27 January 2011
Today’s decision to dramatically wind-back the National Rental Affordability Scheme (from a foreshadowed 100,000 homes to just 35,000 homes) and the halving of the Building Better Regional Cities Program leaves the Federal Government without a clear approach on more affordable housing, according to the Urban Taskforce. The Taskforce’s chief executive, Aaron Gadiel, said that re-building flood-affected communities is clearly vital, but it shouldn’t come at the expense of a coherent federal housing strategy.
These two programs were originally announced to demonstrate the Commonwealth’s commitment to addressing the housing supply shortfall, Mr Gadiel said.
These programs were symbolically important, but always lacked sufficient funding.
Nonetheless, they served a useful purpose, because once in place, they could have been gradually increased as part of a broader federal solution to affordable housing problems.
Instead the government has elected to cut back funding to comparatively paltry levels.
When the National Rental Affordability Scheme was launched in 2008, the Federal Government said that the scheme aimed to create up to 100,000 new affordable rental properties across Australia in the next 10 years.
Now the scheme will deliver just 35,000 homes and the priority for the remaining 13,000 homes built will be for disaster relief, rather than improving the housing supply, Mr Gadiel said.
The Building Better Regional Cities Program was one of the governments first election promises in last years federal election.
The $200 million scheme was supposed to give participating councils new funding to invest in local infrastructure projects that support new housing developments, such as connecting roads, extensions to drains and sewerage pipes, and community infrastructure such as parks and community centres.
This scheme was supposed to see up to 15,000 more affordable homes in regional cities over three years, but we can expect that this number will now be halved. Mr Gadiel said the ease in which these programs have been cut-back was disappointing.
If the governments small, but symbolic, housing affordability programs are to be chopped, what hope can we have that the major issues will be addressed? he asked.
The Federal Government should now move urgently to demonstrate that it is just as passionate about addressing the housing undersupply as it was when it was first elected in 2007.
If this isnt to be achieved through these programs, then the government should quickly articulate its alternative strategies.
Mr Gadiel said a good place to start would be the release of overdue papers commissioned by the Council of Australian Governments (COAG) in April last year.
The COAG tasked a Housing Supply and Affordability Reform Working Party to report back to the Council by mid-2010 on:
¢ the potential to reform land aggregation, zoning and planning processes;
¢ nationally consistent principles for housing development infrastructure charges;
¢ the merits of measures to ensure greater consistency across jurisdictions, including local government planning approval processes, in the application of building regulations; and
¢ extending the land audit work to examine ˜underutilised land and to examine private holdings of large parcels of land.
Further reports were due by end-2010, these included:
¢ the efficiency and effectiveness of housing supply/land release targets;
¢ government policies that may act as barriers to supply;
¢ the impact of both Commonwealth and State energy efficiency regulations and environmental acts, including the Environmental Protection and Biodiversity Conservation Act 1999, on house prices (by end-2010); and ¢ the impacts of titling systems (such as residential strata title arrangements) on the housing supply market.
“These reports flagged the start of a serious process of microeconomic reform around town planning law, Mr Gadiel said.
Yet the reform push seems to have stalled none of them have been released.
Our national housing shortfall is more than 178,000 homes, with a projection for it to grow to 308,000 dwellings over the next four years.
Mr Gadiel said the shortage makes housing more expensive than it needs to be.
A massive 37 per cent of low-income renter households are officially in rental stress ” that is, they are paying more than 30 per cent of their gross household income in rent, Mr Gadiel said.
Just 28 per cent of homes sold are currently affordable to moderate-income households.
Were seeing increased homelessness, overcrowding, and adult children remaining at home for longer periods.
There have been repeated indications from the Reserve Bank that interest increases are partly a response to the recent strong residential property price growth, linked to constraints in the supply of housing.
In November the Organisation for Economic Co-operation and Development highlighted the serious medium term risk our economy faced as a result of restrictive planning laws and inefficient infrastructure charges on new homes.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
