The Deputy Prime Minister and Minister for Housing, Brian Howe, is quite right to be concerned about the state of Australia’s housing stock and its inefficiency and therefore its inability to provide housing for those most in need. He is right to say something ought to be done about it. However, all the indications are that the Government will look at the issue in isolation; it will deal with symptoms not causes. Mr Howe expressed his concern at the launch last week of the Australian Institute of Health and Welfare report entitled Public Housing in Australia. The report said that 216,000 households were waiting for public housing. It would cost some $8.6 billion to satisfy the demand. Australia has about 370,000 public houses. The trouble is, Mr Howe points out, that many houses built for families have only one or two occupants. In privately owned homes one house in three has two or more vacant bedrooms. He argues therefore there is a massively underused capacity, especially when there are so many without housing. He wanted the private and public sectors to work together to iron out the imbalance. He foreshadowed a National Housing Payment Scheme to help low-income renters in the private sector so that no-one had to pay more than 30 per cent of their income in rent _ a sort of housing Medicare.
He pointed out that rent assistance is the Commonwealth’s fastest growing social-justice program, with annual payments rising from $225 million in 1984-85 to $1.4 billion in 1993-94. Mr Howe may be proud of those figures, but in fact they demonstrate failure. If the Government keeps pouring money in so people can get into the private housing market, any first-year economics student knows that the result will be higher rents. As demand goes up; so do prices. So the more the Commonwealth pays in rent subsidies, the higher rents will go. But the housing situation is more profound than that. A huge range of factors determine how and where people house themselves and how much it costs. Housing cannot be looked at in isolation. The inefficiency of the housing stock is partly due to government policy and administration _ mainly state government policy. Put simply, the actions of state government make it extremely costly for people to move to more suitable housing. Typically, young families face a choice of extending an existing house or moving to a larger house. Similarly, older couples face the choice of staying in a large house after children have left, or of moving. State Government policy makes extending more attractive. Moving house entails very large, punitive stamp duties.
Over the past 20 years no state or territory government has come anywhere making proper adjustments for inflation. Typically, average home buyers in the 1990s are paying duty at rates reserved for the very top end of the market in the 1970s. In the ACT, for example, average homes are attracting $4000 in duty _ in effect a fine on moving house. It is no use Mr Howe crying for more efficiency in the housing stock on one hand if state governments are hitting people with huge disincentives against moving. And nor can Mr Howe’s Government plead innocence; its policies have driven the states into ever narrower tax bases. And the Hilmer report, which quite reasonably wants the states to have competitive, commercial utilities rather than de-facto tax milk cows, will make the matter worse. States will have to pick up the money lost in Hilmer reforms from somewhere, and stamp duty is the obvious place.
It illustrates the complexity and interconnectedness of policy which has got more difficult to deal with as governments get ever bigger. On top of stamp duty are agents fees and lawyers fees. State governments are acting very slowly in picking up Industry Commission recommendations to deal with these unpalatable monopolies in the real-estate market. Conveyancing could be made much easier, and therefore cheaper, if all state governments embraced “”one-stop”, computerised conveyancing instead of having a plethora of authorities and utilities involved. Thus instead of people moving to more suitable houses they are extending (adding to long-term inefficient housing stock) or staying put in houses that are too large. When the Commonwealth-State Housing Agreement comes up for renegotiation, stamp duty should be high on the agenda. The policy contradictions do not stop there.
It seems bizarre that a Government so concerned about housing does not even have a population policy. There is not even a glimmer of a long-range objective by the national government on what Australia’s population ought to be. Neither the national nor state governments have any idea what they think ideal populations of Sydney or Melbourne ought to be. There is no long-term immigration policy; it runs ad-hoc year by year. Yet immigration, population and housing are inextricably linked. It is not that there should be some ghastly piece of social engineering regulating the national and big-city population with precision, but some broad long-term aims would be helpful as would some intelligent assessment of the affect that one policy will have on others. And then there are general government economic policies that affect people’s ability to get housing, most notably the government’s monomanic flirtation with interest rates. So we have Mr Howe ignoring the real causes of the housing problem, but using it as a launching pad for a very wide, intrusive social agenda. He said of housing aid: “”Ultimately, it could form a universal system of social protection. . . .
We should be able to ask people what the problem is and then come up with a solution that fits, which may be a package of combining a bit of housing assistance, a bit of help with child care, some sort of transport concession and so on.” Australians should be deeply sceptical of such an approach. The only “”universal social protection” needed is that against the government policies that caused the problem in the first place.