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Co-operation essential to great Aussie dream

By Tanya Plibersek - posted Wednesday, 28 February 2007

Australia has always prided itself on high levels of home ownership. In 1911 half of Australians owned their homes; it took Britons until 1970 to reach that rate. Today we're going backwards, creating a situation in which even well-paid young Australians will be locked out of home ownership unless their parents are able to give them a hand up.

Homes are becoming increasingly unaffordable to rent, too. The Federal Government has slashed $400 million from public housing and the states are struggling to maintain the stock they have: there is little expansion. Crisis accommodation is at, well, crisis point, with 78 per cent of families (couples with children) who seek emergency accommodation turned away each night.

Across the spectrum - emergency accommodation for homeless people, private and public rental, and home ownership - things are tough. People are commuting longer distances because the housing they can afford is far from their work. Longer days away from the family, bigger financial worries, and laws that make it harder to predict hours and income and make it easier to sack people, all contribute to enormous strain on many families. HECS debts and high child-care costs hit young families just when their housing costs are highest, too.


Piecemeal solutions are proposed periodically. The Howard Government claims incorrectly that if the NSW Government would only release more land in western Sydney, everything would be fine. The scarcity argument doesn't explain why costs are high in other parts of Australia. Releasing more land might reduce house prices in surrounding suburbs - it may even push existing home owners into negative equity - but alone it won't fix unaffordability elsewhere in Sydney or around the country.

Home owners quite rightly expect an increase over time in the value of their family's biggest asset. Those who have children, though, aren't looking forward to having their adult offspring at home indefinitely because they can't find a place of their own. Even baby boomers who are thrilled with the capital growth of their homes (and investment properties) want action to make housing more affordable for their children's generation.

At local government level, streamlining approvals processes is a good start. Some councils have effective policies requiring a component of affordable housing in large developments, or a developer levy for affordable housing. The City West affordable rental project in central Sydney was set up by NSW in 1994, with help from the last Labor federal government. The project today obtains part of its funds from developer levies.

At state level, land releases may be part of a solution, as may stamp duty reforms such as the NSW Government's scrapping duty on first homes costing less than $500,000. States can also get involved in innovative programs such as the recently announced shared equity scheme in Western Australia, designed to help low-income-earners buy low-cost housing.

Federally the most obvious measures are keeping downward pressure on interest rates (we've had four rises since the last federal election and homebuyers are spending a greater proportion of their income on interest repayments than ever).

Tax and superannuation policies also affect the amount and type of investment in housing. Government spending on public and community housing and emergency housing has fallen, subsidies to private rental through Commonwealth Rent Assistance are unpredictable, and policies such as the first home buyer grant are poorly targeted. The skills shortage has also forced up the cost of building in some areas.


Our approach to housing affordability has been muddled and contradictory for too long. Each price lever is pulled or pushed in isolation. We need to include all types of housing - emergency accommodation, public and private rental, community housing and home purchase - in our thinking; and we need an agreement between the three levels of government that will end the blame game.

There are exciting proposals for this type of intergovernmental co-operation, such as Queensland's Home Link proposal, that would provide secure long-term housing for low-income tenants and a low-risk investment that would be attractive as part of a portfolio for investors like superannuation funds.

Housing affordability will require creative thinking; goodwill and co-operation across the levels of government, and a determination to ensure that young Australians don't need to give up on their dreams of a place to call their own.

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First published in the Sydney Morning Herald on February 21, 2007.

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About the Author

Tanya Plibersek MP is Labor's Federal Member for Sydney.

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