This article is from the Australian Property Journal archive
A PUBLIC developer would compete with “profit-hungry developers” and deliver hundreds of thousands of new homes in a bid to solve the national housing crisis, under a $28 billion proposal from the Greens.
It is the Greens’ first policy announced for the next federal election, with the initial pitch made yesterday at the National Press Club by its Spokesperson for Housing and Homelessness, Max Chandler-Mather, dominating a debate about the national housing crisis with Property Council of Australia CEO Mike Zorbas.
The proposal has been lobbed as the country’s housing system buckles under a severe lack of supply, even with billions of dollar’s worth of new “well-located homes” and social housing on the way via government initiatives.
Under the Greens’ plan, costed by the Parliamentary Budget Office (PBO), the public property developer would build 360,000 homes over the next five years – and 610,000 homes over the decade – and sell and rent them at a big discount. The PBO’s analysis says an average renter participating in the program would save $5,200 a year on rent, or a 19% discount on market rent, and the average first home buyer participating in the program would save $260,000 on the cost of a home, or a 33% discount on the median private market house.
Of the homes delivered by the developer, 30% would be available to purchase and 70% would be available to rent. Homes would be available to any renter or first home buyer, with 20% of the rentals allocated towards the bottom 20% of earners. The allocation would prioritise those with connection to the local area, including if they have children enrolled in local schools, work and support services connections, or if they are First Nations peoples.
“If Australia can do something similar post-World War 2 when we had much less wealth in this country, fewer trained workers, and much less government capacity, of course we can do it now,” Chandler-Mather told the National Press Club, citing the 1940s government housing boom.
The net underlying cash balance cost to the budget would be $27.9 billion over the decade. Chandler-Mather said that compared the federal government spending $27 billion in rental deductions for property investors this year alone. After including construction and land costs, interest costs on debt and rental and sales income, the headline cash balance impact would be $285 billion over the decade.
The Greens say there is a shortage of 750,000 public homes across the country.
Pressed on the lack of a means-test in the policy, Chandler-Mather said, “In the same way that anyone can walk into a public hospital or anyone can go to a public school, we do want a public option for housing, where anyone is able to live in that.
“What that does is increase the amount of revenue that public property developer earns that can be put back into building more housing. In a lot of European countries there are almost no income thresholds to access that housing, and what it means is that they generate way more in rental income, even if it is capped.
“It also turns it into a social good and a social right.”
He said federal and state government housing policy has been “explicitly geared towards turbo-charging house prices and driving up rents, and putting billions of dollars in the pockets of property investors, property developers and the banks”.
Chandler-Mather criticised the Albanese government’s appointment of former Mirvac boss Susan Lloyd-Hurwitz to chair the National Housing Supply and Affordability Council, which will advise the government on its housing reform agenda which includes the $10 billion Housing Australia Future Fund (HAFF) and the National Housing Accord, the latter of which aims to deliver 1.2 million “well-located homes” over five years from July.
“This is the body that’s meant to advise the government on housing affordability, so I don’t think we should be surprised that Labor’s only ‘solution’ for the housing crisis, the National Housing Accord, when it boils down, is basically giving more money and power to private property developers.
“Relying on private property developers to tackle the housing crisis is sort of like relying on Coles and Woolies not to rip us off.”
Chandler-Mather criticised Mirvac for having “bragged” that the rent on their build-to-rent apartments had averaged 15% to 20% higher than market rents, and went on to rebuke homebuilder AVJennings and billionaire apartments developer Harry Triguboff for withholding supply to the market.
Zorbas said Chandler-Mather’s “miscast” the property development industry as similar to the supermarket duopoly demonstrated a “fundamental misunderstanding of the way the market works for housing in Australia”.
“Precious few parliamentarians or councillors know anything about how to fund or deliver the creation or renewal of cities on assuming office. It is a steep learning curve even for politicians that are a quick study,” Zorbas had said in his prepared remarks.
Federal Treasurer Jim Chalmers dismissed the Greens’ proposal.
“I think this is consistent with how the Greens go about things. It’s easy enough for them to write press releases with big numbers attached to it.”
The debate shows a significant shift in the political sphere as parties begin to chase homeowners’ and renters’ voters. Opposition leader Peter Dutton this week put housing at the forefront of the shadow ministry, recognising growing discontent as the Australian dream of home ownership drifts further out of reach. Liberal Senator for New South Wales, Andrew Bragg, was made Shadow Assistant Minister for Home Ownership. Recent data from the Australian National University’s Federal Election Study highlights the political implications, with a higher proportion of homeowners favouring the Liberal Party compared to renters who lean towards Labor.
At the 2022 election, 38% of homeowners put Liberal in their first preference compared to 26% of renters, according to Australian National University’s Federal Election Study. On the other hand, 32% of homeowners and 37% of renters voted for Labor. Whilst 9% of homeowners and 22% of renters voted for the Greens.
“Broken state planning systems”
Zorbas used his address to slam “broken state planning systems” and government taxes, and put forward the Property Council’s plan for an “unprecedented era of partnership” between all levels of government and developers that would assist in realising the National Housing Accord target.
“The challenging thing about bringing projects to life in Australia is making the finances and management of risks and delays and ultimately, the affordability of the end product work in a marketplace that is mired in the quicksand of Australia’s relentlessly unproductive planning regimes and ever-changing taxation systems”.
“And I can tell you that there are housing ministers, planning ministers around this country who are sitting on development approvals right now that they could release very, very, easily and make a really material difference to supply, but it’s a very difficult and slow process.”
He attributed the national housing crisis partly to the “rank incompetence of previous government and parliaments…failing to unlock that supply, failing to anticipate population growth,” and added that Western Australia’s recent planning reforms would “hopefully” make the state an exception to this.
Zorbas stated three reasons why the National Housing Accord target should be within reach, noting that Australia has the 55th largest national population (“not very big”); dependent on on cycles, is the 12th to 15th largest national economy, and is also the sixth-largest nation by land mass (“spoilt for land…even if if much of it is arid”).
“Given this trifecta, that 1.2 million homes by 2029…should and can be a modest target in a land-rich and affluent nation. And yet by all public measures, anywhere, Australia is one of the global supply wooden-spooners.”
“We need to genuinely partner to have a serious crack at 1.2 (million).”
