An update on housing from Ged Kearney

Ged Kearney is the MP for Cooper, and I’m one of her constituents. Recently I received an email from her office trying to drum up support for the Housing Australia Future Fund (HAFF) and promote Labor’s accomplishments in addressing the housing crisis.

I found it to be an extremely frustrating read, and I’ve assembled some thoughts as to why. It’s my hope that Ged reads this and uses it to inform future policy and communications¹.

The HAFF

The HAFF will be a $10B investment in the stock market, which will likely grow in value over time. The government will draw on that growth to fund housing in the form of grants to social and community housing organisations, so that they can purchase and construct housing, and then provide it to people who need it.

Ged’s email opens by describing the HAFF as

the single biggest investment in social and affordable housing in a decade.

which I instantly haff to dispute. The HAFF is not an investment in social and affordable housing at all. It’s an investment in the stock market². The returns will not even be retained as a government asset. You might call this quibbling, but it’s a reasonable quibble: the fact that the HAFF doesn’t invest in housing is one of the key objections to it.

A true investment in housing would be buying and building houses with government funds, and then keeping those houses. That’s not what the HAFF purports to do.

Its backers

The HAFF has the support of the housing industry, the building sector, the community and social housing providers and the welfare sector. Every state Premier and Chief Minister support the HAFF.

This list of supporters honestly makes me more skeptical of the HAFF.

First, I notice that “the housing industry” is listed separately to the building sector and housing providers - it’s talking about real estate sales & rental. Along with the building sector, they are the ones who stand to profit the most from the passage of the HAFF, regardless of whether it succeeds in addressing the housing crisis. Of course they support receiving a ton of free money.

The community and social housing providers & the welfare sector will also receive a lot of the financial benefit of the HAFF, so their support is also totally unremarkable. Unlike the real estate and construction industry, I’m not directly accusing them of profiteering - the benefit will come in the form of their continued existence, rather than windfall gains - but their support is not a reason to believe the policy will be effective.

Obviously the support of premiers and ministers is meaningless. They are largely Labor politicians, of course they support their own party’s flagship policy.

The omission of tenancy advocacy groups, renters unions and antipoverty advocates from this list sticks out to me like a sore thumb. If Labor could find a way to get them behind the HAFF it would go a long way to securing my own support, but I imagine that would need substantial changes made to the policy, and Labor has been unambiguous that they are unwilling to do that.

Its guaranteed perpetuity

Labor wants to ensure that we have a pipeline of funding for housing in Australia - and we know from a decade of Coalition government inaction this is crucial. The HAFF ensures that this fund will remain in perpetuity, which I know creates a great deal of confidence for the housing sector.

It means that social and affordable housing can be built each and every year, thus guaranteeing the HAFF to not be at the mercy of future governments. States and territories and the community housing sector can rely on it. This is revolutionary for the industry - it allows for long-term planning and sustained investment that we all know is desperately needed.

What? Future governments absolutely could dismantle and reapportion the HAFF, come on. The idea that a future Tony Abbott wouldn’t be able to go ahead and point its returns elsewhere based on some concocted need is laughably naive. It would be easy. With the fact that its passage has been such a trial, it would be trivial to paint it as not having a social license. The arguments against passing it are the arguments in favour of revoking it. “We’d get a $10B direct injection to the budget! It wouldn’t be tied up in some nonsense housing fund that doesn’t do enough anyway!” etc. The campaign writes itself.

This claim boils down to “they wouldn’t” and… look, they absolutely would.

Its urgency

[W]e must pull every lever available to us to tackle this challenge. The HAFF must pass the Parliament so we can continue to build housing now and into the future.

This makes absolutely no sense. The government absolutely does need to try and pull a bunch of levers, I agree. But the HAFF is simply one of many levers available. Like, it’s just a funding mechanism! Surely no-one serious would claim that the failure of the HAFF would represent the end of housing in Australia, but I cannot see what else this claim might represent.

Direct investment of taxpayer funding is possible and necessary now, and will continue to be possible and necessary later, whether the HAFF lives or dies.

Later in the email, Ged describes the impact of Labor’s failure to pass the HAFF earlier this year:

I was moved by the words of NSW Minister for Housing Rose Jackson when she said this the day after the Coalition and the Greens teamed to block the HAFF legislation from passing the Senate:

“As a direct result [of the HAFF being blocked] we had a meeting in NSW with our senior officials where we essentially put on pause a whole series of work that we were doing to prepare our round 1 applications for the housing fund that were due to open on the 1st of July.

Charles Northcote, the chief executive officer of BlueChp - a social, affordable and disability housing provider said his staff had spent the last 18 months preparing 3,000 properties, which may not even happen as staff now need to renegotiate all transactions made and resecure finances.

Wendy Hayhurst, the chief executive officer of the National Community Housing Industry Association, said in July that even if the package passes in October, this could still mean a further six-month delay on homes being built due to Christmas. This equates to 8,000 to 12,000 homes that are not being built.

It is absolutely galling that the government is overseeing the cancellation of critical housing projects due to lack of funding, in a year when it has announced a $20B+ surplus. These programs could have been funded and they should have been. The funding was already there; it was Labor’s decision to tie their funding to the passage of the HAFF and so it’s on Labor that they didn’t make it.

I know that it is becoming a bit of a political gotcha to point at “The Surplus!!” every time an issue comes up that could easily have been solved by throwing money at it, but… I think that when the government has an extremely obvious lever that instantly solves the problems they continually cry about, and refuse to even attempt to mount any kind of defense as to why they won’t pull it, well, it should be a gotcha.

Labor could have funded these projects. Instead, they underfunded them so they could brag about a surplus, and then used their cancellation as ammunition in a spat against a rival. Shame.

We can’t have any more delays for the HAFF. Every single day that the HAFF delayed is $1.3m lost for housing to be built. That’s new homes for women and children escaping domestic violence, First Nations people and veterans at risk of homelessness or experiencing it.

My message for the Senate is we need to get this done.

Labor’s claim that the HAFF is urgent and important is belied by their flat refusal to negotiate improvements to it.

My read of the situation is this: giving the Greens a win on housing represents a political cost that Labor is not willing to cop. It’s more important to them to hold that political battle line than it is to meaningfully address the housing crisis.

Whenever Labor figures list the vulnerable groups impacted by the housing crisis, that’s what rattles around in my head. It seems really wrong to me, really evil. Everyone agrees those groups need housing urgently. Labor is the party who is refusing to negotiate here.

Assistance for renters

You may hear calls for rent freezes when discussing the HAFF. Constitutionally speaking, we do not have the levers available to do this. Demanding the federal government to intervene in a state responsibility is unconstitutional. What we have done, though, is placed renters’ rights on the National Cabinet Agenda.

This is a consistent furphy around the rent freeze debate, and it’s disappointing to see Ged perpetuating it. Nobody was calling for an unconstitutional intervention. The demand was for National Cabinet to coordinate a rent freeze incentive, something entirely within their powers. Either Ged and her staffers are underinformed on this issue, or it’s a cynical misrepresentation to score political points. I don’t rate this behaviour at all.

National Cabinet have also agreed to deliver a stronger and unified approach to renters’ rights:

• Developing a nationally consistent policy to require genuine reasonable grounds for eviction.
• Moving towards limiting rental increases to once a year.
• Phasing in minimum rental standards.

These are positive steps forward from the states and territories - but it doesn’t end here.

Cooper is located in Victoria, a state which has already implemented the minimum rental standards and rental increase frequency limits (like most states!).

This is entirely aside from the fact that the issue with rental increases is the magnitude, not the frequency. It is trivial for a landlord to switch out smaller frequent increases for annual much larger ones. It is glaringly obvious that that will be the outcome of this change. It’s frankly silly to suggest that this will matter at all to anyone hoping to live in their home for more than one year (ie basically anyone).

The second issue here is that it’s already really common for a rental property to fall short of the minimum standards. Maintenance issues are routinely left unattended, and thanks to the lack of no-grounds eviction protections, a landlord can easily kick out a problem tenant for complaining too much.

Put simply: Ged’s constituents do not stand to benefit from the improvements to renting outlined in National Cabinet. I’m filing this one under “uninformed or cynical” as well, I’m sorry!

I recently read this piece from Brendan Coates, Economic Policy Program Director, and Joey Moloney, Senior Associate, from Grattan Institute, who stressed that freezing rents can do more harm than good³. What we need is supply.

Look, I honestly think there’s a coherent argument to be had around whether a rent freeze would be effective. But I think that Labor is not seriously engaging with that argument.

That’s because, even if I do buy the argument with my whole heart, we’re still left with the fact that increasing supply takes years before it alleviates rental stress, and people are ending up on the street today. The government could announce a hundred trillion dollars worth of supply funding, available immediately, and renters would be in exactly the same boat until the end of 2024 at least. It’s simply not quick enough.

The arguments against rental caps will continue to land on deaf ears because the underlying demand is for urgent help, and increasing supply does not provide that.

When you’re faced with people dying of starvation, begging for pizza, you may be right to object that pizza is junk food. But if you say, “so instead, we’ve begun work on renovating the kitchen,” you’re condemning them to death. The action is thematically aligned, sure, but it’s not a solution.

Building more housing

The email also outlines a series of other funding boosts & planning reforms that will go towards boosting supply. Some examples:

• $2 billion Social Housing Accelerator to deliver thousands of new social homes across Australia right now
• A National Housing Accord which includes federal funding to deliver 10,000 affordable homes over five years from 2024
• $1.7 billion one-year extension of the National Housing and Homelessness Agreement with States and Territories, including a $67.5 million boost to homelessness funding over the next year.
• Increasing the maximum rate of Commonwealth Rent Assistance by 15 per cent, the largest increase in over thirty years.

And, a cautious hooray for these. I’m happy to see the government investing directly in housing. When the government turns some of its revenue into real estate equity, I’m a happy camper⁴.

My main objection here is just that these reforms represent tiny baby steps when we need to be making ambitious strides. The social housing shortfall is in the hundreds of thousands; Labor’s announcements seem to have set the lofty goal of solving a little bit under 3% of the problem.

My second objection is that some of these just strike me as marketing rather than real progress. Calling the rent assistance increase is “the largest in thirty years” when it’s still totally inadequate³; framing the extension of the Homelessness Agreement as a win when it really sounds like a major homelessness program will be terminated in 2024. It honestly seems disingenuous to have them laid out in the email as though they’re significant accomplishments.

I feel like Ged and the rest of the Labor Left faction have been fighting really hard for these reforms within the party, and so want to be able to celebrate a win. That’s a relatable sentiment, but the fact that these weak results represent a triumph is pretty damning of Labor generally.

Conclusion

We need action on housing - and we need it now.

We are agreed on this. Indeed, I think the main people this email is arguing against are the ones pushing for more action, more urgently. In this debate, Ged is on the “no action” side!

For the sake of the most vulnerable in our community, I hope the Senate hears this call.

The Greens have made very clear & reasonable demands for improvements to the HAFF that would secure their vote and guarantee its passage. Labor has a straightforward, slam-dunk path to get the HAFF done if they want to take it. I can only conclude that they don’t want to take it.

All the best,

Ged

Cheers, hope to hear from you again soon,

McLean