Affordable housing needs a COVID cure

Feeling the cold? Spare a thought for the rough sleepers in Sydney who shivered through the city’s chilliest June morning in 13 years.

Australia needs to build more quality housing, and fast. Low-wage workers are sleeping on the streets. Families are being forced to choose between paying rent and putting food on the table. Nurses live in boarding houses because they can’t find accommodation close to hospitals.

Those struggling to pay the rent will no doubt hope the recent flurry of political activity in Canberra and the state capitals means change is coming. Prime Minister Anthony Albanese famously grew up in social housing and has committed his Government to address the economically and socially debilitating housing crisis currently gripping the country.

Yet an uncoordinated and often contradictory suite of policy responses is not going to cut it. The Greens, who rejected the Federal Government’s signature $10 billion Housing Australia Future Fund (HAFF), say a delay won’t impact the crisis. They are wrong. Complex property transactions require certainty. There are undoubtedly deals that will be delayed while the HAFF legislation languishes.

To really tackle Australia’s housing crisis, we need a radical new approach. It’s time to start from the ground up.

We’ve been here before. Back in 2020, during the first fear-filled days of the COVID-19 pandemic, our governments went on a wartime footing. Politics, vested interests, and old-fashioned inertia went out the window, replaced with a sleeves-up determination to meet the crisis head-on.

Fast-forward three years and we are facing a crisis of a similar magnitude. Housing threatens to be the spark that ignites a much wider social and economic catastrophe. Already, it is driving an uptick in anti-immigration sentiment.

Fiddling around the edges is not going to cut it.

In fairness, individual governments at all levels are treating housing as a high priority. Yet, without coordinated action, this is not likely to solve the problem. Julie Collins, the housing minister, is keenly aware of the scale of the crisis, but her hands are tied. With much of the responsibility for planning sitting with state and local governments, a harmonised approach that brings together all levels of government is the only solution.

The first step must be to act with pandemic-era urgency. The second must be a national, well-considered tax system for property developers. The Federal Government’s move to halve Managed Investment Trust Withholding Tax for foreign investors in the fast-growing build-to-rent (BTR) sector is a welcome step, but developers still face a confusing assortment of state-based taxes. Some offer land tax or stamp duty concessions, but these are complex and inconsistent. They may look good on paper, but in reality, the requirements are so onerous that many developers won’t qualify or will face the prospect of having to pay back tax if their circumstances change.

The third step must be to speed up planning approvals. Antiquated planning rules are one of the main impediments to addressing the supply side of the housing affordability crisis, but they don't need to be. In Auckland, far-reaching reform of local planning laws in 2016 has resulted in a dramatic increase in housing supply and moderated price increases.

New South Wales Premier Chris Minns’ new planning rules are a welcome and important step. But councils immediately expressed deep concern around about what the new rules will mean for scale and density in areas where there has already been significant development. Expect NIMBYism to be a significant thorn in the Premier’s side.

This is not a call for developers to be given free rein. The unintended consequences of poorly planned housing can reverberate for decades. It’s also a mistake to conflate all policies to boost housing supply with the provision of social and affordable housing – but taken together they can help alleviate the deficit.

Despite the challenges, this is an important opportunity that Federal, state and local governments alike must not squib. In April, National Cabinet released the "A Better Future for the Federation" statement, which includes a commitment to develop a plan to increase housing supply and affordability within the next six months. The clock is ticking.

Property prices are again gathering seemingly unstoppable momentum. Can our political leaders, tasked with addressing the housing crisis holistically, do the same?