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Australia needs a genuine national housing strategy to make adequate housing available for everyone in the country, researchers have argued.
Key points:
- We need an ambitious national project to fix Australia's housing, researchers say
- Housing Australia should be the lead agency driving the national strategy
- The goal is to provide adequate housing for everyone
We need an ambitious national project that deals with every area of housing policy as a coherent whole, and which ends the fragmentation of responsibilities between different levels of government, and across different agencies.
It should acknowledge that the Australian government has a special capacity to finance public projects and use money for the public good.
And it needs to drive the construction of 950,000 social and affordable rental dwellings by 2041, which, at 50,000 new dwellings every year, is far higher than current government target of 8,000 dwellings a year over the next five years.
In a new report published today by the Australian Housing and Urban Research Institute (AHURI), researchers say a national strategy is needed to overcome decades of accumulated policy errors that have contributed to our current housing crisis.
They say it will require new federal legislation, new federal agencies, and a new appreciation that people in a civilised society have a right to adequate housing.
"To meet that challenge, it is useful to think of governments and stakeholders being engaged in a mission that requires government leadership in the deliberate shaping of markets and direction of economic activity," they say.
We need an ambitious national project
The report is titled, Towards an Australian Housing and Homelessness Strategy: understanding national approaches in contemporary policy.
It has been co-authored by six academics: Chris Martin, UNSW Sydney; Julie Lawson, RMIT University; Vivienne Milligan, UNSW Sydney; Chris Hartley, UNSW Sydney; Hal Pawson, UNSW Sydney; and Jago Dodson, RMIT University.
They argue Australia's incoherent and fragmented housing policies have become so unworkable a circuit-breaker is needed.
They say in the years after World War II, widespread home-ownership in Australia was regarded as a means for having stable housing during one's working life and in low-income retirement, and it was encouraged by an array of preferential policies by governments.
Those housing policies included exemption from income tax (on imputed rent), land tax and the Age Pension assets test; concessional sales of public housing; war service home loans; building society subsidies; first home buyer grants; and rent controls that repressed competition from landlords.
But, they say, in recent decades housing has taken on additional financial features that have changed the landscape for younger generations and low-income households.
Housing is now seen as an asset for leveraging into consumption, as an investment (especially in additional housing assets), and financial assistance to children (especially in accessing home ownership themselves).
They say over time many of those supportive post-war policies were dropped (such as public housing sales and rent controls), while new policies were added (such as exemption from capital gain tax, and finance liberalisation), and the modern array of preferential treatment for housing no longer supports home ownership so much as existing home owners.
"The tax expenditures represented by these special treatments make owner-occupation the most subsidised sector in the housing system, and the wealthiest the most subsidised cohort, through a capitalisation of tax benefits in house prices that compounds barriers to home ownership access for those lacking familial housing wealth," they say.
This has changed the face of Australian society in a number of ways, they say.
What's the solution?
The researchers say Australia needs a national housing and homelessness strategy with big ambition.
They say the strategy should be enshrined in new legislation — they call it the Australian Housing and Homelessness Strategy Act — that places an obligation on the Housing Minister to make a national strategy and stick to it.
They say the National Housing Finance and Investment Corporation — or "Housing Australia," as the Albanese Government proposes to rebrand it — should become the lead agency that drives the housing strategy over coming years.
They say the new Act should create two new statutory offices to advise and keep the government to account on the conduct of the strategy and the pursuit of its mission.
They say the two offices could be called the Australian National Housing Consumer Council (representing the interests of homebuyers, tenants and the homeless), and the Australian National Housing Advocate (with the power to inquire independently in to the conduct of the strategy).
The researchers say the mission of the national strategy should be clear: everyone in Australia must have adequate housing.
And they've produced the below diagram to illustrate what they have in mind.
When looking at the diagram, start in the bottom left-hand corner.
They say a national strategy would have — at its core — the two grey-blue boxes in the bottom left: social housing and homelessness.
Then, moving up and out, the strategy would add housing assistance, residential tenancy law reform, and building quality as three new core policy areas for a national housing plan.
Then, moving up and out again, you would align housing-related taxation, housing finance, and planning and development laws with those five core policies areas to create the foundation of the strategy as a coherent whole, covering all levels of government.
The researchers say the expanding nature of the strategy implies it will take time to put into place.
But once it's in place, you would eventually have macroeconomic policy, immigration and settlement policy, welfare and retirement income policy, and employment policies, among others, adjusting over time with the mission of the national strategy, to ensure adequate housing is always available for whoever needs it.
The researchers say it would be a vast improvement on what currently exists, where institutions like the Reserve Bank often seem to have their own housing policies.
They say our major economic institutions need to work together on housing policy, rather than at cross-purposes.
"Within the Australian Government, responsibility for housing and homelessness policy is divided. No one agency has overall responsibility for housing outcomes and for forming a strategic view of the housing system. Most intergovernmental activity has been around housing and homelessness conceived of as residualised welfare issues," they say.
"Meanwhile, the Australian Government's financial regulators, the Reserve Bank of Australia and the Australian Prudential Regulatory Authority, are arguably conducting housing policy of their own," they say.
The research report also lists some of the major ways in which our modern housing policies have failed millions of Australians.
Problems with the private rental sector
They say the private rental sector now houses 26 per cent of Australian households and has been growing at the expense of both owner-occupation and social housing since the 1980s.
"For growing numbers of Australians, private renting has become a long-term or even perpetual prospect," they say.
"The private rental sector is also the site of the worst affordability outcomes in the Australian housing system.
"The median low-income private renter household spent 36 per cent of its income on rent in 2019-20, with some 20 per cent of this cohort spending over half their income on rent.
"Moreover, as a source of low-cost accommodation, the sector has become increasingly deficient, with the national deficit of private tenancies affordable to low-income private renters growing from 48,000 to 212,000 in the two decades to 2016."
They say private rental dwellings are largely owned by other households, with more than half owned by landlords who own a single dwelling.
But properties and owners churn in and out of the sector rapidly, making housing in the private rental sector structurally insecure.
Residential tenancy law biased against tenants
They say modern residential tenancy legislation in Australia is light on regulation when compared internationally, and it's "highly accommodative of landlords dealing with their properties as they see fit".
They say states and territories have residential tenancy legislation that is based on a broadly common model of prescribed standard terms, with the outlines of the model first set out in reports from the mid-1970s (which were more protective of tenants than they are today).
But states and territories have repeatedly reviewed and reformed their laws over the decades in a largely uncoordinated way, and it has resulted is increasingly divergent positions on significant issues for renters (such as security of tenure).
They say there are obvious gaps in reform.
For example, little attention has been given to regulating affordable rent increases, and significant aspects of the law regarding landlord obligations for the condition of properties are uncertain.
And they say contrary to claims by the real estate sector, past reforms have not caused landlords to disinvest around the country.
"As households rent longer into their lives, the degree of accommodation the law affords landlords, at the expense of tenants' security and autonomy, makes the model increasingly unfit," they say.
Social housing inadequate
The researchers say Australia's supply of social housing needs to be dramatically increased.
They say in its post-war heyday, public housing (the only social housing form at the time) was funded by Commonwealth-State Housing Agreements to be a significant force in the planning and construction of Australian cities and towns, and ancillary both to industrial development and to home ownership.
In the quarter century to 1970, public housing authorities built just under 250,000 dwellings mainly for low-income working families and the aged, and had sold 100,000 of them on favourable terms.
But funding for the Commonwealth-State Housing Agreements was drastically reduced by the Howard government in the mid-1990s, and funding has largely continued at starvation ration levels since then.
And the sector's income from rents is also increasingly constrained.
They say social housing landlords charge income-related rents and after increasing the proportion of income charged over the 1990s and 2000s, the low incomes of their target cohort — 98 per cent of whom are in the lowest 10 per cent of incomes — are now "tapped out".
They say Australia's social rental sector — public housing, community housing and Indigenous controlled housing — now houses just 4 per cent of all households, down from over 6 per cent in the mid-1990s.
But for the minority it assists, social housing nevertheless provides a degree of affordability and security unavailable to low-income households in the private rental market, which helps them realise other benefits.
"Social housing tenants report improved school attendance by their children, improved access to doctors, eating healthier food, and feeling less stress," they say.
"According to a wider analysis, social housing investment generates a return 'comparable to, or better than' major infrastructure projects.
"Looked at the other way — the cost of not providing social housing, given its benefits, research by Professor Christian Nygaard concludes that the 'large, but avoidable, annual social and economic costs' of Australia's affordable housing shortage will top $1 billion annually by 2036," they say.
Homelessness linked to poor housing policies
They researchers say 120,000 Australians were homeless on the night of the 2021 Census, and it's a growing problem.
They say homelessness is inextricably linked to housing policy, as the Productivity Commission argued last year:
"If governments want to reduce homelessness, they need to address the structural factors that lead to housing unaffordability. Otherwise, more people will become homeless and services will continue to face barriers to supporting people out of homelessness. Governments need to make social housing more accessible to people who need it, increase the supply of housing, and help people to pay for housing when needed."
The researchers say for many, homelessness is triggered by personal crises related to finances, relationships or health.
The most cited reason for persons seeking specialist homelessness services assistance is "financial difficulties" (39 per cent), followed closely by family and domestic violence (37 per cent).
Equally prevalent is "housing crisis" (37 per cent) — a synonym for eviction — while 26 per cent cite "inadequate/inappropriate home condition," according to the Australian Institute of Health and Welfare.
Both these reasons link homelessness strongly with housing system problems, consistent with the statistical relationship between housing affordability and homelessness in Australian research.