Inequality is most evident and distressing in regard to housing. As Tone Wheeler says, ‘The rich get richer with even more houses; the poor get rent stress or homelessness.’
Housing availability and affordability are central to inequality. ABS data show that home-ownership rates for people aged under 40 are declining with a widening of intergenerational inequality. The Grattan Institute notes that the share of Australians who own their homes is expected to fall sharply in the decades ahead.
Housing and speculation
Housing in Australian is now almost as much about financial speculation as about acquiring a home and shelter. There is a strong argument that the housing market operates so as to concentrate wealth and make the rich, richer.
There has been a rapid increase in house purchases for speculative purposes and a long-term increase in the ratio of the value of homes relative to household income. The unregulated housing market is fully integrated into the finance market and is a generator of inequality. The changes in the Australian housing situation are relatively unique in the OECD, especially the high proportion of housing finance accounted for by investors.
National Shelter shows the impact of such speculation on low-income households and document how
The impact of the capital gains discount combined with negative gearing has dramatically increased the number of investors who compete with homeowners for available property, and also kept more households out of home ownership and trapping them in the rental market.
And the proportion of renters in housing stress (spending more than 30% of their income on housing) is increasing.
Homelessness and Older Women
Women who are 55 and older are the fastest growing group of homeless people. The complex reasons include low incomes, unemployment, retiring with low superannuation, relationship breakdown and domestic violence, unaffordable rents, and insufficient public and community housing. Such homelessness is intensified by Covid and by the systematic inequalities shown by Respect@work and other reports.
ALP Housing Policy
Labor proposes a $10 billion off-budget Housing Australia Future Fund to build 20,000 social housing properties and 10,000 affordable housing properties for frontline workers over five years. 4,000 of the 20,000 social housing properties will be allocated for women and children fleeing domestic and family violence, and older women on low incomes who are at risk of homelessness.
Labor has also announced a Regional First Home Buyer Support Scheme which they state will help 10,000 first home buyers a year in regional Australia to buy a home. This will provide a government guarantee of up to 15 per cent for eligible first-home buyers, so locals with a 5 per cent deposit can avoid paying mortgage insurance. It will operate like the current scheme of the Federal Government but will be triple the number of people assisted.
The Greens policy is to significantly increase the proportion of public housing in Australia’s housing system including:
- Ending the privatisation and sale of public housing stock.
- Phasing-out negative gearing and abolishing property-related capital gains tax discounts and exemptions.
- Public and community housing to cost residents no more than 25% of household income.
- A significant increase in Commonwealth Rent Assistance.
The ALP has not continued with its 2019 policies to curtail negative gearing to new homes and to reduce the capital gains tax exemption for housing to 25%. These policies were explicitly linked to housing affordability and reducing inequality.
Numerous, credible, studies show the need for more social housing. A net increase of 15,000 units a year is needed just to keep pace with ‘normal’ population growth and halt the decline in social rental as a share of all housing. The ALP Housing Australia Future Fund offers 6,000 new social housing units per year – well short of the
requirement to keep pace with let alone make significant improvements for all those with housing needs.
A much more comprehensive approach to housing is required including:
- A guarantee of decent and affordable housing as a universal right.
- Controlling speculation by curtailing negative gearing and eliminating or reducing the capital gains tax exemption.
- Expanding social housing through a non-market housing system, akin to the way public healthcare provides a non-market medical system.
As Cameron Murray shows, Australia has enough housing supply: there are more houses than households, with second (holiday) homes among the fastest growing sector. We cannot rely on the private land market to meet the needs of renters and first-home buyers. It is a mistaken belief that increasing land supply by ‘reforming planning schemes’ will solve the affordability problems.
Active public policy must tackle our grossly unbalanced housing tax settings, boost renters’ rights and diversify the available choice of quality housing for everyone.
(This article is part of the SEARCH Activists Guide to the 2022 Election. You can download the entire guide by clicking here.)