Australia Is Facing the Biggest Housing Crisis in Generations, and Labor’s Plan Will Make It Worse

Anthony Albanese’s Labor government is accusing Greens MPs of standing in the way of solutions to the housing crisis. But under Labor’s plan, the proportion of public housing will drop while rents keep rising.

A residential building and the Sydney Tower Eye in Sydney, Australia, on Monday, April 17, 2023. (Brendon Thorne / Bloomberg via Getty Images)

In the middle of the worst housing crisis in Australia’s history, a major national debate has emerged over the Labor government’s proposed centerpiece housing policy, the Housing Australia Future Fund (HAFF).

The Australian Labor Party (ALP) requires the support of Greens MPs to pass their housing plan through Parliament. However, in its current form, Labor’s plan will see the housing crisis worsen, while doing nothing to support renters. Instead, the Greens have launched a national campaign demanding that Labor directly invests billions in building public and genuinely affordable housing. The Greens are demanding as well that the Labor government coordinate a national two-year freeze on rent increases, followed by 2 percent cap every two years on future rent increases.

So far, Labor has refused and has instead attacked Greens MPs — myself included — for “standing in the way,” while its allies in the media have tried to argue that “something is better than nothing.” In a less-than-veiled threat, Prime Minister Anthony Albanese said he is willing to let the bill fail and instead take it to the next election.

So, with the PM digging in and with Labor refusing to offer any extra funding toward public housing or move on freezing rents, this begs the question: Why are the Greens holding firm? To explain why, it’s first important to break down exactly what Labor’s Housing Australia Future Fund is. Second, we need to understand it in light of the scale of the housing crisis.

A $10-Billion Gamble

Labor’s plan is to gamble $10 billion on the stock market via the government’s Future Fund — which lost money last year — and to spend a limited fraction of the returns on housing. According to Labor’s proposal, even when the fund does make a return, funding for housing would be capped at $500 million a year. By way of comparison, Labor will spend $30 billion per year on the Stage 3 tax cuts that give a tax break of $9,000 to everyone earning over $200,000. Worse, because the proposed fund will only be allowed to spend money after it has generated an adequate return, at a minimum, it will be 2025 before a single home is completed.

Labor claims the HAFF will finance the construction of 30,000 social and “affordable” homes over five years. So far, they have not defined “affordable,” and at any rate, it’s extremely unlikely their plan will achieve anything near that target. And even if it does, the current national shortage of social and affordable housing is 640,000. And this number is due to increase by another 75,000 homes in the next five years, in part because the ALP is withdrawing funding for 24,000 rentals subsidized under the National Rental Affordability Scheme.

In sum, even if the Greens do pass Labor’s plan, the proportion of social housing in Australia will actually decline to a historical low of 3.4 percent of total housing stock. In comparison, the Organisation for Economic Co-operation and Development (OECD) average is 15 percent. In comparable countries like Austria, over 20 percent of housing is community or public.

If it wasn’t clear already, Labor’s plan won’t even touch the sides of the housing crisis, let alone provide relief for renters. In effect, it doesn’t even maintain the status quo.

Labor’s Neoliberal Housing System

The status quo is the product of a decades-long neoliberal effort by both Labor and the Coalition to transform housing into a major object of financial speculation. At the same time, they have almost entirely outsourced housing provision to property developers, banks, and other for-profit entities.

This neoliberal housing program had three key pillars. The first was the deliberate and chronic underfunding of public housing, both construction and maintenance. The second was large-scale financial deregulation. This included relaxed lending restrictions on banks and floating the Australian dollar. Neoliberal reforms also allowed financial institutions to trade and sell packages of mortgages, that is, allowed the creation of a secondary mortgage market and securitization, leading to a surge in credit and aggressive lending from banks and other mortgage brokers.

The third pillar of the bipartisan neoliberal housing policy is the potent combination of negative-gearing and capital-gains tax concessions. These measures provide massive incentives to property speculators and function as a key driver of housing financialization. Next year alone, they will cost the federal budget $12 billion.

Together, these factors have transformed housing into a lucrative financial asset. The attraction of easy cash and turbo-charged property prices has caused the number of property investors to surge. It is precisely this housing system — created by Labor and the Liberals — that is in crisis. And it is this housing system that both parties are working to protect.

This is why federal Labor and its state counterparts are trying to convince the public that it’s not possible for the government to do more to respond to the housing crisis. And this is the key to understanding the HAFF. It isn’t designed to tackle the housing crisis. It’s designed to make it look like Labor has done something. And once the government has done “something,” they hope it will reduce the social and political pressure on the federal government to actually do something.

Why the Greens Are Holding the Line

It’s important to understand that the government’s power extends beyond the ability to pass laws. Almost as important is the government’s power to frame what is and isn’t politically possible. Once Parliament passes a “plan,” it constrains civil society’s ability to demand more, even if the plan is worse than a Band-Aid.

Consequently, if the Greens were to wave through the HAFF bill, it would foreclose on the possibility of building the social and political pressure needed to force the government to take meaningful action. Partly, this is because Greens support would give tacit endorsement not only the HAFF, but to Labor’s broader argument that this is the best the government can do in the current circumstances. And that is just not true. The consequence would be abandoning millions of people to permanent housing stress, as they struggle to pay rent, wait for social housing, or are forced to sleep in their cars or on the streets. Allowing the HAFF to pass would demobilize the growing section of civil society that is justifiably angry about the degree of poverty and financial stress that exists in such a wealthy country.

By refusing to pass Labor’s housing plan without even a debate, the Greens forced a national discussion about large-scale investment in public housing and a rent freeze. This can help lay the political foundations needed to push Labor into making real, lasting concessions.

In practical terms, after only six months of campaigning, 60 percent of the country now supports a rent freeze, with only 17 percent opposed. Only a few months ago, the PM dismissed the idea of national renter standards and a rent freeze as “pixie dust.” Now it’s on the table at the National Cabinet. These are small victories given the scale of the crisis — but they are an important first step toward more transformative solutions.

In parliamentary terms, threatening to vote against the HAFF is the only immediate leverage the Greens have to force Labor to take serious action. And just as important, this parliamentary conflict helps create the space for a broader campaign in civil society. By disrupting Labor’s attempts to sandbag the rapidly deteriorating status quo, we are also disrupting their attempt to convince the public that nothing can really change.

Door Knocking for Housing

While Parliament has debated the HAFF, the Greens have also launched a national door-knocking campaign targeted at Labor-held federal electorates. Our aim is to apply pressure on the ground, in turn building a social basis that can strengthen the pressure applied in Parliament. In a basic sense, the purpose is to show Labor that if they don’t agree to invest billions in public housing and to freeze rents, they will lose seats to the Greens at the next federal election. At the same time, door knocking helps us accurately temperature-check the mood of these electorates. And this, in turn, ensures that the parliamentary wing of the Greens remains connected to the people we are meant to represent.

What we’ve found at the doors, unsurprisingly, is that the vast majority of people also want meaningful solutions. For instance, according to data gathered while door knocking, over 80 percent of people we have talked to nationwide agree that the Greens should refuse to support the HAFF until Labor agrees to coordinating a freeze on rent increases and invest billions per year in public housing.

This mobilization is underpinned by an emerging self-conscious renter class who form the core of our organizer and volunteer base, as well as our growing voter base. In other words, as rents skyrocket and house prices continue to surge ahead of wages, growing numbers of people are beginning to contemplate renting for life. In Australia, this means a lifetime of unlimited rent increases, short leases, and unfair evictions. Renters — in coalition with mortgage holders screwed over by increasing interest rates — are becoming a powerful social force capable of winning real and lasting reform on housing.

Labor Is the Party of Property Developers

Labor has largely tried to avoid engaging with Greens’ policy proposals or demands. Instead, they’ve operated on the implicit assumption that the government will never have to concede anything substantial. Consequently, much of the discussion has focused on whether or not the Greens will roll over and support Labor’s housing plan, largely unamended. A compliant media without the time or inclination to interrogate Labor’s plan has helped with this framing, with some notable exceptions.

At the same time, Labor has tried to discredit the Greens, attempting to paint the party as hypocritical for opposing particular private developments. According to Labor, nothing really matters except boosting the supply of private housing. But this assumption is revealing in itself. Instead of addressing the structural inequalities produced by for-profit housing, Labor is effectively campaigning on behalf of multibillion-dollar private developers.

In other words, for Labor — and property developers— the problem is that developers don’t have enough power to build as many homes as they want. They would have us believe that the housing crisis has been caused by NIMBYs and overly tight planning restrictions.

The facts belie this pro-developer narrative. From 1996 to 2018, supply of private dwellings exceeded demand by 500,000 homes. Indeed, from 2015 onward, there were more dwellings being constructed in comparison to the population than at any time in the last sixty years. Yet despite this increase in supply, housing prices have surged in recent years, as have rents. On the night of the 2021 census there were one million vacant dwellings — but this didn’t lower prices.

This is because developers will only “supply” housing if it doesn’t drive down property prices. This often means they will hold up construction if they think extra supply could lower prices. In Sydney, for example, authorities approved 94 percent of development applications over the last nine years. However, one hundred thousand dwellings with approval were never built.

Refusing to build can also be a source of profits for developers. Favorable planning approvals drive up the price of land, allowing developers to make a profit either selling to other developers or land banking.

People vs. Profits

But Labor’s arguments aren’t about facts — they’re about winning public consent to maintain property as a valuable financial asset for banks and property developers.

When you do consider the facts, there are no technical or economic barriers to a nationally coordinated freeze on rent increases. There are no barriers to building massive amounts of good-quality, genuinely affordable public housing. It could be funded by phasing out negative-gearing and capital-gains tax concessions for property investors.

Shortages also aren’t the problem. The ongoing decline of the private construction industry has freed up an excess of skills and construction materials that could be put to work building public and genuinely affordable housing.

And there are clear and successful precedents internationally that we could learn from. Some countries like Austria already run successful public housing systems with selection criteria so broad that 80 percent of people qualify for public housing. This means teachers, nurses, and professors live alongside cleaners and those on benefits, in turn creating a sustainable system where the rents collected can be reinvested in more housing and infrastructure like public parks.

Ultimately, the Greens are pushing hard because there are millions of people in desperate need of real solutions to the housing crisis. During the worst housing crisis in generations, we have a federal Labor government with a progressive majority in the Senate, and excess construction capacity thanks to declining private construction activity.

This means that we have a once-in-a-generation opportunity to pressure Labor into delivering a national rent freeze and agreeing to invest billions in public and genuinely affordable housing. And a clear majority agrees. Now is the time to stand strong.