NSW Labor builds profits, not housing

What do you think is a good use of $1 billion of public money? You might say building more schools and hospitals, raising public sector wages or making transport, groceries and housing more affordable. The correct answer, according to the NSW Labor government, is none of the above—it’s to give the money to billionaire property developers.

The $1 billion “Pre-Sale Finance Guarantee Scheme” is the centrepiece of NSW Labor’s housing affordability policies announced in its 2025 budget. Under the scheme, the government will guarantee to buy apartments from property developers if the developers can’t pre-sell enough to secure finance, no strings attached. They can build overpriced apartments in developments so risky even the banks wouldn’t fund them, secure in the knowledge that the government will bail them out if they can’t find buyers at the price and profit margin that they want.

The government says this will result in an additional 15,000 homes on the market, because developers will be able to get loans they otherwise couldn’t. That is rubbish. The government is guaranteeing to buy properties that developers can’t sell, so it’s just paying for properties that people either don’t want or, more likely, can’t afford. Even if the government ends up owning some properties and uses them for public housing—a big if—it will have paid a market price that includes the developer’s profits, instead of the fraction it would cost to build the properties itself.

The scheme is a handout to multibillion-dollar corporations and the billionaires who own them. Instead of corporate welfare, the government should spend that money on building desperately needed public housing.

In addition to the scheme, NSW Labor Treasurer Daniel Mookhey announced two other policies that he said would help “build, build and build our way out of the housing crisis”.

The first is to make the 50 percent land tax exemption for build-to-rent properties, due to expire in 2039, permanent. Build-to-rent developments already get significant planning concessions, including “flexibility” on things like whether apartments should have sunlight or storage space. The apartments are rented out at market rates, and this additional tax handout to property developers just props up their profits without doing anything to make rents more affordable.

The second measure allows developers themselves to build the civic infrastructure associated with new housing developments. Currently, developers contribute to a government fund that is used to build the roads, schools and other infrastructure needed for new developments. Under Labor’s “work in kind” scheme, developers will be able to avoid the contribution by building a road or handing over a plot of land for a school. The government says this will fast-track new developments by completing essential infrastructure more quickly.

But the residents of Wilton in south-western Sydney know what happens when developers are responsible for building infrastructure. As the Guardian reported, developers were approved to construct what was touted as a flourishing new residential hub and permitted to take responsibility for building key infrastructure under a “voluntary planning agreement”, very similar to what Labor is proposing with its “work-in-kind” policy. But after six years of construction, “developer-led” infrastructure resulted in a town centre that has only a single skydiving business, land being sold without sewerage pipes and the nearest supermarket a 14km drive away. One developer provided a road to connect the development to the main arterial, but because traffic lights were more expensive, it proposed that cars would only be able to turn left into and out of the estate, meaning a 4km detour if residents needed to turn right.

This is the logical result of giving big corporations control over building essential services; they care only about their profits and will literally cut corners to increase their bottom line.

Labor’s policies in the 2025 state budget are a cash splash to big corporations that will only make housing more unaffordable. Rather than see escalating house prices and rents as a crisis, the NSW Labor government sees an opportunity: an opportunity to give public money to multibillion-dollar corporations, to reduce already threadbare planning controls to allow developers to build lower quality homes and to boost profits for billionaires in a housing market that is already the second most expensive in the world.