A leading community housing lobby group has slammed the Victorian Government’s decision not to require mandatory affordable housing to be delivered in new development precincts along Melbourne’s biggest rail project.

The Community Housing Industry Association (CHIA) has warned that the Victorian Government’s decision not to impose mandatory affordable housing contributions on precincts which surround the Suburban Rail Loop East (SRL East) project means that few if any affordable homes will be delivered in SRL East precincts.

CHIA acting chief executive Jason Perdriau said that the decision will have serious consequences.

“Housing is set to boom around Suburban Rail Loop stations as Victoria’s population grows,” Perdriau said in a statement released last week.

“But without mechanisms to build more social and affordable homes, the proportion of housing that is genuinely affordable will go backwards and more Victorians on the lowest incomes will get left behind.”

Set to open in 2035, the $30 billion to $34.5 billion SRL East project will link Cheltenham in Melbourne’s southeast to Box Hill in the east via two 26km tunnels and six new stations.

It is the first stage of the broader SRL project that will link middle suburbs in Melbourne’s southeast, east, north, west and southwest via a 90km orbital rail loop.

As well as the new rail line, the project is expected to deliver up to 70,000 homes as well as commercial, retail and employment space in precincts surrounding the six stations.

Draft structure plans for the precincts were released in March.

Public hearings during which a standing advisory committee will consider these are set to be held next month.

To help ensure that the precincts include housing for the state’s vulnerable households, social and community housing lobby groups had hoped that the government would adopt a mandatory inclusionary zoning policy.

This would have required developers to include a mandatory minimum number of social and/or affordable homes in new housing developments.

However, the government has rejected this approach.

Instead, it hopes to encourage private developers to incorporate housing which is delivered at below market rates within SRL East precincts through incentives which are offered as part of a voluntary Public Benefits & Uplift Scheme.

Under the scheme, developers who include either affordable housing, public open space or other strategic uses of land (such as office space) will be able to benefit through a development uplift.

This will allow them to build to greater densities (and thus sell additional housing) compared with what they would have otherwise been allowed to deliver.

The affordable housing delivered under the scheme will need to be transferred to public or social housing providers at a minimum discount of 30 percent to market rates.

In a response to questions from Sourceable, a Victorian Government spokesperson said that the incentive approach which has been adopted emphasises flexibility.

This will be important in order to address the differing needs and characteristics of each SRL neighbourhood, the spokesperson said.

(artist impression of SRL East Cheltenham precinct. Image: Victoria Big Build)

However, CHIA has slammed this approach.

It warns that a similar voluntary incentive scheme which has been adopted in the City of Melbourne has barely produced barely any affordable housing.

By contrast, the City of Sydney’s mandatory scheme is expected to deliver 3,484 affordable homes by 2036.

Perdriau says this is a missed opportunity.

“Melbourne desperately needs tens of thousands of social and affordable homes. But voluntary affordable housing developer contributions simply don’t work,” Perdriau said.

“A voluntary scheme in the City of Melbourne, that mirrors the one the state government is proposing for SRL East, has not delivered the affordable housing that’s needed. Developers get the same incentive to build office space as they do to build affordable housing. Delivering homes that are affordable for renters is a less profitable choice for developers, so unless it’s mandatory, it won’t happen.

“Mandatory schemes actually work and Sydney proves it with the thousands of affordable homes that are being built because developers are required to contribute.

“It’s great that the Suburban Rail Loop will deliver more homes in well-connected locations, but what’s missing is an effective way to make sure this includes homes that will be affordable for people who are priced out of the private rental market.

“The Victorian government should introduce a mandatory affordable housing contribution scheme in the SRL East precincts. Developers who are building any new housing must either build social or affordable homes within their developments or financially support the construction of social or affordable homes to be built elsewhere.

“Developers are already required to contribute to essential infrastructure like roads, parks, and community facilities yet contributions to social and affordable housing, which is the foundation for a good stable life, remain voluntary.

“This is an opportunity that Victoria can’t afford to miss.”

Enjoying Sourceable articles? Subscribe for Free and receive daily updates of all articles which are published on our site

Want to grow your sales, reach more new clients and expand your client base across Australia’s design and construction sector?

Advertise on Sourceable and have your business seen by the thousands of architects, engineers, builders/construction contractors, subcontractors/trade contractors, property developers and building industry suppliers who read our stories across the civil, commercial and residential construction sector