Many of us would agree that housing is a basic human need. For many Australians, however, finding and keeping a “fixed abode” is becoming increasingly difficult. Of course, it must be acknowledged that some people choose a lifestyle that frees them from the obligations and constraints of being a tenant or homeowner. We immediately think of the iconic Aussie Swagman, as a carefree traveller, enjoying the freedom of the open road and the great outdoors. However, the lyrics of our great national song, Waltzing Matilda, suggest that there could be a dark shadow hanging over many of these jolly fellows. Nowadays we see increasing evidence of homelessness in our cities, when as day turns to night, “rough sleepers” emerge to claim a park bench or doorway where they can spend the night. Many of these “fringe dwellers” cast a pathetic figure: often unkempt and sometimes intoxicated with a few meagre possessions scattered around them. They evoke a variety of emotions in passers-by: pity, disgust and in some cases anger.
Recently a new generation of more functional homeless citizens has also emerged. These people can be found sleeping in tents, motor cars and vans, largely because they cannot afford Australia’s skyrocketing rental costs. Indeed, people are now discovering that having a modestly paid job is no protection against homelessness.
Having somewhere to live, means much more than simply having a structure that will protect you from the elements and attention of opportunistic muggers. Having a home has other obvious advantages: somewhere to store and cook your food, somewhere to store and launder your clothes, and a bathroom to promote personal hygiene. When you have a fixed abode, it is easier to secure and maintain employment, send your children to school, arrange ongoing health care and obtain credit. There are other important psycho-social advantages to having a home of your own: it is easier for householders to make social connections and feel part of a neighbourhood. Finding your own home can bring with it a sense of achievement and self-esteem and you can avoid the stigma and discrimination that often accompanies homelessness.
Like people who continue to bang their heads against a wall, we seem surprised that we have a homelessness problem in Australia. In this short opinion piece, I will argue that the answer lies in a re-orientation of public policy, which reflects an emphasis on the social utility of housing versus housing development and home ownership as a means of wealth creation.
I will also suggest that housing development should be planned to assist social connectedness and well-being.
Wellbeing versus Wealth Creation
For many Australians home ownership means much more than having a roof over their head: it can also be a means of creating and storing wealth. A surprising number of Australians own investment properties that they place on the rental market. This kind of property investment is often facilitated by the use of negative gearing. Money is borrowed to purchase the property and the rent it produces is used to pay most but not all of the interest due and other related expenses. The resulting loss can then be offset against the owner’s taxable income to achieve a net profit. In addition, increasing house prices yield capital growth. Negative gearing has existed in Australia since at least the 1930s when it appeared in the Income Tax Assessment Act of 1936. Over the years, various governments have made attempts to abolish it, but each time there has been a swift and severe backlash from voters which has ensured that negative gearing has remained. Of course, it is a controversial measure that overwhelmingly benefits the wealthy. Furthermore, the resulting tax concessions for property investors have a heavy impact on the public purse.
Further up the housing “food chain” are the developers who turn tracts of land into housing estates. This has always been a potentially lucrative process: past estimates have suggested profits of around 20% are possible: nowadays, 5-10% may now be a more realistic expectation. Housing development is also an inherently risky enterprise where all sorts of things can and do go wrong, meaning that insolvency is always hovering somewhere on the horizon. Very recently several high-profile housing developers have “gone bust” causing major financial difficulties for sub-contractors and those home buyers who have already parted with substantial deposits.
The conduct of councillors in development matters and their dealings with developers and submitters is often controversial and can pose corruption and misconduct risks. Indeed new research from the Australia Institute finds that Australians believe that there may be a range of improper government behaviours, including corruption, cronyism, political expenditure and hobbling or ignoring integrity watchdogs. People are most likely to think corruption is common among state and territory governments (69%), followed by local governments (68%) and the federal government (66%). Local councils, that is, councillors, (based on recommendations of their planning staff) have direct responsibility for zoning, development plans and development approvals. In their book, Game of Mates, Murray and Frijters describe economic modelling which suggests loses of some $11 billion from Australian Government revenue each year: funds that are overwhelmingly “gifted” to connected developers and speculators. They conclude that it is not so much a matter of anything illegal, but the evolved, protected and self-perpetuating nature of revolving doors for politicians, bureaucrats, lobbyists and developers that result in the majority of the population losing out to the privileged few.
Location, Location, Location
Real Estate agents emphasise that position is a key determinant in securing a good price a adding that…… it is better to buy the worst house in a good street rather than the best house in the worst street! Of course, this mantra is quite often forgotten when it comes to selecting the site for new housing developments. All too often we see new housing estates appearing far from any existing infrastructure but with promises that improved roads, public transport, schools, health facilities etc will appear in due course. It is assumed that new homeowners will be happy to spend hours commuting or will have white-collar jobs that will enable them to work from home. In past years I have visited quite a few developments like this which left me with the feeling that I had just been in “an urban wasteland” where it would be a challenge to make social connections and establish any sense of community We’re told that these remote locations may be necessary because of land scarcity or the need to prevent urban sprawl. However, I suspect that such locations may also have significant economic benefits for developers.
Houses for People
Over the past 10 years, there has been a progressive reduction in the size of each new building block in housing developments. The average site area of new house approvals decreased by sixty-four square metres (-13%), whilst the average floor area decreased by only three square metres (-1%). Typical homes will have at least three bedrooms, two bathrooms and a garage in addition to the usual living and dining accommodations.
However, little or no space is left for a traditional Aussie backyard with its vegetable patch and kids' cricket pitch. Children’s play facilities, where they exist, will of necessity be remote from both housing making it difficult for responsible parents to allow their children to enjoy unsupervised play time. The dwellings in these new housing developments have been designed primarily to attract buyers from households comprising two adults and 2 or 3 children. There will also be investors ready to purchase these properties for rental to families from the same demographic. Housing Developers, no doubt regard this as a safe way to maximise profits. Indeed, this seems a sound approach when houses are viewed as a means for the creation and storage of wealth. When, however, housing is viewed as a human right, it becomes clear that the needs of the following sectors of society are being overlooked.
Singles Whilst “well-heeled” singles are likely to buy or rent a self-contained apartment, many single house hunters lack the necessary financial means to pursue this option. Instead, sharing is likely to be the only viable possibility. For many, this probably means living in a rented house with multiple occupants sharing the cost of rentals and utilities. Share houses can be great fun for young unattached adults who enjoy socialising. However, life in a shared house can be unpredictable and sometimes risky depending on the ongoing mix of occupants. However, a rite of passage” for twenty-somethings is now becoming a reluctant necessity for some folk as they approach middle age. At least one alternative approach to singles accommodation is starting to emerge: a dwelling with several ensuite bedrooms with a common laundry, kitchen and an area for eating and socialising.
Separated Parents with shared parenting arrangements. In such circumstances, it is not uncommon for one parent to undertake most of the parenting and children staying with the other parent on alternative weekends and for perhaps 2 weeks during school holidays. Two parents with this minor role could share a dwelling with some of the bedrooms used on a “floating” basis to accommodate children.
Retirees. People in retirement are, as often as not, empty nesters who no longer require a large home and certainly do not want the chores and maintenance expense that goes with it. The market has responded to this with the development of an increasing range of retirement complexes which include independent living units and communal facilities such as swimming pools, bowling greens and social clubhouses. Most of these complexes require residents to purchase their unit or pay an equivalent entry fee and make a weekly payment towards common facilities and services. In some cases, pensioners can claim a small supplementary contribution towards this weekly payment. Unlike remaining in a family home, moving to retirement does not provide much in terms of wealth creation but is certainly a lifestyle investment. In practical terms, this option is only available to retirees who have an unencumbered home to sell or have sufficient savings to purchase a unit or pay an equivalent entry fee to the complex. There is quite a limited supply of “retiree-friendly” rental properties and most of these are unlikely to provide significant lifestyle resources.
Private versus publicly developed housing
All levels of government in Australia treat the provision of housing as primarily a matter for private enterprise. As indicated earlier, private investment in housing is supported by the provision of tax relief through negative gearing. Local authorities and housing developers work in close cooperation in the development of new housing. The purchase of housing is also supported through the First Home- Owner’s Grant Scheme. Governments play a role in the provision of housing for people deemed to be socially disadvantaged. Pensioners and those receiving an unemployment benefit are eligible to receive a means-tested rent allowance. For some years there was also a National Rental Affordability Scheme which facilitated the designation of a proportion of dwellings in new developments as NRAS properties which have been available at a significantly discounted rent. A recently canvassed alternative is the development of "build to rent" complexes which would be owned by large corporations and financial institutions like superannuation schemes. It is thought that this could provide more stable long-term rental accommodation. State Governments will also continue to develop housing complexes for rental to low-income tenants. In the past, this was administered through state bodies known as Housing Commissions. To live in a Housing Commission home was stigmatising. This was due, in part, to the practice of creating large, unattractive, ghetto-like areas of low-cost public housing. Housing Commissions have been abolished to be replaced by the term Social Housing. Unfortunately, the stigma has not been abolished. Indeed, there appears to be some stigma attached to home rental per se: something that has encouraged people to get onto the “first rung of the property ladder”. Unlike some European countries, long-term rental in Australia is uncommon. There are obvious social detriments in treating public housing as a residual activity. It encourages the revolving door effect of people “escaping from the ghetto” and inhibits the growth of social cohesion and community activities. The development of attractive small-scale publicly-owned housing would pay a welcome social
Reacting to the ongoing housing crisis
The kindest way to describe Governments’ responses to the current housing crisis is to label them as inadequate and disappointing. Billions of dollars have been allocated to build sporting facilities for the next Olympics, while the number of homeless Australians increases.
In my view, the current housing crisis indicates the need for crisis management strategies, such as the provision of transitional housing designed for limited-duration accommodation. The problems associated with this approach have so far served to prevent anything more than piecemeal action, which many would consider tokenistic. Governments at all levels and of all political persuasions need to show compassion, courage and creativity and move forward to remedy this unconscionable state of affairs.
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