Fixing Australia’s housing crisis requires cooperation, not political perfectionism

If you ever want to make a Greens parliamentarian bristle, just mention the carbon pollution reduction scheme.

The CPRS was the Rudd government’s 2009 emissions trading scheme proposal. The Greens famously voted it down.

The Greens’ bristle is so entrenched that it even has its own exasperated page on the party’s website.

For the past 13 years, the page (originally posted in 2012) says, “we’ve been asked the same question: “If the Greens care so much about climate change, why did you knock off Labor’s CPRS in 2009?”

“Here’s the answer: We voted against the CPRS because it was bad policy that would have locked in failure to take action on climate change.”

What particularly riles the Greens is the suggestion that they sacrificed some good for the politically impossible perfect.

Their claim that “there would have been no reduction in emissions for 25 years” under the scheme, even if true, has looked like less and less of an argument as each year as politics has passed, consumed by climate wars that sent policy backwards by years.

At least the Greens appeared to take that 2009 position based on a policy principle.

These days, it is a little harder to be confident about motivations, as the party has become more ambitious for numbers in the House of Representatives, and shifted the focus of its politics to issues driven more conspicuously by voter demographics.

This week, in the Senate, as the stand-off over housing policy between Labor, the Coalition and the Greens crystallised in votes over the government’s housing agenda, it was hard not to ponder the motivations for the Greens opposition to the government’s (relatively small) Help to Buy home equity scheme, which aims to provide government equity for a small group of low-income households.

After all, the Greens too, have a home equity proposal in their policy platform. Labor’s is much less ambitious. It doesn’t involve setting up a whole function of federal government as a home builder as the Greens propose. But the idea is the same.

A perfect storm of housing issues

Labor has made clear that it is throwing a whole suite of measures at the current housing crisis: a bit of everything as long as it isn’t too inflationary, from short-term measures like boosting rent assistance to funding the building of social housing, partly in conjunction with the states.

And it’s not as if the Coalition hasn’t tried a few similar things, either. Coalition governments in several states have set up home equity schemes. The Morrison government had a First Home Loan Deposit scheme under which the government guaranteed part of the deposit for a home for single parents.

But when the Senate examined the Help to Buy Scheme a few months ago, the Coalition senators’ dissenting report concluded it was “not a home ownership policy, it’s a home nationalisation policy”.

“Labor has given up on home ownership,” they said.

Loading…

Life used to be a lot easier for politicians — not to mention housing-stressed Australians — when the only political cliche to pander to was the dream of owning your own quarter-acre block, and there was still space for cities to just endlessly spread out to accommodate the dream.

Australia in 2024 is now beset by a multitude of really serious housing issues from ones with real social costs like homelessness and housing unaffordability, to complex questions of redesigning our cities and communities.

People are living in tents and cars. Countless people are forced to live far from their workplaces.

It’s not just a question of the quarter-acre block becoming unaffordable. There has been a perfect storm of issues — brought to a particular ugly head by the pandemic and a once-in-a-generation inflation shock — that requires a reset of the housing debate which so far has not been able to happen in the poisonous political competition of 2024.

Housing isn’t an issue that can just be fixed by a change in interest rates or even a change in taxation policy. Changing policies like negative gearing and capital gains tax treatment of investment housing have to be considered as an intergenerational equity issue. But they aren’t going to change the number of houses available for people to buy.

The main problem right now? Supply

Similarly, the Coalition’s only contribution to the debate (other than blocking anything Labor comes up with in conjunction with the Greens) is to suggest people be able to access their super to help fund a house: as sure-fire a recipe for house price inflation as the previously mentioned tax changes initiated by the Howard government in 2000, which triggered the start of the spiral in house prices which we all live with today.

The main problem right now, as analysts keep pointing out, is supply.

Asked on 7.30 this week if there was a clear short-term remedy to the housing crisis available to policy makers, chair of the Productivity Commission Danielle Wood was clear.

“I would like to say there is a clear short-term remedy,” she said. “But I think unfortunately, a lot of the problems have been slow burn and have been building over a long period.

“We have really welcomed the focus of both the Commonwealth and a number of the state governments on supply and particularly the emphasis on reforming planning systems to build more houses close to jobs, close to amenities. That’s going to be critically important for bringing prices down and for bringing broader productivity and social benefits.

“I think what we’re seeing is that planning, though, isn’t the only challenge.”

At least one challenge, Wood said, is that the residential construction sector “hasn’t been good at building in innovation”, in areas like prefabrication.

Loading

We’d have ended up here with or without COVID

There are workforce shortages, too, exacerbated by the state infrastructure boom, not to mention government regulatory overlap.

“It’s not going to be a quick fix, unfortunately, but we didn’t get into this problem quickly, so we’re not going to get out of it quickly,” Wood said.

Migration, she added, “clearly does contribute on the demand side”. “[But] we’re coming out of a very unusual period where we had borders closed and then reopened, so we had a sort of catch up in migration levels, what the government and others are forecasting is something … returning more to the levels of the pre-COVID era.”

In other words, on the migration settings that existed for the past decade we would have ended up at this supply crunch point with or without COVID.

The complexity of the issues requires a level of cooperation between governments, and politicians, which feels a long way from a debate which has been reduced to one about migrants, or renters versus owners, or various propositions which falsely suggest you can make housing cheaper or more available with subsidies or rent controls, instead of more houses.

Even better, even as senators express their alarm at the real housing distress many Australians feel right now, they opted this week to put off a vote on just some measures that might have helped at the margins for two months.

We are a long way from the politically perfect.

Laura Tingle is 7.30’s chief political correspondent.