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Labor's Budget vs the Housing crisis

This month we saw the government hand down a budget that showed that while they’re starting to feel the pressure on housing, they’re still not taking the scale of the crisis remotely seriously. 

There’s been a lot of spin from the government about how seriously their budget takes the cost of living and housing crisis. I thought I’d take a bit of time to unpack all the housing measures it contained, and what impacts they would really have on helping people struggling with the cost of housing, rent and housing precarity right now.

The basic summary is that while the government has no problem finding $368 billion for submarines, and $3.5 billion for stadiums they couldn’t find a single extra dollar to invest directly in public or affordable housing. Their budget confirms Labor is happy to hand $9000 a year in tax cuts to politicians and billionaires ($25 a day), but the best they could do for renters was a pathetic increase of as little as $1.12 for those lucky enough to qualify for rent assistance - while the other 5.5 million renters in Australia got nothing at all. 

Here’s the key bits in more detail:

1. Increasing Rent Assistance by 15%

This sounds okay in a headline, but unfortunately what this translates to is that those renters lucky enough to qualify for Rent Assistance will get as little as $1.12 a day extra. Meanwhile, according to the Budget papers, rents are set to continue to rapidly increase over the coming years.

Rent assistance will go up $1.12 a day, which is ten times less than average rents have gone up in the past year ($115/week on average for capital city renters). Even after this increase, the maximum rate of rent assistance for a family with 3 or more kids is only $120 a week - good luck finding a family home that you can afford to rent for that price. What this means is that $12 a week is nothing more than an insulting drop in the ocean that will be completely swallowed up by their next rent hike. 

In this budget, Labor will be giving out $7 billion a year in tax handouts to property moguls and big investors, via landlord tax breaks and capital gains concessions - 10 times more than they’ll be spending each year on this deeply inadequate Rent Assistance increase.

And for the 5.5 million renters who don’t get Rent Assistance, the Budget had nothing. 

What this budget item says to me is that they’re starting to feel the pressure to acknowledge the rental crisis. Unfortunately, they are so far out of touch with what being a renter at the moment is like, that they think coins fallen down the back of the couch will pay us off. When what we really need is a nationwide freeze on rental increases and an end to no grounds evictions. Only this will stop more renters from being priced out or evicted into homelessness.

2. Tax incentive for Build-to-Rent developments

The Budget announced several new tax incentives for investors in build-to-rent developments. Build-to-rent is a relatively new model of housing development where private investors build and rent out large unit blocks, meaning one corporate landlord for the whole development. Build-to-rent is usually marketed as a premium rental product, often rented out for well above local market rates. Some think that build-to-rent will lead to more housing being built, and cause rental costs to go down. This was definitely not the case in Australia’s first BTR project (at the Gold Coast athletes village), where the 1251 units were released in stages, despite the local rental shortage. According to management this was to avoid “flooding the rental market”, keeping hundreds of brand new homes vacant for years just to keep rents high. Regardless, tax revenue that could otherwise be used to directly fund public housing should not be gifted to property developers to build high-end apartments. 

Tax incentives for wealthy property developers and investors is exactly what has gotten us into this mess in the first place, and now the government wants to double down and hand out $30 million to make the problem worse. Certainly turning massive for-profit corporations into landlords won’t fix the housing crisis - not when we have weak rental protections and no limits of how much rents can go up by. Overseas tenants living in BTR projects have experienced mass evictions, exploitative rent setting via algorithms, limited maintenance and issues pushing issues back on unreasonable demands from their hedge fund landlords.

This measure isn’t about seriously addressing the housing crisis - if it was, that money would be going to building public and genuinely affordable housing (and it’d be a heck of a lot more $30 million), but instead Labor has again opted to hand out public money to their property developer mates.

3. Cuts to homelessness funding 

After recently announcing that they’re restoring $67.5 million per year in vital homelessness funding, the Budget papers show that the Government is cutting this funding again after only a single year. At a time when frontline services are under immense strain and pressure to service a rapidly growing homeless population, it’s incomprehensible that this government thinks it’s wise to cut nearly 700 frontline jobs.

These services are the last lines of support for people sleeping rough and facing imminent eviction into homelessness. These organisations also desperately need MORE funding, and they need security, to know their funding streams will continue so they can make plans and do their jobs more effectively. The Greens will be fighting hard to see this funding restored, increased, and provided on an ongoing basis in coming years.

4. Funding for 24,000 more affordable rental homes to be cut

The National Rental Affordability Scheme (NRAS) is set to expire in 2026. The NRAS scheme provides discounted rental housing via federal government subsidies to keep rents affordable. With the government winding back funding for NRAS over the next three years, these 24,000 homes are set to go back to full market rents, resulting in likely eviction for many of the tenants who won’t be able to afford the rent and can’t find a place in public housing. 

Over the Budget period funding will be cut each year ($181 million in total), leaving the scheme with no funding and 24,000 less people without an affordable rental by 2026, which means that even if the housing fund achieves its target of 30,000 social and affordable homes, this will hardly make up for the loss of affordable NRAS homes.

5. What about the “guarantee” of 1200 homes per state?

According to Senator Tyrrell in Tasmania, the government has guaranteed that the Housing Australia Future Fund will provide a floor of at least 1,200 homes per state and territory. This number represents a huge back down from the supposed 30,000 homes the government is trying to convince everyone their Fund is going to build. 

But aside from that, even the supposed guarantee of 1,200 homes is not backed up by the Budget papers. There’s zilch in the papers to show any change to the Fund’s model. There’s still no guaranteed minimum spend. This means that in years where the stock market loses money, like it did last year, there’s no guarantee that any homes will be built by the Fund. All that’s new is that the government’s housing body is required to “take reasonable steps to allocate a minimum of 1,200 homes” per state and territory out of what the Fund manages to build in 5 years - meaning states could still end up with zero.

6. No new money for building public or genuinely affordable housing

This week it became clearer than ever that we were looking at a declining private construction industry, freeing up considerable skills and construction materials. Alongside the urgent housing crisis, this means now is the perfect time to invest in building high-quality public housing, just like governments did in the past. Yet, there’s no money at all in the budget for new public housing. This government has chosen to ignore the desperate need for genuinely affordable housing, and instead keep pouring money into handouts to property moguls and giving tax concessions for developers trying to make a quick buck off the housing crisis.

One thing you might have heard about is the $2 billion increase to the government housing agency (NHFIC’s) liability cap announced in the Budget. To be clear this is NOT new money for building social and affordable housing. In fact it doesn’t even appear anywhere in the budget papers as a cost. All it means is that community housing providers will be able to access more government-backed loans, a necessary step to allow projects to proceed with the Housing Australia Future Fund. This isn’t inherently a bad thing, but it's nowhere near as good as actually just allocating funding for building public housing, just like we do for public schools and hospitals.

7. Is there anything else for housing?

The Budget also included changes to eligibility for their first home buyer guarantee scheme for 5% deposit loans, but this doesn’t expand the number of places in the scheme, just fiddles with who’s eligible. Research shows this policy may allow some people to get a home loan faster, but doesn’t actually make a difference for anyone who isn’t able to afford a house, and may push up house prices further by allowing people to take out bigger loans. If the government was serious about helping people afford a home they 

All in all, there’s nothing in this budget that will fundamentally shift the scale of the housing crisis or provide relief to the millions of renters struggling to keep on top of their bills. There is no policy or technical reason why the government can’t invest billions in a mass build of public and affordable homes, or coordinate action on a nationwide rent freeze - they are simply choosing to prioritise the profits of property investors & developers ahead of the needs of everyday people. 


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