“What all state governments could do with the federal government is to pool subsidy and to address the subsidy at the big gaps [in low-cost housing supply]. If you target the subsidy at the real need, you get much more bang for your buck.
“There’s enough money in the bucket at the moment if you bring it all together to solve the problem. But it’s mainly being consumed by mum and dad investors.”
More capital for affordable housing developments could be available if institutional investors like super funds, foreign pension funds and not-for-profits were given more incentives, he said.
“There will be a big gap [in supply] by 2030 if we don’t address this problem now, but there’s already enough subsidy and policy opportunity in this system if only we work together.”
A paper written by ISA for the NSW Community Housing Industry Council submitted on Monday criticised federal tax incentives for fuelling demand for housing, such as through negative gearing and capital gains tax discounts, and warned of an existing shortfall of more than 300,000 social and affordable homes in NSW.
“The COVID‐19 pandemic provides the urgent justification to address the 30‐year decline in
affordable housing as part of an effective and targeted fiscal stimulus package,” the report says.
The Morrison government revealed on Sunday a deal to give $100 million in loans and grants to the NSW government to help fast-track roads, water and electricity for affordable housing development through the $1 billion National Housing Infrastructure Facility.
One of the proposals from ISA is for an Affordable Housing Tax Credit allowing institutional investors like super funds to buy tradeable tax credits in exchange for equity funding in community housing providers. Another option is the formation of an independent fund to invest in affordable housing developments on the basis of a rate-of-return benchmark.
The paper encouraged planners to increase density of development around train stations and allow publicly-owned sites to be developed into housing, including disused manufacturing sites, golf courses and vacant space above cark parks.
Other broad reforms recommended by ISA include an oversight agency to guide local planning rules, an audit of under-utilised land sites across the country and tax reforms, including replacing stamp duty with land tax.
By re-purposing some of the existing housing subsidies towards a single program, the industry superannuation fund lobby group said larger developments could be built in areas identified to have a greater need for affordable homes.
Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.