Urban planners, architects and academics across Australia have come under attack as the Government MP who presided over an inquiry relating to housing affordability has launched scathing remarks against those who downplay the role of supply-side measures to tackle affordability challenges.

But the planning industry has struck back, accusing the MP of taking cheap shots and failing to provide a coherent blueprint for resolving Australia’s housing affordability crisis.

In an explosive foreword to the House of Representatives Standing Committee on Tax and Revenue’s report from its inquiry into housing and affordability released on Friday, Committee Chair and Coalition MP Jason Falinski launched a scathing attack on academics and members of the urban and town planning industry who have argued that the focus on housing affordability issues needs to extend beyond simply adding additional housing supply.

Based on feedback during submissions and inquiry hearings, Falinski characterised housing policy debate participants into two ‘tribes’.

“The first tribe consists mainly of planners and academics, who believe that the problem is the tax system which has turned housing into a speculative asset, thereby leading to price increases,” Falinski wrote in his foreword.

“Furthermore, this tribe believes that home ownership is an overstated social good and people should instead allocate their financial resources elsewhere and concentrate on secure long-term rentals. ‘Mum and Dad investors are the problem’, ‘we need more institutional capital from Big Super’, and ‘increasing supply raises prices, unless the supply is public housing’ are this tribe’s common epithets.

“This tribe has largely run Australian housing policy for the last few decades, presiding over the greatest price rises in recorded history.

“The second tribe believes that planning, the administration of the planning system and government intervention have materially damaged home ownership in Australia. This group notes that while the rental property market matters, home ownership has significant positive externalities that provide real social benefits.”

In an address to the Urban Development Institute of Australia last Tuesday prior to the report’s launch on Friday, Falinski doubled down on his attack – this time including architects in his line of fire.

“I want to say on this inquiry, we had a lot of people coming in and saying, ‘if you want to reduce prices and therefore improve affordability sustainably over the long term, you need to create a framework in which we can build more dwellings,” Falinski told the audience.

“And then you would have some well-known people who are frankly in charge of the housing market in Australia like planners and architects (and) people who are university professors who would literally come into the inquiry and say, ‘we don’t believe that supply has any relationship to price’ and indeed argue on various occasions that increasing supply will lead to increasing prices.

“That goes against every known economic model and every known econometric study into this issue.

“I felt really let down throughout that process.”

(Author note: Based on more than a decade of covering the building and construction sector and conducting extensive interviews with a wide range of stakeholders over that time, this author believes that Falinski’s characterisation of what planners, architects and academics actually argue and believe is partly misleading.

Contrary to Falinski’s assertions, many planners and academics have stressed to me personally that they are NOT opposed to measures which will unblock additional supply. Rather, they have pushed back on the notion that simply adding more supply will solve affordability challenges and in off itself and have argued that the focus of measures should extend beyond simply adding more supply.)

Falinski’s comments come as the report included sixteen recommendations.

Largely speaking, these are focused on unlocking additional housing supply by alleviating the tax burden on new housing and improving the efficiency of planning, development assessment and approval processes.

The recommendations also focus on establishing a framework for alignment between all levels of government (Commonwealth/state/local) in delivering housing and planning outcomes.

They include recommendations that:

• State and local governments increase urban density in suitable locations along a framework being trialled in Europe that would enable communities to negotiate higher density in return for better infrastructure and more convenience.
• The Commonwealth provide incentive payments to reward state and local governments who enact better planning policy and better administration of that policy. This could include streamlining of approvals or bringing infrastructure contributions into line with social costs such as value capture and sharing.
• The Commonwealth introduce a grants scheme to pay states and territories for delivering more housing supply and affordable housing.
• The Commonwealth provide grants and subsidies to states to increase the supply of critical housing such as crisis housing.
• The Commonwealth work with the private sector to deliver discounted rent-to-own affordable housing.
• The Commonwealth develop and implement policy which allows first home buyers to use their superannuation balance as collateral for a home without using the funds themselves as a deposit.
• State and territories replace stamp duty with land tax.
• The Commonwealth work with state and territories to reform developer contributions to ensure that funds raised through these are indeed used to fund infrastructure which is needed. This could be through replacement with a value capture model or by ensuring that developer contributions can only be expended on their intended purpose.
• The Commonwealth continue to support NFIC’s concessional loans to infrastructure projects and community housing.
• No changes be made to taxation settings regarding negative gearing.

The report was rejected by Labor members of the committee.

In a dissenting report, Labor members said the inquiry focused too narrowly on supply and failed to address structural issues in the market.

As outlined in the report, challenges facing Australians in securing affordable housing to either or rent have grown in recent decades.

In terms of ownership, an increase in the ratio of house prices to income from four times in the 1980s to more than eight times today (refer p27 of the above report) has meant that for many, home ownership is now a distant dream.

On rents, more than half of all lower income Australians suffer from rental stress (spending more than 30 percent of income on rents) whilst one in five working-aged households who rent are forced to skip meals, obtain help from charities, sell personal items or forego heating in order to meet budgets (report p22&23).

The report also comes as forecasts from the National Finance and Investment Corporation suggest that on current trends, the nation will build more homes than is necessary to keep pace with new housing demand between now and 2024 but is likely to under build from 2024 onward until at least the end of its forecast period in 2032.

Falinski said the importance of new supply opportunities should not be underestimated.

In particularly, he sees opportunities through greater density along transport corridors, improvements in land releases and for better facilitation of movement into rural and regional areas.

Moreover, he says there are substantial challenges not only with the planning laws themselves but also how these are currently administered.

He points to several examples contained in inquiry submissions, which include:

• People needing to wait six months for approval to alter the timber used in external staircasing
• Six different approvals being required for a drainpipe
• A builder having been stuck on a project for more than a year as the council was refusing permission to move trees on the basis that they could be used as koala habitat but the fire department was arguing that the trees should be removed to create a corridor of reduced bushfire risk.

These inefficiencies can be seen through broader examples as well.

In Coffs Harbour, Falinski says the waiting time for land rezoning is seven years.

In Ballarat, multi-year timeframes apply to approval of development applications.

In the Pilbara, a shortage of housing had emerged despite the widespread availability of land on account of steep taxes and levies on development along with long waiting times for development approvals.

Developer lobby groups welcomed the report – some joining in Falinski’s attack on planners and academics.

Tom Forrest, CEO of the Urban Taskforce, a NSW-focused developer lobby group, says the housing market has been captured by ‘economically illiterate planning academia’.

“The Report cuts through the self-serving sophistry of those public servants, local government planners and academics who have created a well-paid industry around regulation,” Forrest said.

“The Report pins the responsibility for rising prices and the lack of supply, on poor planning, poorly targeted taxes and charges, a lack of leadership, and a regulatory environment which favours reducing supply and increasing costs over meeting demand for housing with housing supply for our growing population.”

Forrest particularly took aim at any notions that additional construction of social housing should take focus over increasing affordable supply in the private housing market.

He points out that the private market accounts for 98 percent of all new homes are developed and delivered.

“If housing supply was depicted as a dog, social housing would be the end of its tail,” Forrest said.

“The dog (housing supply) is sick.

“Affordability has gone through the floor. You don’t cure the dog by supplementing its tail.”

But the planning industry has responded angrily, accusing Falinski of taking ‘cheap shots’ and failing to recognise the role of effective planning in creating spaces which are vibrant and meet the needs of residents.

David Williams, chief executive officer of the Planning Institute of Australia, said that many of the recommendations simply outline effective planning practice and stressed that planners welcome any moves to improve Commonwealth/State/local collaboration and coordination.

However, Williams said that many of the recommendations were disjointed.

He says the recommended actions would have much greater impact if they were part of a national settlement strategy which guides how Australia manages growth, population and housing in a coordinated manner.

In addition, Williams expressed disappointment about the committee’s recommendation to remove debate around negative gearing.

He says that the full range of policy solutions need to be considered – not just those which are politically palatable.

“Unfortunately, this report fails to provide a coherent blueprint for solving Australia’s housing affordability crisis and is more focused on playing a blame game rather than understanding the issues in our housing market,” Williams said.

“Our housing affordability crisis is an urgent issue for the Australian community and requires more comprehensive solutions than this report provides.

“Unfortunately, the Chair of the Inquiry has been more interested in taking cheap shots at planners instead of recognising the vital role of good planning in creating places that are nice to live in and valued by residents.”