The Turnbull Government's latest band-aid measures will do little to address housing affordability and nothing at all for Australia's homeless, says John Passant.
THERE are two housing crises.
Yet the number of unoccupied houses, flats and hotel rooms far outweigh the number of homeless people. A society that put people first would take measures to match those needing a roof over their head with the supply of empty residences.
Our society doesn’t do that because it is ruled not by compassion but by money. People without money are the ones who end up homeless. People with money buy mansions in Point Piper.
Secondly, there is a crisis of affordability. The median price of a house in Sydney is now over $1.1 million, $300,000 more than the second-highest city, Melbourne. By comparison, the average full-time wage is about $80,000, while the median full-time wage in 2015 was under $65,000.
‘The poverty line (50% of median income) for a single adult was $426.30 a week. For a couple with two children, it was $895.22 a week.’
The cost of living is higher in Sydney than elsewhere because of the higher cost of housing.
Unemployment benefits for a single person are $267 a week — which on the ACOSS figures, is about $160 a week below the poverty line.
To borrow from a bank to buy a median priced house in Sydney, a young purchaser would need to have saved up to $100,000 for the deposit and for add-on costs. How can you do that earning $65,000 a year?
The cost of the housing market in Sydney and Melbourne (where one in three Australians live) has been growing rapidly for years and last year was no different. Sydney prices rose 20% and Melbourne’s went up 17.5%.
One consequence of this ongoing rise in housing prices well above wages is that people are going deeper and deeper into debt. The debt to income ratio among working Australians is at its highest level ever.
How can you even rent in Sydney on $65,000 a year? How does a low paid worker, a pensioner, a student, an unemployed or disabled person, all on inadequate government support, rent in Sydney? You can’t, or you have to live two hours from the centre of the city, or in group houses, or make other "adjustments".
Assuming a 3% return on a $1.1 million median house in Sydney, the rent would be $33,000 a year, half the median salary. The minimum wage is just under $35,000 a year. For single mothers, the unemployed, pensioners, those on disability and so on, $33,000 in rent is actually much more than they receive from the government — two times, at least.
This housing and rental crisis, for example, is one of the reasons why more than one-third of pensioners (those renting rather than those who own their own homes) live below the poverty line. This is the second highest number of poor pensioners in any OECD country.
The solutions on offer from the government (and the opposition) are all market oriented. The housing market is the problem, not the solution.
Instead, we could abolish negative gearing and abolish the capital gains tax discount — two measures which effectively give billions a year to the top 10% of income earners. Getting rid of these legislated tax rorts, along with superannuation concessions, would raise about $16 billion.
Labor wants to make some small adjustments to the capital gains tax and negative gearing. The Liberals won’t touch these areas, unless with even more superficial changes. Wait for the Budget.
The government supports letting the market rip but wants to give the impression of doing something, without upsetting their rich mates, supporters and voters.
Peter Dutton's investment portfolio expands https://t.co/lJEIYNruDQ— Julian Burnside (@JulianBurnside) December 2, 2016
Over $5m in negative geared property. Not bad for an ex-cop
‘... at least 97 federal members and senators, or their partners, own an investment property. A handful own more than ten, while 50 MPs own more than two investment properties.’
Every night Dutton stays in Canberra when Parliament is sitting, his $276 a night accommodation allowance covers the cost of rent — to himself and his wife. Nice work if you can get it.
‘An examination of the register of interests of MPs and senators show 31 MPs and 23 senators have residences in Canberra - largely in the leafy, well-heeled suburbs that surround Parliament House such as Kingston, Barton, Griffith and Forrest.’
The need to give the impression of doing something without really doing anything about housing affordability explains the nonsense debate in Government about allowing first home owners to use their compulsory superannuation savings to fund a home deposit. Look, we are doing something!
It will not happen because it is a really, really stupid idea and the more rational members of Cabinet (Christopher Pyne for God’s sake!) know it. Scott Morrison doesn’t. This might be his leadership swan song.
Government's piecemeal housing fix simply won't work https://t.co/cg8aLz4Q7V— Nina Springle (@ninaspringle) April 11, 2017
Labor are treading carefully on housing because they fear bolder initiatives might cause prices to fall. The housing market is already a bubble. Any changes risk destroying the value of millions of homes. The political fallout of the bubble bursting would be disastrous for whoever is in government. The fact is, however, that the bubble is likely to burst sooner or later, given the rapidly escalating costs are pricing many working people out of the accustomed housing and rental markets and forcing them into alternatives that are often stressful and unwanted.
One of the successes of former Prime Minister Robert Menzies was to create home ownership as a goal for workers and entrap them in the ideology and reality of private property. This was done in the context of McCarthyist fears about communists at home and abroad.
As ABC Splash says:
'The "great Australian dream" of home ownership was promoted during the 1950s and '60s as a protection against the growth of communism. The reasoning was that people who were committed to home ownership and mortgages tended not to become "revolutionaries".'
Home ownership rates rose rapidly. Much of this happened as a consequence of mass public housing programmes across Australia, which ran from after World War II until about 1980. Those programmes are no longer adequately funded and are nowhere near enough to adequately address the demand.
A first step in addressing the housing affordability crisis, then, would be a new mass public housing programme. This could be paid for by increasing taxes for wealthier Australians.
A second step would be rent control. Each State and Territory has the capacity to control rents — there is no chance of a coordinated response along these lines. The Commonwealth Government could drive it through, for example, tied grants.
The third step would be to increase real wages to make the housing market in Sydney and Melbourne affordable again. That is an issue for the labour movement — especially in a time of falling real wages. It would require a real class struggle to smash the three decades of wealth and income shifting from labour to capital.
The ACTU wants to lift the minimum wage by $45 a week from its current $34,980 to $37,420. It is still not enough to ensure adequate housing for workers in Sydney, Melbourne or other rapidly rising markets. Even getting the ACTU’s proposal to increase the minimum wage over time to 60% of the average wage – about $47,000 – won’t do that. The minimum wage has fallen from 65% of median earnings in 1985 to 53% in 2015.
Finally, we could lift the payments we make to the homeless, pensioners, students, the unemployed, the sick, the disabled and others we support through government payments out of the poverty levels in which they currently exist to at least the minimum wage.
This will all require massive social and industrial struggles. The market is not the answer to the problems of the market. We must take action to right its wrongs. Otherwise, adequate housing will be out of reach for more and more Australians.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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