For the last ten years, corporate property behemoths have ridden roughshod over communities, dismantling sixty-year-old social-housing neighbourhoods and pushing the cost of accommodation through the roof. Governments have pursued a policy of incorporating social housing into private developments, handing over billions of dollars and public land to property developers, while homelessness has increased and millions have been unable to afford adequate housing. This policy has failed to provide sufficient levels of affordable housing.
I have worked on tenancy and housing advice lines and case management for the past twenty years, and in my experience the problems faced by tenants and homeowners intensified as the housing situation deteriorated. The reversions and inconsistencies of housing policy from year to year made providing support to people almost impossible. Low- and even middle-income earners have been bounced around the housing system, unable to build a good life and accumulate assets for their future.
Government rebates and grants, which were supposed to alleviate the situation at the individual level, have unintended consequences for the housing system. As money is pumped into the housing sector, rents and property values increase apace and affordability declines. Rather than viewing housing as a right or a necessity, governments have chosen to regard all housing as a commodity to be traded. Professor Alan Morris, of the University of Technology Sydney, has made the link between the selling off of public housing and privatisation through the back door, calling this the ‘financialisation of housing’. The logic of the market is so imperative that all must fall before it.
Exploring the impact of this perspective, a new documentary, The Eviction, directed by Blue Lucine, highlights the plight of NSW public-housing tenants in Millers Point. These residents built a community over sixty years. Many had moved from the Rocks after the demolition of dock workers’ homes in the 1970s. In 2014 the NSW government decided to sell off the public-housing properties in Millers Point and Dawe Point. Residents were forced to move and were dispersed throughout the area. Some tenant campaigners said that the compulsory relocations led to suicides and the premature deaths of elderly residents. The film hints at dark deals done behind closed doors between the NSW government and Lendlease property developers to remove the public-housing tenants who lived next door to Barangaroo, the notorious multimillion-dollar project that includes a high rollers’ casino built by James Packer. Such unholy alliances are not new in the world of property development, where the vulnerable and decent values are sacrificed at the altar of high profits.
While the NSW government boasted of building new housing, Professor Hal Pawson, from the City Futures Research Centre at UNSW, argued that the provision of social housing did not meet growing need. While stock had received a 7 per cent boost (10,000 homes) since 2008 (mainly due to the federal government’s 2009–12 Nation Building Economic Stimulus Package to stave off the Global Financial Crisis), the population grew by 13 per cent. Between 2015 and 2017, NSW’s public-housing stock remained effectively static: 110,214 housing units in 2015, compared to 110,221 in 2017. The Land and Housing Corporation (LAHC) has been building only enough homes to offset sales and demolitions, not enough to increase the stock. Professor Pawson argues that:
Keeping up with population growth alone would have called for an increase of 18,000 homes—not 10,000. So the stock addition projected under current NSW government plans amounts to less than half the number needed just to stand still—let alone to make any inroads into the existing backlog of need (exemplified by the 60,000 households on the waiting list).
The NSW Independent Pricing and Regulatory Tribunal has also reported that the supply of social housing is not keeping pace with demand, and has not been maintained in acceptable condition. ‘Thus, it is eroding the benefits of previous investments in social housing and adding to the already rising costs of meeting future demand.’
In response to the lack of affordable housing, the Everybody’s Home Campaign, a coalition of housing and homelessness peak bodies and providers campaigning to improve housing affordability, has called on state and federal governments to increase the supply of social housing. CEO of Shelter NSW Karen Walsh said that the NSW government needed to increase the supply of social housing by at least 5000 homes a year for the next ten years.
And the NSW government has responded. The Communities Plus program aimed to boost the number of new social dwellings built. The policy invited banks and property developers to integrate affordable housing into projects in exchange for access to major urban-renewal projects sited on new transport corridors. Ageing 1960s public-housing tower blocks and low-rises in inner-city locations like Sydney’s Waterloo are targeted for redevelopment. Former state treasury secretary Rob Whitfield developed the plan to put public-housing stock to work as a property asset for the state (rather than an ongoing cost and liability), thereby integrating public-housing assets into the private property market and adding to the housing frenzy.
Disconcertingly, in 2011 the Property Council of Australia (PCA) recommended that the government transfer public housing to the private sector for redevelopment, management and ownership to: ‘enable more efficient and effective redevelopment of run-down housing stock, finance new stock through capitalisation and result in more public housing units for those most in need’.
The claims by the PCA are overblown. Plans for Waterloo Estate in the rapidly gentrifying inner-Sydney suburb were revealed in August 2018 by the NSW government. Other earmarked sites include Telopea, Riverwood and Elizabeth Street, Redfern. The Waterloo project will destroy 2012 public-housing units and build 2300, in addition to 4500 luxury units in the same project. The efficiency and effectiveness to which the PCA refers is the capacity of government housing to pay for itself, rather than whether there is sufficient good-quality housing being provided.
Policies incorporating social housing into private developments have been applied to council housing in the United Kingdom, and the outcomes were not in line with the claims of the PCA in Australia. Ann Pettifor, director of Prime: Policy Research in Macroeconomics and a fellow of the New Economics Foundation, argued that building more high-end housing will very likely fuel speculation in the UK property market, thus intensifying stratospheric house-price rises:
When the ‘fuel’ of private capital, mortgage credit and cash from the bank…is supplemented by government subsidies and tax breaks, house prices rise… House prices won’t fall until the tide of cash flowing into the market abates, for example by tightening mortgage credit, or shrinking the pool of buy-to-let investors. [my italics]
Speculation is fuelled because new money is quickly created when homeowners and financiers borrow against land (which is regarded as a low-risk asset) and derive monthly income from renting out property. It seems that programs to build more high-end properties may be misguided if they do not limit lending, rebates and grants. In addition, these policies to include affordable housing in private development projects do not in fact create more social housing or sometimes even replace the housing that is demolished.
Such ‘regeneration’ policies have been in operation in the United Kingdom for a decade on council estates including St Ann’s in Nottingham, Cressingham Gardens in Lambeth, the Gorbals in Glasgow and the Aylesbury Estate in Southwark. They have led to the neglect and destruction of social-housing communities and a reduction in available housing stock. In the last ten years, London has lost 8000 social-rented homes. Between 2010 and 2014 the amount of affordable housing delivered across the country fell by a third: from 53,000 homes completed in 2010 to 36,000 in 2014.
Just 74 out of 2500 units in Southwark’s Heygate Estate ‘renewal’ project were low-rent social housing, affordable to very low income earners. Otherwise consisting of high-rent units, the project had demolished a council estate of 1200 homes. The number of social-housing units was well below Southwark council’s planning guidelines, which specified that 35 per cent of properties must be available at an affordable rent, and 70 per cent of those at ‘social’ level. The council and Lendlease justified this discrepancy with a document called a ‘viability assessment’. This study assessed ‘viability’ on the basis of Lendlease needing to make a 25-per-cent profit on the scheme. In addition, profits were estimated assuming that homes would sell for £600 per square foot: in fact, when sales began in 2015 properties were going for over £1000 per square foot. Thus Lendlease’s profit was actually much bigger than officially recorded.
Bob Colenutt at the University of Northampton describes viability assessments as ‘a wholesale fraud on the public purse’. The assessments, once a statutory requirement founded on ensuring the best use of land, have become, in the eyes of Colenutt and many other experts, solely about safeguarding the profits of those who want to develop the land.
The cost to former tenants was high in terms of loss of community and stability. The last Heygate residents were removed by bailiffs in November 2013, following six years of protests, legal challenges, planning hearings, alternative proposals, and compulsory purchase orders of resisting leaseholders. Council tenants were scattered away from the area, across Southwark and beyond. Some have called this ‘social cleansing’.
And it seems that Southwark Council was diddled on the deal. Lendlease paid just £50 million for the 22-acre site of prime central London real estate. This didn’t even cover the £65.4 million the council spent on removing the residents. Leaseholders were offered compulsory purchase payments of as little as £80,000 for a one-bedroom flat, or £225,000 for a three-bedroom ground-floor maisonette. The equivalent property would cost around £1 million in private developments.
Reports of corruption and unethical influence dogged the deal. In 2013 council leader Peter John faced investigation for failing to declare the gift of £1600 worth of Olympic Games opening-ceremony tickets from Lendlease to his partner. Many more gifts from Lendlease to Peter John and other councillors (trips to a property fair in the South of France as well as Proms tickets, dinners and more) were declared on the council website. In other similar deals, councillors and council officers involved in the regeneration have since become either Lendlease employees or private consultants working with Lendlease and its partners. Wanting to play with the big boys and attend glitzy events seemed to be playing havoc with the integrity of some council members. Providing good social outcomes to residents appeared to be a low priority.
Although council budgets have been cut to pieces by the UK government, limiting the number of new homes that could be built, some campaigners claim that many councils are following a policy of ‘managed decline’: deliberately failing to maintain council estates so that they can force residents out of their homes and sell the land to private developers. Paul Sng, director of Dispossession, a documentary about attacks by councils on housing estates, argues, ‘People are being swindled out of their homes and market forces are writing the narrative’.
The record of these development projects in London and elsewhere has been plagued by controversy and corruption. Councils and governments face the might of mammoth property developers whose holdings and projects span continents and whose revenue equals that of small countries. Companies like Lendlease, Frasers Property and PAYCE Consolidated make donations to both sides of politics as part of doing business and use their market power to force governments to give them extraordinary consideration.
Over the past decade, public–private partnerships (PPPs) to build affordable housing have had a slightly different flavour in Australia. Housing PPPs were introduced to Australia on a large scale in the federal government’s NBESP, whose primary focus was the creation of employment. The aim was to build 50,000 houses, with community-housing providers to own and manage the majority. This program and the National Rental Affordability Scheme (NRAS) delivered 37,000 homes and reduced housing stress for approximately one-third of participants at the time the programs were scrapped by the Abbott government.
With the federal government stepping out of significant housing funding in 2014, it has fallen to state governments. In New South Wales several public-housing sites have been earmarked for renewal. At 600-660 Elizabeth Street in Redfern, three consortiums involving major developers Lendlease and Frasers Property have tendered for New South Wales’s first build-to-rent project in Sydney, in partnership with major community-housing providers (CHPs). Under the Communities Plus build-to-rent scheme, developers enter a long-term lease, collect rent, and build and manage the dwellings on the site. The NSW government retains ownership of the land and the properties. The master plan for Elizabeth Street, Redfern, detailed that 30 per cent of the 500 new units would be earmarked for affordable and social housing. While at this point the projects seem susceptible to the problems that have troubled UK developments, some factors may help them to succeed.
The provision of social housing by the not-for profit (NFP) sector (such as CHPs) resulted in greater retention of affordable housing units over longer periods. AHURI examined case studies of affordable-housing programs in several states and found that, under the NRAS, variation in the retention of affordable housing was affected by whether the subsidy had been allocated to CHPs or private investors. Private investors maintained the provision of affordable housing for only up to ten years, while CHPs maintained the benefit of subsidies over the longer term. Time-limited grants to the private sector depended on the future sale and realisation of capital appreciation, and the public benefit was lost after a few years. The NFP model provides the potential to retain the social benefit created by public investment over the long term.
Another positive factor identified by AHURI was that governments retained ownership of the land rather than selling it off (as happened in the UK). Government-facilitated access to land, through government land organisations or inclusionary planning processes, was central to creating development opportunities and improved long-term project viability. By preserving ownership of land in the form of equity, the government reaped the benefits of the increased value of the land that the development created.
Assuming the best intentions, governments have nevertheless inflicted extreme uncertainty, fear and even death due to callous execution of well-meant policies. The residents of Millers Point and Heygate Estate have had their lives turned upside down because the government decided that they weren’t important enough to get in the way of multibillion-dollar property deals. It is imperative that governments and CHPs be vigilant in dealing with property developers to maintain the integrity of these projects, which must remain committed to the public interest and not completed so that a few may make large profits.