While Kevin Rudd continues his guerrilla warfare campaign on hospitals, playing hit-and-run in hospitals across the country, there’s another and much more pressing issue that could do with a federal takeover: housing.
The irony is that health reform is — at least in terms of the primary target, hospitals — a sort of confected issue. Australians aren’t crying out for a more economically efficient hospital system. Instead, they’ve been convinced by politicians and the media that the current system serves them poorly. In any event, however, this at least gives an economically beneficial reform a constituency — one Kevin Rudd is assiduously cultivating with his election campaign hospital tour.
A key problem with housing is that there is a strong constituency with a vested interest in no reform — the nation’s homeowners, who benefit from rising house prices — although this is your old-fashioned “false consciousness” for mortgagees, given the Reserve Bank has only one lever to pull at the point in the future when it deems that it must act on housing prices.
But those who would benefit from greater supply and more affordable housing don’t garner as much media attention because they’re young families, or on lower incomes, or in outer-suburban areas the media pretends don’t exist until there’s a riot. There’s a sort of parallel between that constituency and those who are in need of real health reform, aimed at communities currently under-served by health services.
But housing supply should be a natural Labor issue. Labor identified affordability as a rising concern before the 2007 election, going to the trouble of holding a summit on the issue. Moreover, Rudd backed up Labor’s focus on the issue in government, reversing a longstanding decline in federal social housing funding through a $5 billion social housing component of the stimulus package. The Prime Minister has also driven the issue of urban strategic planning co-ordination through COAG. It’s only a first step, identifying national criteria, but it’s an important start.
And in December, COAG announced that Treasurers would be leading a “housing supply and affordability reform agenda”, to be considered “in the first half of 2010.” While all the focus is on health and tax reform, this is one of the most important reform agendas being pursued under COAG.
The Rudd government also reversed the historical — and entirely irrational — refusal of federal governments to become involved in urban infrastructure. It’s still unclear whether the coalition supports this altered role for the federal government or in the event the coalition returns to government there will be another reversal of the policy, just as previous coalition governments have reversed Labor urban initiatives.
But infrastructure is where, to use the dreaded Ruddism, the rubber hits the road on housing supply. Land release is an issue, yes, as is the development approval process, particularly in NSW. But infrastructure provision is the key — not just transport, but water, power, education and health facilities and urban amenity. Getting infrastructure strategy right is critical.
At the moment responsibility is all over the place, split in no rational way between different levels of governments, with funding divorced from responsibility, constant sniping between local and state governments over development approval processes, and the level of government with the deepest pockets and best credit rating historically uninterested.
As NSW Premier Bob Carr earned the soubriquet “Malthus of Maroubra” (an inspired invention from Stephen Mayne) for his regular attacks on high immigration. Whatever you might think of his views on population policy, Carr’s frustration encapsulated the basic problem that as Premier he had responsibility to furnish infrastructure and land for a growing population without any control over the rate of population growth or how many new arrivals gravitated towards major cities such as Sydney.
The tension between infrastructure supply and high rates of immigration is beginning to be exploited, not just by mainstream political players but by fringe elements whose attitude towards immigration is driven more by xenophobia than sustainability concerns — on the Left and the Right. This will have unhealthy long-term consequences for economic growth, and might have decidedly unhealthy shorter-term consequences for the Rudd government.
Establishing a more rational allocation of responsibility for infrastructure planning and funding between different levels of government is critical to addressing the housing supply problem, which will continue to worsen in the face of high demand for labour and the lack of effective co-ordinated action to deliver infrastructure. There’s a lot riding on COAG Treasurers’ deliberations on the issue. Pity there’s no media obsession with housing like there is with hospitals.
Quite a good article Bernard. As you put it, the real problem is infrastructure. Yes more land could be released but people don’t realise with endless sprawling suburbs comes crime, pollution and disconnection (ie the USA).
If new land tracts are opened for development we need hospitals, police, roads, power, water and other services which need to be taken into account.
I believe a Federal takeover of housing would probably be a good thing – they may actually have the clout to get past the developers and even start a new ‘greenfields’ city someplace, connected to major cities by high speed rail. That would be a very good start towards decentralising the population and in turn, taking some of the pressure off of house prices.
Good article. The one thing I’d point out is that it is not land release that is the problem, but ‘urban consolidation’ or whatever you want to call the knocking down of inner city houses or old industrial areas to be replaced with high density housing (apartments).
The problem with this process is not so much the politicians but the public, this kind of development is almost always strongly opposed by resident groups. One of my biggest issues with the Greens (who I generally am sympathetic towards) is that they are far too often found supporting these ‘grass roots’ local groups in opposition to development. If we want a sustainable city with functioning public transport then we will have to move to a high-density setup than we currently have, and that means re-development. We can’t simply push further and further out to the west with every house having two (or more) cars and enormous volumes of air requiring energy guzzling cooling.
Why is there so much emphasis on centralisation? Just because NSW is in the toilet doesn’t mean that everything has to be taken over by the Feds.
Smaller government is usually a lot more effective than big government at service delivery and economic efficiency. Let the states do their thing. (NSW will get better once Labor is out the door)
This amounts to yet another argument in favour of getting rid of States and their governments and reforming local government, so that service deliverers are either national (eg rail, highway) or local (eg buses, water supply and so forth.
And the furphy that denser dwelling ratios are somehow greener was laid to rest in articles appearing Crikey! during the past couple of weeks which indicate that resource usage by inner city dwellers far exceeds that of suburbanites. Bogdanovist, take note.
The issue is that in NSW, it is Government policy to push for more ‘urban consolidation’.
This is dressed up in ‘green’ rhetoric but is really about the state not having either the funding nor the desire to open up new land release areas.
For example, the limited amounts of land being released means that property remains scarce, faiing to meet demand, which drives up the selling price and thus the amount flowing through to the Government in transfer fees.
3% of $500,000 is a lot more than 3% of $250,000, which is the key factor.