H.Reuse is likely to be a major point of contention in the upcoming parliamentary elections. This emerged from the latest ALP budget Answer. Labor had already supported the coalition’s first homeowner initiatives. But the budgetary response of opposition leader Anthony Albanese Promise to boost social and affordable housing marked a clear difference to the government.
This wasn’t difficult to achieve. Despite the continued rise in housing affordability stresses over the past decade in many cities and regions, successive liberal national governments have noted a persistent shortage of off-market housing. In his stock response to calls for an incentive for social housing after CovidThe Minister of Housing Michael Sukkar has repeatedly washed his hands by explaining it purely state and territorial responsibility.
What exactly does the federal work have in mind? At an estimated cost of $ 10 billion, the proposed social and affordable building program would produce 30,000 homes over five years. That would represent a quadrupling of recent construction rates – certainly a welcome prospect for a sector that has effectively shrunk by a third since the 1990s (from 6% to 4% of all housing).
Albanese’s pledge to supply residential real estate follows the groundbreaking announcement by the Victorian government to provide $ 5.4 billion in 2020 Big housing construction Initiative as an integral part of the state’s post-pandemic recovery plan. As part of the BHB, more than 10,000 new social and affordable housing will be added to the housing stock in Victoria over a period of four years. One important difference, of course, is that this is a plan and not – as in the Albanian declaration – just a proposal.
After a decade of inactivity in social housing, both the plan and the proposal deserve applause. But neither is a commitment that changes the scale of the game. According to Victoria’s plan, social and affordable construction would increase from 0.5% of total housing construction in the state to around 5% – dramatically, but well below that 16% seen across Australia [1945-70[1945-70
The scheme proposed by the ALP would expand current annual rental of social and communal accommodation by a worthwhile but modest 18%. In terms of its contribution to the national social housing stock, the annual production of the 6,000 housing system would lag well behind that of the program 15,000 just had to keep up with the growing population (and demand).
While most Australians are well housed and many have suffered huge financial losses in the real estate market, our current system is poorly served by significant and growing numbers. over 200,000 households are on waiting lists for social housing and census-informed evidence suggests that well over double that number are either homeless or living in unaffordable or otherwise unsuitable housing.
Do Australian governments just have to face the need to spend more on housing? Many of us would say no. Indeed, public finances are already supporting huge, but not targeted, housing spending. Most notoriously, the negative gearing and capital gains tax rebate concessions that private landlords benefit from. The highly regressive nature of these can be assessed using the Grattan Institute estimate 80% of the CGT discounts flow to the top 10% of income recipients.
Adding the generous tax breaks granted to homeowners as well as direct support such as direct lending, we calculated that the public purse is already effectively pumping more than $ 100 billion in our housing system every year. But only about $ 8 billion Of this, they specifically aim to lower income earners through social housing subsidies, homeless assistance and rent support.
This imbalance is not only socially unjust, it also significantly distorts our entire housing system. It is far too strong an incentive to over-invest in a market whose ability to react quickly is inherently limited. The result is all too well known: high and soaring property prices.
Expanded social housing programs are undoubtedly an integral part of Australia’s better housing future. Reversing the decline in the social rental sector would be beneficial in all circumstances. A reasonable long-term goal would be to expand care to the OECD average – 7.1% of all apartments.
But only through more fundamental reforms can Australia really get a grip on the greater unaffordable housing. We need to rebalance a system that unduly benefits existing homeowners and landlords at the expense of tenants, especially lower-income tenants. We need to move away from a path that increasingly restricts young adults’ home ownership opportunities to those who have access to family wealth.
Are the types of action that would be required to move in this direction just a breeze? Perhaps, but a progressive housing tax and legislative reform are not impossible. The New South Wales government recently committed to mimicking the phased introduction of ACT Replacement of stamp duty with property tax. And just a few weeks ago the Victorian government significantly strengthened Tenant rights.
Farther away, and on a much larger scale, Britain saw this Elimination the home mortgage interest tax break in the 1990s and greatly reduced tax breaks for investors landlords in the 2010s. Both initiatives were implemented under conservative governments. Perhaps more remarkable in what has been described as “A step towards a fairer tax system“In 2017, the US government significantly cut two of the major homeowner subsidies available to wealthy Americans.
What is needed above all in Australia is clear ownership by our national government, as well as states and territories, for the challenge of housing affordability. Only then could the country set the course for a more balanced and fairer housing system for the benefit of all.
Prof. Hal Pawson, UNSW, is the author of casing Politics in Australia: An Argument for System Reform (Palgrave 2020)