No Solutions: The Australian Labor Party and the Housing Question

18/05/2022

Dan Kelly

The No Solution series analyses and critiques the policies of the different political parties in the 2022 Australian Federal Election. It seeks to highlight the issues within the proposed solutions of these parties, to demonstrate how they refuse to address the root problems of housing. The material presented critiques the flaws within these policies, and provides solutions that address the needs of the Australian population in relation to the housing crisis.

Setting the Scene

As Labor rolls into the 2022 election after years in opposition, they are facing a grave task of dealing with the never-ending housing crisis impacting the majority of Australians. Accompanying Labor’s proposal is the often repeated personal tale of the leader of the Opposition, Anthony Albanese. Albanese is always quick to mention that he was raised in public housing that the government provided to his single mother who was on a disability pension at the time.

Yet, rather than pursue a stable social housing policy similar to the one he benefitted from and which has been lacking in Australian politics for decades, Labor has instead opted for a convoluted market-based approach that leaves most working people behind.

Labor, much like the Coalition, has discounted broader measures that would assist the majority of people on low and middle incomes in favour of two major policies that promote private profit out of the housing crisis working Australians face.

So What Do They Propose?

This approach by Labor is centred on two main proposals, which apply half-measures and shaky policies to slightly alleviate the housing crisis for a handful of Australians, while leaving the rest behind. The two main elements of their program are the Housing Australia Future Fund and the Help to Buy Scheme.

Housing Australia Future Fund

The Housing Australia Future Fund (HAFF) is a part of Labor’s Safer and More Affordable Housing policy, which in and of itself applies weak, band aid approaches to systemic and entrenched issues that have brought about the housing crisis for working Australians. The policy would work to build slightly more social housing, upgrade some existing social housing, and seek to extend the ‘promise of home ownership’ to a handful of Australians.

According to Labor, this scheme could build 30,000 new social and ‘affordable’ properties over the first five years, and in the process could support, not create, 21,500 full-time jobs across the construction industry and ‘broader economy’ for each of these five years. Of these 30,000 properties, 20,000 would be social housing, 5,000 of which would be set aside for women and children fleeing domestic violence, as well as older women on lower incomes at risk of homelessness. The other 10,000 would be for frontline workers such as ‘police, nurses and cleaners’ so that they may live closer to where they work.

Now, the most interesting part of the HAFF is how Labor plans to fund it. Labor will first borrow, and then invest $10 billion into the National Housing Finance and Investment Corporation (NHFIC). The NHFIC represents the peak of the Australian bureaucracy, as it is chaired and led by a selection of vultures from Mirvac, Lendlease, the Liberal Party and other proponents of privatisation and predatory real estate practices. The unscrupulous professional backgrounds of these individuals, and their ideological focus on privatisation and profit, is reflected in how they expect to fund Labor’s plan.

Labor will take the borrowed $10 billion and use the NHFIC to invest it in large multinational companies such as Apple, Microsoft and the Commonwealth Bank. If returns are gained from these ‘investments’ (or gambling, to be more clear), this money will then be put towards the projects Labor has promised. Of course, Labor won’t build these houses themselves, but instead will funnel this money into problematic and predatory community housing providers.

Researchers and advisers from independent bodies have noted that rather than pursuing this convoluted process, Labor could fund the modest project at just $450 million a year. Furthermore, researchers have noted that if Labor must gamble with these investments, then they could at least invest in relevant businesses where the government could acquire majority shares in the interest of the Australian public, such as Telstra and private bus companies.

Help to Buy

The other main policy the Labor party has announced to purportedly address the housing crisis is its $329 million “Help to Buy” housing initiative, based off of existing policies in place in Victoria and Western Australia. This policy, touted by Labor to assist low and middle income Australians to buy houses, is another convoluted and complex scheme that doesn’t actually address the issue.

The proposal would allow a mere 10,000 homebuyers to apply for a commonwealth contribution, that would see the government contribute up to 40% for new homes and 30% for an existing home, intending to raise income for the government through their share once the properties are sold off in the future. However, to qualify for the 10,000 positions is a slog. Individuals must have a taxable income below $90,000, and couples $120,000, but they must have saved a deposit of 2% and qualified for a standard home loan to be approved. Government support for a tiny minority of the people looking for a home, and people who already qualify for a loan at that, is not the kind of radical action Australians need. In fact, this move is so feeble that Scott Morrison advocated for the scheme as early as 2008 and only dumped it in 2017! And they say Labor isn’t Liberal Lite.

Conclusion

The ALP is offering Australians an umbrella in the middle of a hurricane. Sure, it’s better than nothing – but not by much. Labor will introduce a policy that will work primarily to line the pockets of bureaucrats and uphold a current Liberal policy that will help 10,000 Australians buy or pay off their home. These are simply not enough to meet the needs of working people in this country. Instead, people need radical changes.

Firstly, Australia’s social housing stock is depleted. We need 100,000 extra social housing units as it currently stands. The current stock is 430,000 dwellings, a decline from 6% in 1991 to 4% in 2021.  Over this period the population has increased by 33%, but the social housing stock has barely moved. Even if the scheme were to work at the level Labor predicts, and was inevitably used to cover debt interest costs, the $500 million a year left over could construct 1,700 new social housing dwellings each year. This amounts not to the 30,000 Labor is promising, but a mere 8,500 over 5 years. This is an improvement over the current situation, as in the last 5 years only 1,600 social housing homes have been built. Nevertheless, it is still not enough.

To put it in perspective, even if the government were to build the 100,000 dwellings that are in urgent need right now, more than two thirds of low-income Australians would still be left to suffer at the hands of the private rental market. Labor’s approach is flawed as it is not based on putting the interests and needs of the community in the hands of a government that represents their interests and upholds their rights. Rather, it sees these corrupt, professional bureaucrats put this serious issue in the hands of predatory, profit-obsessed capitalists.

The lack of focus on major public housing construction is an issue. A median low-income social renter spends 24% of their income on rent, compared to 37% for a typical low-income private renter. Labor’s policies would build only a tiny amount of new social housing. Furthermore, it upgrades but a fraction of the existing social housing that is in vast need of repair, and prioritises home ownership for the few that can afford it or can afford to put themselves in debt for it.

These policies fail to address the needs of the millions of renters and people that are in insecure work and without savings. With the bare minimum it does commit to, it relies on gambling and the private market. The fact of the matter is that Labor doesn’t want to solve the housing issue. It wants to funnel money back into the hands of their bureaucratic mates, and keep it to business as usual in Canberra. They will never put the interests of Australia’s working class before their own financial interests and careers. Don’t be fooled by a fake alternative. Under the current capitalist government in Australia, the working class may be offered crumbs from the tables of the rich, but there will be no true solution to the housing crisis.