The ACT government has initiated a review of housing affordability but without, it seems, having first identified the problem it is seeking to address.
The paper released by the government to facilitate consultation claimed, for instance, that: “The government has kept up with Canberra’s growing population by releasing more land than needed”. It went on to assert that it had in fact released land for 7000 more houses than required to meet the estimated demand.
If that statement is true, i.e. that demand for land for housing has been more than met and there is in fact an oversupply, then what is the exact nature of the problem that the current review has been tasked with addressing?
The claim can of course be subjected to a simple test – a look at the prices. Around the same time that the discussion paper was released Canberra’s median house price surged, according to local media reports, to $723,299 in the June quarter, an annual increase of 8.9 per cent. Perhaps only the government can explain how such a massive increase is consistent with the basic law of supply and demand.
In releasing the discussion paper, the Minister for Housing “challenged” the community to consider three key questions: What is working well? What do you think is not working? What could be done to improve the situation?
One worries that the government has not asked these questions of itself, but luckily it does not have to look too far for answers. A report published in October by the Australian Housing and Urban Research Institute (AHURI) titled “Government led innovations in affordable housing delivery: Inquiry into increasing affordable housing supply-evidence based principles and strategies for Australian policy and practice”, has examined the ACT government’s initiatives under its 2007 Affordable Housing Action Plan (AHAP), and compared it with strategies in a number of other jurisdictions. The report provides a rigorous and comprehensive analysis of the various strategies adopted by state/territory governments and delivers a strong endorsement of the ACT Plan.
It notes: “The 2007 Plan was an ambitious strategy. The ACT is in a different position from other states in that it directly controls land supply and hence has available a series of land supply levers not available to other states or territories.
“Nevertheless, even taking this into account, comparing the 2007 Plan with previous and current state government strategies, the breadth and depth of the plan was unusual. Moreover, the nature of the strategies were very action and outcome focused. There were very few ‘investigate’ or ‘consider’ strategies – they were predominantly strategies that required specific actions.”
Among the range of strategies evaluated by AHURI, development of the community housing sector in Canberra received particular attention and a glowing assessment. Under the 2007 AHAP, the government had provided support to Community Housing Canberra (CHC) by:
- Injecting $3 million worth of capital;
- Transferring the title of 132 public housing properties;
- Providing a $50 million revolving finance facility at government borrowing rate to enable 1000 new affordable dwellings within 10 years; and
- Providing guaranteed access to suitable land (120 dwelling sites a year) through an MOU with the LDA.
In commenting on these arrangements the AHURI report noted that the “provision of cheap government financing to the CHC was unique in Australia [in 2007] and was one of the key reasons that CHC could produce so much affordable housing stock without significant direct capital contributions from government.”
The AHURI report concludes that “CHC is now one of the most successful not-for-profit developers in Australia” and that “ their growth has been a direct outcome of the AHAP, and is an excellent case study of how a reasonably small public investment can provide an enduring stream of affordable housing supply. The ACT government has supported their growth which has also been the result of some very effective strategies led by the board and the two most recent CEOs of the company. They are an enduring legacy of the AHAP.”
In light of the unqualified endorsement by AHURI of CHC and the AHAP generally the government has no reason to delay engaging again with CHC in setting an even more ambitious target than that set 10 years ago to deliver 1000 units of affordable housing in Canberra. There is nothing to prevent the government maintaining the revolving finance facility, transferring (say) another 150 public-housing properties to CHC and increasing the guaranteed number of dwelling sites per annum to at least 200.
For the government to do anything less will expose it to a rather more personal and unwelcome response from many in the Canberra community to the third of the “challenges” laid down by the minister in releasing the discussion paper, namely: “What could be done to improve the situation?”