Liberate housing from the unfree market

February 28, 2019
The housing affordability shortage is the inevitable outcome of decades of government policy.

As the housing affordability crisis in Australia grinds on, it is worth remembering that this debacle is no accident: it is the inevitable and intended outcome of decades of Coalition and Labor government policy, at both the state and federal level.

A quick review of the facts reveals how governments in this country have abandoned any notion that access to affordable and dignified housing is a basic human right that should be guaranteed.

Public housing makes up 44% of France’s total stock; in Denmark it is 20%. In Australia it is a pitiful 4%.

To compound the problem we have some of the weakest protections for private tenants in the OECD. In many European countries, a tenant that abides by their lease has the security of knowing that they cannot be kicked out of their home except under very specific circumstances.

Other countries have legislated to limit rent rises. Even US cities such as Los Angeles and New York impose rent controls.

It wasn’t always this way in Australia. Public housing used to be a mainstream housing option for working class people.

Across the road from where I live in Fremantle, the suburb of Hilton used to be entirely government housing that was build after World War II when the country faced a desperate housing shortage and had to accommodate hundreds of thousands of returning soldiers.

The fact that people had suffered and sacrificed through the Great Depression and the war put the heat on the government to deliver a dividend.

Since then public housing has been allowed to dwindle down into an ever shrinking pool that only the poorest sections of the working class can qualify for, and for which there are ever growing waiting lists to get into.

Both Labor and Coalition state governments have refused to provide new investment to state housing authorities to expand their stock to keep pace with population growth and general demand. The same is true of successive federal governments.

They have actually succeeded in doing something quite insidious: so few now qualify for or have any hope of getting into public housing that many working people no longer identify with it. Worse, it has become an object of fear and contempt.

Of course this suits the neoliberal politicians perfectly, as it sucks away the pressure on them to boost funding.

It is worth remembering that the destruction of something that we used to regard as a universal right and its conversion into an inadequate welfare safety net is exactly what the Coalition would like to do to public education and healthcare.

The sad irony is that a significant expansion of public housing would put downward pressure on private rents and property prices, benefiting working people in private rentals or seeking to buy.

Such a policy would be far more effective than rent relief or the first home owners’ grants that just end up in the pockets of landlords, developers and banks as they further inflate prices.

Completely starved of funding, state housing authorities have no other way to renew and upgrade their stock other than to sell off dwellings and the land they stand on in more gentrified areas to buy and rebuild in cheaper areas.

Sometimes they partner with private developers on the land they are selling off to build a mixed private-public block of apartments. They extol the virtues of this new form of mixed development for reducing the "ghetto-isation" of public housing.

But across our cities the opposite is happening as the majority of public housing gets pushed to the outer suburbs.

While housing authorities charge rent based on a fixed percentage of the tenant's assessable income (25% in Western Australia), they also have very low income thresholds above which tenants have to leave. This is justified on the basis that other people on the waiting list need the housing more.

However it has two perverse consequences. It is a disincentive for a tenant to earn more if the cost and disruption of having to find new accommodation on the private market outweighs the benefit.

Also, if a tenant is paying 25% of their income in rent and their income rises, that should mean a rise in revenue for the housing authority, which could be used to grow its stock.

Instead this road is blocked.

With no access to new capital grants and prevented from incrementally growing its own stock, the huge waiting lists for public housing is being deliberately maintained and extended.

Federal Labor leader Bill Shorten recently proposed a subsidy of up to $8500 a dwelling to investors prepared to charge rents at 20% below the market rate. The limitations of this scheme are obvious.

First, 20% below the market rate is still not necessarily affordable.

Secondly, it is yet more welfare for landlords and developers.

Thirdly, there is no guarantee that it will be picked up. Rent controls on private dwellings would be a more effective measure.

Rebuilding our public housing stock has to be at the centre of a serious housing affordability strategy.

We have to liberate housing from the artificially inflated private market and win the argument that housing is too important to be left in the hands of speculators and profiteers.

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