It’s time for some answers on the housing crisis

187 views 2021-09-13 12:30:53

If you have the answer to Australia’s housing crisis, Jason Falinski wants to know – and by Monday.

Falinski, the Liberal member for the Sydney seat of Mackellar, is the chair of the House of Representatives Standing Committee on Tax and Revenue, which has been tasked by the Treasurer, Josh Frydenberg, with a new inquiry into the impact of tax and regulation on housing affordability and supply.

Submissions close on September 13 with the first public hearing on Tuesday and a report in early 2022. So far, despite the hand-wringing and outrage over house prices, only nine submissions have been lodged.

Perhaps we have had enough. I count five Commonwealth government and Productivity Commission inquiries into housing in the past 20 years, along with a pile of state reports, Reserve Bank analyses, and even dustier volumes dating back, in my library, to a report on Urban Land Prices 1968-74 commissioned by the Whitlam government.

Yet for all that time, while politicians, bureaucrats and developers have championed the cause of the first home buyer, prices have risen inexorably higher, housing costs as a proportion of income have increased, and home ownership has slipped, particularly among 20- to 40-year-olds.

“It is hard to think of any area of widespread public concern, where the same policies have been pursued for so long in the face of such incontrovertible evidence that they have failed to achieve their ostensible objective,” writes independent economist Saul Eslake, a long-time campaigner for housing reform, in his Falinski submission.

For Eslake it’s politics. The majority of voters – those who own houses and those who aspire to ownership – want house prices to remain high, as ALP leader Anthony Albanese has conceded by ditching reform of negative gearing and capital gains tax.

“Sadly, there’s no reason to think that the political calculus is about to change,” Eslake concludes.

Global shift

Nevertheless, the pandemic surge in global house prices, driven by dramatic improvements in mortgage affordability – for those with jobs and savings – and a new appreciation for life at home, has produced a slew of new proposals around the world.

Many address supply constraints. US President Joe Biden has a $US5 billion program to reform the remnants of racist exclusionary zoning; California has just passed legislation to allow duplexes in single-house zones; UK Prime Minister Boris Johnson has a hotly contested proposal for a “once in a generation” reform of the planning system; and the major parties in the Canadian election all promise to boost housing numbers.

New Zealand, which has tried to boost supply with little success, has returned to demand management, trimming the tax advantages for investors and boosting prudential restrictions on mortgage lending.

Falinski, a former local government councillor on Sydney’s northern beaches, has already decided his committee should focus on supply.

“As consistently noted by the RBA and others, regulatory settings are directly responsible for the unresponsive nature of housing supply in Australia,” he said at the launch of the inquiry. “The research points to limitations on land, and restrictive planning laws, as the major causes of short supply.”

There is plenty of fodder here. Falinski is due to address UDIA National TV on Thursday with stamp duty, the managed investment trust treatment of build-to-rent schemes, inefficient planning systems, industrial relations and contribution reform already on the agenda.

The government’s National Housing Finance and Investment Corporation (NHFIC) weighed in to the debate last month with a new report, Developer Contributions: How should we pay for new local infrastructure, which pointed to the increased use of infrastructure charges, to as much as $85,000 a dwelling in NSW which, chief executive Nathan Dal Bon said, “increasingly act like a tax on new housing, which can impede new housing supply and reduce housing affordability”.

Nevertheless, I hope Falinski and his committee understand that housing is more than a metric of building activity.

New era, new challenges

As the pandemic has demonstrated, the quality of homes is vital. A few of the houses and apartments delivered in the last boom are literally unlivable. The next generation of housing must meet the challenges of working from home, of greater occupier diversity, and increased energy efficiency and climate resilience.

And yes, Falinski does acknowledge the impact of housing affordability on issues such as mental health, family formation, domestic violence, financial stress and unemployment.

Housing will also be at the heart of the post-pandemic city and community. More than high-rise inner-city apartments and low-rise distant communities are required, which is why so many look to the opportunities, and challenges, of densification in the suburbs and responsive housing in the regions.

Even Boris Johnson, with his sarcastic criticism of “newt-counting delays”, has stressed the UK needs to build “better” and “greener” as well as “faster”.

Falinski shows his Liberal Party DNA with an “urgent moral call” to “restore the Australian dream for this generation and the ones that follow”.

But he also acknowledges what I see as the moral imperative; the need to properly house the more than a million low-income Australian households struggling in private rental accommodation.

The average Australian household spent 14 per cent of its income on housing in 2017-18 according to the Australian Institute of Health and Welfare. But those on the lowest 40 per cent of incomes in private accommodation paid on average 32 per cent of their income for their homes, which puts them well into financial housing stress.

NHFIC estimates that 700,000 new social housing units are needed and can be developed over the next 20 years.

Sydney’s decision-makers, polled in August by the Committee of Sydney for the latest Sydney Leadership Survey, took the same view, with more than 70 per cent rating increased funding for social/affordable housing as “very important”, well ahead of the 31 per cent who felt the same way about the NSW government’s new land tax proposal.

Not every Australian can afford to buy a house; but every Australian should have the safety and security of a home.

This article is from Australian Financial Review, please click the following link for the original article:



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