Meaningful housing policy

It's time

home
is this my home
been starting over
bathe in the water

—The Engineers

One aspect of George Megalogenis’ Quarterly Essay I didn’t give any attention to in my previous unreview of it was what he says about housing policy. In many ways, it is the most important part of the essay, so I will go through it here. The issue also exemplifies the problem I have with GM’s analysis in general, that it comes through a two-party frame, pro-Labor, Green-hostile, and tending to discount the possible upsides of minority government while overplaying the downsides.

Basically, GM argues that Labor should embrace housing policy reform at the next election, and it is another area in which I am in strong general agreement with him. He recognises the political difficulties with a such a plan and recognises the ways in which Albanese has painted himself into a corner that makes prosecuting such policy difficult for him: Prime Minister Incrementalism will have difficulty shifting gear. GM notes that Albanese “remains a progressive prime minister in waiting, caught between the hybrid Labor/Coalition program he took to the last election and the reform program he is still finalising for a second term.”

The idea that Albanese is a “progressive prime minister in waiting” strikes me as little more than wishful thinking at this stage and it is a real weakness in how GM is thinking about housing reform. It is more likely Albanese will need to be replaced as leader if we want anything like GM’s policy reforms enacted rather than waiting around for Albanese to reinvent his prime ministership as reformist and progressive. I don’t want to get bogged down here in a discussion of Albo’s progressive bone fides, but they must be acknowledged given GM’s framing.

As I say, GM is well aware of the difficulties with embracing housing policy, saying that “The housing crisis is too big to fix within a single term, which makes it almost too easy to politicise for short-term gain,” and that “politicisation risks alienating the very voters who broke the duopoly at the last election, and with it the constituency for a new era of reform.”

In this, GM is part of growing chorus people putting housing as the defining policy of the next era of Australian politics, and that is a good thing.

In a series of posts at the Emergent City newsletter, the author sets out the wicked nature of the problem housing represents, and it is worth reading through some of the articles there. Like GM, he recognises the scale of the problem and in one excellent piece writes that “The housing crisis is an emergency and we're not acting like it.”

[T]his is not a problem that can be solved by changing a few rules. That ship sailed about a decade ago.

There are many policies that need to be deployed to address the housing crisis, but several dimensions of the issue have become a bit of a punching bag - including by me (I’m on a journey here). These scapegoat issues serve a convenient purpose by taking up an oversized amount of oxygen in the debate, while not leading to anything resembling substantive or ambitious policy proposals. Meanwhile the policy responses that (in my opinion) need the most attention are almost never even discussed publicly.

…Those who understand the issue should be framing this as a national emergency that calls for bold, heavy-handed and large-scale solutions.

Another prominent voice in support of major change is that of economist Cameron Murray who has produced this report that is worth your time.¹

Megalogenis sets out the problem in this way:

Where the climate wars have veered between government support for and denial of renewable energy, government intervention in the housing market has been a constant and counterproductive feature of our national life. The construction industry, the nation’s largest employer of men, is unable to build enough houses, apartments and townhouses to meet demand. The political system, across all three tiers of government, has been its accomplice in driving prices beyond the reach of the middle class, with handouts to prop up demand and restrictions on supply. A twin failure of capitalism and government intervention.

Megalogenis, George. Minority Report: The New Shape of Australian Politics; Quarterly Essay 96 (p. 69). Schwartz Books Pty. Ltd.. Kindle Edition.

His solution is for Labor to reframe the debate in their favour by “doing a Howard”. He notes that the former Liberal PM reinvigorated his government by pursuing, against the received wisdom of his colleagues and the political class in a general, a GST. In the same way, GM thinks Albanese should adopt the policies that, he concedes, cost Bill Shorten two elections.

“Albanese ruled out those policies at the last election and continued to do so at the time of writing,” GM writes. “But if the past does inform the present, then he should follow Howard’s GST example, and his own on the stage-three tax cuts, and go to the next election with a housing reform package that shows both sides of the budget: the savings from winding back tax breaks for property investors and the personal tax cuts they would fund for all workers.”

As an idea, it is a bit undercooked. It is steeped in the technocratic bias that believes that a good idea’s time will come, that fixing some of the distortions built into the way we approach housing, particularly those associated with negative gearing and the like, is so self-evidently the right thing to do (and it is), that people will eventually accept the logic and vote for it.

Third time lucky.

The comparison with what Howard did with GST is valid up to a point, but there are some obvious problems. One is that Albanese is unlikely to be the person to sell such reform—as I have already suggested—and another is that I wonder to what extent the past can really inform the present in this case? This reach back for the playbook of politics past is, to me, further evidence of GM’s essentially negative take on what might be possible with a minority government of Labor and an independent/Greens crossbench and we need to move past that kind of thinking.

Megalogenis constantly refers to the notion of a “hung parliament”, but as I have argued for a while now, that term is misleading. What is actually hung is the two-party system, that it is only the unwillingness of the major parties to accept the validity of a parliament in which one or other of them doesn’t have a clear majority that causes all the problems. In fact, minority government potentially opens the possibility for more substantial reform than does a simple rerun of Howard’s approach to the GST.²

When GM says, then, that “The impasse on housing highlights the inherent instability of a hung parliament in dealing with long-term challenges,” I suspect he is just flat out wrong. What it highlights is the inherent problems with the two-party system, showing that cooperation between the major parties—any temptation they might have to work in unison to solve the wicked problem of housing—is completely undermined by the politics of that two-party system. The convergence between the LNP and Labor on key issues that I noted in the previous discussion of this Quarterly Essay—and which I highlighted as a function of the status quo protecting itself—does not apply with housing.

In other words, Labor and the LNP are unlikely to ever cooperate meaningfully on the matter of housing, and it will therefore take that new third force to break out of the dysfunction that currently undermines a solution.

The market will not solve the matter and so the only way we are ever likely to fix this problem and provide more people with affordable housing, either owned or rented, is by a substantial government investment in public housing. As the author at The Emergent City puts it, “the single most important thing the Federal Government should be doing is undertaking a massive, sustained investment in building public housing. We need to get back to something approximating the quantities of public housing we used to build in the 50s-80s period.

“We need to go Full Singapore. We need to become Viennese.”

Rather than rely on warmed-over political tactics from the Howard era and wait for Albanese to grow a spine for another roll of the Shorten dice, there is a much stronger case to be made for installing a crossbench with the balance of power that can leverage that power to force real change on whichever party they support to form government.

One of the things that struck me in researching the Voices of Us book was how common it was for housing to come up in conversations with voters and organisers and candidates. They all understood that this was a huge issue, debilitating for the country unless something serious was done. The reflexive belief that “the teals” will never risk alienating their leafy-suburb constituents by touching this third rail is misplaced.

I’m not pretending any of this is easy, but it is more realistic than Albanese, weakened as he currently is, coming to our rescue.

If you want a further political comparison from another era, maybe it is a case of only Nixon can go to China. Just as the community independents explained and gathered support for the Voice referendum in their electorates—and caused those electorates to vote Yes against the run of play—they are the ones most likely to be able to sell housing reform to voters traditionally most hostile to such reform.

Their kids are being affected too; that’s how deep the malaise goes. And they know it.

What I am saying is the crossbench should make serious action on housing conditional for their support for whichever party can form government (most likely Labor at this point). The basic idea would be that they insist on real action. They should be demanding more than just a promise of “more funding” or something nebulous like that. They can’t just trade off their support for token promises on relatively minor matters.

Ideally, the independents (with support from the Greens) would have a clear idea of what that means, of an actual policy. Or at least, some research document or plan that sets out all the elements. In developing this, the crossbench is time and resource poor so there is a real opportunity for some community group or individual expert to drop on their desk a plan they could adopt and make part of their negotiations.

Anyway, it's good that someone with as much clout and integrity as George Megalogenis has further seeded the idea of housing reform, even if he hasn't quite nailed what needs to be done (imho).

And yes, I have all sorts of misgivings about the efficacy of community independents, but the two-party system has become so sclerotic, we need a controlled demolition of the status quo. A transformative housing policy brought into existence as a condition of minority government is the sort of nation-improving idea that vast constituencies within Australia’s fractured electoral landscape could get behind.

We shouldn’t waste the opportunity if it presents itself.

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1. Yet another is Jack Toohey.

2. In general, the political class needs to update its playbook, to stop holding the Hawke-Keating-Howard era up as the sine qua non of all that is good in Australia politics and adjust their mindset to this new era of there being a major third force in Australian politics. Worth reading the comments on my previous post from Mr Denmore for more on how this mindset pervades the political class. (Always read the comments!)