Labor’s housing bills do nothing to fix the crisis
If you have been following the commercial press, you would think that the Labor government is trying to fix the housing crisis. Headlines such as “Why this is the housing fight that Albanese had to have” and “Bulldozer PM blasts Senate in election clash on housing” in the Sydney Morning Herald were prompted by parliament blocking two bills that Labor says are “critical” to addressing the housing crisis.
The Help to Buy scheme promises to assist up to 10,000 households a year to buy a house through a shared equity scheme, in which the government provides 30 to 40 percent of the purchase price. In a press release promoting the bill, Minister for Housing Julie Collins said, “Right across the country Help to Buy will be life-changing, bringing home ownership back into reach for thousands of Australians, particularly renters”. But the scheme is tiny and at best would help only 0.2 percent of renters or 8 percent of the estimated 120,000 first-home buyers each year.
Government measures like these also push up house prices. The existing First Home Buyers Grant, which gives eligible purchasers $10,000 towards the price of their first property, is estimated by Deakin University academics to have increased the median price of a house by more than $57,000 between 2002 and 2012. The Grattan Institute has said that the effect of Help to Buy on house prices will be only a marginal 0.016 percent. But as economist Saul Eslake told SBS News: “The fact that it’s only a small percentage is a reflection of the fact that this scheme isn’t going to help many people”.
Far from being “life-changing” for renters, Labor’s flagship housing bill is a tiny drop in a vast ocean of housing unaffordability. It’s a scheme so insignificant that it will help only a tiny number of people buy a house, and so market oriented that if it did help more people, it would make housing more, not less, expensive.
Labor’s other measure, the Build to Rent bill, is a handout to property developers wanting to cash in on the lucrative rental market. It offers tax concessions to multibillion-dollar companies like Mirvac and Meriton to build apartments that will be rented out at market rates. In return, developers must designate just 10 percent of apartments as “affordable housing”. The meaning of “affordable” is stretched to breaking point at 75 percent of market rents, which would be $558 a week if based on the median rent in Sydney—that’s 42 percent of the median weekly income.
In case even that is too much of a drain on developer profits, they will have to keep the apartments “affordable” only for fifteen years, after which they can charge however much they want. A similar scheme, Kevin Rudd’s National Rental Affordability Scheme (NRAS), gave developers $11,000 for every $4,000 in “reduced” rents. The Grattan Institute estimates that one third of the $3 billion of public money spent on the scheme went to developers as windfall profits. Like the NRAS, Labor’s Build to Rent bill is a public subsidy for developers that will only increase rents, not lower them.
Two reports released this week highlight the depth of the crisis that these schemes will fail to address. PropTrack data on the housing market reported in the Guardian showed that only 13 percent of homes across the country are affordable for a household with a median income, down from 40 percent only three years ago and the lowest share since records began in 1995. For those on low incomes, there is no prospect of being able to buy a home, an estimated 20 percent of Australian households being shut out of the housing market entirely.
The Everybody’s Home campaign’s “Priced Out” report confirmed the dire situation for renters. Record rents, combined with stagnant wages and benefits payments, mean that those on the age pension would be left with just $8 a day if paying the median rent, while those on the minimum wage would be giving 68 percent of their income to a landlord.
So far, the Greens have blocked Labor’s housing bills in the Senate and demanded that the government introduce rent caps and reduce tax breaks for investors. In response, Prime Minister Anthony Albanese has painted the Greens as “unreasonable” populists who are letting “the perfect be the enemy of the good” and siding with the Liberals to form a “No-alition” (yes, Albanese’s rhetoric really is that bad) of the “extreme right” and “extreme left” to stop young people buying a house. The government has even threatened an early election if these policies are not passed.
But the Greens were right to block the bills, and they should continue to refuse to pass them. Labor’s Help to Buy and Build to Rent are not small steps towards fixing the housing crisis, they are backward steps that hide Labor’s inaction, put more money in developers’ pockets and do nothing to help the millions struggling to pay for their homes.
