Everything But The Kitchen Sink

You’ve got to hand it to the Victorian Labor government, they’ve finally realised their political survival is dependent on them improving housing affordability for first home buyers. It looks like they’ve thrown everything but the kitchen sink at the problem. Just a few of the schemes they’ve put in place include: stamp duty savings for first home buyers who buy homes that cost less than $600,000. A 50 million dollar pilot program will give around 400 Victorians the ability to co-purchase their first home with the state government. The state government will take up an equity share of 25%. One hundred and ten thousand new housing blocks in 17 new suburbs in Melbourne’s growth corridors will be opened up for sale.

At the same time the Minister for Housing in Victoria has announced the government will offer a one billion dollar government guarantee to private banks to lend money to privately owned community and social associations. While 100 million dollar Treasury grants will be available to privately owned registered housing associations to build new community and social housing. At the same time the Minister has approved over 60 new public private partnerships on state owned land to provide houses to privately owned social and community housing associations.

I wonder if you’ve noticed the missing link in all these grand plans to improve housing affordability in Victoria? It doesn’t take an Einstein, let alone an economically illiterate Toscano to spot the gap. PUBLIC HOUSING. If you increase public housing stocks from the ridiculously low 3% they are currently at, to 15% or 20%, the housing affordability crisis would be over. I'm sure tens of thousands, if not hundreds of thousands, of Victorians would be happy to be paying 25% of their income for safe secure public housing.

If you increase public housing stocks, competition will drive down prices at the lower end of the market. Rents for these properties will fall and property prices will fall.

You don’t need hair brained Mickey Mouse schemes drawn up in the back offices of the state public service, which will most likely fail, to achieve their objectives to improve housing affordability. If the government is worried about the long term cost of the scheme, all they need to do is to introduce legislation in parliament that mandates any private development of more than 10 units or houses that is built has to either provide 10% of the cost of the development to the state government to build public housing or it provides units/houses at the development site equivalent to 10% of the cost of the project. It doesn’t take an Einstein to formulate such a policy. It does take a government with political courage to take on developers who are making money hand over fist while contributing next to nothing to the public coffers.