The Greens have opened the new year by declaring they will seek to extract concessions from Labor if they are to support their upcoming “help to buy” housing scheme.
This brewing stoush comes off the back of last year’s Labor-Greens standoff over the government’s Housing Australia Future Fund (HAFF), which resulted in a last-minute deal.
The crossbench rightly negotiated a guarantee that at least $500 million will be spent from the fund per year — much better than the previous rule that would’ve capped expenditure to ensure reinvestment. There’s nothing wrong with the government using an investment model per se, but providing an annual baseline provides more certainty of steady results.
Once this rule was amended, however, the Greens were right to cut a deal. While the HAFF still wasn’t big enough, it represented a much-needed step forward for a sector suffering a long-term dearth of federal investment.
This time around, however, do the Greens have a case for going for Labor’s jugular? We know they have electoral incentives to portray Labor as insufficiently radical on housing to appeal to young voters. But on the policy merits, how hard should they push?
In short, Albanese has invited a good shove.
Labor’s “help to buy” scheme is certainly better than state governments’ equivalent “first-home buyer grants”. The beneficiaries of such might be marginally better off, but only at the expense of marginally bidding up the cost of housing overall — an inefficient and inflationary way of giving them a leg up. Such schemes aren’t serious reforms, but mere gestures to placate concerned middle-class parents that something is being done to put their kids on a similar life trajectory to theirs.
Albanese has improved on this concept by having the government take a stake in each house, rather than simply loaning funds or funnelling them to the private sector. For the Grattan Institute’s Brendan Coates, who first floated the shared equity model, there’s another clincher — differing incentives.
“With first-home buyer grants, the temptation is to use the extra money to buy as much as you can [a bigger house] upfront, because it’s costly to upgrade your house later due to stamp duty,” he told Crikey. “However, a shared equity scheme with associated targets and caps is less likely to encourage that.”
One big difference is Labor’s scheme isn’t just for first-home buyers — you aren’t precluded if you previously owned a home, you just can’t own one now. As Coates highlights, this means it would help more older renters, which is important given how our retirement system discriminates against them.
“Nearly half of single retired renters live in poverty,” he said. “The issue for older renters is often not the deposit, but having long enough in the labour market to pay off a mortgage. This scheme would help reduce that.”
However, the low inflationary risk relies on the program being relatively small, with the current scheme slated to help 10,000 buyers per year. Labor thus faces a paradox — it’s pushing a policy that only works because it’s bite-sized into a Senate that understandably wants something meatier.
Accordingly, Greens Leader Adam Bandt has been testing some zingers — calling it “Labor’s ‘hard to get’ housing scheme”. A little overwrought, but not wrong — a program this small can only blunt the edges of the crisis.
Labor should not, however, respond by making more households eligible for “help to buy”.
“The big risk is that through parliamentary negotiations this scheme gets much bigger — then it really could be counterproductive,” Coates says.
Given this foreseeable clash, and given the constrained ambition of this foray from the get-go, Labor must prepare to add on meaningful sweeteners. Coates argues an additional policy for politicians to consider is an increase in rent assistance: “It’s the other way you stop older renters from being in poverty”.
The Greens’ two-year rent freeze proposal is a poorly reasoned non-starter, but there is more Labor could do to pressure the states on housing supply and rental protections. And then there’s negative gearing and capital gains tax — items Albanese will be keen to avoid, but which one can’t blame the Greens for pressing him on given the cowardice displayed in forswearing reform. Perhaps the simplest unity ticket is the same one agreed to in the HAFF negotiations: more investment in social housing.
Labor may present such counter-claims as the Greens making the perfect the enemy of the good, as it often does — sometimes rightly, sometimes wrongly. But the party’s latest offering can hardly purport to the moral urgency of, say, the nation’s first-ever emissions reduction scheme, or the largest investment in social housing in a decade, to assuage consternation about the shortcomings of its design.
Like the HAFF, “help to buy” should pass eventually. But in squeezing the last drop of juice from the necessarily minimalist demand subsidy model, Albanese is practically begging the Greens’ housing spokesperson Max Chandler-Mather — perhaps Parliament’s most talented grandstander — to extract his pound of flesh.
When you serve salad at a steakhouse, you can’t be surprised when your guests ask for at least some extra french fries.
Yet in watching our two progressive parties take cheap potshots at each other, I fear those suffering the pitfalls of our broken housing system will be left with a sour taste.
Other than it being unnecessary, inadequate, complex and creating yet another middleman-skimming feeding trough.
There are not two progressive parties involved. There is one progressive party and one led by someone who thinks he is Scott Morrison. I did not vote for this!
Ben says there is nothing wrong with Labor’s using an investment model for its housing fund. Well, this is. What is the point of putting public money away in a gambling fund instead of just spending it for the purpose it was raised. In other words building houses. If all government programs were arranged like this the country would grind to a stop.
It has reached a stage where I shudder every time I hear Labor is proposing something. I know it will resemble LNP policy and it will be a mess. Votes for Labor are in a stampede out the back door.
Yep, how about we spend $368B on affordable housing and create a gambling fund of $10B and spend the investment return (if any) on toys to share with the hegemon.
“ The Greens will play hardball with Labor on its next housing scheme. “
I sincerely hope so. I hope they use the bat and pointy end of the stumps. Like the rest of the better than a third of the population who rent, I’m sick and tired of announceable tokens.
I actually wish both the ALP and LNP would come clean and say “ Look. We’re not going to do a thing about unaffordable housing in this country. We’re certainly not going to do anything about exorbitant rents and non- existent rentals. We couldn’t care less about renters because…”
A) the rest of the population- the ones on some rung of the property ladder – love what we’ve created. They love their money for jam. They love the fact their “asset” increases in value every year, year after year, through no effort on their part. ‘That ain’t workin, that’s the way you do it’ as the song goes.
B) even if (when) the percentage of the population renting hits 40 or 50 or more of the population, we’ll still be the government. That’s how our system works. It has to be the LibLabs, and we’ve made some progress on making it that much harder for independents or micro parties to get elected, so it’s our way or the highway. Even if the entire population decided it hates unaffordable housing and homelessness and actually meant it, you’d still be stuck with us.
You might recall many if not most of us are landlords ourselves. It’s not as though we don’t know how to protect those who matter from the fruits of our policy choices. We have fine examples of exclusive, leafy green suburbs right here. We just need to add gates and security to these communities of merit.
Amen
First HAFF, now “Help to buy”. You have to wonder – is the ALP workshopping ideas for a future comedy routine?
HAFF was bad enough. A bunch of words pretending to be a policy, a plan to achieve absolutely nothing while pretending to be fixing a problem. A bit like a Neil Breen movie, where he’s somehow unscrewing a nut with a wrench held a couple of centimetres above the nut that he’s “working” on.
But “Help To Buy” is somehow even dumber. Give a few people an extra loan (over and above what the banks will grant them) so that they can maybe compete with property speculators and investors. The end result can only be one of two outcomes: the policy is ineffective because on the one hand the recipient is looking at a larger mortgage repayment while the investor is looking a a larger tax write-off, or the price of housing goes up because there’s a class of buyer with a little more money to splash around.
All to avoid being too left wing and actually making an effort that might result in people having a little stability with their accommodation.
Yes, the whole ‘invest 10 billion and then spend the return on that to actually build houses’ idea is very ‘Yes Minister’ isn’t it! Almost Pythonesque. Here’s an idea. Invest 10 billion directly on affordable rented housing, AKA public or council housing, and spend the returns on that on more housing. The Netherlands are also going through what they term a housing crisis, although it’s nothing like ours, so they’ve embarked on a program to build a million homes over the next ten years, 67% of which will be affordable rental. Makes our measly 40,000 in five years (maybe) look rather pitiful doesn’t it.
Hey, it’s two birds with one stone. You’re helping a few miserable young voters who probably vote Greens anyway to maybe get into the market, but much more importantly you’re raising house prices for the 60% of voters – home owners – who will determine whether or not you win the next election & who demand that, whatever socially nifty housing policy the government invents, the value of their home must go up. And up. And up. And up.
I think you’ve misunderstood the help-to-buy program. It’s a shared equity scheme, where the govt will put up 40% of the cost to purchase, so the buyer will have lower repayments based on a loan of only 60% of the purchase price. The deposit needed from the buyer is able to be dramatically reduced as a result.
My gripe is that the income cap is probably too low.
How about a competition for the best mass-produced prefab house/units? Must be green, beautiful, capable of design variety and cheap. The prizes being government contracts.
Agreed Drastic, and it doesn’t even have to be a competition. A number of suppliers doing as much in the factory as possible (to minimise the need for rare tradies) who offer a range of different claddings, so the buildings have a variety of looks, to address our national disgrace of a grossly inadequate supply of social housing is a good start. Make the buildings energy efficient and add solar panels to keep the bills as low as possible for those of us on fixed incomes.