Bill Shorten announced Labor’s plan to ‘fix’ Australia’s affordable housing crisis in December. But giving huge handouts to landlords is no solution when the fundamental problem is building houses for private profit, rather than to meet people’s needs.
The plan is a reboot of the failed “National Rental Affordability Scheme” from the last Labor government. It would offer subsidies of $8,500 per year for 15 years to landlords who provide rental housing at 80% of the ‘market rate’. That equals $127,500 in total, and it will mostly go to big institutional landlords.
‘Market rent’ is entirely under the collective control of landlords. There are no laws to regulate it. Labor’s scheme is at the mercy of these landlords and of the private construction companies who act wholly and solely in their own short-term interests.
Anywhere that ‘market rent’ is $817 or less per week, the subsidy to the landlord is worth more than the discount to the tenant. If rent is less than $407 per week, the subsidy is worth twice the discount.
After 15 years the subsidy ends, rents can rise, and low to middle income tenants can be forced out. If a landlord decides to pull out of the scheme early and charge ‘market rent’ or higher there is no penalty.
Big landlords and developers will be rubbing their hands together and thanking their mates in the Labor party for this gift. They will be the main beneficiaries, not ordinary tenants.
Discrimination also comes as part of Labor’s package. International students, migrant workers and “other non-residents” are excluded from being tenants – even if they are very low income earners. This caters to the false idea that migrants are to blame for the housing crisis.
A conservative estimate that excludes students says that Australia has a shortage of over 430,000 affordable homes. To fill the backlog and meet increasing need, more than thirty thousand new affordable homes are required every year for decades to come.
Labor’s plan – even if it was implemented – falls woefully short of what’s needed. Starting with just 20,000 homes in the first term of a Labor government, the target rises to 250,000 over a decade.
People in housing stress, who spend over a third of their income on housing, can’t wait ten years for a mere half of what’s needed now!
Moreover, Labor is relying on private construction companies and housing providers to sign up to do the work. There is no guarantee they will, because you can’t properly control what you don’t own. The problem is that private companies only do work and provide services when they can make a profit.
We can’t rely on private corporations driven by profits to solve this mess. These profiteers and their system created it in the first place!
Instead we need a massive public housing construction program where houses are built and owned by the government. That way the houses will be owned collectively by everyone in society and can be permanently rented out at a low rate.
This would be a much cheaper option than subsidies to profiteers. There is no need to pay for a profit margin for bankers, developers and do-nothing shareholders.
Public homes can be built on public land, avoiding land purchases and taxes. Even where land needs to be acquired, stamp duty tax need not be paid.
The costs of the housing crisis to individuals and society as a whole are massive. There are 116,000 homeless people in Australia and millions more suffering from high levels of housing stress.
Rapidly ending the housing crisis would save money in the health system and support services.
A serious housing plan would also quickly acquire some of the tens of thousands of houses that are left deliberately vacant across the country by property speculators. These could be used to house those with the strongest immediate need. Predictably, Labor has no plans on this front.
All new developments could be planned to be clean, green, social, energy efficient and cheap to run through a public house building program. Tens of thousands of good quality construction jobs, including apprenticeships, would be created.
Providing everyone in need with high quality, secure, affordable homes is only possible on the basis of a democratic socialist housing policy that prioritises needs rather than profits.
We need to bring the banks, the construction companies, the utilities and all the related industries into public ownership. Then they can be run and managed by workers in a planned way to end the housing crisis and raise our standard of living.
By Kirk Leonard