Property Council backs the HAFF as important part of tackling Australia’s housing crisis, says more supply is key to affordability
Affordable housing and the HAFF are set to feature in an ABC Four Corners episode this evening that raises important questions about the definitions of housing and shines a light on the supply gap that remains across the provision of Australian housing from social, through affordable to ‘at market’.
The Housing Australia Future Fund (HAFF) is a relatively young scheme that is becoming an important part of the solution to the nation’s housing crisis, the Property Council of Australia said today. Chief Executive Mike Zorbas said that while there is a long way to go, thirty years of neglect on social and affordable housing couldn’t be fixed overnight.
“This serious discussion about how we supply more housing will be cold comfort to people in rental stress,” Mr Zorbas said.
“After decades of underinvestment, and in some cases the defunding of social and affordable housing, it is easy to lose sight of the fact that federal and state governments are now making a real effort.”
“The Property Council supports the HAFF. There should and will always be debate about how the HAFF can be improved and strengthened. More of the national property tax haul of $130 billion a year should be diverted into housing.”
“The least cost fix is improving the national definitions of housing. That includes social, affordable and including land lease and purpose built student accommodation. With a funding shortfall of close to $300 billion over the next two decades, patient institutional capital is a realistic source of new housing funding and the HAFF is a program that can leverage that.”
Having offered to appear in tonight’s episode, the Property Council has provided a written statement to Four Corners which is set out in full below.
Statement attributable to Mike Zorbas, Chief Executive Property Council of Australia:
Australia faces a housing supply deficit, both at-market and social and affordable housing, for purchase and to rent – directly attributable to a lack of Federal and State government leadership this century.
The most important question our wealthy, land-rich nation faces is how to deliver more homes – social and affordable, and at-market housing – at the scale required to meet the needs of our growing cities.
- We have roughly 400 dwellings per 1,000 people compared to an OECD median of around 500.
- Without better tax settings, homes cannot be delivered sustainably. Up to 40 per cent of the cost of a new home, at the moment the buyer walks in the door, is government taxes and charges.
- 96 per cent of housing is privately held. For social and affordable housing – less than 4 per cent of total housing stock – the funding shortfall is around $300 billion across the next two decades.
Over the past 7 years two things have changed in Canberra: (1) successive Federal governments have accepted they have a leadership role to play and (2) a pro-housing supply mindset has emerged at National Cabinet level.
- The current Federal government has made much stronger commitments to housing supply and social and affordable housing than its predecessors. The Opposition has also made policy moves to unlock new supply but is yet to arrive at its answer to social housing.
- The housing targets are a vital pillar of our national ambition to close the supply deficit. They need to be set every 5 years even after we reach enough supply on a sustainable basis.
With some $130 billion in taxes and charges levied through three levels of government, the Property Council has long held the view that social and affordable housing should and can be exclusively funded from consolidated revenue and discounted government land.
Other approaches are generally examples of the least efficient taxation types. For example, mandatory inclusionary zoning is a red tape cost injection into project feasibilities and design and ends up as a direct tax hit on affordability for the new home buyers across the rest of the project. That is not an argument against mixed income developments, rather a question of where the tax that pays for them should be levied.
On the simple basis that having a fully developed plan is superior to no plan, the Property Council welcomed the creation of the Housing Australia Future Fund (HAFF) and continues to support its expansion beyond the initial investment. Questions of governance and delivery are rightly raised with all government schemes of this size but there can be no doubt that government and industry are trying their best with the HAFF at a time of historic tax, labour, material and capital cost escalations.
The HAFF is not perfect, but it’s a damn sight better than the negligent underinvestment in social and affordable housing from both sides of politics over the past four decades.
The supply solution that needs most attention over the next decade, while Federal and State governments struggle to keep their spending under control is a combination of more domestic capital and patient, long-term institutional capital which will often involve overseas capital partners.
Community housing providers don’t have the balance sheets, and, frankly, neither do governments who refuse to tighten their belts and manage their budgets.
Affordable housing projects face the same barriers affecting housing delivery across Australia, particularly apartment development – elevated construction costs, labour shortages, financing constraints, infrastructure requirements and lengthy approval processes. Planning reforms that improve certainty, reduce delays, and support project feasibility can help unlock additional supply, but will not solve the challenge alone.
It is disappointing to note that the Federal Budget was a leap backwards for housing supply with additional taxes on investment in the supply of new homes through unflagged negative gearing, capital gains and trusts changes which Treasury says will remove 35,000 homes from the national pipeline even with extra infrastructure funding.
It is also worth noting that the definition of housing must be improved to include land lease communities and purpose-built student accommodation which both take pressure off the middle of the market.
Australia’s housing crisis was a long time coming and it will take a long time to fix. The HAFF, and its attempts to mobilise capital at scale, is an important start.
