Just as Thursday's Labor-organised Housing Affordability Summit appeared to be reaching some sort of consensus, a plain-spoken charity worker rose to make a statement.
“We have been talking today about strategies, and St Vincent de Paul thoroughly agrees,” John Wicks said. “We put out a paper last week with a lot of those points in it.”.
“But the fact is that is there are thousands upon thousands of homeless families right now in crisis. The question is: What are you all going to do about it?”
“It's a bit like talking to a starving man in the street and saying, 'don't worry fella, we're developing a strategy and in one year we will have a complete bread supply strategy, and that will fix your problem in a year's time'”.
“What are we going to do about the crisis now?...
“As I kid I was bombed out three times in London, so I know what it is like to go around without having a roof over your head. In London they set up demountables. But they didn't have a city of a thousand - a ghetto. They had a bomb site and three or four went there, two miles away another bomb site.” “In Australia we've got millions of half acre blocks, all over the place. We've got a very good demountable industry. You can go down to Sydney and buy one for $12,000 to $15,000 second-hand. Why can't we - in the short-term, I am talking about dealing with people now - put some demountables on these? Those people would never own the land, they would pay a rent and it would go to the owner. When they left to go into public housing or affordable housing as priorities, the demountables would be taken away.”
The incident both jarred with and underlined the consensus that had been emerging at the Parliament House Summit. After some early talk about middle-class housing affordability (the sort of concerns that politicians use to win votes and publishers use to sell newspapers) the conference moved on to the much more important problem of people for whom housing is next to unaffordable or unattainable.
One of the first speakers, the ANZ Bank's Saul Eslake made it clear that when it came to middle class affordability, the house had bolted. He said that the late 1980s the problem for middle-income buyers was largely caused by high interest rates. The solution - lower interest rates - was something to which no one could possibly object. This time the problem had been largely caused by high housing prices. The 'solution' - lower housing process - would make the bulk of Australian households worse off.
Prices had jumped because buyers could now afford to borrow more and because of an “ill-advised” government decision in late 1999 to halve the headline rate of capital gains tax. It turned negative gearing from a strategy that only deferred tax to one that permanently cut it. The resulting rush of investors into property pushed prices up to a higher plane.
But despite Kevin Rudd's invitation to the 100-odd guests at the summit to “walk on the wild side”, it was clear that he had no enthusiasm for removing the tax concessions that have contributed to the mess (negative references to them appear to have been airbrushed out of the Labor document prepared ahead of the conference). So attention turned to the sort of things that could be done.
What astonished me as I sat behind Kevin Rudd at the summit was the way in which the developers, welfare workers, financiers and academics who spoke moved toward agreement on what needed to be done.
What impressed me even more was that the Labor leader - most likely Australia's next Prime Minister - stayed for the entire summit, listened intently, asked questions and indicated in his summing up that he had understood and drawn lessons from the consensus that emerged.
At least one million Australians fit the definition of housing stress, and around 100,000 sleep rough every night.
As the relevant Commonwealth Minister Mal Brough confirmed at a press conference more than a thousand kilometres away in Brisbane while the Labor's summit was underway there has been a woeful lack of public investment in public housing. There are now fewer such houses than there were ten years ago.
South Australia's Housing Minister Jay Weatherill lamented that public housing used to be provided almost universally. At one point 15 per cent in the houses in South Australia were publicly owned. Darwin and Canberra were built on public housing. But then government's got frightened about debt, sold many of the houses and introduced extreme targeting. This meant that only the really disadvantaged could get into public housing, it became stigmatized. It became no longer possible to cross-subsidise it by charging market rates to better-off tenants.
Adrian Pisarski from the peak body Shelter said that what was needed was a broader concept he called “social housing” - aimed not only at high-needs people but at people who were merely stretched and some who had no difficulties with repayments.
Significantly he said this should be privately provided in return for an explicit Commonwealth government subsidy. At the moment Commonwealth rent assistance is paid to tenants and finds its way only indirectly to landlords.
Speaker after speaker said that what was needed to reinvent the idea of low-cost housing was “scale” - massive mixed housing developments to be privately built in return for very straightforward subsidies - one subsidy for a 20 per cent reduction in market rent, another for a 30 per cent reduction, and so on.
A 20 per cent reduction in market rent may not sound like much, but to a person on a low income whose rent would otherwise take up most of what they earn it can make a big difference.
Hamish MacDonald of the Becton Property Group is already developing such a project in partnership with the NSW government, Westpac, Spotless Property and St George Community Housing at Bonnyrigg in Sydney. The $700 million development will provide 900 houses and possibly double that number down the track. He is considering similar projects in Melbourne and Canberra.
He said that low income housing was expensive to maintain. It is not always certain that the rent will be paid, and his partner organisations often need to work with the tenants on issues such as employment to get it paid. As well investment bankers are reluctant to lend for such projects believing that “poor people trash houses”.
The rents Becton will get from the developments will only pay for the running costs. It will get its profit from government subsidies. The more straightforward and the more certain those payments are, the easier he will find it approach other financiers.
Australia's superannuation funds are an obvious source of funds. But the final speaker, Garry Weaven of Industry Fund Services brought what the Labor leader Kevin Rudd later described as a “refreshing brutality” to that notion.
Super funds are in the business of making money for their members. He said the industry funds that he assists have made an average of 10 per cent per year for the last 10 years. It is not a record he is about to give up just to help fund the sort of housing that governments have been reluctant to fund.
As a rule rental housing was “not attractive to super funds”. It was complicated to manage, the returns varied and it had no scale.
However, very big projects with guaranteed government subsidies over very long timeframes could well suit the funds.
Super funds need massive scale and so does low-income housing. While the returns from subsidies for low income housing may not be great, if they could be made stable as a result of guaranteed long-term contracts they could be valuable to funds as a low-risk part of their asset mix.
That became the basis for an agreement on some sort of solution to Australia's low income housing crisis and Kevin Rudd seemed genuinely excited by it.
In closing, he promised not only to install Australia's first Commonwealth Minister for Housing as he had previously announced, but to consider naming that person the Minister for Housing Affordability and giving him or her Cabinet rank. He couldn't have known that as he was making that promise, much further north in Brisbane, Australia's present Minister responsible for housing, Mal Brough, was saying the same sort of thing. “Clearly, more of the same won't work. It will not help those in need,” the Minister said.
Mr Brough called for immediate expressions of interest from governments, non-government organisations and major builders and financiers about how the Commonwealth money directed at housing could be used better.
It is a result that may not have been achieved without the Summit. That both the Government and the Opposition are now thinking about new ways to get Australia's most vulnerable citizens into secure housing, and appear to be thinking along the same sort of lines may be this week's lasting legacy.
