One doesn’t need to look far to notice the housing crisis gripping Australia – it’s the subject of daily media coverage and news commentary.
Rent increases have far outpaced wage growth, increasing over 10 per cent in Sydney over the past 12 months. Prospective homeowners are locked out of the inner and middle rings of the city as house prices regain momentum following consecutive interest rate rises. Mortgage home occupiers, having taken advantage of low-cost mortgages when interest rates were low, are struggling to meet repayments and are living in after-housing poverty. The most jarring symptom of the crisis is the growing number of rough sleepers on our city streets. Those sleeping in their cars, couch-surfing or living in overcrowded, unsafe housing are less visible.
Frontline workers, caseworkers, social workers and health outreach professionals will tell you the housing crisis has been building for years, perhaps decades. But the cost of inaction has become riskier for our political leaders because it is no longer contained to the disadvantaged and marginalised groups in our community.
“Middle-Australia” increasingly feels the pinch after decades of short-sighted housing policy that has rewarded debt-fuelled speculative investments rather than valuing housing for its utility – shelter. Australia’s middle-income and working classes cannot afford to purchase a home in the neighbourhood where they grew up and can no longer afford to live close to their place of work. Australia’s housing dream is in turmoil.
The solution? It depends on who you ask, but the onus to solve the housing crisis sits with all levels of government. After toppling the Liberal-National Coalition following nine years in power, the Australian Labor Party has outlined its housing agenda with the “National Housing Accord”, the Housing Australia Future Fund”, and the “National Housing and Homelessness Plan”.
The National Housing Accord aims to bring together all levels of government, investors and the construction sector to unlock housing supply and deliver more affordable homes. This includes a commitment by the States and Territories to enable the construction of up to 10,000 affordable homes.
The more substantive policy is the Housing Australia Future Fund which promises to deliver 30,000 new social and affordable homes over five years through a $10 billion, debt-funded, equity investment. In other words, the $10 billion investment fund hopes to accrue $500,000 a year in interest returns to be re-invested into building subsidised social and affordable housing.
The future of the Housing Australia Future Fund is uncertain with the Australian Greens blocking a vote on the bill in the Senate last week for at least a month. Without Coalition support, the Greens hold the crucial votes to see the bill pass but argue that the bill needs to go further, calling for significantly increased spending on housing and increased support for renters.
Whatever the outcome, one thing is certain – the Australian Labor Party is reasserting Commonwealth leadership on housing. Whether its policies are up to task is another question. Some media commentators argue that the reforms laid out merely tweak a housing system that is fundamentally broken – a far cry from the more systemic reforms that the party took to the 2016 and 2019 Federal elections. The now scrapped changes to Negative Gearing and Capital Gains Tax sought to lower the heat in the housing market. Investors and property-owners wouldn’t be as enriched for selling a house on the property market as one would sell a share on the stock market.
Perhaps the real boogie-man hiding in the closet is the Government’s most significant fiscal contribution to housing – the Commonwealth Rent Assistance (CRA), costing the Government over $5 billion a year. CRA is a subsidy paid to tenants renting on the private rental market who receive certain social security benefits. A recent productivity report found that 45.7 per cent of CRA recipients remain in rental stress, paying more than 30 per cent of their net income on rent.
The introduction of the CRA in the 1980s heralded the death of public housing as the Federal Government, in agreement with State and Territory governments, switched to subsidising low-income households on the private rental market as opposed to guaranteeing rent controls through the provision of public housing – bricks and mortar. It’s a sad piece of history for the 57,000 applicants languishing for 10+ years on the NSW public housing waitlist.
Addressing Australia’s housing crisis is complex and uniquely political. We are yet to decisively see where the newly elected NSW Labor Government moves on housing. Still, indications from the Federal Government offer housing advocates hope that the solution won’t primarily rely on assisting Australians into home ownership.
Join REDWatch on Monday June 5 from 6pm at Alexandria Town Hall to discuss the Federal Government’s housing policy with Member for Sydney and Minister for Environment and Water Tanya Plibersek. Follow REDWatch on Facebook, or contact REDWatch at email@example.com or call 8004 1490.
Adam Antonelli is Secretary of REDWatch and works for City of Sydney Deputy Lord Mayor Sylvie Ellsmore.