JESS:

I guess I'm an eternal optimist and I was sort of shocked when I had this opportunity to hang out with a bunch of 13 and 15 year old girls. And they were doing this project on, on writing a story about the future or set in the future, and every vision of the future they had was so dystopian. It was so depressing.

ANGE:

Jess Scully is someone who thinks a lot about the future.

JESS:

They would have been living through the pandemic, They would have experienced some really extreme lockdowns in different parts of the country. And then living in this cost of living and housing crisis, which has made a lot of people feel really uncertain about the future, disconnected from the places that they live and feeling like they're completely disempowered and don't have anyone representing their interests.

ANGE:

Jess wrote a book called Glimpses of Utopia, which is about imagining a better life for all of us. It talks about the courage and political will of improving our world - and that a fundamental improvement we need to make is in housing.

[Theme Music Starts]

JESS:

The fundamental idea of housing as a human right, I think it shouldn't be utopian, but it is. It is a kind of utopian vision. Imagine being able to live in a place, whether you rent or own, to have the security of tenure, to feel that you have rights, that a place has to have a certain minimum standard, and that we have a spectrum of housing types and choices. So not just market or social, but rent controlled housing, cooperatives and other types of housing models, just to have a greater diversity of options that is more healthy and conducive to quality of life, that's well-located, and that people can afford to live in.

ANGE:

Having affordable and safe housing shouldn't be a fantasy but often, it is. That makes a solution to this crisis the most sought-after idea in Australia. Political careers, fortunes, and the fate of a generation will rest on what we do. And there’s countless solutions to this crisis being debated. But in this episode, we'll just explore four of them. What you won’t hear in this episode is a discussion about changing negative gearing and capital gains tax. That’s not because it isn’t important. In fact, those things are what all of our guests agreed on and called for.

So you’re about to hear from finance expert Alan Kohler, Housing advocate Maiye Azize, Greens spokesperson for Housing Max Chandler Mather and author Jess Scully, who all have solutions you might be less familiar with than tax changes.

I’m Ange McCormack and this is The Great Housing Disaster, a special series from 7am.

This is episode four - how to solve it.

[Theme Music ends]

JESS:

My name is Jess Scully. I have previously been the deputy Lord Mayor of Sydney and an elected councillor in Sydney. So I worked as a policy adviser to the Minister for the Arts in New South Wales, and then eventually got elected as a local government councillor in the City of Sydney in 2016. And so I served for about seven years on the local council here.

ANGE:

During her time in local government, Jess formulated a lot of ideas about what's driving the housing crisis. According to her, it's all about the way we plan out our cities, and who plans them. Jess’s solution, in a nutshell, is to reimagine our cities and invest in robust urban policy.

JESS:

Yes, we're having a housing crisis, but that's because we're also having a kind of an urban crisis. 80% of us live in the 21 largest cities in Australia. And yet it's kind of politically not attractive to talk about cities. We've kind of not seen ourselves as an urban nation. Despite the fact that we are one of the most highly urbanised nations in the world, I think our national image of ourselves is at odds with our reality. And one thing that we're really missing in Australia that's super important is city level planning. We don't really have city level planning in most of our Australian capital cities. It's sort of left to those individual local governments and to state governments, and there's sort of a layer missing in the middle, someone who can think about Melbourne as a whole, someone who can think about Sydney as a whole, and make plans for infrastructure and housing at that citywide level, because that's how we live. We live at a kind of city level.

ANGE:

Part of your work, you've looked into how other countries work and the way they think about cities and urbanism. What are the main differences between Australia and the countries that are actually doing a bit of a better job?

JESS:

Yeah, I mean it's really interesting because for the past 18 months I've been researching, exclusively pretty much, urban policy and interest and institutions around the world. And the thing that I find extraordinary is that in Australia, we have an almost complete lack of urban policy. And the first time Australia had a national urban policy was in 2011, interestingly under Albanese as the infrastructure minister at the time, and now the federal government is working on a second one. So that's really a positive step. There are so many other countries in the world that do have urban policy. And one of the fundamental things about those countries is that the right to housing is embedded in the Constitution and the social and ecological function of land. The purpose of land and land ownership is also embedded in the Constitution and embedded in national urban law.

ANGE:

Right and can you explain what urban policy actually does?

JESS:

One of the key things that an urban policy does is that it sets rights and obligations for landowners. So somewhere like Spain, for example, or Colombia, you can own a piece of land, but if you go to put a development on it or do something with it, a percentage of that has to go back to the community because you are generating a benefit due to investment from the community, whether it's a road being put in front or a train line coming to you, or if you have the opportunity to get up zoned, you know, to to build a block of flats there rather than a one storey house in a place like Brazil, for example, you have to pay a portion of that development gain back to the state. And in a lot of places that's called land value capture, and that's something that we don't really use in Australia and could be used in a really important, constructive way to fund infrastructure. So there are all these policy tools that are used in other parts of the world that just aren't even on the table in Australia. And so they're worth learning about and chucking on the table.

The idea that just up-zoning everything is going to unlock this generation of cheap building, I think, is a fantasy. Because there's still only so many workers, only so many materials, only so much investment capital. And they also are motivated to extract a profit. They have to make at least 20% profit, that's how property developers work.

And so it can't just be one tool in the toolbox. There's got to be a whole range of tools in the toolbox.

ANGE:

Whatever tools you use from the toolbox, the goal is still to get houses built and there is a suggestion that could make big changes to the way Australia does that, while cutting out those incentives for profit.

MAX:

So my name is Max Chandler Mather. I'm the Federal MP for Griffith, for the Greens, and I'm also the Australian Greens housing and homelessness spokesperson.

ANGE:

Max is one of the loudest voices on housing in Australian politics. His solution is the Greens’ key federal policy on housing. It’s called the Public Property Developer, and basically is about building a lot more affordable housing that's accessible to everyone, using public funds.

MAX:

The biggest solution we've proposed is one that's actually used around the world and was actually sort of basically replicated by Australia in the 20th century, which is a mass scale build of good quality, government built housing, but made available not just to the worst off, but to teachers, nurses, anyone on any sort of income, that requires a good home. And this has to be done in combination with phasing out the tax handouts for property investors and capping and freezing rent increases. But the major proposal we've made is establishing a public property developer, established at a federal government level, that would build homes and then sell and rent them for below market prices, which, you know, a lot of European countries do. And the average renter would probably end up that according to the PBO, the Parliamentary Budget Office, would save about $5,200 a year on their rent. The average home purchaser, so someone buying a home off this public developer, would save about $260,000 on the price of a home, basically because this public developer would cut out the profit margins that private developers add on to all of their construction. These would be really good quality homes, rents would be capped at 25% of a household income, homes would be sold at just over the cost of construction. And the idea being that we need a massive intervention into this broken private housing market, to fix it.

ANGE:

And how would this policy deal with the question of fairness that obviously comes up in this policy because, you know, how can one person be allowed to buy a house of the public developer at a discounted rate, while another, doesn't have access? There's only, you know, a limited amount of homes available under this scheme, right. How would we decide who gets to actually enjoy the benefits of a scheme like this?

MAX:

Well, firstly, yeah, we're very unapologetic about the fact that it's universal so that there aren't any means tests to get access to it. You wouldn't means test access to public hospitals or public schoolss, so why would you do it for housing? And, in terms of how it would be allocated, there would be priority given to a few sorts of criteria. So do you have to work in the local area? Do you have family connections in that particular local area? Are you First Nations or a local mob from that area? And a variety of, sort of criteria that would weight your selection. I think the two other things to say is this would be done in combination with freezing and capping private rent increases across the country or other proposal, and phasing out the tax handouts, negative gearing and the capital gains tax discount that are denying millions of renters the chance to buy a home. The other thing that would happen if you built this amount of housing, which is a huge amount, right? Like we're talking 360,000 homes, over the decade, well over a million people would live in these homes, assuming the average 2.1 person to a home. This would help drive downward pressure on private house prices and rents, because for the first time, since post-World War Two, you would have a public competitor going into the private housing market and competing with private developers that too often drive up the price of housing and profit from it. The total cost to the budget measure, its called the underlying cash balance, would be $29 billion over the decade. Part of the reason it's actually so cheap is because even though rents and asset prices would be capped under this public property developer, it would still earn rental and sales income. So taking that into account, taking into account that the government would hold on and own all of this housing that it didn't sell, the cost is actually relatively minimal compared to, say, in the latest federal budget, the federal government spent $27 billion in one year just on tax handouts for property investors. And again, to be very clear, this is what happens in Europe and in places like Singapore as well. So to give an example, Vienna, 60% of that city lives in some form of social housing. You have teachers living next door to cleaners living next door to people on employment benefits. That does a couple of things, you get great diverse communities and you don't get concentrations of disadvantage, but also you get a really broad income base for this scheme. So even though rents are capped at 25% of income of a teacher is actually still a good revenue source for the government, the big losers will end up being some private property developers. And the banks who currently obviously benefit enormously from a very financialised housing system.

ANGE:

And Max, our generation, I think you'll be familiar with this idea, can get quite defeated about this crisis and feel quite hopeless about it being solved. Because even if we know the answers are there, or even if someone is really interested in your idea of this public property developer, you know, the Greens aren't in government, making that into laws is a really difficult challenge for a minor party. So, I guess, how do you respond to that pessimism we sometimes see in our generation about this crisis? How do you view that and respond to that?

MAX:

Well, firstly, the government's biggest asset is low expectations, like the thing they rely on. And certainly what we've seen in the course of this housing debate is, when we say, oh, we should freeze on cap rent increases or we should build, you know, establish public property, develop and build high quality housing that anyone can move into, or scrap the tax handouts for property investors. You'll see the government's attempts are to attack the credibility of those policies, they say that'll never happen. It's not possible. And the reason that they do that is because their biggest asset is lowering people's expectations about what government can achieve. Now, that's not true because we know Australia has done that before, countries around the world have done it. The reason they do it is to demobilise people and stop them from standing up and having a bit of hope about the fact that they collectively could achieve some of these policies. So the first way to respond is, it's not surprising you have low expectations or feel hopeless about the situation, because that's what the government wants. The second thing to say is, the only way we are going to change anything is with large-scale collective action, and a large-scale political and social campaign putting pressure on the government to act. And the final thing I'd say is we're starting to see that pressure tell.

There's now a giant national debate about the housing crisis. And now people are starting to say, you know what, I should be expecting that my government picks our side and picks the side of renters in the vast majority of this country who would benefit from a housing system that doesn't treat it as a financial asset for large profits, but does treat it as a place to call home.

ANGE:

After the break, can we shift our idea of where we need to live and the kind of communities we live in?

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ANGE:

People from all professions and walks of life are trying to figure out how to solve the housing crisis. Politicians and local advocates are part of it. But so are people who can see a bigger economic picture - who’ve been studying what works and doesn’t - for decades.

ALAN:

I'm Alan Kohler, I'm the finance guy in the ABC news. I write columns for the New Daily and I also write for Intelligent Investor.

ANGE:

Even though Alan is a finance guy, I asked him about a solution he mentioned in his recent Quarterly Essay on the housing crisis, which had nothing to do with finance or investing. Alan’s solution isn’t really about houses. It’s about trains.

ALAN:

You know, the government is talking about building a lot more houses. I think that that's fair enough. But I can't see how that's going to really do it, and anyway their ambition is nowhere near enough anyway. A lot of people talk about the need to densify the suburbs. I'm pessimistic about whether that's achievable or not. So I kind of came, in the essay, I came down to the idea that we need to open up more land further away from the cities through fast train travel. But I also recognise that that's kind of challenging and difficult as well, mainly because it's expensive and also fast train lines are very difficult. I mean, you can't just put fast trains on existing train lines. You have to rebuild them

ANGE:

High speed rail is often talked about in terms of building a connection between, Sydney and Melbourne, for example, a fast rail connection. But this idea that you're talking about would be more about going to those out of suburbs or, say, a fast train between Sydney and Bathurst, or Sydney and Canberra, or Melbourne and Geelong. Is that the kind of...

ALAN:

That's exactly what I'm talking about. We've been talking about very fast trains in Australia for 40 years, I remember when I was the editor of the Financial Review in the 1980s, there was talk of the very fast train, the VFT it was called. And, you know, we spent a lot of time, wasted a lot of time talking about it. But the trouble is, very fast trains in Australia are pointless because they simply will not compete either in costs or time with air travel. People are not going to spend three hours on the train, expensively, going from Melbourne to Sydney when you can get there in an hour on the plane. I just don't think that's viable. It's never been viable. It's not going to be viable. And I think that the idea of spending a whole lot of time and money talking about and, and building fast rail between Melbourne, Sydney and Brisbane is pointless. The focus needs to be on opening up the ability to commute from Bathurst to Sydney, or from Geelong to Melbourne, Bendigo, Ballarat to Melbourne, Toowoomba to Brisbane, and so on. I think that's what needs to happen and I think that there needs to be a focus on achieving that, really.

ANGE:

And Alan, it is a kind of novel or imaginative way to think about solving the housing crisis, because it forces us to reimagine what we think of as our cities, and I guess challenges the idea of Australia being mostly a place that’s populated in the big capitals. Would it take a lot of shifting of the public’s perception and willingness to live outside the cities, for this kind of idea of fast trains to regional centres to take off?

ALAN:

I mean, for more than 100 years there have been efforts to decentralise Australia, which has never worked. Succession of governments has tried to get people to sort of shift to the regional areas and regional towns by locating industry there, and that's never really come off. I mean, the city's, growing and growing and taking an increasing proportion of people. So I think that you're coming up against a real unwillingness of people to live somewhere other than the city.

You can say, okay, what we need to do is centralise planning, either at the state government or in the federal government as the UK did, and say, well, okay, you know, we're not going to let local councils that are controlled by NIMBYs to decide on whether there's going to be a high rise. We're going to just sort of bulldoze it through. But really, I don't think that's very viable either.

One of the responses to my essay came from the Grattan Institute, where they said that denser cities are better cities, they said that, there is a mood now, an acceptance, of the need to densify the cities. And they say that there's quite a willingness now among the Australian population, people living in the cities, to accept densification and more high rise. And my response to their response was, I hope that's true. And if it is right, good stuff, I'll be happy. But, I haven't seen it myself, and to be honest, I don't believe it.

ANGE:

Whether we have higher density in our suburbs and cities or spread the population out around the country, we’re going to need to think about who gets to live where, and the makeup of those communities.

MAIYE:

I’m Maiye Azize. I'm the national spokesperson for Everybody's Home, which is a campaign to fix Australia's housing crisis and the goal is to make housing more affordable for everybody.

ANGE:

Right now, public housing is a small part of the market, but it doesn’t have to be. Maiye’s solution for the housing crisis is investing heavily in public housing specifically and advocating for a shift in thinking about public tenancy.

MAIYE:

One of the problems that we've got at the moment in Australia is that to qualify for public housing, you basically can't have an income from paid work. It's virtually impossible to qualify for public housing if you've got any kind of steady job. And of course, you understand why that is. It's scarce and you want to target it to the people who really need it. But one of the flip sides of that is it means that the system is really, really expensive because the people who live in it aren't paying rent. But in the past, we've had people living in public housing who are public servants, teachers, construction workers, normal professionals paying into the system, and it makes the system more sustainable.

ANGE:

If the government took on board the solution that you're suggesting and we build like, tons and tons and tons of public housing, how would that transform Australian society as it is today? Can you sort of paint a picture of what that might look like and look like and how transformational it could be.

MAIYE:

Yeah, I would love a future where many more and different kinds of people, professional people, actually get the opportunity to live in public housing. But I think for the people who choose not to, it means that there are real standards in place, because there's a major competitor in the government, with private landlords. And so people who do choose to rent in the private market will not have to absorb these huge rent increases year on year, can expect some stability, maybe we'll start to see the public sector set an example and drive some standards. There should absolutely be some limits on what private landlords can do and how much they can charge, and the standards that they keep their properties in. But in the past, we know that the private sector has been a real driver of quality and cost, and a driver of an expectation among people that they can expect decent and affordable housing. And if they can't find it on their own, the government will provide it for them.

ANGE:

Do you think that there needs to be some work done culturally? Like, this idea has come up as, you know, over recent decades, the sort of attitudes towards public housing has really shifted and there's been a, kind of, you know some people really look down on public housing and demonisation of public tenants and stuff like that. Do you think, coupled with practical solutions, there’s some kind of societal, cultural work to be known about attitudes as well?

MAIYE:

Yeah. I work at Anglicare Australia, and we did a really big study back in 2018, about people's attitudes towards the welfare system, the welfare state. And what we found is the most popular aspects of the welfare state in Australia, are the age pension and Medicare. And they're also the most universal and the least popular are the most targeted. And we've seen support for public housing over the decades declined as the number of people who could access it declines. We need to get to that place with public housing, where more and more of us are using it, because it also means more and more people have a stake in it. More and more people are paying in. Where I live here in the ACT, Canberra used to be about 70% public housing, seven zero. And all sorts of people used to live in public housing and they paid a market rent and it meant the system was really sustainable and we all had a stake in it, and things were getting repaired and fixed. And you weren't having these situations where people were living in uninhabitable homes. What we see now is that the system is for people at the margins, and we're spending a lot of money to deliver a really small amount of housing, but those people live in completely atrocious conditions that none of us would tolerate. And a big part of it is just because of who they are and because it's such a narrow segment of society. So I think the best way to change attitudes is to expand access.

I really push back against this idea that the problem is so complicated that we don't know what the solutions are. We know what the main drivers of the crisis are and we know how to fix them. What's difficult is the politics of it. The politics of it is complicated and difficult, and we know that if enough people put pressure on the government, they can act quickly.

We've seen lots of different signs that the government is listening. And what we really need from them now is kind of a solution that matches the scale of the crisis. But I absolutely believe that that is possible and doable and in fact, I really believe it's inevitable. The question is really when and how much pain do people have to endure before that happens?

ANGE:

A rethink of urban policy, a public developer, fast trains and a new vision of public housing are just four ideas among many being called for. But the only people who get to decide what we do from here are the people in government. So, how do they plan to fix it? I asked the Federal Minister for Housing Julie Collins, about Labor’s solutions.

That’s on the next episode of the Great Housing Disaster.