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RUBY:

From Schwartz Media, I’m Ruby Jones, this is 7am.

Everyone knows we have a housing crisis – rents are spiralling, homelessness is growing and more and more of our income is going to trying to keep a roof over our heads.

But did you know that on any given night more than a million homes in Australia sit empty? That’s more than 10 per cent of Australia’s housing stock.

It’s because the shortage is not in homes, but in affordable homes.

Today, National correspondent at The Saturday Paper Mike Seccombe, on how Australia lost its way on housing – and why the current plan only addresses one part of the problem.

It’s Monday, May 29.

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Archival tape -- Reporter 1:

“Australia's housing crisis is reaching new lows..”

Archival tape -- Reporter 2:

“Before the pandemic, rents were rising on about 25% of properties.”

Archival tape -- Reporter 3:

“The soaring cost of rental properties and lack of supply means some Sydney workers are being forced to live on the streets despite being employed.”

RUBY:

Mike, we've started to hear a lot of stories about a rental crisis in Australia, so stories of people's rent being hiked hundreds of dollars without warning or places being rented out before people have a chance to even go and inspect. And there seems to be a lot of people unable to find somewhere to live and struggling in a way that perhaps they've never struggled before. Those are the stories that are starting to emerge in the media. But what do the statistics actually tell us about what's going on?

MIKE:

Put it this way - before the budget, Anglicare did a study where they looked at the number of places available to rent across the country. They looked at 45,895 in total places listed for rent, and they calculated how many of those places a single person on Jobseeker could afford. And the answer was four, and all four were rooms in share houses. Now, that was before the budget, where the Treasurer Jim Chalmers, raised the rate of jobseeker by a princely $2.86 per day or $40 per fortnight. So after that, Anglicare reran the numbers to see how many single people on Jobseeker could now afford a place to rent. And what they found was five.

RUBY:

Right? So barely a difference then, Mike.

MIKE:

That's right. Out of nearly 46,000 rental properties across Australia, only five were actually accessible to people on jobseeker, you know, which is a tiny amount. And it's not just people on government benefits either. It's also people on low wages. The Anglicare numbers, for example, for people on minimum wage, only 1% of all those rentals were affordable for them. It tells us that yes, there is a housing crisis and although, you know, mortgage holders are feeling the strain of rising interest rates, there's really only a fairly small proportion of those who are in real strife. The people who are really getting screwed by the market are renters, and that's roughly a third of Australians. They're struggling to afford to live in cities where rents have gone up by much more than inflation. A recent CoreLogic report found the annual rent increase in the cities, across Australia's capital cities, was 11.7% in the past year, which is way above inflation, which is, you know, still high, but it's at 7%, rents are going up by a great deal more than that.

So what it comes down to is, you know, record low supply. And in fact Anglicare found that in the study that I mentioned earlier, it was the lowest supply they had recorded–30% less places available at the moment than there were over the pandemic years, for example. So … things are really crook.

RUBY:

Okay. So it sounds like this is really a supply issue. There just aren't enough houses available for rent. And that means that landlords and real estate agents, they're able to advertise for higher prices, knowing that people who rent to a certain extent are just going to have to take whatever it is that they can get.

MIKE:

Exactly Ruby, as you say, people are forced to engage in very unseemly fights, basically to find a place to live. You know, we have huge numbers of people applying for every vacancy. We have places being rented sight unseen because people are so desperate to get them. We have agents forcing people to engage in bidding wars, to get places. It's terrible.

RUBY:

Why is it that we're facing this record low supply of housing right now?

MIKE:

Well, that's the key question, isn't it? And it depends on who you ask. I mean, if you listen to the federal coalition, if you listen to Peter Dutton, they blame migrants. And I should say they're not the only ones saying that. But, you know, the opposition has the loudest megaphone and Peter Dutton keeps hammering it hard.

Archival tape -- Peter Dutton:

“Amidst the housing and rental crisis, our migration numbers will increase massively by 1.5 million people over just five years, the highest number in our country's history and more than the population of Adelaide.”

MIKE:

And he's right. Australia is facing the highest number of migrants arriving in our country's history.

Archival tape -- Peter Dutton:

“And the Government is now proposing to bring in almost 6000 people per week, which will make a very bad situation even worse.”

MIKE:

Dutton has a point, but it's far from the full picture and I think it says more about the deep seated insecurities about foreigners that are inherent in conservative ideology than it does about our housing crisis.

RUBY:

Ok well let’s unpack what’s actually going on with migration then. How does Peter Dutton’s argument stack up when we look at what impact migration is actually having on housing and the economy?

MIKE:

So a couple of key points. First one, without migration, Australia would soon become a smaller, older and according to most analyses, poorer nation. Without migration, our population would start to shrink in about a decade as a result of the fact that our fertility rate has long been well below replacement levels. Second, the high net overseas migration numbers in this year's budget, that is 400,000 this financial year and 315,000 next year, really amount to playing catch up. But something that should be said here is that the overall numbers are essentially the same as the previous coalition government was planning on saying, you know, essentially Labour's only doing what they would have done anyway.

The twist on this is that it isn't really an issue of a lack of homes in general. It's an issue of a lack of affordable homes. In fact, there are plenty of homes. Trouble is, many of them are empty. On census night in 2021, more than 10% of dwellings, more than a million homes, were unoccupied. Now, there were many reasons for this. Some had been sold, but the new owners had not moved in. Some were being renovated, some were owned by people who are travelling, etc. Some homes were being landbanked, that is, they were being held vacant until they could be sold or redeveloped and many more–and this is very important–were second homes for wealthier Australians. They were our beach houses, our country places, you know, our places in the ski fields. It's not that there's a lack of places to put people. It's just that it's very unequally distributed.

RUBY:

We'll be back after this.

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RUBY:

Mike, we were talking about how it’s not so much there isn’t enough housing – it’s that there’s not enough affordable housing in Australia. So, if the real issue here is a lack of affordability, where does that trend begin? When did Australia start to have less affordable homes available for people?

MIKE:

Well, I think you could say the seeds of today's crisis were planted about 40 years ago. I mean, part of the story there is negative gearing, which has existed for a long time. But what really lit a fire under the property market in the eighties and nineties was the Howard Government's halving of the capital gains tax in 1999.

Archival tape -- John Howard:

“What's the answer? The answer is simple. Get rid of it. Get rid of the capital gains tax. …the moment we are elected we will move to abolish the capital gains tax.”

MIKE:

And it also, combined with the liberalisation of mortgage finance rules, which made it easy to get a loan and suddenly for wealthier people, housing became a great investment, not just a place to live.

The general rise in income and wealth inequality also led to those wealthier Australians simply taking up more space. You know, second homes, bigger homes, holiday homes. And then, of course, more recently we've had the Airbnb phenomenon.

Instead of renting out houses on the long term market whereby they go to lower income earners, they are rented on the short term market at a premium.

The other one is, of course, that at the same time as we were liberalising the private sector to get more and more into providing housing, the government pulled out of public housing. The government used to build an awful lot of houses itself and instead of that they came to rely on the private market to provide places for people to live on low and no incomes in cities and in regional areas.

RUBY:

And the federal government, they do have a plan that they say will address this. The Housing Australia Future Fund, which is currently stalled in the Senate. But let's talk a bit about how fit for purpose it is. It does aim to address supply, but does it go far enough and is it the right kind of housing supply?

MIKE:

Well, it's an interesting way they're going about it.

Archival tape -- Anthony Albanese:

“I'm proud to say that Labour in government will create a $10 billion Housing Australia Future Fund with the annual investment return to build social and affordable housing and create thousands of jobs."

MIKE:

What they plan to do is invest $10 billion, not spend it off the budget, but invest it and then use the returns on that investment, which they calculate to be around $500 million a year. That would then be channelled into social and affordable housing. And via this scheme, the Albanese Government claims it could build about 30,000 social and affordable houses in five years and that number rises to 40,000 if you consider some more that would be built under something called the National Housing Accord, which has been reached with the States. As you say, that proposal is now stalled in the Senate. And oddly enough, it's been blocked by the conservative parties for no clearly articulated reason, except that they've long preferred to leave the provision of housing to the private market. And the Greens, who say that Labour should be doing much more.

Archival tape -- 10 News:

“The Greens are threatening to derail one of the Albanese government's signature election promises to address the housing crisis sweeping the nation. The crossbench and advocacy groups say it doesn't go far enough.”

MIKE:

The Greens argue that the fund has no floor, so it could well return less than forecast depending on the state of the market. It won't return any more than is forecast because the Government has capped it. The Greens are, you know, clearly not happy with this and I think they have a pretty strong point and they're open to negotiation. But essentially they say the government should be spending ten times as much if they're going to address the real need out there. So, you know, assuming they're saying the government should be spending $5 billion, seems like a big sum of money. And then you consider that the government is preparing to spend on the stage three tax cuts, $313 billion over a decade, and half of that would accrue to people earning more than $180,000 a year. So the top few percent of the income scale, you could build an awful lot of homes for a fraction, just a fraction of that 313 billion. The question, I guess, is would the government prefer to see that money go into providing holiday homes for the wealthy or affordable homes for the struggling.

RUBY:

Yeah, and Mike, the Housing Future Fund, I mean, it could be improved. It could be more generous. But no matter what form it does take, it's a solution that really only addresses one part of the housing equation, which is supply. So is this kind of what we're left with here in Australia, political parties fighting over how much supply they can build and what type instead of anything that would fundamentally redraw the relationship that Australians have with property as a way to accumulate wealth?

MIKE:

Well, I think you're entirely right. They're doing nothing to change the way we look at housing. The two elections before the one last year, Labour proposed measures to wind back negative gearing and capital gains tax discount and they lost. And as a consequence of losing, they jettisoned those policies. Now they do have other housing policies that aim to encourage big investors like superannuation funds to build more housing to rent. But it's still all about incentivising the private sector to do all the heavy lifting. From the end of World War Two until the 1980s, governments built houses themselves and at some point 20 to 25% of new home construction was being done directly by the Government. It just seems to be the case, and this is a point that has been made by a number of people in the sector, that there are certain things that the private sector just doesn't do well and one of them is providing affordable housing.

RUBY:

Okay. And I suppose, you know, as we wait to see whether the Future Fund actually goes ahead or not and what else happens with our housing market, there isn't really an end in sight for those who are renting at the moment is there, who are facing spiralling rents and in some cases are not able to find a rental property?

MIKE:

Well, yeah, I struggle to see an end to this, I've got to say. At the moment we have a shortfall of about 640,000 social and affordable houses and the government is not spending anywhere near enough to get anywhere close to addressing that need. So we've got about 400,000 people on waiting lists around the country and a lot more people who just aren't even bothering to join the waiting lists because they know they'll be on them for, you know, ten years. I hate to say it, but I don't see any solution in the immediate future.

RUBY:

Mike, thank you so much for your time.

MIKE:

Thank you.

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RUBY:

Also in the news today:

The European Union has revealed twitter is pulling out of its voluntary code for tech companies to combat fake news.

The code includes commitments to demonetise the spread of disinformation and guarantee transparency of political advertising.

However, the EU has already passed new mandatory regulations against disinformation that twitter will have to comply with – they begin on August 25.

And

1,579 people were arrested in the Netherlands over the weekend, during a climate protest on a motorway to The Hague – it’s the largest number of arrests during a months long campaign over climate action.

I’m Ruby Jones, this is 7am. See you tomorrow.

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