Australia’s reimagined federalism – the National Cabinet – has plenty of work to do, none of them more pressing nor serious than getting more dwellings built, across the country. Though some still want to incentivise demand, the consensus has shifted to be firmly focussed on supporting improved housing supply, which was the main agenda for the National Cabinet conducted on 16th August.
Whether housing supply is a crisis right now depends on your perspective. Like the proverbial frog in the pot, if you have grown up with housing supply gradually worsening, perhaps not so much (especially if you are already residing inside your gold mine). If you are younger and facing affordability that makes even wealthy eyes water, well, it’s a crisis.
As Laura Tingle reminded us in the Australian Financial Review, for too long the solution has been to ‘release more land’ at the edges of our sprawling cities. We have reaped from that sowing exactly what was deserved – a structural inefficiency that is impossible to sustain for infrastructure purposes, that forces lower income households to the fringes, requiring them to spend soul and productivity sapping hours on roads every day to commute to jobs often very far distant.
No matter how much land was released, it could not be built quickly enough to satisfy demand, which continues to rocket ahead of supply, which is caught in its own boom-bust vortex.
There is no doubt that land supply does matter for housing supply, but it is not the be-all and end-all topic. It is the commencement point, reflecting the divided responsibilities between the Commonwealth and State governments. So, in that context, a National Cabinet focussed on housing, with the (near enough) wall-to-wall State governments (who do have responsibility for land releases, along with their local governments) getting together, was always going to demand a greater focus on the rest of the elements that make up housing supply.
National Cabinet has established a fairly straight forward shared agenda for housing, headlined by two key elements:
- Removing constraints to building more houses in established suburbs and
- Giving renters more rights
The latter point is more important than it might seem from a housing supply perspective. Follow the Greens’ proposals for rental increase freezes and absolute controls and investment into rental stock would dry up pretty quickly, argue most.
However, as work by the Grattan Institute, reported in The Conversation on 17th August, get the proposed 1.2 million additional new dwellings built and rents will reduce by at least 4% (and as much as 8%), once they are all built.
Using an additional $3.5 billion to the $12 billion already in the pot, the Federal Government intends those 1.2 million dwellings to be built in five years, across the country.
State and local governments that move quickly will have access to $500 million from the Housing Support Program, aimed to ensure services are properly connected where ‘infill’ housing development occurs.
This is no easy feat, and it needs money and political will because wherever medium and higher density living options are under consideration for good public policy reasons, there is opposition. Mainly from those in single family dwellings. One way to alleviate the concerns in established suburbs is to build decent quality multi-residential dwellings. Again, incentives under the national plan may aid that.
More social and affordable housing is also part of the mix with the intention that some 30,000 dwellings would be funded by the $10 billion Housing Australia Future Fund. This is presently awaiting passage in the Senate and hopefully the National Cabinet housing plan will provide impetus to a resolution.
The quicker the better in terms of resolving the political manoeuvres on the housing front: the nation’s housing needs cannot afford delays.
