On why not 30 per cent public housing

Caryn Kakas is head of housing strategy for ANZ bank and her voice is a great addition to the range of experts we heard at Let’s Hack Housing last week.

Her work is all about funding affordable and social housing solutions in Australia through a variety of partnerships with government and social housing providers that she outlined in a recent article she authored on the bank’s Bluenotes website.

After all funding is key to everything we do in a monetised society; it’s how we allocate resources.

After working through 6000 words that captured most of the views and counter views from 14 experts that took part in two panels at our Let’s Hack Housing event last week, not to mention those of the experts in the audience, a few things emerged.

That we need more public housing was not in contention.

How much we need and how we deliver it, is still up for grabs.

            See our full report: On a dark and stormy housing crisis – what they said at Let’s Hack Housing

What might be worth exploring is whether public housing might be the most politically anodised way to defuse the ridiculous hysteria that accompanies any notion of tax reform around housing – whether capital gains tax or negative gearing. It seems absolute dynamite and political suicide to mention these.

So fine. Let’s not.

Let’s move to a possible solution that leaves those poison pills alone (and this is by way of seeking feedback).

How about we simply ramp up, by a huge number, the amount of public housing we deliver.

Let’s not focus on the timid 1 or 2 per cent addition to the current 4 per cent of housing delivered by the public sector that’s sometimes touted.

Why not be bold and deliver a big number – let’s say 30 per cent – of our housing through a public system.

What the exact number is almost irrelevant but note that other countries seem to manage 60 per cent and even more –  Austria, Singapore, just for starters. And their economies don’t seem to have fallen in a heap.

So the logic is, let’s aim as high as possible – see how far we get.

Thirty per cent could meet the needs of people at the lowest end of the income scales, provide housing as infrastructure in the same way we do with a metro,  tunnel or WestConnex. And have no problem paying for. Billions and countless billions.

And yet the people who drive our economy, work at its most important and productive levels, end up being priced out of the places that need them. No wonder productivity is falling. Why would you bother trying hard in a job that won’t reward you with more than smashed avocado?

At the very least a big public housing number could diffuse the volatility of the market but tempering its worst price excesses but stop prices from falling.

And the private development sector could be left in peace to do its thing.

It would be free to bid up properties it deems worth bidding up.

A kind of dual lane super highway to deliver the most important asset we can have – owned or securely rented.

We might even be able to stop asking for inclusionary zoning or an affordable housing quotient in housing projects.

Private sector development lobby groups might finally be able to rest easy and stop the constant whingeing and whining about affordable housing contributions. Mind other countries manage this just fine because the cost of the contribution is planned, flagged and factored into the price offered by the developer to the vendor of the site, as Tim Williams so eloquently noted at the event.

The result would be a dual lane superhighway to the future we want – public housing for those who are in the lower income brackets and private housing for those who can afford it.

Now for infrastructure. We absolutely need to capture some of the value that the public purse invests in infrastructure where it benefits certain well located properties.

Sue Weatherley, president of the Planning Institute of Australia NSW noted at the event that our system currently lets lucky private owners benefit, tax free, from the investments we as a society make in the roads, rail, bridges, metros and so on.

“The story I always tell is the north of West Rail line. When they were building it, some guy bought a property in Cherrybrook for $1.5 million. A couple of years later, they announced a station and he sold his property for $14 million. So that’s a windfall gain, and he took all of that into his pocket and walked away (tax free)”

There are clever finance people who can do the maths to make the tax collection fair and equitable.

By the way, what about the tax free capital gains currently enjoyed by people lucky enough to own property but  who have done nothing to earn the rising value either through hard work or capital improvements?

Those gains come from the rising tide of a well functioning economy and society and rightly ought to be shared in some way.

Mmmm maybe we need to leave capital gains in the mix.

Outside of this the “how” to deliver public housing is the big open question.

Someone on the event night privately told us we should not aim for big public sector builder. Why not we asked? Because it creates a big bureaucracy, they said.

The implication is it’s inefficient. But all companies private or public squander funds at some point. And as more than a few people have pointed out in recent times, a public development program would train the tradies we desperately need (they all leave and go to the private sector anyway), the quality of work could be monitored (check out the blocks of six or eight pack apartments built by governments past – they’re still good: simple but good) and we’d retain the workforce on a permanent basis.

And there’s a great precedent for a strong public housing authority. As Michael Pascoe reminded us at the event it was Bob Menzies himself, father of the Liberal Party, who ramped up public housing in Australia.

But the delivery of public housing doesn’t have to be a one trick pony.

As Caryn Kakas noted in a recent article she authored on the bank’s Bluenotes website, social and affordable housing can be delivered in partnership.

The $10 billion Housing Australia Future Fund is absolutely

about a collaborative effort and ANZ is fully supportive of this and already demonstrating it can be done, she says.

“We commit to fund and facilitate $10 billion of investment to deliver more affordable, secure, and sustainable homes to buy and rent across Australia,” she says.

The bank’s purchase of Suncorp in Queensland was part of the plan to help house people who are flooding into the sunshine state, with commitments to provide lending for a total of more than 6000 homes through the Queensland Government’s Housing Investment Fund.

The bank has also partnered with  Tetris Capital, a social infrastructure, property developer, and investor for seniors housing in Cairns, she says.

And that’s alongside more debt provided to the Northern Australia Infrastructure Facility (NAIF) and Housing Australia as well as a capital grant from the National Housing Infrastructure Facility to deliver the 490 social, affordable and specialist disability apartments.

And the list goes on.

All we need to do is look around and talk to some new people.

Coming soon will be interview/podcasts with Liam Wallis of Hip V Hype who was a panellist at the event and this issue we delve into the reasoning behind the ambition timber/Passive House/build to rent project by Rory Hunter’s Model.

If you have new ideas get in touch. We want to keep covering this issue.

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