There has been a lot of talk about homelessness in recent months.

Everyone in the Federal Coalition (apart from the former Member for Mackellar, Jason Falinski) completely misunderstood the housing supply and affordability problem and went to the last election with a commitment to allow new buyers to use their superannuation funds.  Without a plan for increasing housing supply, all this would have done is further push up the cost of housing.

The Coalition correctly stated that housing supply is a responsibility of the States, regulated through their respective planning systems.  However, having said that, they refused to do anything about it.

In the meantime, a perfect storm has emerged and the victims were (and are) those who are most vulnerable.

• Planning approvals for new homes dropped off and have stayed low (you can’t build without a planning approval)
• New housing supply dropped off
• Construction costs rose dramatically shortages of labour caused by the COVID-related negative migration rates over 2.5 years the cost of structural steel went up (critical for apartments) as supply from China became unreliable along with difficulties securing shipping services the cost of timber went up (critical for free standing homes) because of bushfires and floods the cost of logistics (petrol price rises and shortages in truck driver numbers)
• The housing supply crisis spread to regional NSW and across Australia
• New fees and charges were applied to new homes, pushing prices further and further upwards
• Interest rates have risen (increasing costs while government and council planners prescribe a mountain of consultant reports), but have had only a minor impact on prices because of ongoing shortages in supply.

This unique combination of factors has resulted in lower end housing stock becoming extremely attractive options for purchase by relatively rich sea changers and tree changers departing the big cities.  That is all well and good for those who can buy the home and renovate, but it has a devastating impact on the rental stock.  This pushes rental prices up and bingo – you have a homelessness problem.  It is all very well for the Prime Minister to propose additional height and higher density in regional locations to ease the housing supply pressures – but it is the States who have the legislative responsibility for this policy space.  This highlights the need for direct Commonwealth action to drive the States on this critical area of their collective failure.

The knee-jerk reaction to increasing homelessness is to leap towards additional expenditure on social housing.  There is certainly a need for greater numbers of social housing and the Commonwealth has a key role to play here.  But this is a potential bottomless pit.  If the Commonwealth keeps stepping in to deliver social housing, there is no incentive for the States to improve their planning systems and deliver more market housing supply.  If supply numbers remain low, with the return of even higher numbers of migrants than were arriving pre-COVID as is now anticipated (visa processing catastrophe notwithstanding), the homelessness crisis and demand for crisis accommodation will continue to rise.

There is a desperate need for an increase in all housing types along with anything that government can do to reduce fees and charges.

Governments (and State Planning Ministers in particular) need to appreciate that any new regulation, any change to design rules, and new process, always comes with a cost and delay, no matter how well intentioned.  Increased costs and delays in obtaining approvals damages the feasibility of proceeding with many projects so new housing is simply not built.  In the meantime, supply falls short of demand, prices go up, rents are increased, homelessness grows.

Urban Taskforce has worked with the development community to propose a feasible scheme which would deliver tens of thousands of new affordable homes.  If development applicants were given ADG flexibility or increased density or height bonuses in exchange for providing affordable homes commensurate with the additional yield arising from the bonus, and these homes were made available for 10 years at a 20 percent discount in rent for key workers or any group deemed appropriate by the Government of the day. This would be feasible, sustainable and attractive.  At the end of the ten years, the dwellings would return to the developer – but these would be replaced by new housing stock through the same scheme as new projects are developed.  Such a scheme would not cause additional burden to new home buyers (unlike the current affordable housing levies which ironically increase new home prices and drive down supply by rendering developments unable to pass the banks’ risk assessment and funding reviews).  This is just one example of the myriad of solutions that could be considered when government and planners are prepared to work constructively with the private sector.

Urban Taskforce has recently been advocating for amendments to the taxation treatment of build-to-rent apartments to make them more attractive to Australian superannuation funds.  Tax issues notwithstanding, the same concerns that developers have with the risk of obtaining a timely development approval has made investment in housing a no-go option for most Super funds in Australia.  The past week has seen a number of the CEOs of Industry and private super funds come out and slammed the high planning risk associated with investment in property – and this falls primarily at the feet of planners.

Homelessness is a blight on any civilised society.  Emergency accommodation and social housing are critical and must be supported.  But so too the cause must be addressed.  The failure to ensure that supply meets or outstrips demand for housing has had dreadful consequences.  The impact is felt most acutely by single women, the unemployed, First Nation communities and all those in the cohorts of lower socio-economic status.

The best thing that the planning communities across Australia could do to assist these groups and reduce homelessness is cut the red tape and work hard towards a faster and more productive planning system generating vastly increased numbers of planning approvals.  Sadly, without Federal support or pressure, I can not see this happening.

By Tom Forrest, CEO, Urban Taskforce Australia