Albanese offers $3.5bn to beat NIMBYs — but developers will be the real winners

Beware of federal-state meetings agreeing to increase housing supply. It tends to lead to… not much.

The Council of Australian Governments (COAG) — as it was called then — was big on housing supply back in the Rudd-Gillard years. COAG set up a National Housing Supply Council in 2008 and tasked it with examining ways to improve supply and affordability. In 2010 it was asked to identify barriers to additional supply. The issue was then handed to the treasurers’ equivalent of COAG, which committed states and territories to overhauling planning processes and working with local councils to speed up land supply.

Sound familiar? The result was… nothing.

Tony Abbott then abolished the National Housing Supply Council as part of his war on reality-based policymaking, and the issue was left idle until housing affordability again became politically hot under Malcolm Turnbull. Then-treasurer Scott Morrison announced — with no-one except Crikey noticing — that he was going to do exactly the same thing as had happened when Wayne Swan was treasurer.

The result? Again, nothing.

Credit where it’s due: this time around, Anthony Albanese has worked out that the states won’t do anything inexpedient without the incentive of a bucket of money, which is what he is offering if they release enough land and facilitate enough development to hit the “stretch” goal of 1.2 million new dwellings. The bucket will be $3 billion big and it won’t be divvied up by population; it will be first-in, best-dressed, based on how many dwellings they achieve beyond their share of the original 1 million dwellings promised under the National Housing Accord.

To sweeten the deal still further, there’ll be another half-billion in grants available for state and territory governments and local councils “to kick-start housing supply in well-located areas through targeted activation payments for things like connecting essential services, amenities to support new housing development, or building planning capability”.

So, $3.5 billion to beat NIMBYism. Will it be enough? Only time will tell, but it’s better than first ministers announcing they’ll be doing something on housing supply and nothing ever happening, which is the history of the past 15 years.

The real winners will, naturally, be developers. This is not about governments building extra housing themselves. There will, however, be tension between state and territory governments and developers. The former will want the incentive payments, so will want developers to build and sell as quickly as possible. Developers, however, aren’t necessarily interested in building and selling as quickly as possible — they will build and sell when it makes the most money for them. Many will prefer to buy newly released land, and even obtain development approval for projects, but will then sit on the land and wait until housing prices rise even further.

Contrary to all the commentators who are insisting developers would solve our housing shortage if only we got out of the way, developers have zero interest in solving that shortage. They make vast amounts of money from perpetuating it, and that won’t change unless state and territory governments decide to regulate land release to force development and sale.

Alas, there’s nothing about that in the “National Planning Reform Blueprint”, also agreed yesterday, which is aimed at the familiar tropes of “planning, zoning, land release and other reforms, such as increasing density … streamlining approval pathways … and prioritising planning amendments to support diverse housing across a range of areas” — all the stuff we’ve been hearing from first ministers for 15 years.

Short of compelling developers to supply housing — outrageous communism! — the only guaranteed way to increase housing supply is for governments to develop new housing stock themselves, especially social and affordable housing. There was only passing mention of that yesterday. Albanese is already offering the states and territories — the only ones who can build social housing — $2 billion to accelerate its construction.

The Greens and the Coalition, however, are blocking the unnecessarily complicated Housing Australia Future Fund that will provide ongoing additional funding for social housing. It’s in the interests of neither the Greens nor the Coalition to see the government seriously address housing supply — as a protest party, the Greens don’t prosper if issues like housing and rental affordability are actually being addressed, and their affluent inner-city voters don’t want social or high-density housing near them anyway.

The $3.5 billion anti-NIMBY funding would thus be better directed at more social and affordable housing — conditional on the states not cutting their own housing spending. The solution to housing supply lies in the hands of governments, not developers.