Unlocking the housing crisis

Jess Scully 0:01

Hello, everyone. Good afternoon. Good evening. Welcome. Welcome to Sydney Ideas. My name is Jess Scully, I'm really delighted to be with you all here this evening on Eora country. Before we really kick off our event today, I want to start by acknowledging that we're meeting on Gadigal country today, and to extend respect to Elders past and present of the Eora nation to acknowledge that their sovereignty was never ceded over this place, and to acknowledge the next generation of First Nations leadership that's emerging here at Sydney Uni, and in Sydney more generally. So, yes, it's good to be with you all here today, as well. We have got a cracker of a panel. I'm really excited. And I think we have an extraordinarily important topic and a framing of that topic that is necessary. It's a sort of first principles framing of a topic that we see spoken about constantly in the media in Australia at the moment, which is good, which is an evolution that we're talking about this all the time. But maybe we're just not starting the conversation in the right place. And so the conversation that we'll have tonight with you, and with our panel will take us to those core first principles. So, I'll introduce our panel, and then I'll talk a bit more about this conversation we're going to have.

Ingrid Robeyns is a philosopher and professor from Utrecht University in the Netherlands. And Ingrid works on issues of contemporary political philosophy and applied ethics. She holds a Chair in Ethics at the Institutions at the Ethics Institute of Utrecht University. Welcome Ingrid, thank you for being here.

Nicole Gurran is Professor and Chair of Urbanism at the University of Sydney. Nicole is an urban planner and a policy analyst. Her research focuses on comparative urban planning systems and approaches to housing and ecological sustainability. Thank you for being here Nicole.

And Eliza Owen is the Head of Research at CoreLogic Australia. Eliza has presented extensively on issues around housing in Australia, including housing affordability, credit conditions, the impact of COVID and housing market performance. Good to have you here.

Eliza Owens 2:23

Thank you. Thank you for having me.

Jess Scully 2:25

I'm, my name is Jess Scully. I do lots of different things and I'm a passionate bystander in the world of of housing affordability and the core questions of, of why and how did we get into this mess. And I think we know we're in a mess, right? In Australia, we know that the housing system that we have today is, is flawed, and it's dysfunctional. It's having a hugely detrimental impact on equality in our society. It's impacting the job market, it's and it's impacting labor supply. It's impacting people's feelings of belonging and community in this country. And it's creating a significant generational divide. And a significant wealth divide when, for a long time, Australia has had this perception of ourselves as being a country that sought to, to be equal that sought to prioritize a fair go. But while we've been having more of a conversation about the symptoms of housing, of our housing system, and the issue of housing affordability, we haven't really had a conversation in this country, about the foundations of this system that we have today. And that's why this conversation is so unique. Because this conversation is about the ethical, and philosophical foundations of the choices that we've made, the policy choices that have got us to this place, and the values that underpin those policy choices. Because I think we can sometimes, in Australia, and in other places, think that policies are natural, you know, natural events, phenomenon, that kind of are handed down. That's just the way things are. That's just the market. But there are value choices that have gone into those policy outcomes that we're experiencing. And so that's why I'd like to invite Ingrid, to, to open our conversation tonight by talking about the ethical and philosophical basis of this conversation. Ingrid.

Ingrid Robeyns 4:43

Thanks, Jess. Yes, well, thank you for having me here. And thank you to all of you for coming. I'm a political philosopher with a focus on economic questions. I actually am also fully trained as an economist, but I'm going to try to ask the philosophic questions here. And when preparing for this debate I thought I could start by just saying that there, when you look at this question of the housing crisis, there are four issues that, in my point of view, stand out. And the first one is, and that's actually the most fundamental question is to ask, what kind of good housing is, what kind of thing it is? And there are many different answers, but I want to single out two of them. One is that it's a resource that's needed for people to make a home. Hence, it focuses on meeting an essential human need. If you take that perspective, then housing becomes a human right. And as we know, it is mentioned as a human rights in International Declarations of Human Rights. And also, importantly, it is in, in a lot of constitutions, it's mentioned as a social right. The other perspective at the other, or well, there are many perspectives. But I think another important one is to see housing as an asset. And this can be a family that regards a family house as an, as an asset, because they want to have certain, they want to try to build up some family wealth. But it could, of course, also be individuals and companies and corporations that rent it out and then see it as an investment object. And I think this will play, I think, a real big role in the debate, because there are tensions between seeing it from those two perspectives. A second thing that I think we can take from philosophy is the notion or the concept of ownership. And here, I well, speaking from my ethic of the planet, we tend to think of ownership automatically as personal ownership. But actually, there are different types of ownership, at least three: there's personal ownership, what each of us has; there's public ownership, what the state has; and there is common ownership, which is what communities or associations of individuals have. And I should say the common ownership in the Netherlands is very important, important because social housing, which has historically been extremely important for public housing in the Netherlands, is a form of common ownership, that means it is neither owned by the state, nor is it owned by profit seeking companies. And that creates certain dynamics. If housing, so, houses can be properties of individuals, families who live in their houses, it can be families who rent it out, landlords, or it can be commercial corporation. And the the motivations that people have if they own a house, of course, really differs. Families want to have a home, corporations tend to be profit maximizing, they want to seek a profit. Or if you if you're an investor who invests in, in a corporation that will then build new houses, you want to have a certain return, if the return is not high enough, you go and put your money somewhere else. Now, what I think, and this is gonna be rough, and but I'm sure we can get back to this in the discussion. What I think is essential in this whole housing crisis debate is the neoliberal shift we've seen over the last four decades. I, as a scholar, have had for many years avoided the term neoliberalism. I've come to the conclusion that it basically disables me in speaking the truth. So, I'm now using it, but I'm using it as a descriptive term. Although, I do think that the policies that let, that neoliberal politicians or neoliberal governments have have rolled out over us have, in the case of the housing crisis, but also other dimensions of life, have been overall, on balance, negative. Speaking of Western Europe, from the 50s, to the 70s, social democratic policies were dominant. And there we see, for example, the social housing building. And but then what we've seen from the 80s onwards was that the stress was on personal ownership, and the personal ownership was subsidized and, and increasingly, things were left to the market. And we can discuss these things further later. The third point from philosophy, and you already mentioned this Jess, is, markets are not just things that exist. Markets are what we as philosophers call social constructions, which means we form them by political decisions. Now, in a well functioning democracy, this means that the voters decides how these markets are formed. Of course not, no democracy is perfect. But the rules and regulations we put on public housing and on the housing markets are political choices. And what we see under neoliberalism is that these choices are increasingly presented as technical choices that the only rational way to do is this way, but as we see with several examples that I can give later in the discussion, this is actually not true. We can choose to do the things differently if we i.e. the voters want it. And then my final comment is that I think in this whole debate, economic inequalities are really key. Housing amplifies existing economic inequalities, it makes them worse. But also it creates further economic inequalities. Because with this whole stress on on private property owning, it's actually unaccessible for the the bottom income groups. So, that means that while there's various dynamics that went on, and we will come to that later, but the, there have been quite significant distributional effects of the housing policies that we have had that have just increased inequalities, both between, I think the most important one is between income groups, but also between those who have investment, investment income, so capital owners, and those who basically have have to work by earning a living by working. And also there's a generational issues, because for young people, it's increasingly impossible to, to get a footing on the housing market. Can I take one more minute?

Jess Scully 11:13

Go for it.

Ingrid Robeyns 11:14

Okay, so then I'll say what the position is that I want to defend in this panel, I think we must see housing from the perspective of basic needs or human rights. I think that should be the first one. That doesn't mean we should ignore assets. But I think that should be the first one. Because if we leave housing to largely unregulated markets, or actually markets that, that subsidize home, home ownership, as is the case in my country, we, I think we are violating human rights. And, if that is the case, then I think there are two main options. Either you say, "Okay, this is an intrinsic feature of capitalism, so we should move to a non capitalist system," or you should tame capitalism. I've done work on what's called limitarianism, which means that we should basically reduce inequalities also from the top down, not only focus on the poor, but also trying to reduce how rich the rich are. And that could be one way to tame, to tame capitalism and to reduce those inequalities, which might then have beneficial effects on the housing markets, too. Because this enormous amount of wealth and investors has basically screws up the housing market for everybody else. Now, there are other measures that could protect ordinary people without much wealth, such as requesting that existing houses can only be sold to families and not to investors. But they can build new houses because we need new houses to be built. Or by giving private persons who do not own a house priority over investor, investors when a house is sold, or by limiting the number of houses that people can have. I'm just saying this here to make it clear that there are many options, there are choices. So, this is political. So, this is value laden. And what is, I think, definitely the case in my country but what I understand here, too, is that we should rapidly increase the share of social housing, and take other measures that address the housing crisis, without only relying on profit maximizing corporations, because they will basically just drive up prices, as we've seen in the past. And I'm repeating just when I'm saying the most important thing is not just about housing in general, but affordable housing, since if we, if people don't have affordable housing, it is a source of stress and anxiety, and hence, they can't make a home. So, that's, in a nutshell, my view.

Jess Scully 13:43

Thank you, Ingrid.

And it's worth noting that limitarianism is a broader political philosophy. But we're applying it in this context to the housing crisis, because it's where we need that kind of reset and rethink here. Nicole, if we could talk a little bit now about the situation that we're in in Australia and those policy choices that we've got here, they've got us here, in the short time that we have. Do want to talk a little bit? I mean, Ingrid talked there about the nature of housing as an asset and shelter. But it's more than that, isn't it?

Nicole Gurran 14:24

Yeah. I mean, firstly, thanks, Ingrid, for that perspective. And as a housing scholar, I really welcome the intervention from a philosopher, and not only a philosopher, but also a philosopher from, you know, the Netherlands, which is a country that housing scholars look to, when we ask, you know, "How could things be different?" And in fact, the Netherlands would look at Australia, even though I'm sure Ingrid would be justifiably critical of some of the directions that housing policy has gone in the Netherlands recently, which are more closely resembling Australia, which I'll get to in a moment. But even with that qualification, I think policymakers and scholars would look at Australia and see us as a country of very, very radical housing policies, very radically marketized housing policies. So, how did we get here? And you know, look, we could start back at the violence of colonization, but I won't, we might just go to say, you know, roughly 100 years ago, or maybe we even pick it up in the post war era, post World War Two, when we had, when we had exactly the same language, actually, that we use right now, we had a desperate shortage, but an actual shortage of physical dwellings, not just, you know, not just what we could even say, as a hypothetical shortage of dwellings, actually, our housing stock has continued to grow in line with our population, which wasn't the case in the post war era, we had a government that was supporting two things. One was supporting homeownership, which was seen to be key to sort of welfare actually, particularly welfare as people move to old age and retirement, the idea being that they'd be secure in their own home, their housing costs would reduce as their as their income did in retirement. So, there was a stability associated with homeownership. And that's been a very important principle of our, of our social and economic policy in Australia. But also a recognition that government, the role of government was to intervene in cases of market failure. And there is not a situation that I'm aware of anywhere in the world, that the market, of its own accord, delivers affordable housing for people on very low incomes, at a standard that, you know, us in the advanced, you know, Western world should think of is appropriate. The market will deliver low cost housing, but in Australia at even in the Netherlands, and you know, around, you know, the United States, United Kingdom, the standard of accommodation that's delivered by the market and was you know, ever thus, you know, ever since industrialization, it has been an unacceptable standard. Overcrowded, unaffordable in the wrong location, unsustainable, all of the problems that we see, today, were the reasons that government said they needed to intervene to fix this problem, you know, in the post war era. And they did that in Australia by supporting the construction of public housing, and also some other market supporting things such as producing land, you know, for housing development, at a moderate, at a low enough price to moderate the market, all sorts of things that, you know, we can revisit later. So, Australia, over that time, though, you know, and Ingrid mentioned the word neoliberalism. What that looks like in Australia, when it comes to housing was actually a retreat of this government conviction that it had a role in providing affordable rental housing through public housing. And instead, we shifted to demand side support. So, income support, rental assistance , so a subsidy to renters, and encouraging the private rental sector to, through things like negative gearing, for instance. So, we shifted to that. That's part of the way that government moved out of the picture. Less commitment to public housing. But at the same time, something was bubbling globally, and that was the deregulation of financial markets, allowing, so, at the very same time that our government, for instance, encouraged investment in property, it became much cheaper and much easier to get financed to invest in properties, and individuals in Australia took that up, overseas it was more big corporate investors. But that led to what we described the, as the financialization or the global financialization of housing. And as we know, the cheaper money is, and the easier it is to invest in property, the more people will and that's why prices, you know, rise and Eliza can can give us the stats and show how depressing that's been recently. But there you go. So we've had neoliberalism. We've got this, this asset assetizaation of housing, because housing has always been an asset, it's always been a source of security as well as a shelter, as well as a positional good, you know, we're proud of our houses, you know, it's a consumption good. If I could, I'd have three bathrooms, that's for sure. I've got two, I'm happy with that. You know, and, and housing, you know, so it fulfills a whole lot of different and complex functions. But what did you want to ask? I'm sorry, I've forgotten.

Jess Scully 20:30

That was all great, actually. So, I feel like we've got we've got that, Nicole, because it was really, my question is, where are we at now?

Nicole Gurran 20:38

Where we're at now? Okay.

Jess Scully 20:38

And that's where we're at now.

Nicole Gurran 20:40

Can we? No, no, we're we're really at is we are waiting to find out. And who knows which side is right, we're waiting to find out whether our Commonwealth Government will be able to introduce the housing Australia Future Fund, which will take us to providing 5000 social and affordable housing dwellings per year. We know we need at least five times that it should really be 30,000 a year, this fund will finance at 30,000 in five years. We've got the green saying we will only pass the bill, if you improve renters rights. So, make renting more secure and limit rental increases. You know, we know both of those positions are right. Greens are also asking for a much bigger investment in social and affordable housing. That's that, you know, we want to get there too. And we've got the states, who knows how to describe what the states are doing. But the Commonwealth is saying, "We can't control them on the on the rental situation." I don't really buy that, you know, there, if money's on the table, it's amazing what you can do. And the states have already started to hint that they might be up for some long overdue rental reform. But the states certainly do have some powers when it comes to planning. And, you know, we might talk more about that later.

Jess Scully 22:05

And land. And they have land, and they have a lot of agencies and have a lot of, there's a lot more tools in the toolkit I think that are currently even on the table when it comes to housing Australia Future Fund, and

Nicole Gurran 22:18

Two points, and then I'll finish. And so the Commonwealth could be saying to the States "With your land use planning powers, why not require, as part of all new developments, some affordable housing to be there, as they have long done in the Netherlands?" That was the basis for the strong establishment of a social and affordable housing sector in the Netherlands and in many parts of Europe. And so, I can leave it there.

Jess Scully 22:43

Thank you, Nicole. I mean, this should have been a whole day, right? We can all talk. The thing is, I mean to two points quickly, before we go on to Eliza. We've done it here before, as you said, after World War Two, there was a compact between the Commonwealth and the States, the intention was to build 600,000 housing units at that time, they actually delivered about 100,000, before that went, went up. But that was the ambition in the 50s. And now our ambition is so much lower. Why is that? You know, and this is not something that is foreign to Australia. This is part of our history. And the last point which I'll make, which we will come back to, is that this happens in other places in the world. This is not unique. And there are choices that are made, policy choices to correct that market failure that as you say, exists everywhere when it comes to housing. Well speaking of the market, Eliza, I feel like this is the moment to bring you in to tell us about what the market is doing right now and, and how that's impacting on the housing situation.

Eliza Owen 23:53

Sure. Thank you, Jess, and thanks to my fellow panelists for what is a really great characterization and framework for looking at the housing market. Australia's housing market is rising in value. If anyone's looking to buy something at the moment you might have experienced there's a bit more urgency, even in the past few months. Historically, housing values move inversely to interest rates. But I find it so interesting that even on the whiff of the idea that we could be at the peak of the rate hiking decisions from the RBA, already, we're getting speculation that that means the rate will go down in future and so there's capital growth prospects and so people coming back in, funnily enough, first home buyers have come back in most quickly. And I think that's something that, you know, is worth noting as much as the financialization of housing has been associated with direct investment in properties. It's also a kind of financial consideration among owner-occupiers and first home buyers who are, you know, even they try and time the market to maximize capital growth and return on their property. So, where to begin, I think as well, I guess, just looking at some of the numbers and how that relates to the state of homeownership in Australia, as well as obviously been declining over decades. So, I think there was a recent high in the 1990s of about 71%. That's down to about 66% at the moment. And fundamentally, we've seen the house value increases have outpaced income growth. So even in the past decade, there's been a real outperformance in housing values of about 50% in the past 10 years compared to wages, increasing around 25% in the same period. So that fundamentally creates more of an inequality in the housing market, because to keep up with the initial deposit, which by the way, a 20% deposit on the median dwelling in Australia represents about 160% of median annual household income. So, in order to get that deposit, you need a windfall, whether it's inheritance, whether it's having a really well paid job that allows you to, to get that money quickly. And interestingly, I, you know, I've just got, like so many thoughts from what's been said on the panel, I think, the, even recently, we've seen policy interventions that have kind of shaped that, that attitude. I wouldn't even go further to say that there's almost just the perception that housing is this investment vehicle, right? I find it so funny when people say that we need the market to deliver housing because the free market is optimal. We don't have a free housing market in Australia, it's not a, it's not a free market operating in a vacuum. We have 50% capital gains concessions for property investment, we have no, you know, kind of capital gains for the family home, we have negative gearing concessions, that's not a free market operation. The introduction of the first home loan deposit scheme is something I think really brought forward first home purchases for probably relatively wealthy young people, because the income caps to qualify for this scheme was so high. You know, those aren't free market, kind of advantages that that you're providing. I think that in the 2010s, it was probably easier to reconcile the idea of housing as both, you know, something that can accommodate everyone, and something that delivers financial return, because we had structurally lower interest rates pushing up values. And we saw the level or the concentration of pure investment in the housing market reached about 40% in the 2010s. So, so immense kind of speculation amid that low interest rate environment. And what is so interesting about that is that we did intervene, our banking regulator APRA literally put a limit on the pace of growth in housing investment lending. In 2017, they put a cap on the amount of interest-only lending that you could provide. And they didn't do that to make the housing market more equal or give more opportunity to first home buyers. They did it to protect the banks, and protect our financial system from exposure to, to greater risk and speculation. So, where was I going with that?

Jess Scully 28:58

I mean, I'm sorry, because this introduces a really important point, Eliza, because this 'safe as houses' market that we have created, has introduced incredible fragility to our entire financial system. Because the whole, we ended up coming up with a great metaphor for this, but we were talking. So, I think Eliza what have you said, this is the housing market in Australia is a cockroach that just never died, right? In the financial crisis, the cockroach has gotten a little bit wiped out in other parts of the world. But in Australia, that didn't happen. We didn't have a crash. And instead, we just thought, let's put more things on the back of the cockroach. And we have built our entire kind of financial health as a nation, you know, our big four banks, you know, people's retirement, superannuation, their whole economic future is predicated on this perpetually growing housing market, as though we don't realize that there are human consequences to that, right? Do you remember where you're going?

Eliza Owen 30:10

Oh, just to say that, you know, when we talk about radical intervention of the housing market and making it more accessible and equal, like, we totally can do it, and we totally have done it, we just haven't done it in the framework of creating a more equal fair housing system, we've done it in the framework of making sure our mortgage market is is stable and resilient to risk.

Jess Scully 30:32

And so I think this is a good moment to pause and to say to you, do you have questions? Do you have ideas? Not right now, please put them into Slido. He's keen, though, put them into Slido. We'll be coming back to you in about 10 minutes for some more for some questions. So, Slido slido.com. The point that keeps coming through here is that these are the housing market we have today in Australia, is the result of ideological choices. of value choices that we've ended up in this position. And it doesn't have to be this way. There are other, there are alternatives from elsewhere in the world. And so we could just talk about that all night. But why don't we start, Ingrid, is there anything you want to share in terms of alternatives from elsewhere in the world?

Ingrid Robeyns 31:22

Yes. But I actually want to ask first question, and that is, we are talking about homeowners, but actually the question is, how about people who rent? So, in the Netherlands, I did have the figures, the 85% of houses are privately owned. And that was only 28% after the war. Social housing was 12%, after the war, peaked to 40%, in '82, is now in at 29%. So you had a backlash. And then the big thing is that actually, the government had an attack on private rent, because they thought people, the landlords were actually, what you said, they were delivering bad housing at high, high rents. So, they thought, this is after the wars, well, after the war until the late 70s, the policies were social democratic. And then the focus was really on the quality of housing. And that didn't mean owning a house. Yeah. So and so I, in preparation of this debate, I read this book by a Dutch specialist on housing, Cody Hochstenbach, and he, one of the things he keeps pressing is, "Why do we glorify owning a house?" So, and one of the things he says is, once people own a house, even as families, not as investors, they see it as their as their assets as what they want to keep for their old age or for passing on to their children or whatever. And they are, their mindset becomes a calculating mindset. And they will vote for policies that will protect homeownership. And that tend to be also policies that actually are not good for people who rent, who tend to be the people either are very young, or to be the people who don't have lots of money. And so I think the, all the discussions, also, when we talk about solutions should also look at the interplay between owning and renting. And one could ask the question, "Why are all these countries, I think yours as well as mine, so obsessed with owning a house? And why is there not just much more common ownership, and then we rent it out?"

Eliza Owen 33:34

Yeah, I think Nicole touched a little on the importance of home ownership in Australia, in that if you're if you get to retirement and you don't own, then, again, in the context of a largely private rental market, you're kind of screwed. You don't want to be paying private rents by by the time you're in retirement, you certainly don't want to have a mortgage. There's too much volatility. Rents have become very high in recent years up about 28%. Since the onset of the pandemic, the median rent in Australia is just under $600 a week across all -

Ingrid Robeyns 34:10

So rents are not regulated?

Eliza Owen 34:14

and if it's proposed is -

Ingrid Robeyns 34:16

Okay, here, I have a solution for you!

Nicole Gurran 34:19

Yeah, timely one. It's, I mean, it's such a timely point in the national conversation. And Eliza is 100% correct. As is Ingrid. We need actually a reset on that. And it doesn't actually matter which tenure it is as long as it's secure, as long as people have agency, as long as it's fairer. But I think for all of the reasons that Eliza pointed to, in terms of the way that our whole economic system, particularly in Australia, we're not the only ones but particularly in Australia, has become so connected to housing and worse, not even connected to new housing construction, but actually connected to the sunk asset that is our existing housing stock. That extraordinary, you know, precarity is what has I think under, it's what underlies some of the political paralysis when it comes to making the right kinds of policy changes. And in part, I think there is a real fear, and an unfounded fear, actually, that the only way to get us out of this mess is somehow to crash the property market, which of course, everyone's afraid of, because of the 67% of homeowners who don't want to see the value of their asset drop, and also, who will stop buying things in the economy, and therefore will actually bring down the economy if their, if the price of their, if the value of their asset drops, not to mention, you know, the importance of the construction sector, etc. So, there is actually, I think, a valid political fear, that if, you know, the option is crashing the property market, or somehow trying to provide palliative cures around the edges, that maybe that's what you do, at least for, you know, their own short term, you know, political term. But the really good news is that there is an option there is actually, you know, the lucky thing is that you can actually fix this without wrecking the property market at all. And also supporting the important sector of the economy that is, you know, like it or not the construction sector. And that is simply by expanding the bit of our housing system that is not for profit, or limited profit. So, it's just becoming a bit more like Holland. And we can do that, you know, obviously, funding is 100% critical. And if we want to keep on, you know, funding, negative gearing, and whatever, and whatever, at least, if we could redirect that somehow more towards a nonprofit, new housing construction, that would be a step in the right direction. And we can also use our planning powers to make sure that we embed, you know, affordable and limited profit, rental and ownership as part of new development. So, there is a pathway forward. But it takes a little bit more intelligent analysis than we've seen lately. And anyway, over to our very intelligent analyst sitting over here. He's also you know, no other way around politics.

Jess Scully 37:45

The thing that's extraordinary in Australia is, you know, we've tried nothing, and we're all out of ideas. Like, and you know, you can really apply that to so many domains, but in housing in particular, right, where one of my one of my jobs is working for the World Bank, and I'm working on urban projects in Indonesia, which also has a range of challenges. But one of the things I find so illuminating about that work, is understanding that every country has a set of policy choices that they've made around land and housing. And there are fundamental choices that we are just not even having a discussion about in Australia. So, you mentioned it earlier, Ingrid, in places like Spain, Colombia, Brazil, for example, the right to housing is in the constitution. The social purpose of land is in the constitution. And everything flows from that. The idea that being the owner of a piece of land, entitles you to more rights and obligations back to society, is something that is tempered through policy choices. And we don't have that conversation here. Instead, we subsidize private ownership to the exclusion and the detriment of housing as shelter. And so that is, we need to have a kind of constitution-level conversation about this. And then we need to think, "Well, what are the other policy tools, like making renting something that isn't sort of dehumanizing in in, you know, in its essence in Australia?" The way that people in the rental market have such short, our tenure of our rental is basically six months. I know, you know, explaining Australian housing to people from around the world should be a TV show. Because the shock is extraordinary. Six months, you know people, people are lose the opportunity to become connected members of their community and feel a sense of ownership in a place not in a property because of the way we treat housing and the way we treat renters in this country. And so there's the fundamentals of land and the contribution that, for example, in places like Spain, 20%, of any development must be social housing. Even in the UK, there's a much higher standard of what percentage of housing developments needs to go into affordable, or social housing. These are, these are standard in other parts of the world. And then to the point that you made earlier, Ingrid, the idea that there could be rental caps, for example, is something that's being debated quite a lot in Australia. Does anyone else have any other ideas to throw into the pot? Since we're redesigning housing in Australia?

Eliza Owen 40:47

I guess the cap debate has, it gets very politicized, gets shut down quite quickly by the Real Estate Institute's which, you know, they're they're doing what they have to do. And they do an incredible job. I think it was the Queensland Government proposed expanding land tax thresholds to count interstate properties and the REIQ had shut that down within a couple of days. They just, you know, get out onto media and yeah, sort of defend, I guess, the private investor "And that wasn't what we signed up for." And, so that's a bit of a challenge. I guess the other point that I wanted to make earlier, which I don't think I hit home, was the the reconciliation of the asset, housing as an asset and housing as a provision for social good in the 2010s, was that because there was such a high concentration of investors, growth in rents was very low. It's about averaging about 2% a year through the 2010s. So that, I guess what I mean, is that that doesn't work now, because of the volatility that that we've seen in the rental market over the past few years, very different to what we saw in the 2010s.

Ingrid Robeyns 42:07

So, one other thought I have is that, so I think it actually, so let me start with saying something that Cody Hochstenbach says in his book, so he wants to give for this is written for citizens, but it's based on his research and the research of his colleagues. And he wants to explain the situation interpret it, but he also says, interestingly, you know, for a scholar, I want you, the reader of this book, to become angry. And what we've seen in the Netherlands is that there have been demonstrations, protests on the street, housing protests. A couple of years ago, mainly led by by young people who just had no, I mean, they were, they had just no place to live. Because the the average price of a house has it gone up from, in '95. It was €160,000, and now it's about €400 000. So, and it's impossible for because wages don't go up.

Jess Scully 43:12

That sounds cheap here Ingrid.

Nicole Gurran 43:14

Euro!

Jess Scully 43:14

Euro, it's euro.

Ingrid Robeyns 43:16

I don't know. But so in any case, it is it just shows it's more than more far more than doubled. And, of course, we know that incomes actually are not. If you don't have wealth, we know wealth grows faster than incomes, it's what you explained also, then you're stuck. And for young people, they can't get a foot through the door. So they had demonstrations, that really has put housing back on the agenda as something that cannot be left to the market. And there's some interesting small things that are happening. So, one thing is, and so that's why I'm hesitant to say whether we may be at a pivotal point where we are breaking with the neoliberal narrative or not yet, but the government always had these reports, they call it the housing market reviews, and they calculate, for example, how many houses do we need and so on and so on. As of this, and then the, for a couple of years, we didn't have a Minister of Housing, because they thought it solved, "We've given it all to the market." And then there were these protests they came back with a new minister, he's no longer, they no longer speak of the housing market, but they now use the term public housing. Public housing is something else than social housing. Public housing is all of us, all everybody literally in Dutch it's 'volkshuisvesting' which means the people's housing the people. And that whole shift to "This is about the public good, how we literally live together rather than a market where you transaction objects," that is the most fundamental thing. And so I think it is really important to to, to emphasize what ideas do. And if that is what is missing in the Australian debate, of course, I'm not to judge, I have a radical one that actually can shift the Overton window, you know that the Overton window? You just need to see something more radical to actually see what's all possible. And that is the citizens in Berlin. The citizens in Berlin have gathered signatures to then demand a referendum. And the referendum was about the statement, "Should the government of the Berlin states, the citizen government, should it socialize all the housing units of housing corporations that own more than 3000 housing units?" This is a, an the majority of the citizens voted in favor. This concerns 240,000 apartments in one city. So, and they've now had a committee that looked into the legal acceptability of this, and this committee has come to the conclusion that yes, it is legal, that the government socializes, which just basically means takes from private ownership into either common ownership or state ownership, houses. And the reason why the citizens do this is because citizens on ordinary wages, the teachers, the nurses, the firemen, they just can no longer afford to live in the city. And that, I think, is the essential thing that that makes people so angry, that they have to go live one hour away, commute, so their whole quality of life becomes much worse. So I do think I don't I do not know to what extent such things play a role here. But you need to really, and with you, I mean, all of us, no matter where we are, it is a political thing.

Jess Scully 46:45

Yes. And it's an interesting point here, because a lot of people described as key workers, you know, teachers, you know, police officers, ambulance drivers, there's been always been a lot of coverage in the last few years about how you have to live two hours out of Sydney, in order to be able to work in those industries and to service the city. It's deeply dysfunctional, the I'll, clarify the point around Berlin, they're actually going to buy the properties at some, so they're not going to commandeer,

Ingrid Robeyns 47:15

Yeah, yeah, no, of course.

Jess Scully 47:16

They're actually going to purchase them. So, so you know, it's not such a bad deal. But that's in a situation where you have more institutional ownership of property than we necessarily have in Australia, where it tends to be more individual owner,

Ingrid Robeyns 47:30

but it's also because there was in the in the German constitution, there is a notion of ownership. That basically went to what you said about obligations. Yeah, in the German - I don't know the exact phrasing. But it's something like " That ownership, ownership should reflect the common good." And that is so anti the values in neoliberalism. And that aspect of the constitution is not much used. But now that German citizens who are fed up with these policies have discovered it, they're going to use it to basically reclaim certain aspects of the welfare state, and in this case, housing, where they think that the shift to the market and to personal and individual ownership has gone too far.

Jess Scully 48:15

Well, we would love to hear from you. And I think we're going to pop Slido up on the on the screen if we haven't already. So you can have a look and and share your questions with us. Because we'd love to hear your questions. And if you have a question in the room, please raise your hand and we'll come to you with a microphone. I mean, there's so much here. Are there, there are examples. We've heard about Berlin, we know it, we've been talking about the Netherlands, places like Singapore, also famous for having a very government rather than market led housing provision. And it's something like 85%, of Singaporeans who live in the housing development board housing, it has its own challenges. But it's extraordinary. A lot of it is quite beautiful. Does anyone want to talk about that or talk about the Nordic model?

Nicole Gurran 49:04

Look, we could but I know there are questions in the room.

Audience Member 49:09

I wondered about potentially very unsexy topic, which is tax, and how our taxation system has functioned, potentially to generate this crisis? You mentioned that politicians, some of whom own 30 properties, and that's hardly unsurprising given the way in which our taxation system is structured. My question is this: how can we change our taxation system? Should we change our taxation system? And what are the moral and political considerations of doing so? When, as you say, so many of the people that derive benefits from that taxation system are private individuals? So, what's our way forward with respect to tax?

Nicole Gurran 49:48

Nicola, Eliza, Eliza Nicole, look do you? I mean, the short answer is yes, of course we should reform you know, the taxation system. What we're doing is we are incentivizing investment in property, and we're supporting people who are already owners, as opposed to people who we want to get into ownership, if that is, was the, you know, policy aspiration. We're not even doing that. Our taxation system is counterproductive in as much as it's forcing aspiring owners to compete against, you know, tax advantaged investors who are already owners. All of that said, we've got two problems. One is, you know, politically, it's, it's turned out to be really, really difficult in Australia. Two, we're not like out on a limb internationally, there are, you know, other countries as well. And as I said, the global financialization of housing has been global, you know. And so when you look at other countries, other countries also advantage ownership through the tax system. So, perhaps a more politically viable alternative, although please get angry people don't listen to me. I'm kind of the, a moderate voice here. But you know, I actually think people should be angry, and we just should reform it because it's not working. But if we wanted a perhaps a more politically viable system, we should at least say, what are we getting for that, you know, forfeit? You know, is it $13 billion or something?

Jess Scully 51:13

So, just negative gearing, yeah, 2021-2022 was $8.5 billion in tax concessions. By 2032, it will be $20 billion a year that we spend subsidizing negative gearing, which is one of the tax breaks that accrue to homeowners and give them that advantage.

Nicole Gurran 51:37

And renters get what we allocate. I think it's we've got, you know, Dr. Chris Martin in the room who could correct me, but I think it's around $4 billion a year in rental assistance, you know, and more than a third of them are still in rental stress, even after we give them that paltry subsidy. So, at least if we're going to, you know, pump that generous public subsidy in the form of negative gearing, we should ask the landlords to agree secure 10 years, to agree to, you know, fair, and consistent and very stable, rental increases, you know, these very modest proposals that are on the table. And we should shift away from subsidizing investment in the existing housing stock, which is so counterproductive, and focus on how we support you know, new housing development, which we need. Anyway.

Jess Scully 52:33

Now, Ingrid, I will come to you in a moment. But I want to let everyone know that it's six o'clock. Who's angry enough to stay for another 10 minutes?

Nicole Gurran 52:40

I'm so angry, right?

Jess Scully 52:41

I'm nagry too. So let's stay for another 10 minutes, and I reckon we'll have this nailed by then. Ingrid, did you want to add something?

Ingrid Robeyns 52:48

Yes, I want to add something which is there is this whole literature by economists that started with Thomas Piketty, but you have Emmanuel Saez and Gabriel Zucman, and all the others, who especially Zucman has done a lot of work on Zucman and Saez have done work on profit shifting and how effectively multinational corporations are increasingly paying no taxes or almost no taxes, because I mean, this is a complicated thing. But this shift around parts of what they're doing. They're multinational companies. And they, it ends up that the profit they make are, is, for example, in Bermuda, where the profit tax is 0%. That's the short version of this. And what we see in my country, and I wonder to what extent this is also happening here, is that those parties are entering our housing markets. So private rent is only as I said, 12%. Of those 12%, 70% is by human beings. So, the the amount currently owned by these private equity firms and so on is small, but it is growing very fast. Currently, they, the new new homes being bought is 15 to 25% is by them. And they of course make a huge profit because they don't pay any tax on those on the rent that they get. And they are going to, so if this tendency goes on, it's going to screw the housing market even more. And that means that your question about tax is not just about tax deductions, which we also have in the Netherlands, which are regressive. They favor those who have more, more than those who have less, but it's also that it links to the international financial tax architecture, which I think for any topic to do with inequality is absolutely urgent to address and we need our political leaders to step up to take more initiatives in this and this is not going to happen if citizens do not become more politically aware and politically active.

Jess Scully 54:59

Absolutely. I mean, tax, international tax justice is at the core of this issue as well. So, thank you. That's a really valid point. I might take a question, which is about the planning system. Why has the planning system made cooperative housing - so, another one of these community non, not for profit approaches - like in Vienna, for example, is famous, I think about 30% of people in Vienna leaving cooperative housing. But that doesn't, it seems to be impossible. Zurich, also a lot of places in Switzerland have this. Why does that seem to be such a small part of the market in New South Wales?

Nicole Gurran 55:38

Look, I don't think it's the planning system. If it is, let's just change that automatically. But I'm not as you know, someone who teaches planning and works in the planning sector. I'm not aware of any, any prohibitions against cooperative housing. But what I would say is, we don't do anything to support it. And that's what we should be doing. We should be using the planning system proactively to say, these are the types of housing developments that we want, and how can we make it as easy as possible for developers to provide them. Now in the Netherlands, where cooperative housing is a big part of new housing development, you have the planning authorities, which happened to be the municipalities who do happen to own quite a lot of land, so that makes it easier. But they proactively say we want to see social and affordable housing, and part of that affordable housing mix is going to be models like cooperative housing. So, to make cooperative housing viable, we need to reduce the price of land. You can't pay commercial land prices, if you're not providing a commercial housing product. And when I say we need to use our planning system to support affordable housing development, that's all I mean, we wouldn't have parks and gardens if we had to pay, you know, commercial, you know, residential prices to provide that nonprofit good. And that's what we need to think about when it comes to housing. But I'm not aware of specific planning restrictions.

Jess Scully 57:09

What I've encountered when it comes to cooperatives and other models, is that there's a huge financial, financial sector barrier. And so maybe Eliza, this could be something you could cast a light on? It's, that it's harder, as you say, of course, first, it's harder to access the land, because it's going up and up and up and up every year. But it's also harder to get a loan from a bank when you're a non-traditional entity, right? Like a cooperative, or

Eliza Owens 57:35

Yeah, I'll be honest, I don't really know too much about it. And that probably speaks to you know, how marginal a form of housing it is that it's never really come under our research, radar. But you know, if you can implement kind of concessions and support for something like 'build to rent', I don't see why you couldn't draw a parallel and say that, you know, we should be looking at more, yeah, different kinds of models. Sorry, I probably don't -

Nicole Gurran 58:01

No, Eliza's completely right. And in the mid 90s, believe it or not, was a heyday of the housing policy in New South Wales, you probably won't believe it. But we did have a housing policy that was specifically designed to encourage housing cooperatives. And we still have the policy architecture there on the shelf, and it could be brought out. And if it was, it would be in exactly that way. How do we subsidize it? How do we plan for it? And then how do we get the private sector entities such as the financiers to help people come together and realize that aspiration?

Jess Scully 58:34

I find that we have this extraordinarily short memory in Australia, because there used to be things called building societies in Australia, right? Where people would get together and collectively pool money to buy, to undertake development to fund their housing. There are hundreds, there are so many different models and things we could try. But we're kind of not testing any of them here. Look there any other questions in the room? Otherwise, I will go to something. So we've got one more question in the room if if people with the mics can come around. We've got a couple actually. But we've we don't have too much longer in the chat. I'll just quickly go to to one of these online questions that we've received. I'll just come to you in one moment. Oh, yes. This is what the connection I wanted to draw. So Australia has this extraordinary superannuation opportunity, we have a superannuation market - who can correct me is it $2 trillion dollars under management? Or is it more? How much two and a half?

Nicole Gurran 59:33

Three and a half!

Jess Scully 59:34

I'm way behind I thought it might have been three, three and a half trillion under management. And and this is our, you know, retirement funds that we have, many of them are not for profit or for you know, their industry connected super funds. Every time I've had a conversation with people on super funds to say this is a huge pool of capital for us to invest in as patient capital in affordable housing. They've said me "But we have a fiduciary duty to get the highest possible return for our investors." And there's no do the investors have anywhere to live is the second question. But there is a huge pot of money there that we could potentially be accessing for this. Is it, do either of you have anything to add?

Nicole Gurran 1:00:18

I can certainly comment on that. I mean, we've done some research on this. And actually, I was at an event less than two weeks ago, where we had a super fund who has invested in social and affordable, actually, it's key worker housing. And they actually reported that their returns are higher, even though they're providing an affordable rental product, their returns are higher because their risk profile was lower. And the property was managed by a community housing provider who is managing it very well, there was virtually no vacancy, no turnover, no rental arrears. And when you calculated the impact of those benefits on the return, they're actually outperforming the standard residential stocks. So, there is, you know, there is a pathway that's definitely part of the solution there.

Jess Scully 1:01:07

You know, there are so few examples of super funds, but that are coming to the party. But you're right. I mean, it's got to be part of a mix that adds more stability to the housing market. But could we go to your question?

Audience Member 1:01:18

In the 2019 election, the Labour Party took a whole raft of policies to the electorate, even grandfathering negative gearing, you know, like it's only for things coming up proactively, that were going to be, miss out on negative gearing, the Australian public delivered a miracle Prime Minister like there was a betting betting markets had him $8 on the Wednesday in a two horse race. And yet he he got the biccies. The Australian people have repudiated on the on the demand side, getting rid of policies that are going to stop stoking prices. So, it seems like the, the, any solution really has to be delivered on the supply side, where we've been pincered by developers who, as I listened during the week there all saying "No, that won't work. No, that won't work. No, we're not going to have affordable things at 15%. What about overshadowing? You know, you're going to reduce it." That sort of thing. There's so many people who want to stymie the market, because the market does work for some people. And they've got no incentive to do that. When you look at issues taken to elections, analysis is is devoid. We don't have any real analysis. Yeah, it'll be a slogan, and Bill Shorten's coming through your houses. You know, it'll be stuff like that, because it's happened before, what I think Ingrid made sort of a reference to that earlier that there has to be a political will on, get on the streets. Well, Australia doesn't really have, they go "What can you do? They're all the same." How are we going to change that? Like, really.

Jess Scully 1:03:10

I think I mean, it's a complicated issue. I mean, so we had an election in 2019, where, one you know, the party, one of the parties, the Labour Party took some changes around negative gearing and some other tax concessions to in amongst a raft of policy choices. It was a complex, I wouldn't say it's the reason that they lost the election. I think there's a whole, that's a big, big story. But you know, is there I guess the question I would take from that is, how do we create the political appetite for change? And how do we have the broader conversation philosophically about housing in Australia? Might start with you, Eliza, and then work our way along.

Eliza Owen 1:03:54

Thank you. Yeah, great question. I mean, I feel like things have kind of changed since then. I feel like there's more groundswell now around reducing the capital gains concession in particular, I think there's more recognition that that that's been too generous. We have a federal government, which is much more sympathetic to the delivery of social housing. That is, you know, a Prime Minister who grew up in social housing. But I think we'll find unfortunately, that as the homeownership rate continues to decline, that could be where your political will comes from.

Jess Scully 1:04:35

Thank you. Thank you, Eliza. Nicole?

Nicole Gurran 1:04:37

Look, I want to be optimistic. I wrote an article in 2015, which is freely available. It's actually kind of a comedy piece and it says, you know, "Why don't governments want to fix the housing problem?" You know, we could have written it yesterday. I don't know. I'm, I'm hoping that the moment in time that we're at represents a bit of a pivot away from you know, where we've been. But I'm, I'm more optimistic that someone totally outside of the housing space, you know, we need to actually, as a, as a community, as a nation just agree that we can't accept the horrendous inequality that we have in the housing space anymore. We just need to make that decision. And we probably need philosophers and political strategists, not housing researchers to tell us how to do that.

Eliza Owen 1:05:35

Agree. Thank you, Ingrid, no pressure.

Ingrid Robeyns 1:05:37

There are two general things. So, zooming out. One is this, so this neoliberal ideology has its it has turned us into consumer producers, investors in our own human capital, all these economic terms, it has basically made us no longer to think as ourselves as people who together decide how we live together, and hence as citizens. This is not just for housing, it's also about how I mean if you look, for example, I don't know whether this applies to Australia. But for example, our childcare has gone from something collective, it's now in the hands of private equity investors, which is mind blowing, in my view, but it's also the way we deal with people on welfare and so on. So, so somehow, and we should really re-politicize ourselves. I have no kind of, I don't think there's a silver bullet to this. But one metaphor that can help is the social contract, because it's doesn't need the term neoliberalism. I'm using it here in this in this audience. But if you do it with policymakers, or powerful people, they will immediately put you aside, but a social contract is like a more neutral term. And it basically just means, let's decide together. And let's deliberate, what the rules are for how we live together. And if we that basically forces them and us to be explicit about those rules. And if we do that it become it may become that we actually say, "Oh, actually, we don't like the rules we have for housing, for income for pensions, and so on." And then we can think about alternatives, alternative social contracts. I think that metaphor may help us.

Jess Scully 1:07:28

And the thing about the social contract when when Edmund Burke wrote about the social contract, he described it as a contract between generations, not just a contract between the citizens of a place and time, but what we owe those who come after us. And there's a fundamental disconnect in our responsibility to future generations with the way we're designing the social contract, the social contract when it relates to housing, and the environment, and a few other things. And so we do need to have that bigger meta conversation about the social contract, and whose values and whose privileges are we preferencing in the policy choices we make? And because I get the chance to wrap up very quickly, I think one of the things that we need to do as Australians is to realize that we have a whole world of policy options to choose from, we have a whole history of policy options to choose from. And we need to expand both in time and in space, where we look to for inspiration, and to have a more fundamental conversation about where we could be where we're going and where we could be going. And this was a pretty good start. So please thank our fabulous panel. Thank you, Ingrid, Eliza, Nicole. Thank you. Thank you for coming.

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The speakers

Professor Nicole Gurran, University of Sydney

Eliza Owen, Head of Research at CoreLogic Australia.

Professor Ingrid Robeyns, Utrecht University

Host: Jess Scully, author and curator

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Room for improvement: cities, housing and health

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