Home truths on housing affordability

[Pauline McGuirk] [00:00:33] Welcome everyone to today's Luminaries Panel discussion where we're going to be talking about housing and the housing crisis, its drivers and possible ways forward. I'm Pauline McGurk and I'll be convening the panel today. I'm Professor of Urban Geography here at UOW from the discipline of geography and sustainability. I'm also Director of Access for the Australian Centre for Culture, Environment, Society and Space. I'm speaking today from the Wollongong campus of UOW. I'd like to start by acknowledging the Aboriginal custodians of the Dharawal lands in the region in which I am privileged to live and work. I acknowledge the elders past, present and future and acknowledge country itself. As we sit here in the shadow of the ancient learning place of Mount Keira or Guyra. I pay my respects to the traditional owners of these unceded lands.

 

So, we are here to talk about Australia's housing crisis, and we call it a crisis because we are seeing these failures in our housing system that are fundamentally affecting the lives of future and current generations and affecting the potential of the social and economic future of Australia and its people. The effects of the housing crisis have spread far beyond vulnerable and low-income groups, and now affecting the much more politically powerful middle classes, so little wonder that it's now dominating the political agenda at federal, state and local levels. The National Housing Supply and Affordability Council, which was formed in 2023 to advise governments in the latest report, they note that affordable housing is, and I am quoting an 'essential infrastructure for sustainable, productive and cohesive communities'. So, our panellists are here today to talk about where we stand in relation to that essential infrastructure, what needs to change to get closer to it and how, and before I introduce them, I would like to take a moment to lay out some of the multiple dimensions of the housing crisis and some of its fairly distressing statistics that we're now depressingly familiar with. Firstly, is the fact that there is a systemic lack of affordability only 13% of houses sold in Australia in the 2022 to 23 years were affordable for households on medium income. There are spiralling levels of debt among mortgagees. The average mortgage nationally is now $625,000. So, we have these spiralling up levels of debt-to-income ratio, that 185% now and historic high. So, we're facing down the barrel of a potential tsunami of foreclosures that would have really uneven effects geographically rents have spiralled up at least 35% nationally since 2020, there rising faster than house prices, rising faster than wages and it's not just an issue of affordability, it’s about availability and security of rental housing. Two thirds of low-income Australians are experiencing housing stress, often forgoing the basics in order to meet their housing costs. We have multi-decade long waiting lists for social housing. 170,000 households currently on the waiting list. We've lost decades of ground in the provision of social housing and we're at historically low levels of supply though of course, recent state and federal government moves are trying to do something about that. Access to the long-term wealth benefits of home ownership is being restricted, with no equivalent benefit being available to the increasing proportion of lifetime renters. So, we're facing an expanding intergenerational divide in wealth. We've got supply problems, high demand, low supply we're building about 50,000 fewer dwellings a year than we need. All of this before we even mention the dimension of sustainability, energy efficiency and the climate readiness of our housing stock so I could go on, it is a perfect storm of sorts, and it's certainly having long term damaging implications for social equity, for the health and wellbeing of households and for the cohesion of communities across Australia now and for future generations. So we are in a mess, and our panel is here today to talk about the situation from a variety of different perspectives and on a more positive note, to talk about how we might find some solutions.

 

So finally, let me introduce our panellists. Dr Nicole Cook is an urban geographer based here in the discipline of geography and sustainability at UOW, she's also part of access. Her research focuses on cities and housing systems, how they shape communities and urban places, and what that means for policy. Tim McCarthy is Professor of Engineering and director of the SBRC, the Sustainable Buildings Research Centre here at UOW, where he leads research on how our buildings and built environments can be transformed into sustainable, resilient and effective places to live and work, and Cathy Callahan is the principal senior policy officer at Shelter New South Wales, which, as many of you will know, is a policy and research advocacy organisation with a vision for a sustainable housing system that provides secure homes for all, and Cathy's particular interests are around community and political engagement, local government and sound policy. So, thank all of you, for joining us today. We're going to work through some pressing questions and to our listeners, please do add questions that you have to the chat, and we will aim to get to some of those towards the end time permitting. So, can I start with you, Nicole, I've just run through some of the outcomes of the housing crisis, and certainly in the public debate, we get talked about supply constraints. We get talked about high interest rates, construction costs. But can you tell us a little bit about what's behind all of that? What do you see as the key drivers of the situation we're in?

 

[Nicole Cook] [00:06:50] Thanks, Pauline. I mean, I just think it is an incredibly perplexing and challenging situation you kind of pointed out for so many households, but it is quite tricky to understand, and I think one way of helping us to understand what the factors are that are really driving the crisis at the moment in terms of housing, is to think about how the idea of housing has changed over the last 25 years. So, I think traditionally housing was seen as a home, it was seen as a space of shelter and what we've seen since the early 2000 is that housing is increasingly seen as an investment vehicle, and it's that idea that I think that underpins a lot of the things that we're seeing at the moment. So even though I think this crisis is really kind of positioned in some ways the perfect storm of all of these different intersecting elements, it's actually the result of a lot of, different policy, decisions that have been taken over time. And I think for most people, the current context could be seen as a policy crisis of sorts, but politicians have advocated for these changes, and by in and large, the Australian population has supported those changes. So, I think discussing the policies that have turned the Australian home into an investment is probably a good spot to start and could be potentially a little bit useful. I'm just going to make a couple of points here and I'm sure some people are familiar with this, but often these kinds of financial and taxation elements are hidden from this discussion particularly around people's kitchen tables and our everyday conversation conversations. So, the first thing to note is that housing in Australia, is a particular commodity so if you sell your house, only 50% of the profits, that you get from selling your house a taxed. So, this is a policy that has been in place since 1999, so for the last 25 years and what that policy did was bring housing into line with other asset classes. So very similar to the taxation, incentives that people investing in shares and other asset classes would experience. So it opened up homes and neighbourhoods to investors, not just people seeking a home, it also incentivised all homeowners to speculate on housing and to see housing as a way to make money, so everyone who's a homeowner will benefit from those tax incentives and so investing in housing, flipping housing and making, tax gains on the profits starts to be the way that we relate to housing and that's from the developer down to the individual owner. So that kind of tax benefit that is attached to housing is one of the reasons that we speculate on housing so much.

 

But secondly, the losses that landlords incur in relation to their rental properties are also deductible from income, so this is another tax incentive to treat housing as an investment, these all have the impact of kind of constantly stimulating supply. It's like these incentives attract us to invest in housing and they also attract well incentivise citizens to treat housing as an investment as well. But there's just a cultural shift that goes along with this big financial change that happened around housing, in the last, 25 years and this is where we see, at the same time as housing is becoming this investment, we see this reduction in public and social housing over the long term, and that kind of gathers pace, I guess, with a few exceptions. But gathers pace through the 21st century, we see really poor rights for tenants because the idea here is to become a property investor, not a renter. We see the removal of some properties from long term rental as landlords seek higher returns on investment, so the idea here is that you invest in property, perhaps you have a second property. You're not doing that to contribute to affordability you're actually doing that to try to increase your rental income, and so you might take your property off the long-term rental market, and you're going to seek higher returns on investment by putting it into the short-term rental market. Then there are people who will buy property and won't rent them at all, and they're just waiting for that capital gain increase. So, we've got this kind of very strong investment culture that not only has increased property prices that includes the range of people who are investing in housing in their capacities to do so but it's also a kind of devaluing of the private rental sector and also, the public and social housing sector. One more thing Pauline, at the same time as all this is happening wages have grown very little over the same time frame and now again, this is not an accident it's a result of public policies that have siphoned tax breaks to corporations and at the same time, ensure a really steady supply of workers, and so wages are just not increasing so we end up with a system that's, underpinned by low wages, high house prices, highly indebted homeowners and insecure tenants, and this is really a model that has no protection against external changes like we might see inflation or interest rate rises caused by global pressures that are happening and so it's really a very a singular model that can't cope with the contemporary economic, social and environmental challenges that we face.

 

[Pauline McGuirk] [00:12:33] Thanks, Nicole. I think that gives us a really good grounding in kind of some of the structural issues that have gotten us into the mess that we're in and you finish thereby by referencing, poor protections for tenants and I think that's a great pivot, I think I'd really like to turn to Cathy to talk about it. In this whole mess of the structural factors that have given us the context we're in one of the big issues that emerges out of that is the question of housing insecurity, something that perhaps affects tenants most especially. Can you tell us a little bit about this concept? Who does it affect and what it means for the lives of the people affected by housing insecurity?

 

[Cathy Callahan] [00:13:13] Sure, and great background Nicole on the many years of policy that have led to where we are. So, in talking about insecurity, I just wanted to talk a little bit about security because it's shot in New South Wales, that's our goal secure home for all, and so it's worth reminding us of what are we actually trying to achieve and is it achievable? We say it is. So we want a New South Wales in Australia where everyone can have access to homes that are truly affordable and if you’re in the low 40% of income earners, the traditional benchmark is that you're not paying more than 30% of your household income and for your housing costs so if you are, you're in what's called housing stress and you might be a homeowner, a mortgage holder, a renter. We want, housing that's accessible to people of all different needs and abilities, and we want housing that's well built and well-maintained and I am sure Tim will come to talk about this later about the quality of the housing stock in this country. Housing is not just the cost of buying the housing or renting the housing it's the cost of living in that dwelling and we can feel that in winter when we think about what it costs to heat some of our dwellings. So to the point on topic how does insecurity impact people? and there's all different cohorts and some are very obvious and obviously what comes to mind is the most insecure, are the outright homeless and, that is certainly a cohort I want to just come in sitting here in the city of Sydney and the council officer who manages the services of outreach for homeless people in this city he said 'five years ago no one cared no one talked to us about policy or services or funding for homelessness services'. So, it certainly is front of mind, but the fact is, each year in certainly in New South Wales, 47,000 people front up to special homelessness services for help, so imagine the dire straits that you're in that you actually are fronting up at the services they are children sometimes they are teenagers and people of all ages and half of them are turned away. Now these are service run by dedicated, passionate and highly committed people and it's a very stressful thing for them to run these services and literally be turning half of them away and that happens every year. I'm just reminded when we talk about homelessness, obviously people living on the street are the most obvious in our towns and cities, but the biggest category and it's growing fast, people living in severely overcrowded dwellings. So that's something to bear in mind when we think about how housing insecurity is felt, to some people they literally have a roof over their head, but they're sharing that roof with many, many people and in particular in Covid times a terribly unhealthy and highly risky, place for them to be and often unsafe so really overcrowded dwellings are a very chronic form of insecurity. But there's this other cohort so I just want to, take some of those things that Nicole raised and talk about, what it means for different groups of people at different parts of their life, and some of these things are being powered by the demographics of the country. So, if we think about how the income retirement system essentially assumes that you're retiring with owning your home so if you don't and increasingly people are retiring as renters, then you're in a lot of strife in terms of your capacity to deal with expenses that come out of nowhere and even just paying your rent.

 

So, we know for example, New South Wales Treasury made a note in their own papers a few years ago that the average wealth of, someone who owned their own home was 1.4 million in entering retirement whereas for people who didn't own their own home, it was 78,000. So that wealth inequality is very stark and it leads to insecurity, precarity when you think about what does just happen to people as they retire around health, things that happen in your life where you need money and not having a property has meant we are seeing a big inequity for working people, in particularly big cities, and where I say I grew up in Newcastle, so I look to places like Wollongong and Newcastle, be careful look at what you know, learn the lessons of big cities that allowed massive sprawl poor public transport, because what we have now is massive work populations travelling vast distances across the city, between cities across our broader region just to get to work and it's having a real impact on the labour force, flexibility in those areas. Just generally I would say for renters, and you probably talk about this later there is just the general threat. So, in a very tight rental market people don't have a lot of choices. Landlords have the upper hand in terms of power dynamic and the law pretty well gives a pretty unfettered power to landlords and it's a market with the smell of blood in the market where people are really perceiving that if you can flip rental properties you can get more and more rent which is a really terrible life to lead, and we think about normal families are wrenching and we're not talking about students just packing up and going to share house somewhere else it's whole families having to move suburbs or towns, and move schools and move jobs. So, it's really quite a difficult dynamic.

 

My last pressing note it would be that a lack of accessible housing so housing that's built with just basics around not so many steps that you can't get into it my sister, suffers from MS and is very incapacitated, her own home that she and her husband built it's really difficult to move around, and they kind of knew what was coming. So, if you're a renter in particular, looking for a house that you can literally get into, let alone and have a decent life and it's really difficult for you, there aren't really very many of them. So that's probably just my quick insecurity all different forms in all different cohorts.

 

[Pauline McGuirk] [00:19:57] That's really terrific and I think that that multi dimensionality to it and the sort of the visceral way in which is experience, I think you've given us a really good taste of that there. Let me pivot at this moment across to Tim, because I think when we talk about the housing crisis, we can and I think certainly the policy settings have gotten fixated on the affordability dimension you know that just to get a roof over people's heads but there's also the question of then, as Cathy mentioned, how do you actually live in that home and how costly that might be. So that brings me to the question of the sustainability of housing and what our housing stock is like in relation to its energy efficiency and in relation to people's capacity to live comfortably in their home. So, this is your meat and potatoes. Can I hand over to you to tell us what needs to be brought to the table there?

 

[Tim McCarthy] [00:20:46] Well, thank you very much, Pauline and thank you, Nicole and Cathy for that introduction and definitely the first challenge is to get that roof over your head. Now, if we think about the sustainability and energy efficiency of our housing stock. Over 50% of our houses are over 50 years old and we only began, introducing energy efficiency standards about 20 years ago in Australia. So, most people are living in houses that unless they've been renovated, were built in a time when energy with cheap, we didn't care about pollution, particulates in the atmosphere or climate change, and it's only really in recent decades that we have now considered the cost of the fuel both in dollars and the cost to the planet. So those who live in older homes are disadvantaged because they have to spend more to keep them warm and, in many cases, they don't spend enough to keep them warm because the investment in heating just goes out the window or out through a vent in the in the world for ventilated housing. What we have seen is that since the year 2000, no national construction codes have begun to increase the energy efficiency of new homes, but they've done nothing for old homes. So if you were living in a new home, built since the year 2000, it's probably a lot more comfortable than something that was built in the 70s, if you're living in a home that was built in the last five years , it will be even better because we've had energy efficiency standards, in the code and right now the standard under the national energy rating scheme for houses is that new houses and apartments must reach seven stars and that's a game changer for new housing but doesn't address the existing housing stock. What it means is now it's now going to be standard for new houses to have double glazing, which gives you acoustic and thermal benefits but all the old houses that have single glazing, they still leak energy quite a lot.

 

Other things that, I guess people who own their own home have an advantage because any investments they put into it increase the value and but not everybody who owns their home is a high income earner we've got lots of low income homeowners, particularly retirees who are worried about their energy bills, and don't have the capital with which to invest in improving the energy efficiency of their homes. So, there's a disparity there as well and Nicole talked about the that investment driver that a lot of people have and people have that investment driver when they think about energy efficiency of their homes, they think what's the payback period for my solar panels? What's the payback period for a battery or insulation rather than, I'm reducing my carbon footprint? That's a benefit to the planet that I'm willing to contribute, or I'm going to make my house more comfortable and easier to heat, so my wellbeing will improve, if I install double glazing, that will make my house quieter and I will have less intrusion from traffic noise. So rather than think of how much time it's going to take me to save on my energy bills. What are the other benefits do I get? Do I get beautification of my house? I put up nice curtains they'll keep the cold out, but they'll look nice and make the room cosy. So, I think there's a few sorts of drivers in this, and a lot of the debate on energy efficiency is what's the payback period rather than what's the overall benefit, both monetary and then in health and wellbeing and general comfort. I much prefer to live in a comfortable home than a pretty home, but I'd like them to be both.

 

[Pauline McGuirk] [00:24:53] Tim, you started to touch on, some real issues that are going to come back to questions of equity about who can afford to have all of the kind of measures you mentioned, and we will come back to that. So, thank you. I think we've heard from all three of you know we've had a really good sort of set up of the multiple dimensions of the issue where we've got on our hands here. So let me start to pivot towards emerging solutions and policy reforms, because we're in a very live space in terms of housing policy reform right now there are changes afoot, lots of policy shifts in the air, new approaches, some innovations being put out there some fairly big reform announcements as well. Lots of them focussed on increasing supply so we've had in recent months the housing accord, we've had the Australian Housing Futures Fund and we've got new commitments to social housing investment at federal and state level, we've also had a fair bit of attention, and at last paid to renters, better rights for renters. As a federal priority and very recently, the establishment of a New South Wales rental commissioner. So maybe we can start by talking about renters first and let me turn back to you, Cathy, because certainly renters are often among the most vulnerable the most insecure in the housing market and obviously, addressing housing insecurity for renters has been a key priority. So are the reforms, innovations that we're seeing are we getting there? They moving us in the right direction or are there big gaps where we need additional or stronger action?

 

[Cathy Callahan] [00:26:38] I would say we're on the cusp of some big potential reform, but just remind us of the progress. Coming up to the last state election, it was quite novel for organisations like us to really campaign on behalf of renters specifically, all renters not just low income. So, it was pretty instructive that the New South Wales Labour opposition as part of the campaign committed to rental reform so this was quite new, and you would think it was the bread and butter of progressive side of politics, but it really wasn’t, so we have come a long way. There's some big reform that's promised so probably the biggest being the ending of what's called no grounds evictions. This is a long fought for reform if you talk to our friends at the Tenants Union of New South Wales, that will say we have been fighting for this for 30 to 40 years. So, we would see if that reform is completed in its entirety and in particular I will come back to where there's potential kind of wobble point from the government point of view if it's actually implemented as it was promised and intended, it would radically change, the lives of tenants and the dynamic in, in the market. Now, there is some fear from the real estate sector that the sky will fall in and that will have landlords fleeing, fleeing the market, we don't really see that as a big problem, but we do see this as a fundamental rebalancing of the power dynamic in the rental system. It will really remind people that as a renter, you ought to have a right to a decent life, you ought to be able to settle into a property and not be constantly living in fear of being evicted for almost well literally no reason, and often, retaliation for tenants who ask for repairs, or any other kind of spares reasons. So, it's a really big reform the big requirement is that the no grounds for evictions be abolished or both periodic and fixed term leases. So that's a kind of difference of the New South Wales government is looking at and getting a little bit nervous about, so we would say if all the advocates would say, if you abolish it but all forms of leases and replace it with a set of reasonable grounds, and there are a number of reasonable reasons why a landlord would reasonably need to end the lease. So, I might just leave it to if you wanted to.

 

[Pauline McGuirk] [00:29:24] Well, I might just ask you about one question. Those issues about, rental security. I guess the build to rent sector is often being put forward as one way of doing that in longer more secure leases, better professionalised maintenance. Where does that sit in your judgement of potential changes coming down the track?

 

[Cathy Callahan] [00:29:42] Look, we welcome build to rent as a product and a model. So, it's having more corporate professional landlords who built to create the whole building for the purpose of renting, who are not actually financially motivated to be flipping tenants, who are not yet picking about, you know, minor issues in rental properties we think that's a good thing. To date there's very few buildings  in Australia that are true build to rent buildings and it tends to be a premium product, so there are some build to rent buildings you know it's the concierge, its pools that people probably don't need its gyms you know it's a very top end market, but it could be and I notice the New South Wales government is partnering with Community housing sector and build to rent upgrades to have standalone buildings that are built with the intention of being long term buildings for renters. So, we think it's a good product, but it's not necessarily being pitched at very low-income earners.

 

[Pauline McGuirk] [00:30:52] Well let me stay on the theme of renters now and flip back to you, Tim, because I think certainly owner occupiers and renters in really different positions and prospects in the housing market and I think that's very true when it comes to questions of improving the sustainability and the energy efficiency outcomes. So, when it comes to the particular position of tenants in relation to those issues, what do you think are the big changes that we need to be pursuing?

 

[Tim McCarthy] [00:31:22]  Well with 30% of all Australians living in rental properties, that's a huge population who are disadvantaged as it has just been pointed out there needs to be incentives for landlords to improve their properties for the benefit of their tenants and currently government guidelines to renters is ask your landlord, are you willing to green this property? and they're many of the greening strategies don't even qualify for tax rebates for the landlord. Some things like solar panels do but they're not very useful to people in apartments so I guess the disadvantage that renters have in that very often they're not allowed to make changes themselves that they might be willing to pay for. The changes aren't being done by the landlords and we see some horrific stories and advice if you go to the better renting the website, the advice for some people put bubble wrap on your windows to keep the frost out. Now these things are appalling, that they're happening in properties that are worth hundreds of thousands of dollars, and landlords are having capital gains on them and so forth. So, I think that the ways of incentivising landlords so that they actually feel pride in what they provide in the product to their tenants. The built to rent market we've seen overseas does lead to much better outcomes because the owner has that long term investment and they want to make sure that their tenants remain, rent paying tenants for as long as possible and quite often they will be incentivised to make the energy efficiency in the common areas and apartment blocks much more efficient, and there can be paybacks then for the people renting those apartments as well or even if you have a mixed between renters and owners. The main thing is how do we make incentives for landlords to do the right thing? How do we make it socially unacceptable for landlords to not do the right thing? If we can move towards things like mandatory disclosure of energy efficiency of rental properties that people would know what they're buying into rather than move in and find that they're freezing in winter and baking in summer.

 

[Pauline McGuirk] [00:34:14] Excellent and speaking as someone who is in a very cold rental property at the moment who didn't have that information before they moved in it's interesting to think about. Look, I've got one last, question I'd like to pose back to you again Cathy while we're still talking about renting. Certainly, one highly vulnerable now I've just lost your visuals Cathy, can you still hear me?

 

[Cathy Callahan] [00:34:40] Yes, I can.

 

[Pauline McGuirk] [00:34:41] Okay. So, you can still hear me, so I'll keep going. Very low-income households are perhaps the most vulnerable rung of the housing markets, and particularly in housing markets like in Australia, that's still dominated by private forms of housing. So, for the question of coming back to the security of housing for very low-income households, we've seen some moves in that direction and in the changes in the last year or so. Can you give me your sense of are we on the cusp again? or moving in the right direction or are there big, big things as yet unaddressed?

 

[Cathy Callahan] [00:35:18] So in terms of very low-income households, what we say at shelter is the private housing market has never provided secure housing to that cohort, so this is not just you know a post-Covid thing, but it really hasn't. But what we have had in the past is a decent stock of public housing that constitute a genuine alternative to the private housing market. So let’s we would say with a safety net and at a minimum we would say we need 5% of all housing stock in New South Wales to be public community housing in order to constitute  a reasonable safety net working towards 10% within say a decade, like a stock of that size would actually provide a genuine alternative to the private market which is charging too much for terrible properties, and insecure tenancies. So we really are not interested in really pushing very low income people more and more into the private market, incentivising them to go there, these are people usually statutory incomes they do face outright discrimination and that's even when there is a rental vacancy rate so we really support the roles of a really big stock of social housing as a genuine alternative not just on price  but security quality of dwelling, management of tenancy and just a more decent life, as a government kind of landlord for the very low income earners.

 

[Pauline McGuirk] [00:37:01] Excellent. I mean obviously both state and federal governments have made fairly historic moves in the last year, about moves towards some of that investment in social housing. Do you think that's sufficient, or are we getting close to what would be needed to drive towards that 10%?

 

[Cathy Callahan] [00:37:23] The Commonwealth has been very modest on this so if you look at previous generations the level of investment from the federal commonwealth governments has been much bigger in New South Wales last week we did see a historic and very welcome announcement. You saw the treasurer this morning $6 billion for social housing so that's new build, repair, important thing repair and upgrade to transport upgrading it's a very old stock. The current public housing stock, upgrading dwellings for accessibility for climate readiness so we're pretty pleased about what was announced last week, and we do think there has been a steady, it's quite depressing when you look at the steady decline in the percentage of overall housing stock that is social housing in New South Wales steady rundown we're now under well under 5% about 4.6%. So, we do think this offers the hope of starting to reverse that trend and heading to the right direction, but there's a long way to go and we would also say it doesn't all need to be built a lot of it could be bought and that's been the smart approach of other states, in particular Queensland Victoria is simply go out and build. Go out and buy buildings that are maybe stalling because of the general slowdown housing market, aged care homes that have been abandoned buy them, Queensland government want hotels, there are things that can be done quickly with the money that's now available.

 

[Pauline McGuirk] [00:39:03] Great, now that brings me back into the sort of policy domain more generally and Nicole I might jump back to you at this point, because I think we've mentioned a bunch of the types of reforms being advocated certainly strong emphasis in some of the government programs increasing supply and freeing up state land to lubricate that supply. Lots of supports going into support homeownership so a bunch of kind of incremental changes. Some commentators have suggested that we need to do something much more fundamental, more dramatic than that, because as you pointed out early on, there are these structural issues in our housing system. So, of the suite of reforms that's been announced over the last year, or so do you think these initiatives are enough? Or are they in the right mindset? Or do you think there are more creative policy responses that are happening perhaps elsewhere that might have some purchase in excuse the pun that I have some purchase in Australia.

 

[Nicole Cook] [00:40:07] Thanks Pauline, yes so, I would echo some of Cathy's thoughts around there have been some really positive changes recently from both the federal government and the New South Wales government most recently but also what is happening in other states, I think seeing affordability, affordable housing needs to deliver right now is really important. The other thing we're seeing is a lot of emphasis on supply of housing and New South Wales government has been particularly, active in that space and obviously is seeking to create zoning situations so planning situations that really encourage housing developments. The question I think that some of this raises well two questions one is around the need for ongoing subsidy of social and affordable housing and of having the revenue that would enable that to continue and to grow in the ways that Cathy has outlined. So I think unless we do look at some changes to taxation, we're going to continue to be subsidising the financialized housing system that kind of push towards housing investment, to existing owner occupiers who I think Tim is absolutely right and not all in the same situation, but nonetheless, it kind of is a squeeze those taxes that I mentioned earlier on revenues that could be distributed towards more pressing questions of affordability. So, I would say that we do need to look at taxation a little more.

 

I'll just make another comment around housing supply as well which is important when considering, I think the market delivery of some of these certainly on the housing supply side some of the sort of knocks that emerge when you're relying wholly on a market to deliver housing while private developers deliver housing, and one of the things that we find in Sydney, particularly in suburban town centres, is that often there is very permissive zoning to be able to have, you know, there's a lot of development approvals that have been.

 

[Nicole Cook] [00:42:27] Approved.

 

[Nicole Cook] [00:42:28] and the possibility for development to occur but that those controls and those development approvals. So, the kind of permissive controls and the development approvals don't always result in houses, being developed because the developers are still seeking or not quite making, it's not quite viable for them to develop. So there is some local government areas in Sydney where there could be billions of development that has been approved that isn't happening and so I think there's kind of an uneven geography here of course a developer is going to go to a higher value market if the zoning is available there and so perhaps that will be good for some areas that are very lucrative there may be the higher value neighbourhoods, but then we still have some, perhaps more out of suburban neighbourhoods that nonetheless have densify town centres or town centres where people would like to live that are really struggling, even with very permissive planning control. So, we get this kind of thing of the market once again just having this kind of gap and this blind spot and this inability to really address affordability quickly. So I feel like that we really do need to continue to look at revenue stream that we can boost and support our more diverse forms of housing, social housing, perhaps, you know DE commodifying some land so that land that is not being used it has been sitting there could be expanded into the realm of community land trust the things that people like the ways Louise Crabtree been talking about for quite some time.

 

So, I think we kind of need to consider diversification, but we need a little bit of structural reform to enable that diversification to happen. Because the market itself is going to come up with these different blind spots and the other thing Pauline that I would say just around the rental market is we have to look really carefully about property investors who are really holding onto properties in the short term rental market or you aren't renting them at all and I think the New South Wales government again has been looking at different ways working with local governments to see whether there can be caps placed on some of those short term rentals but we've got to remember that there is supply sitting there that in a fully marketised system is going to go out to the highest bidder it's not about delivering affordability. It's actually about trying to get the highest rental income, so I think we do need to keep our eye on public policy on structural reform and innovation at the same time as all the positive things that we're seeing in terms of supply that are happening at the moment in response to the crisis.

 

[Pauline McGuirk] [00:45:09] Thanks Nicole, you've touched on a couple of things there, one of which I will come back to. You've started to point towards perhaps a suite of interventions in the market that are stronger than there's has been a tolerance for. So, I'll come back to that in a moment. But you also started to touch on questions about inequity, geographical inequity and so on. So I wanted to twist that and perhaps return back to Tim on that point, because when it comes to questions around sustainability, energy efficiency, and the different quality that people have access to in those, regards around their housing, there's certainly very significant inequity around energy efficiency in the housing stock that you mentioned and people are very differently positioned in relation to what their experiences around energy efficiency and sustainability. So, do you have a sense of the dimensions of that problem and what you see as necessary to address the social equity dimensions of that?

 

[Tim McCarthy] [00:46:09] Yes. Thank you, Pauline. Look, I think it is a national crime that we have the poorest people living in their homes that require the most money to heat and to cool and so there is a definite I guess drive that we should have to improve that. Now, the government both federally and state have announced significant investments for improving the energy efficiency of social housing and that's likely to improve about 50,000 homes over the next four years but that doesn't address the whole housing stock. I mean, we've maybe got 250,000 homes that need upgrading, so we're going to hit about, a fifth of those so that's an inequity and there's going to be a lottery as to whose, apartment or whose house does get that improvement and it does also feed into, the health and well-being of the occupants because if you live in a cold, environment you're likely to suffer illness more frequently than if you live in a comfortable well heated environment or you'll suffer heat stress during, the times when we have heat waves.

 

So I think there's a there's a benefit to improving the energy efficiency in that people will get, more value out of their electricity bill if they're heating and cooling themselves in an efficient apartment or house, and that will then have value nationally in terms of improving their health and well-being, because they will be more comfortable, they will be less susceptible to cold related illnesses and heat related illnesses in the long term, and I think that equity is definitely in the social side of things and that the poorer people have less access to comfortable homes and they have less access to energy efficient homes and then what we have seen overseas is as a sort of a perverse thing that when energy efficiency had been improved in social housing, the amount of energy that's consumed has increased because the occupants now see value in heating their home. They see value in coating their home, it's not costing them everything to do that and they're not living in overly cold environments. The World Health Organisation suggests that we shouldn't live in temperatures below 18 degrees, and some of our studies, we've found people living below 16 degrees throughout the wintertime. So, I think that's the inequity of it, is that people are afraid of their electricity bill shock, afraid to turn things on and that leads to other health and well-being issues.

 

[Pauline McGuirk] [00:48:58] Right. Thank you. Look, I think we've got a really strong sense of just the nature of the crisis, the affordability, dimensions of the supply dimensions of it and the really pressing social equity dimensions of it and you know the diversity of different people's positioning in relation to the impacts of this. So, Nicole, if I could turn back to you one more time. I think a lot of housing reform advocates, and I'm sure, Cathy, you've been amongst these over the years been suggesting reworking current tax incentives and controls on rents, for instance to keep rental increase under control and major uplift in investment in social housing. So we've known that these are solutions potentially or can contribute to a solution for a long time but it's proven very, very difficult to get some of these, reforms off the ground, in part because there are lots of vested interests in maintaining a housing system that is basically a profit driven housing system and Nicole you started off the conversation by pointing to some dimensions of that. So, there's obviously a politics to all of this and I wonder if you could just say a little bit and to speak just for a moment to those politics and what they have done to our capacity to move some of these reforms that we might agree on in a forward direction.

 

[Nicole Cook] [00:50:21] Thanks Pauline, that's, such an important question around these debates, I did mention some of those policy reforms that were turning our homes into investment vehicles, something like occupiers and investors, and all the flow on effects that that has for the other tenders and in a sense it was a policy shift but it also created a voting block of people who have a vested interest those who are owners occupiers or investors and 65% and that's 65% of Australia's population are owner occupiers so they are buying their home either with a mortgage or they own a home outright and that whole block is, in an economic sense, notwithstanding potentially the different, personal perspectives in an economic sense has an incentive for the kind of speculation on property that the price is going up, the non-care for the rental sector, they have an incentive, an economic incentive to allow that to continue. So, when there is an attempt really to modify, I think how that system works, there's often a very swift, electoral response and different governments have felt that over the years when they have tried to introduce changes, for instance, in modifying some of the taxation settings that I mentioned earlier. So that voting block is very significant and what the challenge that governments face, I think although the kind of political challenge here is kind of threading that needle between the need for housing affordability, and bringing voters along with that, when you do have this big block of voters who have every incentive for house prices to continue to escalate, I think what is happening in that space is that many people who are, an investor or a homeowner will be starting to know people, perhaps their children or their children's friend  who are having a very different experience to them in terms of accessing housing, and I do wonder whether those little pricks of insight that kind of coming through in at the household level are starting to filter up and that we might see a different political situation. At the end of the day, I think these debates are really important that people don't necessarily know what the policy shifts have been of the last 25 years, and I think continuing to communicate that and understand that there are different policy choices is really important.

 

[Pauline McGuirk] [00:53:07] Thanks, Nicole, that is really great, and you've brought me to a point where I would like to jump out to a question from the chat before we wrap up, because obviously in our conversation, as Nicole has just said, we're pitching forward, we're looking to reform, we're looking to how things might change in the immediate future. Somebody has asked the question to someone who's currently positioned in rental crisis, who does not have the means to wait for these changes to be adequately implemented? What advice might we give to people right now who are in the rental crisis right now? So that's a challenging one I think, one that is really worth paying a little bit of attention to before we close and I might, Cathy turns to you for your initial response to that, if you don't mind me putting you in the hot spot.

 

[Cathy Callahan] [00:53:55] Well, it's interesting. I was asked this very question during a live TV interview by a channel ten reporter, and she wrapped up the segment on the rental crisis, saying, so what's your advice? Look, it's really tough, it is really tough but what I said then, I said now is know your rights. So, while I've said landlords can kind of do a whole lot of things and pretty powerfully there are standards, there are rights that tenants have about their properties, having maintenance done, about evictions, about rent increases, about real estate agents not bidding up rent prices during the application process so just a strong encouragement for people to seek help. The Tenants Union of the South Wales has incredible, set of resources for people about if your landlord wants to do x, y, z, you know, he's a letter he's a standard letter, a template that you can use, if you need to go to the tribunal there's various community legal centres around the state. So unfortunately, it's you know, it's not a very good answer because it's really, really difficult for renters. Know your rights and don't be afraid to ask for help because there's some really fantastic professional advocates who work all day and every day to support renters, right across the state.

 

[Pauline McGuirk] [00:55:19] Thanks, Cathy and I think that acknowledgement of just how tough it is a really important point to make as well. Look, we have five minutes left, and I have five minutes that I wanted to give back to the panellists to answer one more thing, which is a scenario here. So, you are magically Prime Minister, housing minister and treasurer for a day. So, I would just want to give you one minute each to say if you could do one thing on that day, what would be the first priority step you would take to address your key issue? So, Tim, for you, that was housing energy efficiency I guess, what would be if you had one magic bullet in your arsenal? If I'm not mixing my metaphors there, what would be the one thing you would do?

 

[Tim McCarthy] [00:56:03] I'd say mandatory disclosure and mandatory energy efficiency of existing housing stock. We have mandatory energy efficiency of new housing stock, but we don't have it for existing housing stock and that disclosure as well, which has been the case in Victoria and Act and COAG actually agreed to do it to introduce mandatory disclosure of energy efficiency in 2009 and still, New South Wales doesn't have it on its books.

 

[Pauline McGuirk] [00:56:34] Okay. Excellent. Let's get that into action as soon as we can. Cathy, yours, I'm imagining, is around housing security. What's your first cab off the rank?

 

[Cathy Callahan] [00:56:44] Look, if I was Prime Minister Albanese who grew up in public housing, I would quadruple the commitment to building and creating new social housing right across the country. It's a winner it's not new, it's a retro approach, but it works, and it's an easy one to implement in terms of the complex problems we had in the country. This is actually pretty simple. If you apply money to it.

 

[Pauline McGuirk] [00:57:12] It's great. And I love your point that it's a retro policy because I think often, we get pushed towards how we can innovate, how can we do things differently. We can actually do this thing we did before and do it really well. Great, Nicole, finally yours might be more complex. The housing system. What's the one thing you would do to it to magically improve the housing system?

 

[Nicole Cook] [00:57:34] I probably have too many things Pauline but I think through this discussion, and as we've been talking I would put taxation reform back on the agenda and I would explore what options are out there I would explore incremental options that the Australian population would potentially be amenable to, and I would test some of that out, and  see whether we can push that a bit more to get the funds that we need into the projects that Cathy and Tim have been talking about.

 

[Pauline McGuirk] [00:58:06] Fantastic. Thank you. Look, we are literally on the cusp of being out of time, so I did want to just close by thanking all of you for a really insightful conversation. So, thank you Tim, thank you Nicole, thank you Cathy, and thank you to our audience as well who are watching now or who may choose to watch on YouTube sometime in the future. The event has been recorded, so if you are registered for the event, you will receive the link, to The Everlasting Cyber version so feel free to share that link with your networks. So, thank you again panellists. Thank you, audience. Thank you and good afternoon.