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We need a fairer plan for Sydney’s housing affordability problem

  • Nick Greiner

There is a long-term decline in home ownership, once the bulwark of Australian society and the centrepiece of much of our economic progress from the end of World War II.

The state government has done an outstanding job in unlocking greenfield housing land and home approvals have recovered dramatically from the record low levels at the end of Labor’s 16 years in power.

"Value sharing", where there is  a percentage of affordable housing in new developments, is one part of the housing ... “Value sharing”, where there is a percentage of affordable housing in new developments, is one part of the housing affordability solution. Photo: John Shakespeare

Equally, after 20 years of no new social housing supply there are initiatives which will lead to the first significant increase in new social housing units in memory through the Communities Plus scheme and other public-private co-operation.

It is now surely time to turn our minds to affordable housing, the market segment immediately above social housing, which largely escapes policy and political attention at all three levels of government. Particularly in Sydney – where the state’s economic success and the record infrastructure spend over the next decade or more will underpin the rapid population growth – it is apparent that the Australian dream will increasingly be out of reach for people in the lowest 40 per cent of incomes. Or to put it another way given the NSW Intergenerational Report conclusion that the city’s population will double in 40 years, we must learn to find ways to do density well and to do it justly.

“Value sharing”, or inclusionary rezoning, is one part of the solution that state and local government should adopt.

Value sharing is the inclusion of a percentage of affordable housing in new developments where development is contingent on government intervention through rezoning.

Conservative leaders should not be afraid to follow their counterparts overseas where global cities are instituting these policies. Boris Johnson in London has argued for a 30 to 50 per cent target, while Amsterdam has a 30 per cent goal. Various schemes with targets between 15 and 30 per cent were in place in New York under Mayor Michael Bloomberg, along with hundreds of cities across the United States and Europe.

It is workers in essential services – aged care, retail, hospitality and early childhood education – who are the beneficiaries of these innovative approaches to housing access. These are people who contribute enormously to the success of our city: there isn’t a neighbourhood in the city that can function without them. Fifty years ago, social housing would be well placed to support these people – but today social housing is struggling to help even the bottom 5 per cent, and virtually no one in full-time employment.

It is a classic Liberal value to create opportunities for those wanting to better themselves, provide for their families or step out of welfare dependency. Yet there is a missing rung on the ladder.

Replacing this rung requires a collaborative government approach. State and local governments will need to create a space for innovation by liberalising development controls in a way that leverages the best of each sector. We need an approach that leverages private investment, using community housing providers as the experts at managing the tenancies and properties and uses the powers of government to support and create the necessary scale.

Value sharing, phased in and considered, can be integrated easily into the booming construction industry which is the basis of so much of Sydney’s current prosperity.

While developers may not have an interest in publicly advocating for such a policy, their counterparts overseas are very used to integrating these policies into the feasibility of projects. With sufficient notice, value sharing need not impact on developers’ bottom line at all.

The city’s population will double in 40 years, we must learn to find ways to do density well and to do it justly.

For community housing providers, value sharing creates a systematic injection of affordable properties into their portfolios, which can then be used as assets to leverage further properties.

We know liveability and productivity go hand in hand in a successful knowledge-based economy of the 21st century. In a global economy, a diverse “city for all” wins the competition for investment. In such a city, housing is prevented from being a barrier to skilled migration, retention of innovators, start-ups and entrepreneurs.

Premier Mike Baird’s current priorities make access to housing a key state priority, and rates of successful transition out of social housing is one of the measures, begging for improvement.

Currently the gap between social housing and market rental is so great that there is a perverse incentive to stay in social housing. Affordable housing provides a step out of welfare dependency.

As the housing boom in NSW moderates, the enthusiastic take-up of this initiative has significant economic and social benefits which should not be ignored.

Nick Greiner is a former NSW premier