Who wants to be a capitalist?


Young couple search for affordable housing

Affordable housing ought to be a hot election issue. Ordinary Australians have been taught to be entitled to look to capital growth in bricks and mortar as the best path to financial security. 

I still have the shack I bought for $26,000 in 1977. I’m keeping it, partly because it’s capital gains tax free – it’s my super!

But also I can use it to house vulnerable household members in WA. One boy can finally live independently of his long-suffering and affectionate mother; another age pensioner is stuck in the rental market. She has blown her pitifully small super, and more than half her age pension goes to rent. She’s been told she’ll never get public housing. 

Two of my friends are still supporting their highly qualified but out of work 29 year olds. This generation is often stuck with parents (who themselves are may be struggling financially, sometimes because they are divorced). The children are unable to separate financially, socially and emotionally from parents and take on adult roles. 

There is not enough affordable housing. A third friend – in his late 40s – has been ‘restructured’ and downsized twice, having to pay rent while receiving benefits of about $250 a fortnight . He is staring at the possibility of actual homelessness.

Sadly affordable housing isn’t a government priority. Ideologically it’s left to the vicissitudes of the market. 18 months ago, the Victorian Government announced plans to demolish existing high rise public housing in the inner city Fitzroy and North Richmond estates. It was argued that they would be redeveloped with a mix of public and private housing. God knows where the residents would go!

Kate Borland is a brave public housing advocate who lives nearby. She said at the time that the policy marked the beginning of privatisation by stealth. The ‘redevelopment’ of Carlton public housing had reduced affordable housing, with the collapse of the high-rise towers. It also saw a huge fence built to to separate the public tenant plebs from the private resident landowners, casting out some of our most needy citizens. 

The Victorian Housing Minister defended the plan on ABC Radio in January last year. It was ‘meant’ to result in ‘no net loss’ of public housing, but rather ‘more sufficient and sustainable communities’. Some is to be ‘social housing’. This disenfranchisement of public housing tenants is mirrored in Sydney with the selling off of harbour side housing at Miller’s Point to the well heeled, and the transfer of tenants to alternative housing in the Western Suburbs.

But housing providers no longer work with difficult tenants, as once they did. Even Aboriginal Housing Victoria is moving to privatise and commercially manage its stock. Evictions are on the rise again.

Reliance on market mechanisms and commercial management models to provide accessible, affordable housing is absurd. It is the government’s job to plan and monitor supply and demand for housing those who aren’t market players. It is society’s job to provide a decent standard of living for those who can’t ‘invest’. 

In July this year the Housing Industry Association was apparently delighted to recognise that demand had outstripped the supply of new homes: ‘The number of homes needed in the coming 30 years will make the present building boom look decidedly average’, their chief economist told a conference.  The average numbers of new homes built over the last decade – about 158,000 a year – was far less than needed to house a growing and ageing population. There is already a national deficiency of at least 100,000 dwellings  

Current housing starts – about 176,000 in the last year – won’t meet those needs. The basic economic maxim is that as demand goes up, supply costs go up too. The HIA’s chief economist saw the main ‘problem’ as 'lack of readily available land, planning laws and delays' constraining supply, along with was the high level of taxation on new homes. 44% of the final price of a new home in NSW was taxation – land tax, stamp duty and GST.  

More than two thirds of us own our homes. We enjoy investing in houses too. But sharp spikes in sale prices have led to unachievable median prices that put housing out of the reach of all but the most fortunate.

The housing market is bubbling, and we don’t really know the cause. Is it Asians looking for a safe investment outside China? Or baby boomers and young couples trying to boost their investments or retirement nest eggs? We feel a sense of entitlement to the benefits of negative gearing. 

The effects are not just economic.  Relationships suffer. Young people – both men and women – are without secure employment. The majority of new ‘jobs’ for non- professionals are temporary, part time or short-term contract. My young IT whizz kid mate in Sydney has been ‘employed’ on three-month rolled-over contracts for three years. Single parents, especially mothers, single women without superannuation or capital, and anyone who is desperately seeking to meet NewStart obligations to apply for jobs they’ll never get, are cast out. They have no investments or savings to spend. I have noticed far more young people sleeping rough, and older women ‘staying with friends,’ for months at a time.

Economists, criminologists and service providers have long known about the proven consequences of insecure housing, especially on children. Resilience is preserved by security. A home is where we can shut the door to the world and settle into the real business of living: making relationships work, venturing thence into a community where we belong. 

Housing is not just about a ‘bubble’ caused by demand exceeding supply. Housing is not just an about economics. Affordable housing is critically absent from political debate. Everybody wants to be a capitalist? No, everybody needs a place to call home. 

Moira RaynerMoira Rayner is a barrister and writer. 

Topic tags: Moira Rayner, capitalism, investment, poverty, housing, negative gearing, social inclusion



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Existing comments

I absolutely agree with Moira that the housing price debacle should be front and centre of Australian political debate. That's because it's a totally manufactured problem, especially in a land-abundant country such as Australia. It's a disgrace. Houses are a fraction of our prices in Texas - a comparable situation. The solution is simple: deregulate land use. The problem will fix itself in the blink of an eye. Capitalism is the solution, Moira. Not the problem. If you're concerned about lowering prices for the poor, consider going to Catallaxy Files and "Australian house prices caused by land use regulations" in particular.

HH | 30 October 2014  

Ms Rayner draws attention to an internationally recognized situation; the comparatively overpriced Australian housing sector and it's structural unfairness. It's causes are debatable but it's effects on people are serious. I think it is simply the natural result of the peeling away of the post-great depression/world war 2 social and political consensus that the results inequality are to be actively mitigated by direct State intervention in the economy. That concensus is shattered. We see today the conquest of old-school laissez faire capitalist ideology. It's a case of living the 19th century all over again with 21st century technology

Harry Spratt | 31 October 2014  

Thank you Moira. Well said. The sad thing is, fewer and fewer people seem to care about this vital issue. Perhaps too many people feel they are sitting pretty with their housing investment. The only way we can restore the health of our society is to recover the idea of 'the common good'. Unfortunately capitalism can't abide that gene - only the selfish gene is tolerated! Keep up the good work Moira and don't get discouraged.

Michael | 31 October 2014  

HH, thankyou for your suggestion; I'd never thought of deregulation of land use as a solution. I do think, from my home in Bendigo, Central Victoria, of other possibilities for those young people who can be flexible in the choice of location. Houses here can be bought for less than half their price in Melbourne. The lovely cottage we bought 5 years ago for less than the cost of a one-bedroom flat in Melbourne would comfortably house two couples, and a single if one room were built on, and there's work here. For nearly a decade I watched an empty commercial building for rent in Hawthorn, and wondered how many couples could have lived in it if a group of friends had invested in partitions. I believe that a small space creatively used can be a solution to housing affordability.

Anna Summerfield | 31 October 2014  

Spot on Moira. Affordable housing must be placed back on the agenda. With 1:6 children and 1: 8 people in Australia living in poverty this needs to be urgently addressed. Housing costs a major player in this! We know there are increasing numbers of individuals and families living on the streets/ in cars/ being pushed out to distant suburbs, were transport costs/lack infrastructure and services add to other concerns. We know more people are needing to approach welfare organisations to survive. Cost of living but particularly housing costs have blown out. Limited housing stock has seen people (lucky enough to afford it) biding excessive/ obscene prices for rental accommodation! How has this happened in just a decade? What sort of a society are we when it comes to this and when we ignore our vulnerable or marginalised? The social and emotional consequences of unaffordable housing and dispossesion are real and seen increasingly. Insecure housing as you alluded causes many other major problems down the track, let alone the instant anxiety and undue stress which can lead to chronic mental illness; what of the kids living under all this burden? As a society our job is to support and nurture the vulnerable so that they can climb out of holes / over walls to high to scale in this current politic of ignorance. Public housing stock needs to be urgently increased.

George | 31 October 2014  

I know a divorced man who lives in a caravan park. He owns his mobile home but rents the site. His ex-wife lives in the former family home fully paid for. Both their daughters are married, have children, work full-time, their partners have casual employment. They rent their respective homes in Sydney. They did the sums and decided they could give their children a better education and lead a healthy life-style by renting rather than being burdened by years of mortgage repayments. One daughter is still paying off her HECS - enough to put anyone of being in debt! The desire to own one's home is understandable but it doesn't always make economic sense. If, as Maslow would say, that desire comes from the need of security of shelter then society/governments should give affordable housing (whether for buyers or renters) a priority. But if more than two-thirds own their own homes politicians do their sums and don't see affordable housing a vote-swinging issue.

Uncle Pat | 31 October 2014  

Thank you Moira, for a focus on truth and reality about our capitalist economy, on profit and surplus, versus social wealth,real wealth, where in Australia family and social relationships seem to be a luxury too. Sadly,"A place to call home" is only a status symbol. Financial health is not achieved by most Australians.Humans are not robots.Marriages fail,disability occurs, and the hidden 'cost' to economies as a consequence there is an increased need for social security support,where this government wants to target those perceived as economic burdens! Hidden poverty,damaged mental and physical health, bankruptcy,are the burdens as so many struggle with to avoid homelessness with no thought of becoming a home owner.Affordable housing has been so long neglected,left to dwindle as more wealthy foreign investors buy up.Along with environmental damage, social capital needs to be reclaimed as a matter of economic urgency. Australia is very wealthy economy.We falsely pride our culture as giving everyone a in a fair go. An egalitarian society?The world UN WHO conference in the Australian desert this week is surely proof that we have headed away so far from that.

Catherine | 31 October 2014  

When 540 separate regulatory ticks are required between approval for housing and the completion of a house in the Melbourne, we're not talking laissez-faire capitalism, H.S. We're talking massive bureaucratic red tape which prices houses out of reach of the poor. Michael, why do prices continually plummet in the electronics sector, which is relatively free of government regulation? Are people just less selfish there?

Name | 31 October 2014  

I especially liked the sentence: 'a home is where you can shut the door to the world and settle into the real business of living: making relationships work, hence venturing into a community where we belong.' Homelessness is not caused by mental illness, choice, drug addiction, unemployment. These things can all create poverty and it is poverty that leads to homelessness. See Felicity Reynolds, http://www.southsydneyherald.com.au/homelessness-is-not-a-diagnosis/#.U-Dh2NoaySN

steve sinn | 31 October 2014  

Thanks, Anna - agreed, especially about fitting in to small areas. I encourage people to google something like "cheapest houses to build yourself" and see the staggering and ever-growing array of concept cheap houses, starting, eg, with the "earthbag" house from $300.00. Sadly, no municipality in Australia would go within a country mile (let alone a CBD mile!) of tolerating these structures, many of which are very eco-friendly. Which just proves my point that the biggest enemy of housing for poor and even not-so-poor people is the state, not capitalism, which would welcome these innovations. P.S. I'd love to live in Bendigo!

HH | 07 November 2014  

"Capitalism" as a solution to anything is as elusive as expecting "socialism" to fix anything. It's just rhetoric and has as many definitions as humans living on the earth. One man's capitalism is another man's socialism. How long is a piece of string?

AURELIUS | 10 November 2014  

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