With Australia in desperate need of more homes and builders seemingly unable to keep up with demand, a creative solution may be needed to fix the country’s housing crisis.
That’s led SA Greens MLC Robert Simms to look back in time for an outside-the-box proposal – establishing a public builder to construct social housing stock and step in when private developers go under.
“We’re in the middle of the worst housing crisis we’ve seen in generations,” he told AAP.
“Simply relying on the free market to deliver the housing that we need isn’t working.”
The waitlist for government-run public housing has ballooned in recent years, with 174,600 households in line in June 2022.
This has accompanied a steady decline in the proportion of social housing in the wider market, which amounts to only 4.1 per cent of properties in 2022 compared to 4.8 in 2011.
Mr Simms says state governments in the past played a much more active role, pointing to the old SA Housing Trust which constructed “a huge amount of homes”.
In the mid-1980s more than 10 per cent of new housing stock in Australia was still being produced by the public sector, University of Sydney housing expert Nicole Gurran says, but recent decades have seen a shift away from that model.
“Australia, like the rest of the world, was infected by neoliberal ideas. The idea that the market is best to solve all of its problems,” she says.
State-owned developers still exist in Australia, but they often sell government land off to private developers rather than completing housing projects themselves.
The Sydney Morning Herald has reported the NSW government is considering shifting the focus of public developer Landcom to building homes, rather than selling to private builders.
Dr Gurran says its South Australian counterpart, the SA Housing Authority, is better geared towards providing affordable housing outcomes than in other states where making a commercial return is more central but would like to see it scale up the volume it delivers.
Despite surging demand, the collapse of major builders Porter Davis, Felmeri and Qattro in recent months has highlighted the volatility of the private construction industry.
“In circumstances where a private building company has gone under and people are left with their home being incomplete, the public builder could step in, complete the work and then the state could acquire equity in the home, which the homeowner could pay back over time,” Mr Simms said.
But Dr Gurran says it doesn’t matter who builds the homes Australia needs as long as the government underwrites the industry with adequate investment.
Pouring more funding into social housing would help ease the industry’s cyclical boom and bust nature by ensuring consistent investment during peaks and troughs in activity.
“When you’ve got mixed public and private development, it’s actually a very good model because … when things aren’t going very well the nonprofit element helps underwrite the private bit, but by the same token when things are going well the private sector helps cross-subsidise the affordable component,” she says.
Mr Simms also suggests a public builder could maintain existing social housing stock, with the SA Housing Authority’s maintenance backlog estimated at $310 million.
But SA housing minister Nick Champion won’t support Mr Simms’ motion to establish a public builder, claiming it risks hurting the industry amid a “profitless boom”.
“It would exacerbate current skills shortages, deplete the construction sector of much-needed trades and drive up costs,” he said.
Mr Champion argues residents of unfinished homes are already protected by building indemnity insurance.
Bruce Djite, South Australian executive director of developer group the Property Council, also rejects the proposal, saying the government could best assist the industry by accelerating the provision of development-ready land and addressing constraints in the planning system to increase supply.
(Australian Associated Press)