Housing affordability debate gains more momentum?

Housing affordability is so bad, even Peter Costello is now having to give the impression that he might do something about it – announcing the Commonwealth “would conduct an audit of commonwealth-owned land to determine areas that could be released for new housing to ease the affordability crisis.”

So during all those years the federal govenrment was beating up on the states for not releasing enough land, they never bothered to look to see if they had any of their own that might be suitable?! Shows how much they really believed in what they were saying. It reminds me a bit of the last time the public heat on the issue got too hot, when Mr Costello ‘acted’ by announcing an inquiry by the Productivity Commission – and then ignored all the findings that applied to him.

After having banged on about the housing affordability crisis repeatedly for the last five years with usually very little media interest, I had the mildly positive experience last week of having a journalist ring me up last week to say he’d noticed I’d been talking about this stuff for a while. Just shows you can never tell when something might get a run or why.

That phone call became part of a good article by Matt Price on housing affordability, which even had a nice title – “Look, a Democrat who makes sense” – although I could have lived without his first 5 paragraphs. Interestingly, the same edition of The Australian had a frankly crazy piece by their economics editor, Alan Wood, seriously trying to argue that there isn’t really any problem with housing affordability – proof that you can interpret statstics to say almost anything, regardless of the reality people are experiencing.

I also got a piece on the issue published in Crikey today. The full text of it is below, but in summary, the problem is complex, and has different features in various parts of the country. We don’t have all the data we need to be sure how best to fix it, but a whole bunch of groups from all parts of the community have been working cooperatively on it for ages, and if the parties at federal level would finally take o nsome national responsibility and leadership on the issue and develop a holistic national strategy in cooperation with all those people who have already been doing the work, it can be fixed. Mind you, if they don’t do it soon, it may be too late to ever fix properly.

Senator Bartlett: time to get cracking on housing affordability
Date: Monday, 9 July 2007
Democrats Senator Andrew Bartlett writes:

It’s probably poor form to quote from one of my own speeches, but I will anyway:
We have a crisis in the public housing sector, we have a crisis in the number of people able to afford private rental and we have a crisis in the affordability of buying a home.

I made that comment in the Senate on 21 October 2002. That same day Laura Tingle, writing in The Financial Review about the growing problems with housing affordability, noted that part of the problem was that there is no “holistic approach” at the federal level to housing policy and that “the growing political issue of housing affordability at the federal level remains largely unaddressed.”

Nearly five years later, nothing much has changed, except the crisis in housing affordability and availability has got much worse and far more people are hurting as a consequence. Indeed, it’s got so bad that both major parties need to look like they are thinking of doing something about it.
The problems have become so severe that they risk becoming permanently entrenched, along with the major wealth and opportunity gaps that go with it.

Part of the problem with addressing housing affordability is that there is no simple answer. The multi-faceted nature of the problem means that any individual action aimed at dealing with it might help one group of people, but can have flow-on consequences which will hurt others. It must also be emphasised that some of the areas with the most severe housing crises at the moment are in regional and remote parts of the country, and sometimes it is availability as much as price that is the problem. An isolated initiative that might help with the housing or rental market in Brisbane may make things worse in a city like Mackay.

Raising the First Home Owners grant might just raise prices. Raising rent assistance might just raise rents. Cutting negative gearing might reduce private rental stock. Increasing supply might deflate prices in some areas, which can be a serious problem for people who have borrowed on the basis of equity which has lost value. Cutting stamp duties might advantage speculators and investors over home buyers and push the overall price up.

That doesn’t mean none of these things should be done, but rather that there needs to be a comprehensive holistic approach based on good solid data that allows reasonable guesses to be made about what the impacts will be.

Another problem is that there is not always a lot of good data around to properly see what the real impact of a particular measure would be. For example, the First Home Owners grant costs over a billion dollars a year and negative gearing provides tax breaks worth over two billion dollars a year to investors, yet we don’t know as much as we should about where this money is spent and how much it is applied on what could be seen as affordable housing, rather than the higher end of the market.

So the bad news is that it is complicated and politically fraught to fix. Which brings us back to the real problem – there is no holistic national housing strategy or policy. The current federal government, despite being the most centralised and interventionist in our country’s history, has vacated the field on overall housing policy – building on a trend, it has to be said, started under the previous Labor government.

That doesn’t mean the feds have to ‘take over’ housing the way they’ve tried to take over workplace relations. Fixing housing affordability needs cooperation, not just having a different level of government incompetently mismanaging the issue.

The good news is that the problem may well not need an overall increase in government spending to fix it, just a reprioritisation of existing spending, combined with other non-expenditure measures.

The even better news is that while governments and political parties have been blaming each other and passing the buck, community based housing groups, developers, real estate and finance sectors, unions, local councils and academic experts have all been working together and holding summits as part of developing priorities and ideas for a national housing affordability agreement.

All it needs now is for the federal government to show some leadership and take responsibility for once. The state and territory governments would have no choice to come on board (and would probably be happy to), and we can get moving.

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  1. Dear Andrew
    Do you have a solution to the Mercedes Benz affordability crisis?
    The whole notion of housing affordability is a furphy as well you know. Low income earners face not only the difficulties of housing affordability, but also food affordability, medical/dental/education/affordability etc.
    But unless you are willing to come out and state you want a regimented society a la the old Soviet Union I feel your concerns represent mere posturing.

  2. Well I said it once and I will say it again public housing ,this will take the pressure off the private sector!!!

    Reintroduce CGT (full) remove negative gearing, and the inflationary “first homeowners grant”, and DUH Rudd DO not introduce “access super” to buy your 1 st home, again more inflationary bullshit.

    The money the government saves could be re directed into the productive economy see how I said PRODUCTIVE!!! like super or “nation building” (like rail) do people really think a more then doubling of property prices in less then 5 years is a good thing for the economy?

    Can someone confirm did’nt Keating remove negative gearing in the 1980’s, though it proved unpopular as their was a dramatic rise in rents? Maybe to avoid a train reck (and it’s going to happen anyhow) the above policies could be implemented over say a 10 year period (or so)

    PS No I’m not on public housing I was lucky I could buy (and pay off!!) my own home in the early/late 90’s!!

  3. Fuuny is’nt it I could buy my own (inner city) apartment under “Keatings high intrest rates” on a lowish-low med income (single) yet today I struggle to see how I could afford the same apartment!!

  4. Spot on about any kind of statistics!

    Pardon me for being cynical, but Peter Costello knows he has an election to lose very shortly.

    A lot of people will have to stop living according to “The Seven Deadly Sins” before housing affordability will improve – whether they are developers, bankers or ordinary citizens.

    Also, if marriage and remarriage were encouraged, there would be far fewer people living alone and trying to purchase houses without a partner to help them with the cost.

  5. housing is often the single most important act of investment, & often is seen as part of the oz dream.

    this oz-DREAM has been smashed by ‘free’ market eco systems promoted by gov from both sides of the polly fence.

    the focus should be on the idea of FAIR markets, rather than some thing that does not exist.

    it is often the case that slogan makers, who act as advisors to pollies, parade the ‘capitalist’ ideal as being a factual [i.e., do-able] goal.

    it is well known by eco people of any colour that there is no such thing as a free market.

    and yet, we stILL get j. *COWARD or gwb or etc… parade this LIE, a VEry BIG lie, as core to their polly platform.

    so, when are the people going to learn that our pollies on both side of any fence are a pack of liers, ANY time they talk of the free market?

    another instance of the application of ‘free’ market slogans is the sale of gov utilities, such as telstra [esp’ sale of DISTRIBUTION net-works].

    the long term consequences of these changes are NOT reversible, like in a car UNLESS there was a war i.e., violence would be the only way of over throwing entrenched greed power systems. this is the problem with social evolution, there social paths that lead to a DEAD end i.e., any innovation or creative stuff is scooped up by the elites that exist now.

    now is this a ‘small’ problem?


  6. The only reason to keep us in the ‘henhouse’? There you go Andrew – Matt Price is advising us to be the houseing affordability single-issue party. Pity we cannot help but have concerns for other issues.

    Best wishes with the campaign on all fronts – you deserve to stay in the – ahem – henhouse.

  7. Well, if they start an audit now, in a few months there might be a list of land that could possibly be disposed of. I would have thought that most of the “low hanging fruit” would have already been picked off but lets assume there are some large tracts of land in areas where people want to live. Then it has to be sold and then developed so we are looking at probably a couple of years before it actually comes on stream for housing.
    And when all suitable government property has been sold off, then what? Dealing with housing affordability this way is like selling off the family silver to pay your bills. Eventually you have no more to sell and you are still left with future bills.
    There needs to be a resolve to address the issue of negative gearing and to commit funds to public housing, but the Howard government will continue to look for short term solutions to long term problems.

  8. Hi, Andrew

    Housing affordability is, indeed a complex issue, and not one “fixed” by throwing more money, or land at the problem.

    An extract of my blog poting follows:
    the problem is much more complex, and it is not simply a case of reducing costs or giving bigger handouts, or releasing more land, to which there is a limit. The psyche of sellers (of existing houses); developers and buyers is that they will simply use the “extra” they get, or don’t pay, to buy bigger or pay more.

    Full text at:


  9. Who says people have to own their own home? They only own it for the short time between paying off the mortgage and dying and leaving it to the kids.

    This is such bollocks when we consider the millions of homeless people all over the world who don’t even have a tent.

    We should just stop whining – it is not our god given right to own a bit of the dirt in this country to put a McMansion on.

  10. A significant issue with releasing more land is that we then have to pay for new roads, plumbing, electricity, schools, hospitals etc – all of which cost money to provide.

    Not that land should never be released, but that it should be done with consideration of related issues.

  11. Haven’t you lot cottoned on yet?
    Why do you think this is starting up now, AFTER he ( Howard ) has collared all that Aboriginal Land.
    Lots of sand and sun, similar longitude Gold Coast( only the water is missing ). And none of those pesky excessively-tanned NT “rent-seekers” to split the divvy with, from now on.
    I notice that many voices are as one as to Mac Mansions, also. How about a tent out the back yard?
    Seriously, I like him demanding land releases( future water availability/ servicing? ); likely to drive housing prices down AFTER all the mugs were sucked into buying “high”. And the states get to pay for all the new servicing infrastructure.
    As some one above said, the central problem is that there is not ( nor ever has been ) any “holistic” cordinated housing policy. The nearest we ever got to that was back in the ‘seventies when Labor briefly flirted with town planning, public transport, decentralisation and provincial development..

  12. Andrew,

    As with the POINT NEPEAN issue, I then canvassed on constitutional grounds that the Commonwealth of Australia would remain the “sovereign” of the land unless it was returned to the State of Victoria, hence Premier Steve Bracks then withdrawing his $74 million offer, it is not that simple.

    Any Commonwealth land held within State territories, albeit pending upon the arrangements existing from onset, if they are like Point Nepean then the Commonwealth of Australia cannot sell the land to prospective home owners, builders, etc but can only hand back the land to the relevant State. This being that all State legislative powers are extinguished and as such if the Commonwealth of Australia were to seel the land to private enterprise then it also has the obligation to provide its own Government for each peace of land, its own law enforcement authority, etc, as the framers of the Constitution debated this extensively and made this clear. As such, if the Commonwealth, for example former Telstra land, were to sell then it must be back to the relevant State in which it is located. To do otherwise means the new landowners would not require to pay taxes to the State because of Section 114 of the Constitution, as the land technically remains in possession of the “sovereign” in this case the Commonwealth of Australia.

    To me, it may just be some gimmick by the Federal Government for election purposes.
    Just get this, the Federal government sells a property to “Jo Blow” and after he signs the contract finds that State planning restrictions, building permits, etc do not apply but Commonwealth permits, etc do. The State has no obligation to provide transport and other infra structure to the land owned by “Jo Blow” and other purchases and neither to provide for education facilities, etc. They cannot vote in State elections as technically they are Commonwealth residents, etc, etc.
    I think I do not need to go further into the horrific consequences that can follow.

  13. And to add to this;

    That is why we need an OFFICE OF THE GUARDIAN, a constitutional council, that advised the Government, the People, the parliament and the Courts as to constitutional powers and limitations, so these kind of traps are avoided!
    No good for some poor family buying land and then have a huge legal bill to try to make the land livable due to the constitutional limits applicable.

  14. social crdeit gives power choice and power gives rise to a social DUTY to act in a fair way – thus, my focus on the word FAIR or just methods in social systems.

    i wanted to [and have done so it in an in-direct way] DEFINE fairness in a tech way, that takes into account human foibles [and there seem to be some loo-loo_SSS.

    greed & arrogance & revenge have ALWAYS won in social systems through human social systems e.g., the roman empire. some things do repeat across all social groups, across time.

    it takes courage & good strategy, at a global level, to put greed in the waste paper basket – good strategy is where each person gives on the basis of comparative strength [one of the few ideas that work from economics].

    a small bit of info/data/act[s] from a unified group can make all the dif e.g., the 1-percenters in sport sum up to a lot.

    my i% is my system of fair trade WITH the tech to do the job i.e., u need to think some thing is possible [however small] before it is possible.

    i have defined my ‘soul’ in an open forum as ‘softwire’ in order to claim copy rights over all my work [this will be in the public domain to promote DEMOCRACY=fair systems of trade & exchange across the globe]. i gave hugo chavez a definition of i*god that defines MY religion.

    GOD is a HUMAN CREATION. thus, god exists, if u or say it is so. i have given u my version of god i.e., a global system of fair play in an evolutionary system of games.

    so, i put ALL sects, cults, religions etc into the rubbish bin – where they should be in my view. so, i have given p. adams [L&L, abc/rn] DISTRIBUTION rights [&cohorts] of all my ‘art works’ – my views on social matters are ‘sufficiently similar’.

    v. putin, pres’ of russia is my SOLE inheriter to negotiate with adams to that end of ‘fair play’ across the globe.

    this is why i designed a value [in&out] account system [real-time].

  15. Would I be correct to assume that all the available Federal and state land that would go into such an audit as Costello suggests is land on which native title has not been extinguished?

    I think so, by definition it must be “vacant crown land”

    keeping in mind that Howard has called for private tourism operators to take a greater role in National Parks http://www.abc.net.au/news/stories/2007/07/10/1974761.htm

    and he has called for mining companies to take a greater role in running Aboriginal communities as part of his invasion in the Northern Territory,
    and of course his present destruction of the N.T. Land Rights act

    It seems to me that there is a theme emerging here. Privatise government land and extinguish what’s left of native title.

    Could Costello be just playing his part in a Liberal strategy to use things like the housing crisis and Aboriginal child abuse as a facade to disguise the real game of privatisation of crown land?

    And if govt land was released onto the market it would not devalue surrounding property, quite the opposite. The ex-govt land will not go onto the market cheap, not lowering the cost of a house and land package. It will be bought off the government and sold for a profit through housing developments – value adding. Simply making land available will not reduce costs but it will expand the property development and speculation business which is more of a factor in inflating housing prices than supply – e.g. gentrification in the inner city and the modus operandi of estate agents in small country towns which are already opening up new estates in rural areas all the time – pumping up prices there.

  16. O.K., here is the solution, forget all that audit crap.

    Step 1
    Encourage and facilitate the subdivision of rural properties. This would release bucketloads more land than releasing govt land.

    Within cutting edge ecological and town planning frameworks of course.

    Step 2
    Revise multiple occupancy laws and allow them everywhere. – Just as 100 people might co-own a highrise apartment building, 100 people (paying 1/100 of the land cost) can own a cattle property with room enough for everyone plus football fields, airstrips and, nature reserves as well as maybe cattle to cover costs of property maintainance, or a tax dodge for everyone on the property.

    Step 3
    Revise the building code (which was recently revised – it’s getting better) so that it is more appropriate to owner builders, recycled material and materials such as mud.

    (a house built cheaply out of recycled material or mud reduces construction costs but does not reduce the sale value of a house and land package. If it is done in a trendy way it can fetch a higher price than conventional materials.)

    Step 4
    thousands of work for the dole, TAFE and trainees build mud brick houses for public housing agencies in these new developments. If they tookk out a low interest loan on land they could build their own house while they were at it if they wanted too.

    There, problem solved!

  17. John Tracey has me in recollection of Social Security “reforms”( that misnomer again!) back about 2000 that really tightened the travel and accomodation requirements for welfare recipients.
    None of this healthy living out in a country town affordably and modestly nonsense. No way was the government going to admit that real world unemployment was set to remain high, a fact that all the rorting of unemployment figures couldn’t and still can’t obscure. So rather than allow a portion of the unemployed and single parents to live clear of the rat race, helping to contribute to the continuance of small rural communities at an affordable rate as to their welfare pittance, these were herded into the big smoke, too. Thus city housing was, indeed, driven up as to cost since this occured at the time Howard was introducing his fertility and housing bonuses for home buyers and at a time when the privatisation mantra had state governments divesting themselves of their stock of affordable public housing.
    Thus grew this bottleneck as to accomodation, at the bottom end of the market, whilst speculators made their killings.

  18. before this govt came to power even at high interest rates a person could still afford to get a roof over there head .
    now we are told that we are all well off .
    so why is it so hard to get a house and even harder to pay it off .
    it will take quite a while to fix that is if we take the option to change the govt next election .also not to give the senate to the govt this time .
    there is no easy solution at this time but if we dont do something now then we will have a country of haves and have not and history will tell us what happens in that situation.
    i dont think that australia will be an exeption to the rule as we dont seem to learn from history or other countys mistakes.
    if there is anything to be learnt from this it is that greed is not the solution.

  19. That’s right, muzz, post #12.

    The state of our hospital, dental, public transport and educational services is really abysmal already.

    This is partly the fault of John Howard, I suspect. We have Labor in power in all of the states and territories. He probably withholds funding to make them look bad.

  20. This is partly the fault of John Howard, I suspect. We have Labor in power in all of the states and territories. He probably withholds funding to make them look bad.
    well sead coral
    just emagine if the fed govt gave the % of money that west australia is contributing at the moment back to w.a.
    the prodiction here is that rents will be at an average of $500 soon .
    one can just emagine the amount of gst that the govt will take from that.

  21. Mr.Price was self-referencing, I am sure,and because he must remain superior to the Senator, otherwise… who ever Price thinks he is would have to then face the prospect that, maybe, the Senator doesnt need to self reference and is genuinely concerned about housing,for Australians.Yet there is something to be said for henhouses as wire which can have a variety of materials quickly blown into it from mud to the newer types of concrete.Which is exactly what I would do here,knock out the white ant and flimsy material nail on chicken-wire and blow some new materials into two layers of that wire.I do not know how much readership the Australian has,and,its electronic front,and I dont know how many active hours the Senator leaves open to telephony and other communication methods.But where are the builders,bankers,trades people,do it yourselfers!? Can the Price do any building himself, someone should offer the Senator and the journalist a go at house building,a few hours at the walls may do more to inspire than endless teeth gnashing about all sorts of matters.Show up here if you like,and bring the building materials and technology,it would blow the owner into accepting the place can be rebuilt.How lucky the Prices of the world can get an income out of a problem,by simply writing, besetting Australians….and putting down the Senator.Something very unfair happening here.

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