One of the most important pieces of work that the ABC has done recently through its Four Corners program is to unpack what’s really going on with the so-called affordable housing model that the government funds.
Bevin Liu’s wrap of this and her interview with Louise Crabtree-Hayes one of – if not, the – leading proponent of community land trust models in Australia, needs to be read at the highest levels of housing outfits purporting to solve the housing crisis.
At the same time, they would also do very well to read Mike Brown’s piece this week, for its clear and simple demonstration of what’s wrong with the private developer model of affordable housing.
Fundamentally, it’s a clash of concepts, a cognitive dissonance, to expect these two incompatible things to produce the outcomes we want.
The objective to provide affordable housing can’t easily be met by a proponent that depends – rightly, of course – on profits to deliver the goods. Those profits have to come out of somewhere. And it’s the product or the taxpayer that must fund it.
Bevin’s story starts with the logic of community land trusts, which offer permanent affordable housing. Not something that expires after 10 or 15 years and then throws people out to the street, as the Four Corners report shows happens.
Crabtree-Hayes, who is professor at the Institute of Culture and Society at Western Sydney University is working with Peter Phibbs, emeritus professor of planning at University of Sydney, and trying to make the CLT models better known in Australia and hopefully mainstream. Other countries have done so, and this is a clever and innovative country so there’s no reason why we can’t do the same. And come up with even more amazing ways to provide permanent affordable housing. Why, a decent and adequate supply of public housing, for instance.
The reason why we don’t do such things is a furphy. There’s inertia and old habits, sure. But it’s more than that. It’s a passionate commitment to an ideology that the market knows best. Which is probably true for a lot of things. But maybe not all.
As the Four Corners report showed this notion that we only have to provide affordable housing short term is confusing and deeply disturbing not just for those who are forced out now that the term has ended but for the rest of us who must come up with yet more solutions for the same problem. Hopefully it’s not the same solution that failed in the first place.
First, let’s ask: why the short term?
Maybe it’s to appease the private sector because it’s done such a brilliant job of convincing government that it’s the best partner in the delivery of affordable housing.
And of course it has to get the kickback that makes that partnership worthwhile or… why bother?
It’s the kickbacks that are the problem. These can range from additional height or number of units on a project in return for some affordable units. Until the developer decides to pay a levy instead. Which, given that the price of construction keeps rising, is generally thrown into a collective pot with ever diminishing capacity to deliver the affordable housing envisaged in the deal. So bigger heights, more units, less or no affordable housing.
The other thing we learned is that affordable housing rents can sometimes start at a percentage of income but is later switched to a percentage of market rent.
Say what?
Market rent is an interesting concept. Somehow, it’s viewed in this country with some quasi-religious reverence. Oh, market rent… Oh we get it. Of course. The rents on all houses go up together as supply contracts and tenants pay through the nose. But why? If it’s a new property we get it. The cost of construction is sky high. It has to be paid for, the banks appeased, the risk the developer takes must rightly deliver the reward that makes the deal attractive in the first place.
But what of buildings that have been there for 30 or 40 years or more?
What are the construction or even holding costs on those?
Never mind. We can see that there will be an argument that simply cites the liturgy of “the market” and all else will be silenced.
But to allow people some respite with a home that’s pegged to income and then switch it up to market seems unfathomable.
Mike Brown’s piece shows that if you change who the developer is you can make housing more affordable.
It’s the profit, stupid!
Governments have a duty of care to deliver infrastructure. It’s what we all pay for. A standard of living that world wide is enviable and wonderful. Other than the poor sods who can’t eat or buy medicine because of the cost of housing.
And of course the tax bill for the rest of us keeps getting bigger because those poor aforementioned sods will likely find it hard to work or be productive or even self-sustaining if all their available resources go the landlord.
Let’s be clear, the private sector is a very clever beast, everywhere around the world, and it can afford to buy the best brains and the best spin merchants, so it will tell a tale of government inefficiency. How it’s the only one that can deliver efficient housing. But how do thousands of builders go broke in just one year? That’s hardly the paradigm of efficiency.
If governments got busy and picked up clever operators from the private sector for their skill sets, and their political motivations from Robert Menzies who kicked off social housing in Australia (to buy or rent – what’s wrong with that?) then let’s take a punt it would not be long before it could deliver housing as efficiently as it did in Menzies’ heyday.
And maybe it could also deliver a workable pre-fab sector, a new batch of tradies, and permanent affordable housing to rent or buy.
All the while enjoying the cheaper cost of capital that governments tend to enjoy.
Come on Mr Albanese, you told Annabel Crabb on Kitchen Cabinet the other day that you were here to enact change. Or why bother?
You’ve started the job with the tax reforms; taking the next step will likely get you another term in government.
