Government under fire for ‘missed opportunity’ to invest in social housing
Welfare advocates, economists, real estate leaders and academics have lashed the federal government’s decision to snub direct investment in social housing in the federal budget.
A social housing boost was touted by Labor and industry stakeholders to not only tackle rising homelessness but revive the ailing construction industry.
The National Housing Finance and Investment Corporation (NHFIC) says housing demand could crash by as much as 232,000 dwellings by 2023 as a result of weak migration.
But the Morrison government stuck to its assertion that social housing is a state-level responsibility.
On the housing front, Treasurer Josh Frydenberg announced 10,000 extra places on the First Home Buyers Deposit Scheme (with higher price caps); $150 million for the Indigenous Home Ownership Program; and $1 billion for the NHFIC to boost lending for social housing projects.
Housing Minister Michael Sukkar on Wednesday defended the Coalition’s pledge, noting that NHFIC had issued nearly $1.5 billion in bonds in two years.
“The issuance of these bonds has already supported the delivery of more than 2000 new and 6300 existing homes built and maintained by community housing providers,” Mr Sukkar told AAP.
But industry analysts say indirect financing falls well short of what’s needed to rescue the under-fire building industry and help rising numbers of jobless and mortgage-stressed Australians.
Community Housing Industry Association CEO Wendy Hayhurst said a dearth of social housing spending had “massive implications” for jobs in home building, which comprises 9.2 per cent of the national workforce.
“Investing in social housing is the right thing to do now,” Ms Hayhurst said.
“There is almost infinite demand for the product [and] a build program can ramp up quickly – our members have already identified almost 12,000 units they could start in six months.”
Mission Australia chief executive James Toomey went one step further, calling the absence of a sound social housing policy a “shocking failure”.
“Investing in 30,000 social homes within the next four years is an obvious solution that will not only help to end homelessness in Australia but will also create vital jobs in the construction industry,” Mr Toomey said.
That call mirrors a Social Housing Acceleration and Renovation Program (SHARP) backed by more than 300 construction, community housing and welfare organisations.
Under the $7.2 billion proposal, those homes would be constructed over four years, with the potential to create roughly 18,000 jobs.
Grattan Institute program director for household finances Brendan Coates told The New Daily overlooking social housing highlighted the government’s “narrowly framed” recovery plan.
With the McKinsey Institute estimating 205,000 building jobs could be lost by March, Mr Coates said a labour-intensive social housing scheme would have a higher multiplier effect than the government’s $10 billion infrastructure drive, particularly given much of the money will be spent on road projects.
Mr Coates also suggested social housing could provide more bang for buck than the $26.7 billion of business investment tax breaks, depending on what proportion of the goods purchased were overseas imports.
“There’s nothing wrong with the business investment plan per se, but the government would have been very well placed to have added to that program with a social housing drive,” Mr Coates said.
“And it says a lot in the current environment that they’ve walked past social housing – which has a very high fiscal multiplier effect, generates employment and would also meet a social need – for other measures.”
Mr Coates also said the states would struggle to shoulder the burden as they have an inadequate tax base to spend the required sums of money.
“We’re talking about spending half to 0.75 per cent of GDP on this issue, and any state that does that would be committing a very large share of their budgetary resources,” he said.
Victorian Premier Daniel Andrews on Wednesday hinted his government would look “very, very closely” at including social housing in his state’s upcoming budget.
And federal Labor will propose a $500 million social housing repair program in Thursday’s budget reply, to fix thousands of existing homes.
“With housing construction demand about to fall off a cliff, this is a no brainer,” Shadow Minister for Housing Jason Clare said.
But there’s still hope the government will change course, according to UNSW housing professor Hal Pawson.
Professor Pawson told The New Daily that although he was disappointed social housing was not a centrepiece of the federal budget, it “might not be the end of the story”.
He said if Treasury’s economic modelling fails to shake out, the government may no longer have grounds to ignore the groundswell of support for social housing.
“It’s clear from what’s announced that things have to get significantly worse, as it’s clear [social housing] is not a part of their approach and something they would like to avoid at all costs,” Professor Pawson said.
“Yet, the [social housing] policy is such a banker as you can turn on the tap without relying on market forces to respond.”
However, like Mr Coates, Professor Pawson noted no significant social housing push has occurred without Commonwealth backing.
“Nothing will happen without subsidy,” Professor Pawson said.
“If one or more states decide to create a subsidy program, the additional $1 billion backing announced by the Treasurer may prove useful as it makes the private finance portion of the investment cheaper than it would otherwise be.”
Real Estate Industry Partners CEO Sadhana Smiles agreed the federal government had squandered an opportunity to address issues around social and affordable housing.
Ms Smiles, whose group represents major brands including Harcourts and Ray White, said reports that urban fringe and regional prices were rising due to increased demand suggested providing cheaper alternatives was critical.
And with limited supply available, time is of the essence, she said.
“I believe there needs to be more done in those sectors than what was announced last night,” Ms Smiles told The New Daily.
“Although we saw some assistance for young people, if they have a job in inner-city areas they would struggle to benefit from the FHBDS – and similar for older Australians staring down the barrel of retirement.”
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