Of all the issues being mauled for our delectation by this spectacularly unedifying election campaign, housing is the one that should matter. Housing should be the decider. Climate is bleeping red and an integrity commission is critical – but having a roof over our head underpins our capacity to care. Housing used to be Australia’s great strength. It freed us to pursue a fair-go society. Now, it’s our most glaring weakness. But it doesn’t have to be.
Knowing that you have, and will always have, somewhere decent to live enables everything else – work, education, health, creativity, ethics. Huge swaths of the electorate – many under 40, single parents, women over 60 – are now permanently excluded from the home-ownership dream that once defined our famous “way of life”. A recent report from The Australia Institute notes that almost 14 per cent of Australians live in poverty after their housing costs are taken into account. More than 100,000 people sleep rough every night.
Plus, as interest rates rise for the first time in years, many who have taken on huge low-deposit loans face housing stress and possible default. According to the Grattan Institute, 40 years ago, almost 60 per cent of young Australians on low and modest incomes owned their own home. Now, Grattan reports, it is only 28 per cent. Nevertheless, and partly because mortgage holders are often geared to the eyeballs, Australian households are among the most in debt in the world. The desperate drive to ownership is further fuelled by a rental system that gives tenants little dignity and few weapons against rampant Rachmanism – named for the notorious Notting Hill slum landlord of the 1950s-’60s.
This is not solely about fairness to individuals. It’s also about the kind of culture we want to create. Yet neither of the major parties has a persuasive answer.
Let’s consider their policies. The Liberal Party insists, as they must, that all is well. That’s not simple, since you’d have to live in a cave to be unaware of the housing crisis. That did not stop former prime minister John Howard telling journalists recently “I don’t accept there is a housing crisis” and blaming house prices on planning and local government. Does even he actually buy that?
The Liberals promise to “more than triple” the number of existing first-home buyer low-deposit guarantees to 35,000 a year. A further 10,000 such loans will “incentivise supply” in regional areas with another 5000 for single parents, amounting to a total of 50,000. To combat the appalling housing situation for Indigenous people in remote areas, the party offers the same limp market-centred model, relying on Indigenous Business Australia to offer low-deposit loans for people “to either enter the housing market or build their own homes”.
Labor’s policy – though much ridiculed by Finance minister Simon Birmingham as placing “Mr Albanese at the kitchen table with you” – is not that different. Help to Buy, Labor’s low-deposit loan scheme based on Grattan Institute modelling, would match the government’s 50,000 and raise it a further 10,000. The difference is, Labor would invest government money. Government – not the bank – would own up to 40 per cent equity in your house, which you would repay, with any increment, upon sale.
Means-tested (for single-income owners earning up to $90,000 or couples up to $120,000) and enabling a deposit as low as 2 per cent, it seems pretty fair to me. There’s also a commitment to 10,000 regional loans and to building 30,000 social and affordable dwellings in the first five years. As to First Nations housing, Labor promises $100 million, compared with the Coalition’s miserable $7.7 million.
The trouble with both platforms, though, is they focus almost solely on easing people into the housing market in a way that can exacerbate inflation and drive interest rates higher, increasing both housing costs and mortgage stress. This could only make a bad situation worse. Both parties are focused on reviving the “Australian dream” rather than critiquing or amending it. They skip over companion issues such as rent protection, negative gearing and the fundamental pathology of commodifying the idea of home.
Of course, politics is at work here. Neither major party will touch negative gearing, which is widely understood to have killed Labor’s chances at the 2019 election. It would be interesting to exclude from any parliamentary voting on this all members of parliament who hold investment properties. But it’s not only MPs or wealthy investors. Many, especially young, people “rentvest” – which involves paying a mortgage on a property you rent out, while yourself renting somewhere else either cheaper or more desirable.
And there’s a further, more general conflict of interest here. All property owners – especially those with investment properties – are inherently conflicted. On the one hand, we want affordable housing for our children and grandchildren. On the other, we’re reluctant to see our principal, or only, asset lose value.
This conflict would be far less extreme if we had a less property-obsessed economy and a culture in which property prices were lower and ordinary people invested more broadly across a variety of business and cultural enterprises. We’d be far more inclined to establish rental decency, using the law to redress the inherent power imbalance of the renter–landlord relationship. That culture would further reduce the urge to own property, since renting would be a comfortable, confident and dignified alternative.
Rental life in Australia is inherently undignified. With few protections against exorbitant rent rises or “no grounds” evictions (now banned in Tasmania, Victoria and the ACT but still legal in New South Wales) you can be evicted for requesting essential repairs or protesting against a sudden doubling of rent. This means you can’t invest emotionally or financially in a sense of home; you are perpetually vulnerable.
On these core culture-making issues only the minor parties offer insight. First, on the instant-political-death question of deliberately shrinking property values, TNL (formerly The New Liberals) offers the audacious policy of giving money away.
This is far less silly than it sounds. Essentially, it’s a choice between government debt and household debt: decades of deficit-phobic governments have effectively devolved debt from them to us. TNL’s monetary reset policy, explains senate candidate and economics professor Steve Keen, “would give every adult resident the same sum of money, which would have to be used to reduce debt, or for those with less debt than the reset, to buy treasury bonds”. This would greatly reduce indebtedness, benefit renters with government bonds and deflate the housing bubble.
TNL’s argument is based on modern monetary theory, as expounded by Professor Stephanie Kelton. Kelton’s New York Times bestseller The Deficit Myth argues that “the deficit bogeyman isn’t real”, because federal budgets are fundamentally different from household budgets, limited not by money but by real resources. Unlike us, governments can easily generate money because they don’t have to pay it back. On that basis, giving money to residents is entirely doable.
On the question of renter protections it’s the Greens who have the sensible ideas. They propose to end the sell-off of public housing, phase out negative gearing, regulate rent rises, end “no grounds” evictions and establish a right to lease renewal. These would be major steps towards building a more vital, inclusive and creative culture.
Many of the liveliest urban cultures are sustained by huge proportions of renters, protected in turn by legislation. In New York, rent regulation and vacancy control remain controversial issues, but at least there is regulation. A 2019 study of New York housing policy by Brooklyn-based researcher Oksana Mironova noted that, since vacancy was decontrolled in 1991, the city had lost 291,000 units of rent-regulated housing. The net effect is to “remove” important bulwarks against displacement and homelessness and “undermine neighbourhood-level stability”.
Two years ago in Berlin, where three-quarters of households are tenants and rents are already lower than surrounding areas, the city imposed a rent freeze, or Mietendeckel, over 1.5 million apartments. The measure was torn down by the courts a year later, enabling a rash of rent increases but also fuelling calls for remunicipalisation of housing stock.
It might seem utopian, even naive, to try to eliminate housing poverty. But some cities and countries refuse to accept this. With legislation, grants and land packages designed to assist, Berlin also actively encourages an entire sector of co-operative and self-build group housing, and Santiago has devised ways of reintroducing public housing downtown.
Finland is now applying the same values to its housing system that over the past 30 years helped to turn its education system around from lacklustre elitist to a chart-topping apparatus of highly respected public school teachers and high-performing public students. Recognising housing as a right, a precondition for tackling other social issues and for a vibrant, creative culture, the country has a policy of ending homelessness by 2027.
Oh sure, you might think. Those Scandinavians. It’s easy for them. But we could do the same. With a per capita gross domestic product 18 per cent higher than Finland’s and a desperate need for creative verve, I’d say we’re almost out of excuses not to try.
This article was first published in the print edition of The Saturday Paper on May 14, 2022 as "Home truths".
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