Experts pour cold water on Greens’ $12b housing policy

Experts have slammed the Greens’ proposal to address the housing affordability crisis, saying it fails to target low-income households, will probably blow out in cost and is unrealistic given Australia’s workforce shortage.

Housing spokesman Max Chandler-Mather unveiled his party’s election promise at the National Press Club on Wednesday, claiming the plan would use a public developer to build housing that is more accessible to all Australians and break the “monopoly” private developers have over the market.

Max Chandler-Mather during his National Press Club address.Credit: Alex Ellinghausen

Under the plan, which would build 360,000 affordable homes over five years for people to buy or rent at a net cost of $12.5 billion, property developers would make $2.2 billion in the first five years of the scheme alone to manage and maintain the properties, and billions more building them.

Seventy per cent of the homes would be rented out, with a fifth of those reserved for the lowest-income earners. Rent would be set at 25 per cent of the national average household income, with that money flowing back to the government.

The other 30 per cent of homes would be sold to owner-occupiers at 5 per cent over the cost of procurement. The houses could only be sold back to the government, at cost price plus inflation.

“Unlike public housing today that heavily restricts access based on incomes, homes will be available to anyone who wants to rent and anyone who doesn’t already own a home,” Chandler-Mather told the National Press Club.

But Grattan Institute economy policy program director Brendan Coates said the Greens’ policy design is expensive and fails to target low-income earners properly.

“It creates very much arbitrary lotteries, because they’re not very well targeted on who’s going to get the homes,” he said.

“Twenty per cent [of homes] will be guaranteed for those on the lowest incomes and the Parliamentary Budget Office assumes that the rest of it is distributed across the income quantiles, so there’s as much discounted housing made available to high-income earners as there is for low-income earners.”

University of NSW professor for housing research Hal Pawson shared Coates’ concern that costs would blow out, also noting the industry would need support to have the capacity to implement the policy.

“Considering that no one will want such an initiative to displace otherwise anticipated private house building output, there would need to be a solid plan for an ambitious expansion of industry capacity,” he said.

Pawson’s comments on industry capacity align with the Housing Industry Association’s chief economist Tim Reardon, who said on Tuesday the government’s target to build 1.2 million homes in the next five years would fall up to 10 years short of demand.

Speaking in Canberra on Wednesday, Treasurer Jim Chalmers criticised the proposal, arguing the party should spend more time supporting the government’s initiatives.

“It’s easy enough for them to write press releases with big numbers attached to it. They never have to implement anything and they never have to make anything up,” he said.

Scott Langford, the chief executive of St George Community Housing, said successfully implementing the government’s housing proposals – such as the Housing Australia Future Fund – was more important for solving the crisis.

“I think [the Greens’ plan] is bold in the ambition in terms of the total numbers I’ve seen reported that it’s calling to deliver. I think the implementation of it will come down to what detail is proposed,” he said.

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