Labor’s capital gains tax and negative gearing reforms are a major step forward, but Australia still lacks the long-term national housing strategy needed to address social housing, rental security, energy efficiency and supply failures.
The most remarkable aspect of the post-budget ruckus over the government’s proposed Capital Gains Tax reforms is surely the way that the housing dimension of the changes has – at least thus far – sailed forward with relatively little contention.
As they apply to landlord tax breaks, the changes to CGT and negative gearing are a highly commendable structural reform of Australia’s housing system – the first such initiative for a quarter of a century. Concessions incentivising property speculation at public expense, disproportionately benefiting the already-wealthy, are finally to be reined in.
While Treasurer Chalmers had deftly prepared the ground for change in the Budget lead-up, keeping faith with the measures through to Budget-night must have seemed to carry serious political risk. But the PM and Treasurer had correctly sensed the electorate’s probable openness to a reform justified by intergenerational equity concerns, and at the same time signifying government solidarity with first home buyers.
Labor’s ‘National Plan’ for housing
With the reforms now before the Senate, the Government has packaged them with its extensive array of first-term housing policy initiatives in a policy statement, ‘Homes for Australia: A National Plan’. Launched at the Press Club on 28 May by Housing Minister Clare O’Neil, ‘Homes for Australia’ is an apparent attempt to deliver on Labor’s 2022 election promise of a National Housing and Homelessness Plan (NHHP).
The inclusion of 2026 Budget property tax reforms substantially re-balances a policy suite that has also enhanced homebuyer purchasing power, hence tending to increase prices. But titling this collection a ‘Plan’ is problematic.
First formulated by Jason Clare as pre-2022 shadow housing minister, the NHHP pledge was later reiterated by Minister Julie Collins in 2023 in her commitment that this would provide ‘a 10-year national vision … to help guide future housing and homelessness policy’.
In a country facing undisputed housing challenges, yet hobbled by housing powers notoriously fragmented across levels and departments of government, and with a history of erratic federal engagement with the topic, the case for a long-term housing strategy is especially compelling for Australia.
In the recently-voiced words of the National Housing Supply and Affordability Council, the government’s expert advisory body, ‘the nation is still in need of an overarching, long-term strategy for the transformation of the housing system to deliver priority housing reforms’.
As published, the 28 May ‘Plan’ has strengths, not least its six well-defined and broad-ranging policy priorities:
- Building the homes Australia needs so housing becomes more affordable.
- Levelling the playing field for first home buyers so more Australians can own a home of their own.
- Making renting fairer and more affordable so renters can live in security and plan for the future.
- Growing the social and affordable housing sector so more Australians have a stable place to call home.
- Closing the housing gap in genuine partnership with First Nations Australians.
- Strengthening the homelessness system so more people are supported out of homelessness for good.
This is followed up with a comprehensive table of Albanese Government housing policy initiatives, logically and usefully organised according to these six priorities; a worthy documentation of recent federal efforts to address national housing policy challenges.
Important agenda gaps
At the same time, the six listed priorities imply some important omissions from the government’s housing policy agenda.
While the number one priority is to boost the quantity of housing, none of the priorities address vital efficiency or quality aspects.
The energy performance of Australian housing – newly-built, as well as existing dwelling – is infamously poor. But the document’s sole reference to the problem is a mention of federal investment in social housing energy performance. And symptomatic of the paper’s style, nothing is said here about how far this program will fulfil unmet need for such investment.
The quality of private market housing, in which 95 per cent of the population lives, does not rate a mention. Housing that is costly to heat or cool, or that makes its inhabitants sick, is not affordable housing. Without energy efficiency improvements in the private sector, the government’s objectives for housing affordability – not to mention emissions reduction – will be constantly undermined.
When it comes to the non-market sector, there is welcome acknowledgement that ‘long-term underinvestment in social housing has left Australia with a structural shortage’. This is implicit recognition of the need for continuing growth in social housing investment.
Considering that Housing Australia Future Fund (HAFF) resources are now close to exhaustion, though, a new financial commitment during this term of government will be required – but this is acknowledged only obliquely. At the same time, the need to address the rundown and financially unsustainable state of our existing public housing system also goes largely unremarked.
While stating with admirable baldness that ‘Australia does not have enough social housing’, the document does not venture to suggest the number of additional homes needed to redress this problem. This is symptomatic of more fundamental weaknesses of the document – the shallowness of its analysis, and its lack of a future vision.
Analytical weakness
‘Homes for Australia’ makes some blunt statements of Australia’s housing problems: for example, ‘Australia does not have enough social housing’, and ‘Australia is not building enough homes in part because our planning systems have made it too hard to say yes to new housing.’
These forthright assertions, however, belie a relatively superficial analysis of housing policy challenges, and a reticence towards acknowledging problems beyond barriers to new supply.
So, while familiar criticisms of planning constraints are rehearsed, the document makes no reference to the huge post-pandemic buildup of planning-approved housing projects which have remained un-commenced.
A deeper analysis would at least ask – if not definitely answer – whether developments are faltering on the costs of material, labour or finance, or indeed whether developers pausing feasible developments now to hold out for even more profitable opportunities in the future.
Similarly un-analysed in this realm is the divergence in apartment construction, which has slumped since the late 2010s, and detached house-building, which has not. Countenancing these questions opens up reform cases beyond increasing development rights; for example, targeted programs for ‘de-risking’ apartment construction.
It might also be that increased development rights are part of the supply problem, because they increase the potential future rewards of speculative holding, without other measures that press rights-holders to bring on development now.
National housing strategy still needed
As a statement of overarching federal housing priorities and measures already enacted or announced under each heading, the 28 May document serves a useful purpose.
But, despite its title, and the claim that it is informed by the 2023 consultation effort that involved 1,700 participants and 517 written submissions, nowhere does the document really live up to its billing as ‘A Plan’.
The anticipated 10-year time horizon is entirely absent. And although, ‘Next steps’ are stated under each overarching heading, most are limited to statements on the continuance of programs already commenced.
A few ‘Next steps’ are more future-facing and exploratory (for example, ‘Work with states and territories to pursue further housing reform that is ambitious, high impact, and well suited to the circumstances of each jurisdiction’). But there are no nominated timeframes, processes, forums or outputs, which would focus policymaker attention and aid accountability.
The national housing strategy Australia still needs would be founded on a rigorous analysis of housing system problems and a program of working through problems with the states and territories and other stakeholders.
The shortcomings of ‘Homes for Australia’ demonstrate the need for the Australian Parliament to place specific obligations and accountability for long-term housing policymaking on current and future federal governments. This calls for legislation mandating the development and implementation of a meaningful national strategy addressed to housing all Australians.
Hal Pawson is Professor Housing Research and Policy, and Associate Director of the City Futures Research Centre, UNSW.