Plibersek, Tanya --- "Putting housing back on the agenda: the federal government's response" [2009] ALRCRefJl 29; (2009) 94 Australian Law Reform Commission Reform Journal 7

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Reform Issue 94 Summer 2009

This article appears on pages 7–9 of the original journal.

Putting housing back on the agenda

The federal Government’s response

By Tanya Plibersek*

When Abraham Maslow proposed his famous hierarchy of needs, he found that housing and shelter were among the most basic.^[1] Our homes are the base on which we build our lives, raise our families and become part of a community. For most Australians, their home is their largest asset.

In recent years it has become clear that there are significant public policy issues in Australian housing. The average cost of a house rose from five times the average income in 1996 to eight times the average income in 2007.^[2]

For several years, rents have been rising faster than the Consumer Price Index (CPI). Data on rental stress shows that low and moderate income earners have been bearing the brunt of this problem.

More than 100,000 Australians are homeless every night.^[3] Of greatest concern is that this estimate came from the 2006 Census, after more than a decade of economic growth.

The problem that underlies all of these issues is the supply of new homes. The National Housing Supply Council estimates that in 2009 Australia needed an additional 85,000 houses.^[4] This is a problem that has been building over many years and will continue to worsen without major reform.

The global financial crisis

Overseas housing markets, particularly the US, contributed to the global financial crisis (GFC). The Australian housing market, in contrast, has not been significantly affected by the GFC. The undersupply of housing in Australia—and more cautious lending practices and better regulation in the banking sector—have protected us from some of the catastrophic events we’ve seen overseas.

The Government has updated consumer protection laws for mortgage holders. A single national regime is being established for the regulation of consumer credit with the Australian Securities and Investments Commission (ASIC) as the national regulator. Under the new laws all lenders will be required to consider hardship applications and the threshold for this assistance will be increased to $500,000.

The global financial crisis has reduced access to finance in the housing sector, particularly in multi-unit developments. There was a danger that even fewer houses would be built and the housing shortage would worsen.

That’s why the Government’s stimulus program has included large housing programs. More than 137,000 households had taken up the First Home Owners Boost by the end of July. The Boost, combined with record low interest rates, has helped a generation of first home buyers enter the market. At the same time, the Boost has supported jobs for builders and tradespeople as well as indirectly supporting jobs in finance, retail, building supplies and associated industries.

The Government has also made the largest ever investment in social housing. The social housing program is important for employment as well as being the first substantial increase in the supply of social housing in more than a decade.

Through the Nation Building and Jobs Plan we will build at least 19,200 new homes for public and community housing. We will also repair 60,000 existing dwellings. This will include major repairs to more than 10,600 run down homes that are already uninhabitable or were so run down they would have been sold off in the next two years.

Reform for the future

As Australia emerges from the global downturn, the need for reform will still be with us.

Over the past few years up to 150,000 new homes have been built each year. To make a lasting difference to housing supply, we need to build up to 190,000 homes each year.

Delivering enough housing is a big challenge for all levels of government. Australians want housing that is part of a community and has good connections to transport, services and jobs. We also need housing in many different sizes and locations, reflecting different needs as people move through stages of life. Most of all we need housing at a price that people can afford to pay.

We need a good mix of greenfield developments on the edges of our cities and infill developments.^[5] New housing needs to be linked to transport, either by making better use of existing infrastructure—like train stations and bus interchanges—or by adding new infrastructure as land is opened up.

The Australian Government has established Infrastructure Australia, including a major cities unit, to play a greater role in making our cities work. Funding has already been provided for key urban transport projects in several cities.

We are also working with the states and territories to improve the performance of our planning systems. Planning and land use policy need to deliver enough housing lots to meet future population growth, at prices that people can afford, in communities that provide people with good amenity.

Inefficiencies in planning systems add to the costs of building houses, costs that are eventually paid by home buyers. To improve housing affordability we need to reduce the time it takes to bring new developments online, without compromising the ability of residents to have a say in the future of their communities.

Low and moderate income earners

Low and moderate income earners, particularly renters, have been the most affected by housing affordability problems. Key workers in industries such as retail and hospitality, child care and apprentices have real difficulty in finding rental properties that they can afford.

Over the next four years, Australian Government programs will increase the stock of social and affordable housing by 80,000 dwellings: 30,000 in the social housing sector and 50,000 under the National Rental Affordability Scheme (NRAS).

We aim to encourage institutional investors, such as super funds, to invest in affordable residential housing. NRAS provides an annual payment for 10 years of $8,672, indexed to the rental component of the CPI, to build new homes and rent them to low and moderate income earners at 20% below the market rent.

Already, more than 10,000 incentives have been allocated and the first tenants have moved into more affordable homes. Over the next few years the Government expects to allocate 50,000 incentives.

Over the past decade public housing systems have been allowed to run down. They are now only able to offer housing to very disadvantaged people. Stock numbers have dwindled and too many social housing tenants are living in communities without good access to services, transport and jobs.

In addition to building more homes, the Australian Government is working with the states and territories on long-term reform in social housing. Central to the reform agenda will be building a small number of not-for-profit housing organisations that can operate alongside state and territory housing departments. We aim to build larger, commercially sophisticated organisations that can deliver better results for tenants and partner with the private sector to increase stock numbers. Over time we expect not-for-profits to become partners in big infill projects, guaranteeing that a proportion of new housing is available for people on low incomes.

Creating a new social housing system will be a decade-long reform. The first steps will include legislation to establish a regulatory system for not-for-profit providers, including appropriate prudential supervision. All governments have agreed to a range of reforms which provide more choice and involvement for tenants and improve the viability of the social housing system.

Homelessness

The Road Home, the Government’s White Paper on Homelessness, was released in December 2008.^[6] The Road Home sets the direction for our efforts to reduce homelessness and includes a role for all levels of government, non-government organisations and the community.

The Australian Government and the states and territories have provided $1.1 billion of new funding for homelessness services and homelessness-specific capital projects. These funds will be spent using Homelessness Implementation Plans in each state and territory and will see the expansion of services focused on helping people who are homeless find a house and keep it for the long term.

All states are putting a greater focus on preventing homelessness through programs such as youth services that keep people connected to their families or in education and training. Women and children escaping domestic violence will receive greater help to remain at home by improving security and providing perpetrators with other accommodation.

There are important legal and policy reforms that will contribute to improving the lives of people who are homeless. The House of Representatives is currently conducting an inquiry into homelessness legislation that will provide valuable advice as to what should be included in a new Homelessness Act. The inquiry will consider what should be done to promote high quality services for people who are homeless and the principles that should underpin homelessness efforts. The Committee is expected to report in December 2009.

Attorneys General are currently discussing laws relating to domestic violence, including the recognition of apprehended violence orders across state borders. The Government’s electoral reforms are considering barriers to voting for some people in the community, including people who are homeless and may have difficulty enrolling and voting.

Housing policy in Australia is coming under greater focus. Given the impact of housing policy on our families, communities and working lives, this should be no surprise. Increased birth rates, immigration, ageing and changes to the way we want to live will all mean that housing reform will continue to be necessary in years to come.

* The Hon Tanya Plibersek MP, the ALP Member for Sydney, is the federal Minister for Housing, Minister for the Status of Women.

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[1] Psychologist Abraham Maslow first proposed a concept of a hierarchy of needs in his 1943 paper, A Theory of Human Motivation. The hierarchy suggests that people are motivated to fulfill basic needs, before moving on to other needs.

[2] Real Estate Institute of Australia, Research Data Series: Quarterly median house prices, all capital cities, September 1996 and December 2007 and ABS Catalogue No. 6302.0: Average Weekly Earnings, Australia, Table 2, September 1996 and November 2007.

[3] Australian Bureau of Statistics, Counting the Homeless (2008).

[4] National Housing Supply Council, State of Supply Report 2008 (2009).

[5] A ‘greenfield development’ is development on lands that have yet to be built upon outside of agriculture or forestry uses, while ‘infill developments’ use land adjacent to or between existing development.

[6] Department of Families, Housing, Community Services and Indigenous Affairs, The Road Home: A National Approach to Reducing Homelessness (2008).