Public Housing an Asset.
Author : Robert Pradolin is general manager, business development, for Frasers Property Australia.
We are becoming complacent and desensitised to the subtle erosion of the ties that bind our community. Social dislocation, suicide - particularly youth suicide - family violence and mental illness are all on the increase. But we don't see the commonality. Unmet in so many people affected by these complex social issues is the fundamental human need for a place to call home. There is a body of evidence that suggests people living in substandard housing are vulnerable, that if people are poorly housed, they are much more likely to develop mental illnesses.
It costs taxpayers a significant amount of money to help these people. Research by the Australian Housing and Urban Research Institute suggests every high-risk young person who is diverted from homelessness saves government about $120,000 a year. And yet we ignore the unintended consequences of members of our community not having a place to call home. Our public housing waiting lists are growing, but neither federal nor state governments have the funds to build the additional accommodation that is so badly needed.
Over the past six years I have been involved in the delivery of two social/private housing projects in Melbourne: the redevelopment of the Carlton housing estate and the Westmeadows project.
The Carlton housing estate is nearing completion and Westmeadows has just started. They are a mix of private and public housing but both projects have been achieved via the traditional development model. My employer, Frasers Property Australia (formally Australand), tendered for the project through a competitive tender process based on what we believed we could sell the private homes and apartments for, and we paid a land value to the state, while also building social housing at an agreed cost for the state government, which it now owns in full.
The more I get involved with this unloved sector of the property market, the more I am learning about how important it is to our economic and social wellbeing as a community.
Analysis by economists SGS Economics indicates a cost benefit ratio of 7:1 in respect to the economic benefit to the community of providing public, social and affordable housing in the right locations.
Our concern should be that if we allow this lack of housing to continue, the dislocation of our community is only going to grow and the aforementioned issues will become magnified and take decades to fix (if we can fix them).
The inclusive, multicultural, safe and tolerant society we have loved is unintentionally and unknowingly dying, slowly simmering in the heated temperatures of our growing housing crisis, and it will only become obvious after it's too late.
We can fix it but we need to start now. We cannot wait for another set of reports or further investigations and feasibility studies. We need to learn from other countries around the world and see what their governments have done for their cities; learn how we can adapt some of their techniques to the Australian context. The economic benefits generated are significant and the ripple effects are intangible but real. It makes good business sense.
However, we can't rely solely on government money to solve this problem. We need to mobilise private capital by making it economically viable for developers to invest in this type of housing. To do that requires a recognition by government of the market realities that will enable capital to flow naturally into this space.
Given that we are experiencing a housing boom, and with all other things being equal, we should expect to be building public, social and affordable housing that keeps pace with the percentage increase in the private market stock. Except we are not doing that. We have gone backwards in terms of both supply numbers and percentage, and, to make matters worse, prices are continually going up. You don't need to be a rocket scientist to understand that housing stress is increasing.
Further evidence of the growing problem was provided by a recent auditor-general analysis of the Victorian public housing stock (about 65,000 dwellings), which identified that 14 per cent of the stock is nearing obsolescence. At the Community Housing Federation of Victoria Conference this year, Professor Terry Burke from Swinburne University highlighted that 6000 social housing units a year would be needed to just maintain the proportion of social housing in Victoria (3.4 per cent), and more like 9000 to achieve 5 per cent - a proportion that is still significantly below current demand estimates. It's a similar story in most other states.
We need significant supply created in this sector and the only way we will be able to achieve this is to involve the private sector. We need to reframe how we think about public housing and recognise that it is key public infrastructure. And many key public infrastructure projects - think roads, hospitals, schools - are now funded as private-public partnerships, which are subsidised by the taxpayer.
We need to recognise that to have economic prosperity we need a well-functioning metropolis. And for a well-functioning metropolis, it makes good business sense to provide public, social and affordable housing in areas where the community will get the best value and it would cost taxpayers less in the long run.
It is not housing that we should be talking about; it is key public infrastructure. We need to move away from the traditional discussion and look at the problem differently.