‘Classic Daniel’: How the ex-premier’s housing gambit created Labor schism

It was Daniel Andrews’ final grand pronouncement as he exited Victoria’s political stage in September 2023 – that Melbourne’s famed public housing towers would be knocked down. That pronouncement was, in the words of a long-term cabinet colleague, “classic Daniel”.

Spruiked as “Australia’s biggest-ever urban renewal project”, the proposed tower redevelopment was part of Andrews’ controversial Housing Statement, a plan for 800,000 new homes across Victoria over a decade.

It was meant to reassure Victorians that Labor was doing something about the worsening housing crisis. Andrews retired from politics just days later.

Instead of reassurance, the government’s failure to notify the towers’ 10,000 residents before the announcement left many fearful for their future.

Flemington tower resident Beza Gizaw recalls the chaos of a meeting with government housing officers afterwards.

“There were these big arguments, and I’m just like, ‘Dear God, why are they moving us in the first place? What’s wrong with the building?’”

Architects, academics, lawyers and Coalition and Greens MPs have asked similar questions.

Less publicly known is the disquiet within Labor’s own ranks.

Single mother Beza Gizaw relaxes in the morning light with her son, Yeabsira, in their Flemington flat.Credit: Chris Hopkins

Current and former MPs are livid about the dearth of information and the uncertainty for the tower residents, especially with a federal election looming.

“It was a very bad decision,” says party elder Brian Howe, a former Hawke-Keating government deputy prime minister and housing minister, of the tower redevelopment.

Former Labor deputy prime minister Brian Howe.Credit: Justin McManus

“I think the premier on the way out the door basically had a look over the road and saw all this public housing occupying very valuable space and thought, ‘We can do much better than this.’

“I understand there was no proper cabinet submission, no proper inquiry or investigation; just a sloppy bit of politics.”

Within Labor and beyond, there is also concern that the redevelopment push sounds the death knell for the bold postwar, bipartisan public housing project in Victoria.

Critics from inside

State Labor MPs have told The Age of their frustration at not being consulted before the surprise announcement.

The Housing Statement was dealt with by a small cabinet subcommittee and went to the full cabinet for a last-minute tick-off before Andrews’ theatrical, high-vis announcement.

One minister present in the cabinet meeting, speaking on the condition of anonymity, says the demolition plan, while included in documents, was not specifically raised and, therefore, not debated. “There would have been a debate if it had been.”

Another minister, also speaking on the condition of anonymity, says there is a widespread view among Labor MPs that the towers should be assessed case by case; some may need to go, others may not.

A former minister insists the redevelopment was an Andrews thought bubble. “He woke up one day and said this is what we’re doing, and everyone else had to scramble.

“There is absolutely no justification [for the demolitions] apart from the [Carlton] red-brick towers.”

Daniel Andrews argued the housing towers were no longer fit for purpose.Credit: Elke Meitzel

Andrews declined to comment.

More agitated still than his former colleagues are federal Labor MPs, particularly those representing inner-Melbourne electorates with towers. In these seats, Labor could traditionally rely on sizeable blocs of public tenant voters. Traditionally.

In mid-November, a group of sitting and aspiring MPs, including federal Housing Minister Clare O’Neil, met state Housing Minister Harriet Shing to discuss the redevelopment.

Among them was Josh Burns, whose Macnamara electorate takes in several estates including two in South Melbourne and is a target seat for the Greens.

Burns says the delegation wanted to encourage “visibility” around the demolitions, especially for tower residents. “Like all people, they deserve to be treated with respect,” he says.

Behind the scenes, he has asked questions about whether the towers really need to go, given the millions of dollars spent in recent upgrades.

“If there are changes to be made as the state continues to protect and provide homes, there must be plenty of consultation to ensure there is high-quality public housing,” says Burns.

But the most exercised of the federal MPs has been former Labor leader Bill Shorten, who recently retired from politics and whose seat of Maribyrnong takes in multiple housing estates, including two Flemington towers currently being emptied.

Bill Shorten delivers food to the Flemington public housing towers during COVID-19 lockdowns.Credit: Getty Images

ALP sources, public tenants, architects, local councillors and even Greens say Shorten has been an outspoken critic of the redevelopment and the prospect of private and community housing replacing public stock.

However, he was not prepared to comment to this masthead.

Housing was topical at last year’s ALP state conference, with resolutions including a call by internal ginger group Labor for Housing that all public housing land be kept in government hands.

The problem

Redeveloping the towers is contentious for two key reasons.

First, it comes at a massive financial, human and environmental cost. Is it really cheaper to empty, raze and rebuild the towers, breaking up communities and relocating thousands, than to refurbish and/or build new infill towers on the estates? Critics say it’s hard to know because the government refuses to provide the evidence for its case.

The Allan government says a key reason for the redevelopment is the estimated $2.3 billion over 20 years – about $55 million for each tower – needed to maintain the buildings in their current condition. It refuses to provide a comparative figure for the cost of replacing them.

In an exclusive interview with The Age, Shing says that in the long term, redevelopment will be cheaper for taxpayers. But to date, the only cost made public is a $100 million contract with building company John Holland for the demolition of the first three towers – in Carlton, Flemington and North Melbourne.

Labor is fighting a lawsuit brought by tenants who claim their human rights were overridden by the surprise announcement. Last week, the Supreme Court confirmed the government’s right to withhold key documents that supposedly justify the redevelopment.

Public housing tenants outside the Supreme Court in Melbourne in October.Credit: Jason South

The second key reason redevelopment is contentious is what it means for the future of the inner-city tower sites, and for public housing more generally.

Premier Jacinta Allan and Shing have repeatedly cast the towers as “past their shelf life”, “not habitable” and beyond salvage. However, critics point out that much of inner Melbourne’s housing stock is as old, or older, and not being knocked down.

“Half of Melbourne is not 20 storeys tall” is Shing’s response, highlighting the structural impediments to renovating ageing concrete towers.

She rejects architect proposals for infill – new apartments for residents on the open space on the estates – before demolishing or refurbishing the existing towers, stressing that residents should not be forced to live on construction sites.

“What I would say to anybody who thinks that retrofitting is the right thing to do, call those towers home for the rest of your life and for the lives of your children and your grandchildren, while other people get housing that is compliant with modern standards, that is all-electric, that is energy efficient, that has natural light, that has good entrance and exit for people who want to age in place, and tell me how that’s equitable? Because it’s not.”

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Beza Gizaw, a 40-year-old single mother, lives in a two-bedroom flat with her four-year-old son, Yeabsira; it’s her “haven”.

Four years ago, at the height of the pandemic, she was a nurse at a major Melbourne hospital, pregnant with her first child, renting privately in Parkville and dreaming of buying her own home.

In quick succession, she had to stop working for health reasons, her relationship with her partner ended, and she lost her private rental.

“So then I could gather my thoughts and say, ‘OK, Beza, just put it together. You’re a single mum. You need to be alive and OK for this little kid,’” she recalls.

The towers at 126 Racecourse Road, Flemington (foreground) and 12 Holland Court (background) are being vacated ahead of demolition.Credit: Chris Hopkins

“I said, you can do it. You’ve got a place. No one’s going to kick you out. You’re not going to be homeless.”

Gizaw now watches as her neighbours move out of the tower next door, making way for its demolition. She knows she, too, will get a relocation notice soon, a prospect she finds depressing. “I’ve created a sense of belonging here, a sense of community.” Now there is uncertainty.

To date, all we know is that by 2051, all 44 towers are to be replaced by a mix of private and social (an umbrella term for public and community housing) units. Currently, about 10,000 people live in almost 7000 public housing units.

The government boasts that 30,000 people will live on the completed estates – but there will only be a 10 per cent increase in social housing units from 6659 to 7336 (or 677 extra over 30 years). Two-thirds of the new housing will be a mix of “affordable” and market-price private housing.

It remains unclear whether the private housing will be rental only or for sale.

Only the future of the two, now vacant, red-brick towers in Elgin Street, Carlton, is clear: they are to be rebuilt as traditional public housing courtesy of a one-off federal grant.

The old red-brick public housing towers on the corner of Nicholson and Johnston streets, Carlton. Demolition will begin in the coming months.

There are no public plans for the other 42 towers, nor information about who will be the landlords at those sites. Shing says decisions will be made as projects progress and in partnership with the sector.

State opposition housing spokesman Richard Riordan says a lack of information has left Victorians unable to assess the merits of the redevelopment.

“I want to see the numbers,” he says. “I want to see the argument. We’ve never been given that.”

The Greens are working closely with anxious tower tenants, too close for Labor’s comfort.

Greens housing spokeswoman Gabrielle de Vietri says the redevelopment has exposed Labor’s ideological abandonment of public housing. “It’s a retreat from public housing as a principle, and it’s a mass privatisation.”

While such charges are vehemently rejected by Labor’s supporters – publicly at least – they touch a raw nerve, especially amid a housing crisis.

The rise and decline of Victoria’s public housing

Built by the Bolte Liberal government between 1958 and 1974, the towers were part of a wider Commonwealth-backed rollout of state housing for working families.

They were controversial, initially for their devastating impact on the inner- city working-class communities they supplanted, then in the ’70s and ’80s for their reputation as hotbeds of crime and social dysfunction.

Now, for young Melburnians who can only dream of living in Fitzroy near city jobs and cafes, never mind an affordable three-bedroom apartment, “the flats” have come to symbolise something quite different.

Etched into the city skyline, they are a reminder that governments can, and did, house lots of people, mainly working families. By taking renters out of the market, government housing also helped reduce price pressure in the private market.

But back in the 1980s, public housing became politically unfashionable as governments moved away from postwar nation building and towards market-driven neo-liberal policies, with Labor under Bob Hawke and Paul Keating in Canberra, and the Liberals under Jeff Kennett in Victoria.

Federal Housing Minister Clare O’Neil acknowledges that for a long time, the Commonwealth “basically washed its hands” of social housing. She blames the Coalition. In truth, both major parties withdrew commitment.

In the 1990s, public housing was reframed from worker to welfare housing for the most needy: people with disabilities, on pensions, others unable to work. The lower rents they pay has further reduced the diminishing pool of public housing funds. Federal housing funding was diverted from bricks and mortar to subsiding private renters.

Nationwide, the sector suffered, but this was the case in Victoria especially. The size of the state’s public housing stock has remained more or less stagnant since the 1990s. This is despite occasional spending bursts including Andrews’ $5.3 billion Big Housing Build from 2020. Victoria’s capital spending of $1.38 billion on social housing was the highest of the states and territories in the 2023-2024 financial year.

Shing blames the former federal Coalition government and “nine years of inaction on social housing”. Other states, however, have fared better.

Victoria has the lowest level of social housing as a proportion of overall housing stock in Australia. Public housing has slumped from a high of almost 4 per cent in 1994 to a low of about 2.4 per cent. The figure is about 2.9 per cent when community housing is included.

The Allan government’s financial woes are certainly not due to lavish spending on public housing maintenance. New Productivity Commission data shows Victoria has the lowest recurrent spending – which excludes capital spending – per capita on social housing in the country.

RMIT lecturer and housing researcher Liam Davies has studied decades of state housing annual reports to find that rent income exceeded spending in the management of public housing for the vast majority of years since 1984.

Counter-intuitively, running public housing – excluding capital costs – delivers an operating surplus in most years.

Meanwhile, the value of the underlying public housing asset – inner-city land in particular – has skyrocketed and is now upwards of $37 billion.

Davies says this makes the estates increasingly attractive for private development, creating “perverse incentives” for the state to defer maintenance and let properties fall into disrepair, to justify redevelopment.

“Victoria finds itself in a position where public housing growth is predicated on redevelopment of estates, condemned to the same fate as the ‘slums’ they were built atop of,” he says.

Shing maintains that partnerships with the property sector are the only viable way to “meet the challenges of affordability and availability”.

Protesters rally in October against the proposed redevelopment of the 44 public housing towers in Melbourne.Credit: Chris Hopkins

Where to for the battlers?

Labor is not ruling out selling off some of the high-rise sites and will not confirm whether it will use its “ground lease model” that allows private housing development on the condition the land and housing are returned to the state after 40 years.

Labor for Housing convenor Julijana Todorovic says the sale of the land would herald the end of public housing in inner Melbourne; no government would buy back into the once dirt cheap but now coveted streets of Richmond and Fitzroy.

“That would be a statement of the government’s values that says Melbourne is not a place for public tenants and diversity; it’s only for private housing and people with money.”

She calls on Labor to hear the message of the Werribee byelection. “We cannot continue to prioritise the wealthy over the people Labor exists to support.”

Party elder Brian Howe is concerned that public tenants will be shunted out of inner Melbourne far from jobs and services. “I worry about that because you’re pushing low-income people out to the fringe and securing valuable sites for higher-income people. I think the politics of that is a bit sad.”

And if the plan is to replace public housing with community housing, Labor will come under fire, including internally, for selling out the lowest-income Victorians.

The community housing model, under which rental properties are owned, developed and maintained by not-for-profit organisations for people on low incomes, emerged in the 1980s, partly in reaction to the paternalism of the state housing bureaucracy.

It has come to enjoy advantages over public housing, including exemption from GST, and tenants being eligible for Commonwealth rent assistance. This makes it attractive to private investors, including super funds, and to governments that want housing off their own books.

Protest posters in the flats in North Melbourne.Credit: Chris Hopkins

Supporters say community housing is leaner and closer to clients’ needs. Public housing advocates insist it tends to be more expensive, less secure and targeted at higher-income tenants. They say it lacks the economies of scale of state housing agencies.

Shing rejects the notion that community housing is a form of privatisation and denies the government is moving wholesale out of public to community housing.

But Victorian Public Tenants Association chief executive Katelyn Butterss says most recent estate upgrades have seen public housing replaced by community housing. She fears this is the model being pursued for the remaining 42 tower sites.

“If we keep going on this trajectory, we could easily find ourselves in a situation where all of our urban social housing, well-located close to jobs and services, is community housing. That’s not fair; it’s not right,” says Butterss.

Does public housing have a future?

O’Neil is unusually frank about the demise of public housing in Australia. “What you’ve seen over a long period of time is that stock of public housing around the country diminished to really low levels,” she says.

“When we look at comparative countries overseas, we see that they’ve got quite significantly higher public housing than we do here in Australia.”

She was speaking at an event in Kensington to announce federal funding of social housing projects through the federal Housing Australia Future Fund Facility.

The first round of funding will help pay for social and “affordable” private housing around the country over a five-year period.

O’Neil insists there is a future for public housing, describing it as “a really important part of the overall housing mix”. She highlights that the second round of funding will go to state and territory governments, some for public housing.

Shing is less forthright than her federal counterpart. Asked three times whether there will be public housing built on the estates, she avoids the word “public”, saying “the plan is to build as much social housing as we possibly can”.

She also stresses that the bulk of federal housing funding is for community – not public – housing.

Where public housing was once supported across the political spectrum as a means of taking pressure off the private market, Shing seems to back a reverse strategy.

Housing Minister Harriet Shing reveals the design of the replacements for the red-brick towers in Carlton, in November. The new homes will be 100 per cent public housing. Credit: Simon Schluter

She says private rentals on the redeveloped sites will reduce demand on social housing.

“Anybody who has ever lined up with 30 other people for a rental property will know first-hand just how difficult it has been to find somewhere to live,” she says.

Neither the Albanese nor the Allan government has committed to the kind of ongoing funding to the states that underpinned the public housing built after World War II.

RMIT’s Liam Davies says that in their attempts to avoid financial responsibility for public housing, governments are using “increasingly baroque interventions” to fund social housing, with marginal impact on home numbers.

He says the housing crisis highlights how both levels of government need to re-embrace public housing.

Davies points to the state’s public housing land as a major asset against which the government could borrow to expand stock. He urges the federal government to use the various levers available to it, including ongoing funding to the states, exempting state public housing spending from GST and extending Commonwealth rent assistance to public tenants.

Labor for Housing’s Julijana Todorovic agrees both levels of government need to do much more. “Our view is that everybody should be pulling absolutely every lever available to them. That includes action on tax reform, negative gearing and more funding for public housing.

“A society that cannot provide housing security to all its citizens is a failed society,” she says.

Beza Gizaw, with son Yeabsira, says her flat is her haven.Credit: Chris Hopkins

Back in Flemington, Beza Gizaw now has her son in childcare some days, allowing her to job hunt. Once he goes to school, she plans to return to nursing and pursue her dream of owning her own home.

Until then, she says, she will advocate for public housing as a safety net for people like her.

“I thought I’d done well, I’d worked my hardest, I’d graduated, got a proper job,” she says.

“Then I realised … anybody can fall apart.”

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