Victoria’s housing plan: A win for developers, a loss for public housing

October 1, 2023
public housing towers
Residents in the public housing towers earmarked for demolition were informed by Homes Victoria, via leaflets, the day after the Housing Statement was released. Graphic: Green Left (adapted from a photo by David Jackmanson/Flickr (CC By 2.0 DEED).

Under the guise of solving the housing crisis, the Victorian state Labor government released a Housing Statement on September 20, which allows for developments valued at more than $50 million to be fast-tracked and approved by the state planning minister, proposes the demolition of all 44 public housing towers for public-private developments and the sell-off of surplus public land to developers to build housing.

This was the last big announcement by former Premier Daniel Andrews before he resigned from parliament.

The housing statement outlines a 10-year plan and claims that 800,000 new homes will be built in the state, to raise the supply of housing stock to address the housing crisis.

The federal Labor government, the Coalition and developers support the state government’s claims that “lack of housing supply is driving up the cost of housing” as a result of “red tape” and councils taking too long to approve developments.

Under the plan, planning decisions will be fast-tracked. Andrews claimed that these changes have been proposed to clear a backlog of planning applications "lagging, gathering dust for years” so that “[we can] turn those applications into houses".

Gift to developers

Developments valued at more than $50 million for Melbourne and more than $15 million in regional Victoria can bypass local councils and go straight to the Planning minister if they include 10% affordable housing. Developments on public land under public-private partnerships will also be exempt from local planning controls.

The Municipal Association of Victoria (MAV) responded to the announcement, saying that 120,000 dwellings had already been approved by local councils across the state, but developers had not begun construction, due to a practice known as “land banking”.

MAV deputy president Jennifer Anderson said: “The fact is it’s often more profitable to delay supply, so naturally that’s what some developers are doing.”

There is nothing in the Housing Statement that prevents developers from land-banking to drive up housing profits, or to prevent investors from leaving dwellings vacant to drive up their value.

MAV deputy president Joseph Haweil said that developments can also qualify as significant by “simply being deemed so by the Minister”.

Haweil said that while residential developments must include at least 10% affordable housing to qualify as significant, “the Minister has been given the power to reduce or remove this requirement — with no guidelines around when that would be appropriate”.

Fast-track approvals

The Planning minister will have the power to ignore existing height and setback requirements that would otherwise apply to these developments, with local communities losing their democratic right to appeal planning decisions.

The Andrews government proposed fast-tracked planning for big developments in February last year, but at that time the government demanded that the development industry pay a special new levy for social housing. When the development industry rebelled against the levy, the government dropped the plan.

Just 19 months later, the Housing Statement grants fast tracking to developers, without the social housing levy.

Critics of the land supply argument, such as Dr Tim Helm, have emphasised that raising the supply of housing does not necessarily bring down its cost. Helm authored the report, Melbourne’s pandemic rental dynamics: an (un)natural experiment in excess supply.

Helm said that during 2020‒21, Melbourne recorded its first year of negative population growth since the Great Depression, while the rate of construction “continued more or less unchanged”.

This generated “an excess supply of 100,000 dwellings, or enough to house 260,000 people,” he said.

However, this excess housing supply only brought down “average rents by a maximum of 12% for about a year. Low rents did not last. Within a year, rents were back to their pre-pandemic levels despite there being fewer people and more houses,” said Helm.

Destruction of public housing

The keystone announcement in the Housing Statement is the plan to demolish all 44 public housing towers across Melbourne by 2051.

The estates that are earmarked to be amongst the first to be knocked down are two towers in Carlton at 20 Elgin Street and 141 Nicholson Street, which have been emptied of tenants over the past two years. These will be followed by 33 Alfred Street, North Melbourne and two towers in Flemington, at 120 Racecourse Road and 12 Holland Court.

Residents in these towers were informed of the decision by Homes Victoria, via leaflets, the day after the announcement.

The towers, which are home to 10,000 public housing residents, will be replaced with a mixture of 30,000 private and social housing dwellings. Only 11,000 of the new dwellings will be earmarked for social housing, whereas 19,000 dwellings will be private. It isn’t clear how many, if any, of the 11,000 social housing flats will be public housing.

“Social housing” is an umbrella term used by governments to include both “public” and “community” housing. This has disguised the privatisation of public housing over the past 30 years.

Public housing is owned and managed by the government with rents capped at 25% of a tenant’s income, whereas community housing is owned and managed by not-for-profit consortiums and rents can be up to 30% of a tenant’s income. The conditions in community housing are often worse, and vary by organisation.

By increasing the proportion of community housing relative to public housing, the government is attempting to funnel more vulnerable people into the capricious, predatory and irrational housing market.

The state government has justified the demolitions by claiming that the towers are derelict and not able to be retrofitted. However, a paper jointly authored by six leading academics from the RMIT Centre for Urban Research, says there is no publicly available evidence supporting these claims.

They say the demolition of the towers would most likely exacerbate and intensify the housing crisis, due to the lack of public housing available for displaced residents, the displacement and break up of migrant and refugee communities, and the stress of displacement.

Public Housing Residents Network and Save Public Housing Collective spokesperson Cory Memery told Green Left, “It’s very frightening for people [in the public housing towers] to lose their forever home. People are being taken out of their community.

“There’s a lot of confusion among tenants. It’s worst for the older people. A lot of people who’ve lived there for a very long time have beautified their flats. It’s heartbreaking and terrifying for people to be ripped out of their community.”

Memery said that the not-for-profit architecture firm Office has developed a plan to retain, repair and reinvest in public housing estates, which shows that “people can remain on their estate without being taken out of their homes”, while the estate is refurbished.

Socialist Alliance councillor for Merri-Bek and public housing activist Sue Bolton told GL that previous public housing redevelopments had removed most of the three-bedroom flats and replaced them with one and two-bedroom flats, which meant refugee and migrant families were prevented from returning to estates.

“This plan represents the biggest attack on public housing in Melbourne’s history and will effectively hand public land in prime locations over to private developers unless we can stop it.

“It will gentrify Melbourne’s inner-city, pushing people on low incomes and from migrant and refugee communities out of the inner city.

“It isn’t just the destruction of the public housing but also the ripping apart of communities in the estates. People will lose their social supports when they are forcibly relocated. There is a strong community network in the towers, which doesn’t usually exist in private apartment blocks.

“The strong social solidarity amongst people in the towers was visible when the Flemington and North Melbourne towers were abruptly locked down in 2020 during COVID-19 without residents being given the opportunity to get supplies of food and other essential items.

“Only 2.24% of Victoria’s housing is public housing. If we are to get out of the housing crisis, we need to radically ramp up the amount of public housing that is built. Public land should be used to build public housing, not privately-owned housing.”

Victorian Greens leader Samantha Ratnam responded to the plan, saying: “There are over 125,000 people on the waiting list for public housing, yet Labor would rather hand over public land to private developers than commit to building the amount of public housing we desperately need.

“The government’s plans could mean the end of public housing in Victoria. They could have committed to build 20,000 new public homes across these sites, yet instead they have chosen to privatise at least two thirds of all these sites.”

The plan would not yield a net increase in supply of overall dwellings for at least a decade. Meanwhile, there are 125,000 applicants on the Victorian Housing Register, and this number continues to grow at an alarming rate.

Handing over public land

Under a Ground Lease Model (GLM), the government will lease the land that the public housing towers are located on to private consortiums, including community housing associations, to manage the sites. After 40 years, the land and dwellings are meant to be returned to the state.

While the land is leased rather than sold, it is effectively privatised because the state will not have control over it for the period of the lease.

The handing over of public land to community housing “is a shift away from the government accepting its responsibility to provide public housing,” said Bolton.

Whether or not the land is returned to the government at the end of the 40-year lease is a matter of speculation. Conversely, that public housing will be supplanted by more expensive, community housing or private housing is certain.

To fund social and affordable housing, a 7.5% levy on short-stay rental platforms such as Airbnb and Stayz was also announced, to come into effect in 2025. This is inadequate and does little to address the systemic causes of the housing crisis and it is likely that this tax will be passed on to consumers.

The Housing Statement introduces some small reforms for renters, but has dismissed any serious reforms such as rent controls, which would prevent landlords from being able to raise rents as much as they like. Instead, the government will restrict rent rises between successive fixed-term rental agreements and introduce a ban on rent-bidding.

Friends of Public Housing spokesperson Fiona Ross told GL: “The privatisation of public housing has been happening for years — often by stealth — right across Australia, and is now being rolled out on a truly massive and aggressive scale in Victoria.”

“If Labor succeeds in destroying public housing in Victoria we can expect to see an increasing underclass of people struggling to survive. Poverty and homelessness will balloon out of control along with its attendant social problems and ills.”

You need Green Left, and we need you!

Green Left is funded by contributions from readers and supporters. Help us reach our funding target.

Make a One-off Donation or choose from one of our Monthly Donation options.

Become a supporter to get the digital edition for $5 per month or the print edition for $10 per month. One-time payment options are available.

You can also call 1800 634 206 to make a donation or to become a supporter. Thank you.