The Greens have opened the new year by declaring they will seek to extract concessions from Labor if they are to support their upcoming “help to buy” housing scheme.
This brewing stoush comes off the back of last year’s Labor-Greens standoff over the government’s Housing Australia Future Fund (HAFF), which resulted in a last-minute deal.
The crossbench rightly negotiated a guarantee that at least $500 million will be spent from the fund per year — much better than the previous rule that would’ve capped expenditure to ensure reinvestment. There’s nothing wrong with the government using an investment model per se, but providing an annual baseline provides more certainty of steady results.
Once this rule was amended, however, the Greens were right to cut a deal. While the HAFF still wasn’t big enough, it represented a much-needed step forward for a sector suffering a long-term dearth of federal investment.
This time around, however, do the Greens have a case for going for Labor’s jugular? We know they have electoral incentives to portray Labor as insufficiently radical on housing to appeal to young voters. But on the policy merits, how hard should they push?
In short, Albanese has invited a good shove.
Labor’s “help to buy” scheme is certainly better than state governments’ equivalent “first-home buyer grants”. The beneficiaries of such might be marginally better off, but only at the expense of marginally bidding up the cost of housing overall — an inefficient and inflationary way of giving them a leg up. Such schemes aren’t serious reforms, but mere gestures to placate concerned middle-class parents that something is being done to put their kids on a similar life trajectory to theirs.
Albanese has improved on this concept by having the government take a stake in each house, rather than simply loaning funds or funnelling them to the private sector. For the Grattan Institute’s Brendan Coates, who first floated the shared equity model, there’s another clincher — differing incentives.
“With first-home buyer grants, the temptation is to use the extra money to buy as much as you can [a bigger house] upfront, because it’s costly to upgrade your house later due to stamp duty,” he told Crikey. “However, a shared equity scheme with associated targets and caps is less likely to encourage that.”
One big difference is Labor’s scheme isn’t just for first-home buyers — you aren’t precluded if you previously owned a home, you just can’t own one now. As Coates highlights, this means it would help more older renters, which is important given how our retirement system discriminates against them.
“Nearly half of single retired renters live in poverty,” he said. “The issue for older renters is often not the deposit, but having long enough in the labour market to pay off a mortgage. This scheme would help reduce that.”
However, the low inflationary risk relies on the program being relatively small, with the current scheme slated to help 10,000 buyers per year. Labor thus faces a paradox — it’s pushing a policy that only works because it’s bite-sized into a Senate that understandably wants something meatier.
Accordingly, Greens Leader Adam Bandt has been testing some zingers — calling it “Labor’s ‘hard to get’ housing scheme”. A little overwrought, but not wrong — a program this small can only blunt the edges of the crisis.
Labor should not, however, respond by making more households eligible for “help to buy”.
“The big risk is that through parliamentary negotiations this scheme gets much bigger — then it really could be counterproductive,” Coates says.
Given this foreseeable clash, and given the constrained ambition of this foray from the get-go, Labor must prepare to add on meaningful sweeteners. Coates argues an additional policy for politicians to consider is an increase in rent assistance: “It’s the other way you stop older renters from being in poverty”.
The Greens’ two-year rent freeze proposal is a poorly reasoned non-starter, but there is more Labor could do to pressure the states on housing supply and rental protections. And then there’s negative gearing and capital gains tax — items Albanese will be keen to avoid, but which one can’t blame the Greens for pressing him on given the cowardice displayed in forswearing reform. Perhaps the simplest unity ticket is the same one agreed to in the HAFF negotiations: more investment in social housing.
Labor may present such counter-claims as the Greens making the perfect the enemy of the good, as it often does — sometimes rightly, sometimes wrongly. But the party’s latest offering can hardly purport to the moral urgency of, say, the nation’s first-ever emissions reduction scheme, or the largest investment in social housing in a decade, to assuage consternation about the shortcomings of its design.
Like the HAFF, “help to buy” should pass eventually. But in squeezing the last drop of juice from the necessarily minimalist demand subsidy model, Albanese is practically begging the Greens’ housing spokesperson Max Chandler-Mather — perhaps Parliament’s most talented grandstander — to extract his pound of flesh.
When you serve salad at a steakhouse, you can’t be surprised when your guests ask for at least some extra french fries.
Yet in watching our two progressive parties take cheap potshots at each other, I fear those suffering the pitfalls of our broken housing system will be left with a sour taste.
