnerable
Michael Pascoe is an independent journalist and commentator with five decades of experience here and abroad in print, broadcast and online journalism. His book, The Summertime of Our Dreams, is published by Ultimo Press.