I am not convinced about all the overall economic benefit of all the cash handouts – I suspect a lot of it will go on saving or repaying debt, rather than job generating consumption, even though it is targeted mostly at lower income earners who are more likely to spend it. It’s unfair that the unemployed miss out yet again though.

Other measures such as the infrastructure money for schools and the funding of insulation for housing will have long-term as well as short-term benefits, although it’s a pity this sort of expenditure wasn’t extended to include retro-fitting office buildings to make them energy efficient.  This would have larger savings on greenhouse emissions than insulation in residential housing, but a perceived handout for owners of office blocks would presumably be far less popular politically than handouts for homeowners.

Opinions tend to differ even on the impacts of what has been done already, let alone what is being proposed to be done next.  Some reports suggest the billion dollars spent increasing the First Home Owners Grants has had a big impact. For example, this article states that November figures show it has created “a surge in first home buyer mortgage applications as professional investors desert the market”.  However, it also says November was “the third month in a row in which the number of loans to buy houses climbed after eight consecutive declines” – dating back well <i>before</i> the first stimulus package was announced.  It also notes that “the size of a typical first home loan jumped $4700”, which is an indication that increasing the First Home Owner Grant helps to increase the cost of buying a home – this is consistsent with basic economic theory, although it’s impossible to separate the impact of the Grant from the impact of reduced imterest rates. 

In any case, while increasing the grant might assist some individual home buyers, it is hard to see how it generates much by way of employment, as opposed to trying to prop up the value of the residential property market.  Given this market is overvalued, I’m not convinced about the appropriateness of using taxpayer money to pump air into a property bubble.  Granted, it would be bad news for many people if this market was to collapse at the same astonsishing rate as the housing market in the USA, but that seems fairly unlikely.

The federal government latest plan to put up two billion dollars to support the commercial property sector also seems to be receiving wildly varying assessments of what its impact will be.  There even seems to be conflicting rhetoric about what it is intended to do – everything from job generation to job protection to preventing the collapse of developers to protecting the value of the commercial property market to protecting the value of the residential property market. Maybe it’s all of the above! 

In any case, I am surprised there hasn’t been more people echoing the consistent calls of National Shelter for the government to spend this sort of money on public housing.  This would undoubtedly generate jobs constructing new houses, as well as relieving some of the growing pressure on public housing waiting lists – a pressure which is almost bound to increase as more and more people find it hard to afford private rental.

The arm of the housing agreement directed at homelessness seems to be the most positive.  An extra $800 million over four years (half coming from the States), combined with a focus on prevention and early intervention, will go a long way towards meeting the stated goals of “a 50 per cent reduction in homelessness, an end to rough sleeping by 2020, and implementing a policy of ‘no exits into homelessness’ from statutory or custodial care for those at risk of homelessness.”

I have to say I am a bit disappointed at the relatively small amounts of extra money provided for social housing (usually defined as public and community housing).  The federal government is providing $400 million over the next two years, which is meant “increase the supply of social housing through new construction, providing approximately 1600 to 2100 additional dwellings by 2009-10.”   Any increase in this area is welcome, but it really isn’t enough to address the shortfall. 

The same can be said for remote Indigenous housing.  Around $167 million a year is being provided by the Commonwealth over the next ten years, which is meant to provide up to 4,200 new houses in remote Indigenous communities and upgrades and repairs to around 4,800 existing houses.
The agreement also clarifies that the States have responsibility as “the main deliverer of housing in remote Indigenous communities, providing standardised tenancy management and support consistent with public housing tenancy management.”

Again any increase is welcome, but it is not really enough over a ten year period.  Having said that, adding all the different measures addressing Indigenous issues does provide a good overall boost in redressing the historical imbalance in this area.

The federal government was recently able to find $1.5 billion to be spent in one year on tripling the first home owners grant.  It is a shame that that sort of money was not able to be channelled into these other areas instead. It would have had just as much of an effect as an economic stimulus, gone much more towards those most in need and not served to pump air into real estate prices.

Even such examination that has occurred of the COAG meetings has tended to focus on how big a pot of money will be offered to the states by the federal government in extra health and education funding.  This is important of course, but many of the problems in these areas are structural and policy based, not purely a matter of extra resources.  The level of public debate on these aspects of the issue seems to have diminished in recent times, although no doubt there are plenty of suggestions being put forward less publicly – particularly to government Ministers and advisors.

Even more concerning from my point of view is the way housing seems to have dropped off the debate.  A major new round of agreement on housing funding is also meant to be part of the COAG decisions, yet it has received minimal public attention or political focus.

It has always frustrated me how little political attention housing policy and funding receives. In my view it is just as significant as health or education – indeed failures in housing people seriously impede the changes of effectively delivering education or health.  Despite this, it receives little attention.

Much of the policy legwork in the housing area over the last few years has been done outside parliamentary and political circles.  Back in September, a range of national non-government organisations who have been working on reforming policy in this area for many years held a National Housing Advocacy Day in an effort to maintain pressure for much needed reform.  The groups – National Shelter, the Australian Council of Social Service, the Community Housing Federation of Australia and Homelessness Australia – have six recommendations for housing:

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  • A growth target should be established involving an increase in the stock of public and non-profit housing by 30,000 additional dwellings by 2012.
  • An Affordable Housing Growth Fund should be established with funding of $7.5 billion over 4 years strictly ear-marked for expanding the stock of public and non-profit housing, contributed on a proportional matching basis by the Commonwealth and the states/territories.
  • An Operating Subsidy Program should be established, with funding of $3.5 billion over 4 years provided by the Commonwealth.
  • These funding arrangements will require approximately $5 billion over 4 years above funding currently provided by the Commonwealth and state/territory governments through the Commonwealth–State Housing Agreement.
  • New stock should meet standards relating to quality, disability accessibility and energy efficiency.
  • Commonwealth Rent Assistance (CRA) should be reviewed to ensure that it best meets the needs of all low-income renters.  As a first step, the maximum rate of CRA should be increased by 30% (approximately $15.00 per week) for low-income households currently receiving the highest rate of CRA, at a cost of $500 million per annum.

Even though the budget situation of governments has deteriorated significantly, there is still plenty of talk of spending large amounts to stimulate the economy and maintain employment.  Significant chunks of that could be spent on boosting social housing stock, including helping to overcome the serious housing shortage in many Indigenous communities.  This would deliver on both the economic and social goals in a far more direct, effective and fair way than the ridiculous spending of another lazy billion dollars on boosting the first home owners grant.

The Labor government took some important early steps by actually having a Ministerial housing portfolio, and developing some measures to start addressing the housing affordability crisis – including the National Rental Affordability Scheme.  The enabling legislation for this has just passed the Senate this week. 

But major aspects still remain undone, not least the development of a national affordable housing agreement between the federal and state governments.  That needs to the subject of serious focus at COAG level, rather than an afterthought.  Perhaps once health and education agreements are finalised, some more time can be spent getting the housing policy and funding settings right, rather than pushing through an agreement as an afterthought.