Originally published in The Guardian on May 8, 2023

Labor’s housing policies risk being as ineffectual as the Coalition’s. The real solutions aren’t complicated – but they need political will.

In 2003, the former PM John Howard said “I don’t get people stopping me in the street and saying, ‘John you’re outrageous, under your government the value of my house has increased’.”

But here’s an economic reality that no Australian politician wants to admit: for housing to be affordable, house prices need to go down, not up. Fast forward to the 2023 budget and a growing number of voters don’t or will never own a home – and for them rising prices and rents are the problem.

Home ownership rates are falling. Interest repayments are rising. More people are being priced out of even renting. We hear of people living in cars, caravans and tents. So with the budget imminent, many are wondering: what is the government planning to do about the housing crisis?

We regularly hear announcements of policies that claim to make housing more affordable, particularly around budget time and elections. So why aren’t they working?

It’s because housing policy has for years been more about appearing to do anything rather than actually doing something; any policy that would make housing more affordable means either decreasing property prices or stopping them from growing for an extended period of time. In Australian politics, that’s the equivalent of shooting Bambi.

Instead, the political response has been to create policies that won’t make any real difference, but that politicians can refer to whenever a distressed constituent asks what they are doing.

We had former treasurer Joe Hockey’s advice to first home buyers to “get a good job that pays good money” and we ended before the 2022 election with Scott Morrison announcing that the Coalition would allow first-home buyers to access their super to buy a house – a policy that would simply drive up house prices. No wonder people under 40 have deserted them.

But after the heckling Anthony Albanese got in Hobart after announcing $240m for a stadium rather than more money for housing, it’s possible economic reality is overtaking political talking points. There is real danger for Labor that their current crop of housing policies are as ineffective as their predecessors.

So, what can be done that will actually fix the problem? The economic policy solutions are not complicated, but they do take political will.

Stop incentivising investors

The federal government needs to stop incentivising cashed-up investors with tax breaks to outbid first home buyers and push up house prices, by limiting negative gearing to new housing and getting rid of the capital gains tax discount.

Tax concessions for people with houses, to help them outbid people without houses, is exacerbating the crisis. Homes should be about shelter and security – not about tax-effective ways to build investor’s wealth.

Invest in public housing

The government needs to build a lot more public housing – and I actually mean build public housing, not set up obscure financial relationships and complex tax incentives to encourage the private sector to build more social and affordable housing.

Many renters might think that public housing is a good idea, but they will never qualify for it. But you don’t need to qualify for public housing to benefit from it. If the government significantly increased public housing, then there is less competition for rental properties and lower prices for all renters.

Rent assistance now

Rents are rapidly increasing and structural solutions to fix the crisis will take time, meaning the government needs to help renters now by substantially increasing rent assistance in this budget

The PM likes to regularly tell us that he was raised in public housing. Having lived the benefits of public housing, you might think he would be keen to expand it, particularly when so many people are struggling to find a place to live.

The government has had some big housing announcements, like the $10bn investment fund which (if it makes a profit) can allocate a maximum of $500m towards building some social and affordable housing, or complicated tax changes to give tax breaks to organisations that build social and affordable housing. Both these policies boil down to handing out money to various organisations to make it financially viable for them to build affordable housing.

A simpler and cheaper solution would be for the government to simply do it themselves.

It seems obvious, but housing affordability requires cheaper houses. And while that might be politically difficult for leaders to admit, what’s more difficult is the lived experience of the some 122,494 Australians who experienced homelessness last year.

If house prices continue to rise, so too will the number of people sleeping on the street and pitching tents in our parks. If things get worse, the economic and political separation between stressed mortgage holders, crunched renters and people without a roof over their heads will continue to shrink – and the political constituency of those in housing stress and looking for real policy solutions will continue to grow.

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