Rob Stokes struck a typically intelligent but more open than usual note for his speech on affordable housing at a jam packed three hour lunch event last week, organised by the Australian Institute of Architects.
The three hour event at the Sheraton Grand Hyatt Sydney had a great line-up, but it was clear that Stokes, who announced he was leaving politics at the 25 March election, was the headline act. He was about to “walk the green mile to that great parliament in the sky” as he put it light heartedly but also, you could tell, a tad relieved.
That he was shoved aside as NSW planning minister by (our view, we promise) an intractable cabal in a part of the property industry that shall not be named (this time) is a disgrace for the state. Sadly, we don’t think this kind of power display is at all unusual in this or many other states. Just a little more obvious than usual.
Laura Cockburn from Conrad Gargett – president of the NSW Australian Institute of Architects – MC’d for the event, titled Affordable housing 2023 and beyond: why design matters. She packed a punch in her introduction.
To the satisfaction of the audience, she managed to politely but firmly place on the public record the widespread dismay caused by the ditching of Stokes’ Design and Place State Environmental Planning Policy (SEPP) last year, alongside his nine planning principles, just ahead of his portfolio being handed to someone much more accommodating to that particular sect in the development world.
Interestingly, the furore that ensued in 2022 opens an “opportunity” for better developers to differentiate themselves. Just watch.
It happened with the fiasco of Mascot Towers – NSW Building Commissioner David Chandler seized the chance to bring on his quality rating objectives for builders and developers.
Now we have another fiasco – a housing affordability crisis. There’s an opportunity again for radical change. Lendlease saw it and this week called for 30 per cent inclusionary zoning, to accommodate social, affordable and build to rent housing in all new residential projects.
We wish they’d left out build-to-rent as it seems far from affordable generally, but it’s a start.
Yes it’s just one green shoot; and the company was hardly swamped in a rush to emulate them. But note that Lendlease knew the emulation/competition card is too weak in this instance. It called for mandatory inclusionary zoning. Not voluntary. This is exciting.
Because when it comes to affordable/social housing voluntary won’t cut it. It has to be something embedded in the planning regulations.
We saw how a goal for pretty modest reform went with the SEPP.
So this won’t be easy. And all the more reason to be glad that a giant of the industry has made the first move.
The big problem or hurdle is that most states more or less obviously are captured by co-dependence on the property industry. Through taxes (but not the big daddy taxes of capital gains and negative gearing), donations from the industry (where there’s smoke there’s usually fire) and the big chunk of voters who earn their living in that industry and would prefer their pollies be nice to the developers.
In this structure, something has to give.
And it’s generally planning that offers the most loopholes for the industry to muscle through.
It’s the thing it complains about the most – and yes the regime in NSW is complicated and time consuming – but the calls for reform are often not the solutions that lead to better outcome for all, despite what’s said.
A big problem is that state politicians face a concentrated barrage of lobbying and so called data that supports just one very lopsided part of the story. Check out Mike Brown’s article this week on this piercing topic.
Supply for instance. More housing will bring down the price of housing, is the argument.
But wait, we’ve noticed a blush of embarrassment starting to enter the conversation in those who supply as a reason for high prices. Something is starting to seep through the miasma.
The fact that there are huge land banks held by companies who won’t release them because the market might fall, for instance.
So too, the supply of units in well-located places. Because even a surge of new units in well-located places are likely to be unaffordable because the cost of construction is so high.
The free market ideologues who argue for deregulated zoning are the only ones with a point. Their solution would probably lead to a free-for-all forest of dense (and ugly?) towers. Of course prices would fall because not many people would choose to live there.
As things stand right now the market is structured to fail for a growing number of people.
We have no prospect of tax reform from the federal government.
Private owners of mansions can double and triple their profit, tax free, through no effort of their own, simply relying on the market to raise values. So, more and more capital competes for the scarce commodity of good houses in good places in the certainty that it’s a Lotto win for its owners’ retirement and their children – tax free.
And round it goes.
Any dip in prices for the top end of the market short term. Plot the graph – in this case the stats don’t lie. Despite the crisis we hear there are Chinese buyers in Melbourne with $100 million to spend on mansions, which sadly Melbourne can’t provide, yet. With this pressure that will soon change.
On the investment front negative gearing encourages owners to keep buying more housing. As the crisis deepens, watch what they call consolidation. This means that those who are cash rich will snap up ever more territory.
In ordinary homeland, meanwhile, things are grim.
Interest rate rises mean many unsuspecting people are snared in the cruel trap of home ownership – the “dream come true” spiked with a tightening ratchet that means they can’t both eat properly and pay the bills.
The Reserve Bank on Tuesday lifted interest rates and promised more such pain to come.
Those still stuck outside the home ownership market had a skerrick of hope as prices started to fall and then realised the repayments or prices were not the biggest problem, it was the deposit gap. And that’s getting worse because banks will want to protect their equity in a falling market.
In rentals, we hear an auction market has erupted and probably not just in Sydney.
In Brisbane a two-bedroom apartment is being offered in a build-to-rent block at $780 a week. Those with car parking are $1000 a week.
In Sydney you’re looking at $750 for one bedroom.
And that’s before we cast our eyes to the growing numbers of homeless people including many previously middle class women who put others before themselves (as society or their humanity told them they should) but were left without a roof over their heads as they got older.
These were the issues that the line up of experts on Friday had to grapple with.
There’s a fundamental conundrum about this problem and on Friday Stokes nailed it.
Supply is a solution he said in as much as a dietitian would say you need a supply of food to survive. But what kind of food is critical. You need a mix. In housing what we don’t need is more $1 million units.
We’re a wealthy country, he pointed out, “yet we are no less immune from the same housing challenges, whether that’s in relation to supply, whether it’s in relation to supply of different types of housing to different sectors of our community, than all our competitors across the OECD.”
So what do we do?
In our view the housing crisis is a clear sign that the market has failed.
When the NSW state government promised to “get out of the way” of the property industry and absolutely not “compete” with it by building housing, which is the neo-liberal agenda everywhere since Margaret Thatcher put her stamp on the Western world, we have had a growing scarcity of affordable and social housing.
There are other issues of course but this ideology of letting the market solve our problems is fundamental to what’s happened.
Stokes thinks it’s unacceptable to stand back and do nothing.
He added: “We accept as a fundamental principle of living in liberal democracy, that the general taxpayer has an obligation to provide that support [for housing], resting in the knowledge that that could be any one of us or anyone in our families.
“It’s something that all of us share as a common entitlement of being Australian citizens.”
Hello ethics. Hello principles that go beyond enriching those who are already rich and those who already “have” (enough).
And it’s government policy – or direct government intervention – that in our view creates these inequities, so right from the start we do not have a free market operating as stated, but one that is powerfully skewed towards helping “those who help themselves”.
Which would be fine if everyone was on a level playing field to start with.
Which we are not.
And besides many of us fall off the playing field whatever it’s shape from time to time through no fault of our own – and even if it was a fault of our own, so what?
We have market intervention now. It’s just that you could call it corporate socialism. You see it in the coal and oil industry too.
But that’s too simplistic as well.
The problem truly is “wicked” Stokes said. Housing is in such a dire state now that even private market buyers are highly dependent on tapping intergenerational wealth to rack up a deposit.
That entrenching of intergenerational inequity was “eroding the very fundamentals of the social contract with our society,” Stokes said.
And fixing a problem in one area can exacerbate it in another.
The fewer people that can participate in the private market the more pressure there will be on affordable housing.
And he ventured into tax.
How about ensuring everyone has one house before encouraging people to have several houses, he said.
“That… to me should be a starting point. I would have thought that that’s a fairly common sense approach.”
Of course there were points of contention during the panel session.
Stokes was joined on stage by a big line up: Labor’s Paul Scully shadow planning minister and Rose Jackson, shadow minister for water, housing and homelessness; Cate Faehrmann from the Greens legislative council in NSW; John Brockhoff from the Planning Institute of Australia; Tony Lavorato from Aurecon representing Engineers Australia and Jason Cuffe from Hassell representing the Australian Institute of Landscape Architects.
Key differences in the panel included the longevity of the affordability schemes we do have.
For instance the National Rental Affordability Scheme, Stokes noted, that was introduced by the federal Labor government “to their great credit” in the wake of the global financial crisis, will soon end.
This will throw renters in 6,619 homes back out to the market.
“It doesn’t make much sense that affordable housing placed in the market was after 10 years removed.”
Stokes suggested this should be at least 15 years, but Cate Faehrmann said why end the affordable status at all? As if we can afford to lose any affordable accommodation.
Faehrmann again spoke up later during the panel discussion and challenged both Paul Scully Labor’s shadow housing minister and Stokes on their agreement to mandate that 30 per cent of any housing developed on government land to be social affordable and diverse.
There should absolutely be no more private development on government land, she said. It needed to be 100 per cent social/affordable/diverse.
Stokes thought it best to avoid the risk of ghetto-isation of low income households of times past. Faehrmann countered that we’ve learnt a lot since the 60s about how to avoid that, for instance how design could integrate the housing into the surrounding community, and so on.
On design Paul Scully made some poignant remarks.
The quality of housing was just as important as the cost, he said; it needed to be decent.
In Wollongong, where he’s from, Scully said there are parts of the city that health professionals could not enter after 4pm without police protection. As a standard. It’s that bad.
“They don’t have fly screens so [the residents] can’t open the front door to let air through. They have tiny windows and fluorescent lights. To [be] honest, they’re horrible. Right? Ten minutes’ drive down the road, you have multi million dollar apartments overlooking the ocean.
These are some of the structural issues that end up creating social problems, health and any number of other problems that end up costing the taxpayer much more than any initial investment in decent housing, you’d think.
And talk to people, Scully said. Encourage the development proponents to speak to the community. You might be surprised at the outcome.
In one project, he cited, a community housing provider consulted with future residents but the additions they wanted tipped costs over the top. However, a serious reappraisal by the builders and designers found comprises, and a drop in per unit cost of $45,000.
Which adds up to a lot over big numbers, he pointed out.
When the residents were ready to move in there was a “wow” moment, he said.
“It’s a ‘wow’ moment everyone deserves. People deserve to walk into their place to be proud of where they live.”
And why shouldn’t social housing tenants have a wow moment and pride in their homes?
Imagine, it could be someone you know there soon.