PM offers $2b for new homes, ups pressure on Greens on housing crisis

Australians will be promised thousands of new homes under a surprise federal move to spend $2 billion in the next two weeks to fund new work by the states while escalating a political clash on the housing crisis.

Prime Minister Anthony Albanese struck a deal with state and territory leaders on Friday afternoon to transfer the cash by June 30 on condition they build or refurbish social housing and press ahead with broader reforms to planning laws.

Australians will be promised thousands of new homes under a federal move to spend $2 billion to fund work by the states.Credit: Bloomberg

The new spending will not jeopardise this year’s forecast for a federal surplus – estimated at $4.2 billion in the May 9 budget – as stronger tax revenue shores up the nation’s finances and creates the capacity to help the states.

Albanese will announce the move at the Labor Party state conference in Melbourne on Saturday after months of dispute with Greens leader Adam Bandt over a separate $10 billion housing fund that is stalled in the Senate because the Greens want greater spending.

But the new $2 billion policy, to be called the Social Housing Accelerator, is not tied to any talks with the Greens and will go ahead immediately while Labor waits for Bandt and his colleagues to agree to pass the bill to set up the Housing Australia Future Fund.

“We are not negotiating with student politicians,” said one Labor insider familiar with the new policy.

Political leaders are at odds over the housing crisis while Australians deal with interest rate hikes, rising rents and an 8.1 per cent slide in the number of new home approvals in April that has deepened concerns about housing shortages.

Bandt is demanding a national scheme to cap rents as well as a minimum outlay of $2.5 billion a year on new homes for the most vulnerable, while Albanese accuses the Greens of blocking assistance because they will not vote for the new housing fund.

Albanese spoke to premiers and chief ministers in recent days in the national cabinet meeting in a phone hook-up on Friday afternoon, with the agenda devoted to housing and concluding with an agreement that the states and territories will respond at the next national cabinet meeting, to be held in August, with details about the number of homes they can add to supply.

The federal money can be used to build apartments, houses or modular homes, as well as refurbishing uninhabitable accommodation.

The states and territories must spend the money in the next two years and the $2 billion will be divided on a per-capita basis between each jurisdiction, with a minimum of $50 million each for the Australian Capital Territory and the Northern Territory.

An extract from the prime minister’s speech to the Labor state conference sets out the policy with a key claim that state and territory leaders agreed in the national cabinet meeting to reform their planning laws.

“They all committed to ensuring that investment in housing will work alongside better planning laws, reforming zoning and freeing up more land for new builds,” Albanese says in a draft of the speech.

“That’s what this is about: real dollars, driving real change and building more homes.”

The reform to planning laws is a key commitment in a housing accord agreed between Canberra and the states and territories last year, which in turn is central to the federal ambition to add one million homes over the five years to 2029.

The federal government estimates the proportion of social housing has fallen from 4.7 per cent to 4.2 per cent of all households over the past decade, with the prime minister using his speech to say the demand for social housing has increased almost three times as fast as the growth in population.

“And our government is not going to wait around while members of the Greens political party call for more housing in the media while opposing it in their electorates and voting against it in the parliament,” he says in the draft of the speech.

Labor has accused Greens MPs of calling for new housing while opposing new projects in their own neighbourhoods, but Greens housing spokesman Max Chandler-Mather has listed several locations in his Brisbane electorate of Griffith where he wants more social housing.

The prime minister will use his speech to label the Greens as a protest movement that is “happy to promise the world while organising a petition against every new apartment building” at a local level.

University of NSW professor Hal Pawson has estimated the current unmet need for social housing equates to 437,000 households.

The Housing Australia Future Fund aims to invest in 30,000 homes over five years, with Labor agreeing to a $500 million minimum on new spending each year.

The parliament meets on Monday for the final week of sittings before the winter recess.

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