More than $5 billion was poured into social housing after the GFC and most economists supported the tactic for its propensity to boost jobs and stimulate the economy.
This time round funding for social housing was a glaring omission from the federal government’s Covid-recovery 2020 budget.
The sector wasn’t ignored completely: an extra $1 billion worth of bonds through the National Housing Finance and Investment Corporation to attract institutional investment in affordable housing was announced.
This will accompany an increase in NHFIC’s cap on total guaranteed liabilities to $3 billion to provide lower cost loans to community housing providers, and an independent review of the NHFIC to see if it’s doing its job to improve housing outcomes.
The government will also inject $150 million over three years into its Indigenous Home Ownership Program for new housing construction loans.
But the scale of these programs pales in comparison to the Rudd government’s 19,500 social housing units built and 80,000 others refurbished over two years at a cost of $5.2 billion as a post GFC stimulus.
Steven Rowley, a professor of property in the School of Economics, Finance and Property at Curtin University, is not alone in describing the lacklustre social housing allocation as a missed opportunity.
He told The Fifth Estate that not only does investment on social housing provide rapid economic stimulus and jobs, but with the end of rental moratoriums drawing near and JobKeeper and JobSeeker packages tapering off, “the supply of housing has never been more important”.
“It makes perfect sense to stimulate the economy using social housing.”
For social welfare groups such as Mission Australia, it was no surprise to see limited funding for social housing in the budget
“With this lack of commitment, there is a looming risk that even more people will be pushed into homelessness and unsafe living situations,” Mission Australia CEO James Toomey.
“Investing in 30,000 social homes within the next four years is an obvious solution that will not only help to end homelessness in Australia but will also create vital jobs in the construction industry.”
Opposition leader Anthony Albanese is also gearing up to spruik the job creating potential of social housing in his budget reply on Thursday night.
He said that a Labor government would be fast-tracking repairs to social housing at a cost of $500 million and encouraging state governments to match the funding.
Funding for social housing even drew the support of the CFMEU and Master Builders Australia back in May. The construction union has since criticised the budget as a missed opportunity to go down this route.
“Construction of social and build-to-rent housing would stimulate the economy and create jobs today, long before the infrastructure spending announced in the budget comes to fruition,” said Dave Noonan, CFMEU national construction secretary.
Mr Noonan said that it’s disappointing that the government’s “ideological aversion to social and affordable rental housing has clouded their judgement.”
“The Morrison government may favour homeowners over renters, but with one-third of Australian households now renting it is time for them to accept that it is a significant and growing part of the housing market requiring reform to ensure its affordability.”
He also said that the government should have taken the opportunity to end the inequitable application of GST on build-to-rent housing that is stopping this nascent sector grow.
Denita Wawn, CEO of Master Builders Australia, was more supportive of the budget, and applauded the amendments to the First Home Loan Deposit Scheme to stimulate new construction.
“The extension of the First Home Loan Deposit scheme and the $1 billion for the construction of new affordable housing will extend the opportunity to own a home to thousands more people for whom it seemed out of reach,” Ms Wawn said.
“It will unlock even more investment and further activate residential building as the engine of economic growth and employment,” she said.
Property professor Steven Rowley said that while stimulus aimed at housing construction in general such as the Homebuilder grants and first buyer scheme changes are positive, it’s more important to be helping vulnerable people in danger of losing their home rather than people who would have bought or built a home anyway.
What else was in the budget around housing?
Other housing-related announcements included wage subsidies for building apprentices, taxation changes to allow businesses to claim losses against the previous year’s taxes and a proposed capital gains exemption for granny flats for eligible people from July next year.
While these boosts to the home building industry were applauded by Tom Forrest, CEO, Urban Taskforce Australia, Mr Forrest also wanted to see more in the way of big picture tax reforms based on Ken Henry’s review of taxation. On his wish list is widening the GST base and removing what he labelled distortionary taxes such as payroll tax and stamp duties.
Mr Forrest said the government should be looking to make foreign investment easier, such as during the GFC, by increasing the FIRB threshold to where it was pre COVID-19, not discriminating foreign investors though state stamp duties and land taxes and reducing withholding taxes for at least the COVID-19 period.
“Foreign investment has the capacity to bring in billions of dollars to local projects and supports Australian jobs,” Mr Forrest said.
“These additional taxes and FIRB processes applied to foreign investors are ludicrous. There is no threat to our sovereignty posed by a foreign investor, including north American pension funds, investing in an apartment block, a build-to-rent residential tower or a house and land package on the fringes of our cities.”