What an eye opening article on Tuesday from Jago Dodson and Liam Davis at RMIT. Dodson has always been an innovative thinker on housing and he’s done it again. With colleague Davis he’s shining a light on a hard truth: the federal government is subsidising property investors to the tune of $6 billion a year and the same again on rental subsidies.
That’s $12 billion from the public purse used to prop up a “nice little earner” for one cohort and housing affordability for another cohort who could not afford housing otherwise.
Dodson and Davis propose a tiered system of tax breaks provided by the federal government to incentivise affordable housing.
Our proposal packages negative gearing and capital gains tax discounts into three tiered bundles of assistance that landlords can choose from.
In Tier 1 landlords get a low rate of negative gearing and a low capital gains tax discount. In return they must let their property at 5 per cent below the market rate and adhere to national tenancy standards.
In Tier 2, the property must be let at 5 per cent below market rate, adhere to new national rental tenancy standards and be rented to a Commonwealth Rent Assistance recipient.
In return the landlord gets a full negative gearing and an increased capital gains discount. Tenants would also benefit, with increased Commonwealth Rent Assistance payments
Read the rest – it’s exciting!
Maria Atkinson who is our host for next week’s Let’s Hack Housing event on Thursday told us in one of our briefing sessions that in Sweden the right to housing is enshrined in the constitution and the law. Check it out – it’s correct.
Cathryn Callaghan from Shelter NSW a panellist at the event says housing should be treated the same way water infrastructure is or bus stops – public infrastructure: “get over it!”
Callaghan has down to earth views that bust the furphies and we know now why she came so highly recommended. Yes Airbnb could destroy a housing rental market but in Byron Bay for instance a planning solution could allocate a part of the town to short term rentals for the tourism that the town clearly needs – “knock yourself out” she says – but restrict rental days available in the rest of the town, preserving homes for locals. In other words, a nuanced approach, based on complex needs around housing and their impacts, might work better than a sledgehammer.
We sense economics and financial specialist writer Michael Pascoe (another panellist) would welcome a sledgehammer to the policy that destroyed public housing in Australia. It needs to be reversed and radically, he says. Even if the federal government did everything it wants now – implementing the policies on the table – the result would not change the status quo.
Interestingly the amount of public housing we would have had without the “small government/sell all public assets” frenzy of the past few decades, closely matches the housing we’re now short of, he adds.
And we should remember that the initial public housing policy was created by the Menzies Liberal government. But of course that was before the Thatcherite years where selling assets was sold as a public good. (In the UK the poor folk at the end of that story are grappling with sewage in their water today thanks to the privatisation of water assets which relied on borrowing funds by investors who immediately made consumers pay for the cost of that, including rising interest rates. But the market is a magical thing that balances all goods and services, right?)
Pascoe will happily tackle the big picture issues around housing because it has implications on so many economic and social fronts.
For instance, curtailment of immigration is not a silver bullet solution; immigration is complex and significantly reducing it comes with its own set of problems, he says. Grattan Institute’s new chief executive Aruna Sathanapally made that point strongly on the ABC’s QandA program last week, saying we could expect labour shortages as a result (in care industries as well as construction).
Among the issues that our event will also tackle is the quality of housing. Last week we heard how the Productivity Commission in NSW wants quality to be subordinated to costs and even occupants, but existing rentals are sometimes in appalling condition. And that’s before global heating wreaks even bigger climate impacts on our cities and towns.
Sadly, many of the remedies to help home ownership – including using super to pay for a home – come at the cost of pushing up the price of housing for those who miss out.
Pascoe points to an exception in Singapore where people can use their super to pay for housing but only if the property is new and if it’s built by the government which builds most of the housing in that country.
Couldn’t we do the same?
Cathryn Callaghan says her organisation Shelter NSW, which has been around for 50 years, is funded by the state government but is also empowered to advise government. “We can tell it what it needs to hear not just what it wants to,” she says.
There have been some successes with government co-ownership of housing, she says.
She’s supportive of the joint government ownership to help some people up the ladder and says in Western Australia it’s worked well for 35 years through the Keystart program, a low deposit home loan scheme.
In response to one commentator saying it’s pretty much a waste of time to give just 1000 people the benefit she says “well go tell one of those 1000 people that it was a waste of time.”
Her organisation claims some successes in housing policy such as the state government’s housing plan announced in the last budget as well as being a strong supporter for the legislation banning no fault evictions. Won’t landlords find ways to game the system? Maybe some, it will stop the worst behaviour and sends a strong signal to the market.
Check out the five key outcomes we believe have general consensus for housing outcomes:
- Affordable – both to rent and buy with special focus on social housing and for essential and creative workers and with options for young people, productive professionals and the over 55s
- Quality – minimum structural performance standards that last the distance in structure to protect against weather, fire, safety and acoustics
- Access – to social and economic services such as schools, medical facilities, retail and to jobs and other economic opportunities
- Connection to Country and people – the physical and mental health (and global heating resilience) promoted by nature amenities such as parks, waterways, street trees, urban cooling, walking, cycling, family friends and social life
- Planetary boundaries – Housing that minimises its footprint and integrates with a national land use plan to provide for other human needs and those of nature and climate resilience.