Structural reform, not sugar hits.

Why our housing system needs more than just stimulus

By Scott Langford

For the first time Infrastructure Australia’s newly released 2021 Australian Infrastructure Plan incorporated social infrastructure, including social housing.

This inclusion points to the value of social infrastructure in enhancing quality of life. It also recognises that governments can’t do this alone. With a projected need of almost 730,000 new social housing properties over the next 15 years [1], solving the challenges of our housing system requires both public and private participation, and requires innovation and ideas from different industries.

While the plan recommends a range of measures and proposes a central role for community housing providers in partnership with government and the National Housing Finance and Investment Corporation (NHFIC), we urgently need the political will for structural reform to prioritise and implement programs that will deliver in a system that is broke and broken.

The disruption of COVID-19 creates an opportunity for structural reform in housing policy not seen since the post World War II era. As Menzies said in his famous The Forgotten People speech, “The home is the foundation of sanity and sobriety; it is the indispensable condition of continuity; its health determines the health of the society as a whole.”  In a pandemic this rings true.

We have an opportunity to reimagine the role of social and affordable housing drawing inspiration from the post-World War II era, when federal and state governments of all political persuasions invested into housing to provide homes for workers that would attract and support industry, help people in rental springboard into ownership, and provide a social safety net.

Our social and affordable housing system today needs substantial recapitalisation to make it fit for purpose and capable of growing to meet demand. 

At a state level, we’ve seen significant announcements for social housing that chip away at decades of under investment, with $5.3 billion pledged by the Victorian government in 2020, and in NSW $812 million announced in the 2020-21 state budget. There also have been a number of calls for stimulus packages or upfront government investment to increase social and affordable housing.

While stimulus funding is welcome, it is a sugar hit. We need structural reforms that will bring together capital and capability. The scale of the challenge requires government leverage contributions from an expanded pool of private investment, utilising the capability of community housing providers. Stimulus is a much needed down-payment but must be accompanied by a willingness to make further reforms.

As NSW’s largest community housing organisation, SGCH’s portfolio has grown from 4,000 homes in 2014 to 7,000 today and has included a mix of transfer programs and new developments – we are steadily working through a development pipeline of over 1,000 units. Our role is to be a coordinating partner with the capability, expertise and vision to draw in a range of complementary organisations and contributions from different levels of government to achieve change and improve outcomes for individuals and communities.

The introduction of NHFIC by the Morrison Government in 2018 is a structural mechanism for community housing providers to catalyse larger scale investment from the private sector.  We look forward to the outcome of the NHFIC Review later this year which we hope will allow NHFIC to build on the successes with ongoing government support, expanding the involvement of the private sector through investment into community housing.

We also welcome Labor’s Housing Australia Future Fund, a policy proposal to attract private investment — a $10 billion off-budget investment to deliver 20,000 social housing and 10,000 affordable housing properties in the first five years. This policy also recognises the central role of community housing providers in bringing together capital and capability. It also, crucially, provides a mechanism for subsidy to complement the financing options available.

Increasingly, social and affordable housing is recognised as an investment class offering the benefits of low-volatility, long-term demand and the assurance of being highly regulated. Investors understand the opportunities of the stable economic return and incredibly high social return available from this emerging global asset class. There is a growing weight of capital with strong ESG drivers looking to invest. With the right policy settings and certainty this appetite can be unleashed to deliver more and better social and affordable housing.

The time has come to move from inquiries and committees to action in the form of structural reform. Failure to act will irrevocably alter the communities in which we live as the gap grows between those who can afford home ownership, and those who can’t. Without affordable housing, the dream of home ownership moves further out of reach and the safety of a stable home becomes tenuous for many Australians.

And the question now as we head towards a federal election, is will political leaders grasp the nettle to make structural reform that in the decades ahead will leave a legacy of a well-capitalised system that provides the springboard and safety net of affordable homes?

On behalf of nearly one million households waiting for an affordable home, we are hopeful the answer is yes.  

[1]https://www.infrastructureaustralia.gov.au/sites/default/files/2021-09/2021%20Master%20Plan_1.pdf p34