Housing Australia Future Fund? Four words, four lies

Whatever vicissitudes the Greens may be having internally, they’re doing God’s work taking Labor to task for the “$10 billion Housing Australia Future Fund”. As the slogathon over this proposal continues, it’s worth noting just how criminally inadequate and cynical it is.

It’s worth noting how it fails to address real housing needs, how desperately inadequate the coverage of it has been, and how far more complex the questions of our housing problems are, than is really being discussed. It’s also worth asking whether the Greens have managed to cut through in their opposition to this, or whether their wonkish side has got the better of them.

Let’s start with what the fund isn’t. It isn’t a $10 billion housing fund, in the sense that “fund” is being used about it. A lot of the terrible coverage hinges on the failure of the mainstream coverage to make this clear. The $10 billion is a capital sum socked away to provide income for housing.

Yes, yes, that is technically a fund, like your untouched super is a fund. But it is being deployed by Labor and carried by its press minions as if it were a disbursement fund, the money you’re going to spend over a period of time. Much of the public take it to be a disbursement fund, and Labor is happy to let them live under that misapprehension.

Still, the fund will disburse $500 million a year, and build 30,000 homes over five years, right? Ha ha, no. The $500 million is the maximum the fund can disburse from its income, by law. There is no guarantee it will make that much money. Or any. Last year it would have lost 3.7% and would have had to use part or all the profits from the next year to restore the fund.

Still, 30,000 homes. That’s a great target, ain’t it? That’s Labor laying down bricks and mortar on the landscape? Ha ha, no. For a start, “homes” means dwellings. That will include one-bedroom and quite possibly studio flats. Better to have than not, sure. But once again an ambiguous term is being used to make this look like a larger program than it is.

Still, even if we conclude that the fund won’t have $2.5 billion to disburse, the general direction of investment is upwards, right? Well, not necessarily. We may be entering a period of stagnation that stops short of crisis but delivers low returns for some time. But let’s say that the fund delivers as a generous lower limit $2 billion over five years. That’s 2 billion bucks, right?

Ha ha, no. The fund will not be indexed for inflation for the first five years, and global inflation may well run for some time. Let’s set that at a mild 3% a year for five years, with a cumulative loss in value of about 20%. That means that not only will the purchasing power of the fund go down to $1.6 billion, but the $10 billion fund will have to be shored up, either from its own income or from a further government injection.

But that’s not the end of it because we have to consider construction sector price rises, which have been running ahead of inflation and are responsible for the current collapse of numerous private builders — indeed, the stalling of the whole sector. Costs rose 13% in Victoria last year, and global demand means that rises will continue. So let’s — again generously to the fund — take out another 12% of the purchasing power of the $1.6 billion over five years, and take it down to about $1.4 billion.

Still, OK, $1.4 billion is… Heh. Even when you throw billions around in 2023, that’s looking pretty piss weak. But wait, it gets worse. The claim that the fund will build 30,000 homes — housing, say, 20,000 families and 10,000 childless couples and singles — appears to be somewhat ad hoc. On the $2.5 billion claimed five-year disbursement figure, it suggest a cost of $80,000 a unit (which is presumably supplements, or is supplemented by, state government funds, to which the funds are paid).

Well, look, I simply don’t believe the $80,000 figure for a second. If this is to be a double disbursement — from federal to state government, and then from state government to private subcontractors — that unit cost is going to blow out. Once again, err on the generous side and say $100,000 a unit. That’s not double-counting of inflation rises — it’s simply a realistic expectation that people will take a slice of “the fat” all the way down the line.

So, we now have $1.4 billion at $100,000 a “home”, which looks to me like we’d get 14,000 of them over five years. Fourteen thousand homes. For the whole country. Split city- and state-wise, this is say 3000 each for Sydney, Melbourne and Brisbane-Gold Coast, 1000 each for Perth, Adelaide and Tasmania, and 2000 for mainland regional and rural Australia.

As an annual build, in the major cities, it’s 600 homes a year, with say 250 of them being small units. So it’s housing about 3000 people total adults and children — in cities of 5 million.

How inadequate is that? Well, the waiting list for public housing in Victoria is 60,000 households, with 36,000 in urgent need. So it would address 8% of the urgent needs — over five years. It wouldn’t even touch the sides of acute housing distress. Rental stress and unmet housing needs? It isn’t within a million miles of doing anything about that.

Come at it another way. Nationally, there were about 60,000 absolutely homeless people in 2021 (with another 60,000 highly precarious). They need, say, 20,000 homes. The Housing Australia Future Fund wouldn’t even house all the Australians sleeping in a tent or their car tonight — after five years.

So it’s not a Housing Australia Future Fund, is it? It’s a cynical joke, a political stunt. It’s been reverse-engineered from political strategising by Labor wonks to work out what would most jam the Greens up, making them choose between being absolutely ineffectual, and backing the plan, or looking like they’re blocking a government “doing something” out of ideological purity.

That is what this fund is for. That’s why this utterly minor fund, which would otherwise be a line item in the housing budget, has been trumpeted as major action on housing. The clear intent is to take people’s desperation over housing, their hunger for any sort of hope, and use that energy for political gain.

The Greens have been going in hard on this, and on the rubbery figures behind it. But Anthony Albanese’s Labor knew its enemy, and knew the Greens would get hung up on the figures, and not go for the jugular. The jugular is to accuse Labor of being cheats, liars and con artists, guilty of using people’s hopes for political gain, and shamelessly punking them.

Maybe the Greens have gamed that all out, and decided to be the party of sensible reason. Maybe there’s a good argument for that. But in the absence of a moral and personal attack, Labor ninjas such as Penny Wong and Jason Clare have been able to paint the Greens as making the perfect the enemy of the good, moral vanity blah blah blah. Maybe this has been a teachable moment for how the newly expanded lower house Greens contingent needs to play things.

Well, with the usual caveat that I am happy to debate some of my assumptions and maths, one has to say this: there is a time when “something”, by its very scale, is nothing at all, where its existence blocks the ability to see the world as it really is, and act upon it. That’s what the Housing Australia Future Fund is. That’s what it’s for. Redouble the attack, personalise it to Labor’s cruel cynicism through bad maths, and make them scream.

Then let’s have a better conversation about what the housing crisis is. And isn’t. We can do a lot better, in talk and action. Housing Australia Future Fund? Four words, four lies. 

Is Labor using people’s desperation over housing as a cynical political tool? And how should the Greens respond? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.