Missing meals, neglecting basic health, cancelling school excursions and roughing it in a caravan park because you can't find a home – for many Australians these dire stories are all too real.

The Prime Minister Kevin Rudd says Australia’s housing affordability is now the worst in living memory. Finding and keeping a roof over your head is becoming increasingly difficult.

Have Your Say: What do you think can be done to make housing more affordable?

Consecutive interest rate rises, soaring rents and low vacancy rates are pushing many families over the edge.

Labor went into government promising to put housing on the agenda, so can our homes be made more affordable?

This week on Insight, we are joined by the Federal Housing Minister Tanya Plibersek, business, housing advocates and people experiencing the crisis.

TRANSCRIPT

More and more Australians are struggling with the cost of housing. The Prime Minister says housing affordability is now the worst in living memory. We have had 12 consecutive interest rate rises, rents are soaring and vacancy rates across the country are at an all-time low.

JENNY BROCKIE: For lower-income families, the rental squeeze is having devastating effects, even in regional centres where rents are cheaper. Here's Ann Worthington.


THE SHANE HOLLIDAY STORY

REPORTER: Ann Worthington

This is Bundaberg, renowned for the local rum factory, it's a regional city in Queensland with a population of more than 48,000. Like everywhere else in Australia, finding a place to live is not easy. Vacancy rates are low and the average rent for a 3-bedroom home is $250 a week. For many that's way beyond budget.
For Shane Holliday and his partner, Allison, things are really tough. Last year Shane hurt his back and couldn't work. And when the car broke down things soon started to spiral out of control. Already struggling to keep up with the rent, they fell eight days behind and never caught up. Their lease wasn't renewed and the family had to move out of their comfortable 4-bedroom home.

SHANE HOLLIDAY: Just after Christmas we got a letter saying that we had to move out of the house. We had until February 7 and that was it. There was no fighting it, there was no pleading our case, no matter what money we had, it was just a case of, "No, you're gone, sorry."

They couldn't find another house and the family of five are now crammed into this tiny single-room caravan, used for emergency accommodation. They're paying $40 more a week than before. So what does $280 a week in caravan land buy you?

SHANE HOLLIDAY: This is where my three kids sleep. This is Stephanie's bed, she's the eldest, this is Alexandria's and this is Dominic's, he's the youngest one. The kitchen I'm a chef by trade and I really don't even want to use this. This is the condition that it was in when we moved in. It's just too small an area, services don't work. This is our makeshift cupboard at the moment, it's where we keep our clothes stocked and 'cause all cupboards are full with bags and other stuff. My main furniture is at a friend's house. We've had to use his storage shed to put everything in. This is our bathroom, there's a small shower in the corner, there's a toilet here and a small sink. As you can imagine, the girls trying to get ready in the morning, it's impossible.

Shane has two jobs working casually as a chef. Allison, who is deaf, has just got work teaching sign language at a local primary school. But even with good employment records, they can't rent a house. They have a bond saved up and two weeks rent and have even been offering up to three weeks in advance.

REPORTER: How many properties would you say that you've looked at since moving in here?

SHANE HOLLIDAY: Oh, crikey... a good 20 or 30. And mind you, that's the amount of people that are applying for the same properties that we're going for. Every place that we've been to we've turned up and there's 10, 12, 15 other cars out the front. It depresses you there on the spot. You can see they're well-to-do families and they've got everything there that they need and they've got the jobs and the support and they haven't got breaches against their names. So yeah, we're automatically put to the bottom of the list and you can feel it as soon as you walk in.

REPORTER: That must be hard.

SHANE HOLLIDAY: It is, it's very hard.

This isn't the first time Shane has been homeless.

SHANE HOLLIDAY: I had a heroin problem and I've been clean now for eight years, but, yes, I'd been in this situation and hit rock bottom where I was living on the streets, boarding houses, squats, anywhere that you could get a roof over your head. And I met my partner and totally changed my life around and I never thought once that I'd be back in a situation similar to that once I'd cleaned up my life. I thought, you know, things can only look better and I've put all my focus into working and earning money for the family and I just feel like I've been kicked real hard.

JENNY BROCKIE: Well, welcome everybody, and Shane, thanks very much for joining us tonight. How many families are living in that caravan park like you are in the sort of circumstances you've found yourself in?

SHANE HOLLIDAY: We got told there was about 300 vans and from a visual aspect it would be 80%, 90%.

JENNY BROCKIE: So do you talk to the other people about how hard it is to find somewhere to live?

SHANE HOLLIDAY: With a couple of people, yeah, I do get into conversations with that, but yeah, it's a kind of place where I don't really want to get out and socialise.

JENNY BROCKIE: It seems extraordinary that you'd be paying $280 a week for that one tiny room with a tiny bathroom in a caravan park in Bundaberg, $280 a week.

SHANE HOLLIDAY: The other emergency one that we first moved into in the first week was actually $300 a week, and that was a besser brick unit, very much like a small motel room. And so we asked to be moved to something a bit more private and that's what they gave us.

JENNY BROCKIE: So this was in the same park and that was really your only option.

SHANE HOLLIDAY: Yep.

JENNY BROCKIE: Marika, you've been living in Canberra, you're a single mum with four kids, is that right? You were facing homelessness until very recently. Tell us why.

MARIKA CARROLL: Late last year my marriage fell apart and my husband moved out of our home. I couldn't afford the rent. It's astronomical in Canberra. It's $400 a week where we are now.

JENNY BROCKIE: And you couldn't find any private accommodation that you could afford?

MARIKA CARROLL: No, no, the cheapest I could find at the time was $320 a week and that was for a 3-bedroom home, and that is almost half of my income on a pension. I'm a student so I'm not able to go out and work.

JENNY BROCKIE: Now you're one of the lucky ones because you've found a solution to your problem, haven't you? What happened?

MARIKA CARROLL: I did. As a result of two stories in the 'Canberra Times', the latest one being on the front page, I was approached by a community housing in Canberra.

JENNY BROCKIE: So they approached you?

MARIKA CARROLL: They approached me.

JENNY BROCKIE: Not everyone can get on the front page of the paper, though, unfortunately.

MARIKA CARROLL: That's right, and I've been incredibly lucky to be given a 4-bedroom home as a transitional housing for 12 months until my public housing home comes through.

JENNY BROCKIE: OK, but without that, where would you be?

MARIKA CARROLL: I would have had to have put all our belongings into storage and probably live in our car.

JENNY BROCKIE: Are you serious? That you would have ended up in the car with your four kids?

MARIKA CARROLL: Absolutely. We just had nowhere to go. With four kids, you know, I've said over and over again, if it was just me or one child or even two children we could probably survive in someone's spare room or lounge room, but with four children

JENNY BROCKIE: And that is when it's difficult, isn't it, because Shane, you've got three, yes, so there are five of you living in that tiny caravan and you would have had five of you living in your car?

MARIKA CARROLL: Yeah.

JENNY BROCKIE: It's extraordinary. Deb, I just wonder, your organisation advises on homelessness in Victoria. Are these stories extreme, do they sound..

DEB TSORBARIS, CEO, COUNCIL TO HOMELESS PERSONS: No, they're typical of the people that turn up to our services. In fact our services only see about one-fifth of the people and can assist only about one-fifth of the people that actually turn up.

JENNY BROCKIE: So what happens to the other four-fifths of people who you can't..

DEB TSORBARIS: They sleep in their cars, they sleep rough. Sometimes if they're lucky, if you can use that word, somebody might allow them to bunk down in a room in their house. It's really an appalling situation and I'm just - if only we could have your story every day where people actually can find somewhere where they can stabilise their lives, but it's rare.

JENNY BROCKIE: How many people, you say lots of people, how many people are doing the kinds of things you're talking about, sleeping in car, couch-hopping, have you got any idea?

DEB TSORBARIS: The last census, which is 2001, we're talking in excess of 100,000 people who are homeless each night across the country and they are a variety of people

JENNY BROCKIE: And the best guess now, that's seven years ago.

DEB TSORBARIS: Certainly if you only take the anecdotal stories from our services and the people who have spoken here today, it well exceeds that, well exceeds it.

JENNY BROCKIE: Cassandra, you've been homeless, haven't you, but you've managed to claw your way back into the private rental market. How did you do that and how much are you spending on rent now?

CASSANDRA BAWDEN: My rent is roughly $250 a week. Since I've moved in that's constantly gone up, which is like anyone else's rent, I suppose. How I got out of it, it took a lot longer than what I would have thought it would take. I became homeless when I had an experience of domestic violence. So I was first in a refuge and then went through the whole system of emergency accommodation and transitional housing and staying with my mother, who was very kind to me and put up with me for a while, and then it still took a very long time before I could get into private rental. So all up it was probably over two years.

JENNY BROCKIE: How are you off now? How much of your income are you paying on rent and how much do you have left over?

CASSANDRA BAWDEN: It's about half my income just on rent and really, at the end of the week, once I've done shopping and paid bills and paid for school fees and things like that, I'd be lucky to be left with $30.

JENNY BROCKIE: So how easily do you think you could end up homeless again?

CASSANDRA BAWDEN: I always feel like I could end up homeless again. I've never felt like I'm, I don't think I'll ever feel like it's not a possibility again, because in reality it is.

JENNY BROCKIE: Bill Randolph, you worked on a report looking at housing stress, here it is. What did you find across the board?

BILL RANDOLPH, CITY FUTURES RESEARCH CENTRE, UNSW: Well the three examples you give are just absolutely typical, you know. Interestingly, Shane has found refuge in a caravan park, but we know there the numbers of caravan parks are rapidly diminishing, so really the bottom end of the market is falling away.

JENNY BROCKIE: Disappearing.

BILL RANDOLPH: Yeah, I mean, these are typical stories of relationship breakdown, problems with employment, you know, you become ill or you lose your job.

JENNY BROCKIE: And that's the thing, isn't it? It's hard enough for people who have jobs and haven't got things going wrong, but there's a common thread in these stories, everybody's had something happen.


BILL RANDOLPH: And it just tips you over the edge and then getting back in is really difficult. The private rental market, which is where the affordability problem resides in Australia, I mean, there are something like 600,000 households in the private rental market in housing stress, and 200,000 paying more than half their incomes. That's where the real crunch is and it's a really hard market.

JENNY BROCKIE: Well, we know how hard a market it is. You know how hard a market it is, don't you, Lisa, because... tell us how hard it's been for you to find a rental property.

LISA CRUICKSHANK: Competing with everybody that's looking for a place is absolutely ridiculous. We turned up at one place on last Saturday and there was 150 people.

JENNY BROCKIE: Let's have a look, we've actually got some footage, I think, of the house that you turned up at in inner city Glebe.

REPORTER: Are you surprised at the amount of people?

MAN: This is just crazy, it's unbelievable. I've never seen anything like this before, ever.

REPORTER: And what about the prices?

WOMAN: Yeah, pretty expensive, I guess, for what's on offer. I think you need to sort of look outside your square of what you had in mind and hopefully find something.

REPORTER: Were you thinking that it would be easier than this?

LISA CRUICKSHANK: Yeah, a lot easier. Yeah, it's hard to imagine why you're trying really. It doesn't seem like there's much point.

JENNY BROCKIE: Well, Lisa and Al, did you get that house?

LISA CRUICKSHANK: No.

JENNY BROCKIE: You didn't. So do you have a house now?

LISA CRUICKSHANK: Yeah, thank gosh for that.

JENNY BROCKIE: How did you get it?

LISA CRUICKSHANK: We actually offered more. It was on the market for $370 and for what we looked at and all the rest of it I was actually happy to pay $390 for it.

JENNY BROCKIE: Is that common, is that what people are doing more and more? They're offering more than the advertised rent to try and secure a place?

LISA CRUICKSHANK: Definitely. Almost like guaranteed, and if not, then it's like two months in advance or six months in advance. And I mean, that's an amount of money that you can think about putting a deposit on your own place with, that people are willing to put up front just to guarantee a rental property.

JENNY BROCKIE: So this is squeezing the bottom more and more, presumably, Bill Randolph? If you've got people who can afford to pay that extra, the people who are on the lower incomes who can't, and are scraping to get the basic rent together, which is high already to start with, must be really suffering?

BILL RANDOLPH: Yeah, it's a sort of cascade system in a sense. People in their life stage 25 years ago might have been looking to buy somewhere, can't do that anymore, so they're looking for the private rental market. The rental market is drying up because investors have left the market for various reasons, nothing to do with demand from households. And then at the bottom end, of course, people are squeezed even further and the supply problem in the inner cities is pushing the rental market out into the suburbs.

JENNY BROCKIE: What's a reasonable amount of your income to spend on rent, do you think?

BILL RANDOLPH: Well, most academics, policy people talk about 30% of your income in rental payments or housing cost payments and that's the sort of benchmark which we call, if you go above that it's housing stress.

JENNY BROCKIE: Are many people going above that?

BILL RANDOLPH: Yes, there are many hundreds of thousands in Australia.

JENNY BROCKIE: Lots of nods around the room, I think. Julian, what's causing this? What's causing this rental shortage?

JULIAN DISNEY, SOCIAL JUSTICE PROJECT, UNSW: There have really been a lot of pressures building up over a couple of decades, and they've reached a crescendo now, and it's going to get worst, I'm afraid. Financial deregulation was a key factor and like a lot of deregulation that can work up to a point, but it was too loose and it led to too much money being borrowed and too much money being put into driving up prices against each other. The taxation system, I think, is badly distorted and it provides too much encouragement for bidding up the price of houses and too much encouragement for investors to come into the high-rent end of the market and we need them more down at the low-rent end of the market. Public housing's been cut very badly. Boarding houses have dropped off in supply, caravan parks, so a whole range of different factors, all predictable, all predicted, but not enough action taken early enough.

JENNY BROCKIE: Ross Gittins, what about interest rates? We've heard people argue rising interest rates are making these landlords push their rents up.

ROSS GITTINS, ECONOMIST, SMH AND THE AGE: I don't think that's a really good argument. The real argument is the demand for rental accommodation exceeds the supply. There haven't been many people wanting to invest, put new money into rental accommodation, but at the same time you've had people, first home buyers who would normally have moved into their own home, have stayed in renting and joined by other people, so the demand has been very strong. That's pushed up the price, that's the way markets work. You don't have to have interest rates in there as part of the explanation and I don't think they are a major part.

JENNY BROCKIE: Kaye, you're working two jobs and your husband's also working, but you're finding it hard to pay your mortgage. How far do you think you are away from sliding into the rental market, from sliding out of being someone trying to buy a house and becoming a renter?

KAYE CAREW: It's close, it's very close. It's been getting close, I could see it getting close for the last 6 to 12 months, I suppose. The interest rates just keep going up. It either means you've got to go without more things and more... not luxuries, I don't mean, I mean necessary things like dental visits and medical prescriptions and things like that.

JENNY BROCKIE: Is that what you're doing at the moment?

KAYE CAREW: Absolutely, I haven't been to the dentist for 18 months, I've had a toothache on and off for probably three months and I can't go to the dentist.

JENNY BROCKIE: You just can't afford it.

KAYE CAREW: I just can't afford it.

JENNY BROCKIE: What other sacrifices are you making to try and hang on to that house?

KAYE CAREW: My kids unfortunately are making a few sacrifices at the moment with regards to excursions, school camps, things like that. They just, they can't go.

JENNY BROCKIE: How do you feel listening to these stories? Because the rental crisis is where a lot of the emphasis is in terms of people being really concerned about what's happening with housing as well as mortgages, but rentals are a real problem. How do you feel hearing this, knowing you might end up in the rental market?

KAYE CAREW: It doesn't sound a great deal better than where we are, to be honest. I had no idea, I haven't been in the rental market for a long time and listening to these people here I had no idea that rental had got so high, the cost of rentals was so high.

JENNY BROCKIE: Bill, how many houses, do you think, we are short of the amount we need to address the rental problem?

BILL RANDOLPH: Well, there's a crude figure going around, we're about 30,000 dwellings per year short in crude housing supply, but that's mainly seen as a home ownership thing. We've been doing some figures on Sydney, and we reckon around about we're short 15,000 affordable home units or homes per year in Sydney at the moment, which, that's the kind of shortfall.

JENNY BROCKIE: How many would we need to build Australia wide or provide Australia wide to address this?

BILL RANDOLPH: Well, if you look at the, again, figures of figures of figures, but around about 200,000 renters in extreme stress, we found in our research. I mean, that's the figure we could go for, 200,000.

JENNY BROCKIE: 200,000 new dwellings.

BILL RANDOLPH: Yep, at least.

JENNY BROCKIE: Will the Government's plans help increase the supply of housing, can it be made more affordable and if so, how? Tania Plibersek, welcome, thanks very much for joining us tonight.

TANYA PLIBERSEK, FEDERAL MINISTER FOR HOUSING: Great to be with you, Jenny.

JENNY BROCKIE: Your government is encouraging private investors, like super funds, to provide low rental housing by giving them tax subsidies, this initiative of yours. Tax subsidies per dwelling, new dwelling, how will that work?

TANYA PLIBERSEK: We've got more people who need housing than dwellings being built. So we want to encourage investment in the lower-cost end of the rental market. At the moment all of the support really makes more sense for people at the higher end of the rental market. So we'll have a $6,000 refundable tax credit and a $2,000 contribution from the States for each affordable rental dwelling built, as long as it's rented out for 20% below the market value in an area. We're talking about 50,000 of those in the first five years and if it works, and if the market still needs it, another 50,000. So a total of 100,000.

JENNY BROCKIE: Rod Fehring, does it appeal to you? You're with one of the biggest property groups in the country. Is $8,000 in tax credits enough to make you want to take up that kind of offer?

ROD FEHRING, CEO, LEND LEASE VENTURES: We'll have a look at it definitely, but I think it's, more importantly, it's not a fix-all. It's a step in the right direction from our point of view and it's really been a long time coming, I guess, because these sorts of urban and housing issues haven't been on the agenda for quite some time.

JENNY BROCKIE: Is it going to be difficult to get those big organisations and super funds and so on to think like this? 'Cause this is thinking differently, isn't it, about investing in a sense?

ROD FEHRING: It will be, particularly at the moment where we're in volatile times. I mean, when the concept of the $8,000 was a good idea but then we've had repricing of risk and suddenly we've also had interest rate rises which just pushes the yield return expectations higher, which translates back into the need for a greater degree of subsidy.

JENNY BROCKIE: So you want more than $8,000?

ROD FEHRING: Well, I mean, $8,000 is a good step in the right direction but by itself it won't do it.

JENNY BROCKIE: So you're saying your willingness to accept, to take on this offer, is contingent on those other things happening?

ROD FEHRING: Well, not contingent on but we're only one group among many. There are plenty who will look at the numbers and pursue it in a constructive way.

JENNY BROCKIE: Does that mean no, that you're not going to, though, that you're not interested?

ROD FEHRING: No, it doesn't mean no. If we can get it to work we'll be in there with bells on.

JENNY BROCKIE: In the end it's all about the bottom line, yeah?

ROD FEHRING: That's the nature of business.

JENNY BROCKIE: That's the nature of business. Lance, you decide where to invest funds in property. Would this interest you?

LANCE VASSAROTTI, WESTPAC RESIDENTIAL PROPERTY TRUST: I think we're definitely very interested in looking at it, but the real, it will be in the details that's important, and I think it's not just about the quantum, it's also about how the scheme's implemented to ensure that you do get long-term alignment of all counter parties, of all parties and that's the tenants, that's the owners or the investors.

JENNY BROCKIE: So what's the kind of detail you want? What are the things that you'd like clarified?

LANCE VASSAROTTI: The details to actually understand how the $8,000 or the $2,000 State grant and the $6,000 Commonwealth grant will interact, what's required to actually access that and how easily it can be removed or how easily it can be maintained.

JENNY BROCKIE: Are you currently concerned about that interaction or the capacity for that interaction on both sides?

LANCE VASSAROTTI: No, I'm quite excited about it. I think it's an essential part of this and I think we're beginning to see, I mean, this forum alone is showing that there are people coming together who are interested in tackling the issue. And you're right, there has to be an economic imperative, it has to make sense for a long-term investor.

JENNY BROCKIE: Tanya Plibersek, I have a question. Who's going to decide what the appropriate market rent is for a property that's then discounted by this 20%? Who'll make that decision?

TANYA PLIBERSEK: We've got a number of options of how we're going to calculate that. We're doing a technical paper in April that will go through all of the detailed ways that you can do a region-by-region analysis of what the market rent is.

JENNY BROCKIE: How many of those 200,000 houses it's going to provide, do you think?

TANYA PLIBERSEK: We've got a huge problem that has developed over well over a decade and there's no overnight solutions. We're talking about 3,500 of these properties in the first year, up to 50,000 by year five of the scheme and then potentially another 50,000 properties. So potentially 100,000 properties. I don't think that that's going to solve housing affordability in Australia but I think it's going to improve it.

JENNY BROCKIE: Shane, you had a question.

SHANE HOLLIDAY: That all sounds fine and good, but are we planning to build low-income communities as in, you know, there's 200 houses all grouped together, they become segregated and, you know, it's something that I've seen happen to estates.

JENNY BROCKIE: You mean like ghettos getting created?

SHANE HOLLIDAY: Exactly. And that's a fear for us. I mean, sure, we'd love to go into a house that we could afford to own, but we don't want to go into a situation where it's one of those low-income communities.

TANYA PLIBERSEK: It's a terrific point that you're making, Shane, and the scheme as we have designed it doesn't depend on properties being all in one suburb or all in one road or all in one suburb or even all in one State. We want to see them diversified. We need to release more Commonwealth land where it's appropriate, to do more building, we've got to support the community housing sector and the public housing sector. It's a range of things that we have to do.

JENNY BROCKIE: Michael, you have first-hand experience with a similar project to this, or similar kinds of projects in the UK. How well did the private sector and government work together in these situations? Is that an issue? Is there an issue about getting these two groups together on projects like this?

MICHAEL LENNON, CEO, HOUSING CHOICE AUSTRALIA: It takes time, it takes experience on both sides understanding the responsibilities of trustees, for example, to look after their members and deliver a proper return on the superannuation investments. It takes time for developers to understand that community housing managers can look after their assets and deliver the yield. So they will take a period of experience.

JENNY BROCKIE: It's a culture shift.

MICHAEL LENNON: Yeah. I think one of the great things about the freshness of the debate is it's forcing us into new spacings. We know fundamentally that some of this is straightforward. We have a huge supply problem. The question is, how are we going to respond to that? Either we can do what we did in the past, which was to put large amounts of public money into public housing, or and I think this is highly desirable, we can diversify the range of provider systems we have and blend public and private money and begin to do new things.

JENNY BROCKIE: Deb, why are you shaking your head?

DEB TSORBARIS: I have a real concern by the fact we're saying it's either-or. We've got large-scale public housing out there in all of our States. In some places it's dwindled to virtually nothing. We cannot leave our public housing to sit there and rot, and for some people with the right property and the right location it's a perfect solution.

JENNY BROCKIE: Michael.

MICHAEL LENNON: I'm a huge defender of public housing and just for the sake of clarity, the public housing system is hugely important but shockingly neglected. Every public housing authority in Australia now makes a net operating loss in cumulative total.

DEB TSORBARIS: So let's invest in it.

MICHAEL LENNON: In cumulative total equal to the

JENNY BROCKIE: Well, don't ask me, ask her.

DEB TSORBARIS: Let's invest in it.

MICHAEL LENNON: Equal to the $900 million that comes out of the Commonwealth State housing agreement. My only response is rather than be locked into old arguments that say we can only do one thing, I think the Government is to be commended for saying, "Let's try a variety of responses to increase the supply response."

JENNY BROCKIE: I want to get back onto what we were talking about in a moment, but just on public housing, what are you going to do about public housing?

TANYA PLIBERSEK: I agree. There's actually been $3 billion taken out of Commonwealth State housing agreements by the previous Commonwealth government. You can not take $3 billion out of a system and not see the neglect.

JENNY BROCKIE: So are you going to put it back in?

TANYA PLIBERSEK: We are not going to put in $3 billion in overnight and we are committed to improving public housing over time. We certainly are committed to doing that.

JENNY BROCKIE: By how much?

TANYA PLIBERSEK: Well, Jenny, I'm not going to pre-empt the Treasurer's Budget and I'm not going to talk about this year's Budget at all.

JENNY BROCKIE: But will there be something in the Budget that addresses public housing funding?

TANYA PLIBERSEK: You can get Wayne Swan on the program and you can see what you can get out of him before the Budget night. I don't think he'll be telling you too much before the Budget.

JENNY BROCKIE: I think I've got a better chance with you, actually.

TANYA PLIBERSEK: But Jenny, this is the thing. We actually have a problem that has built up over a long time, it is not going to be fixed overnight. Public housing is part of the solution, community housing and those partnerships.

JENNY BROCKIE: Can you just clarify this, because I'm sure a lot of people at home are going, "Community housing, public housing what are you talking about?"

TANYA PLIBERSEK: Public housing in most States is actually run by the State Government and they decide who goes into which house and they manage the tenancies. Community housing has a more devolved management structure, so there'd be a public housing group might have 10 houses or 200 houses or 400 houses and they're making more day-to-day decisions about who goes into that housing. They might have a speciality, they might work particularly with people with a disability, for example, they might work in a particular geographic region.

JENNY BROCKIE: Can you clarify who will qualify for these new houses that might be built as a result of this rental affordability scheme?

TANYA PLIBERSEK: People on low and moderate incomes will qualify. So if you're on a health care card, if your a family is receiving a certain rate of family tax benefits, people on moderate and low incomes will qualify. Our intention is to have a broader range of income levels and to have low-income working people as well as people on social security, because we think that that makes a better living environment for the people who are living in these properties.

JENNY BROCKIE: Lady up the back wanted to say something.

WOMAN: I live in affordable housing, I pay $90 a week in Pyrmont for 3-bedroom unit, it's affordable housing.

JENNY BROCKIE: How did you get three bedrooms in inner Sydney for $90?

WOMAN: It's the best-kept secret and anyone here..

MICHAEL LENNON: Not anymore.

WOMAN: It's affordable housing. But it's already..

JENNY BROCKIE: Very briefly, how does it work?

WOMAN: It's subsidised.

JENNY BROCKIE: So it's community housing? It's affordable community housing.

WOMAN: No, you have to be working.

TANYA PLIBERSEK: It is.


JENNY BROCKIE: I think you'll find that it is, because it's not public housing, it's not run by the Government.

TANYA PLIBERSEK: It started with a big grant from the previous Labor government, it's had contributions from various levels of government over time, but mostly it runs through the cross-subsidisation of tenants' rents, so people on higher incomes pay a bigger proportion, they help people on lower incomes, they design and build their own housing stock. It's first-rate housing, it's great.

JENNY BROCKIE: Can we just, can we just let Deb comment.

DEB TSORBARIS: I just want to make a comment, there are people who can't work. We want them to participate, we want them to engage in their communities, but they're living on incredibly limited incomes. So these sorts of types of scheme relying on people having an income, they're not going to work.

JENNY BROCKIE: Michael.

MICHAEL LENNON: There is no single answer, what we're looking for is a diversity of response that can cater for people, the homeless and people in crisis circumstances to work at housing where we know that some families will be in rental accommodation for most of their life. And I think what we're heading for in Australia at the present time is a growth in diversification of a range of providers. And the truth is the term 'community housing' defines a space between government and the market place where we're using government money, government subsidies with private borrowings, private investors and with donations from churches and creating long, local solutions.

JENNY BROCKIE: I want to whip through a number of policies that we already have. Mark O'Brien, rent assistance, what about rent assistance, is that working?

MARK O'BRIEN, CEO, VICTORIAN TENANTS UNION: Well, it's not currently working, and interestingly enough, rent assistance, even with the new national affordable rental scheme, Commonwealth rent assistance will still be the biggest program in the private rental market. Roughly speaking it's about, there's about 950,000 recipients across Australia, a third of those, for a third of those people even after rent assistance they're still in housing stress.

JENNY BROCKIE: And this is low-income people?

MARK O'BRIEN: Absolutely. Even building 50,000 units, you'll still be left with a very significant number of people who are reliant on Commonwealth rent assistance as their major form of assistance in the private rental market.

JENNY BROCKIE: Are you reliant upon it, Shane?

SHANE HOLLIDAY: That's unreal, mate, 'cause on $240 a week we were getting $98 a fortnight. Now how can that, what can that do? What is that? That's a drop in the bucket.

MICHAEL O'BRIEN: I absolutely agree with that, absolutely agree with that. The system isn't effective enough to deal with rapidly escalating rents.

JENNY BROCKIE: Marika, were you on rent assistance?

MARIKA CARROLL: Yes, and the thing is that my rent assistance hasn't changed, it's still the same amount as it was when I was married and our income was here. My income's now down here because I've had to go on a pension and the rent assistance is still the same, and it is whether I'm renting for $300, $400, $600 or $800 a week. It's capped, you know, it stops here.

JENNY BROCKIE: So what do you do, Michael? Do you increase rental assistance?

MICHAEL LENNON: I think there are arguments for two things, for the sharper targeting of rent assistance, but secondly, I think we need to transfer those subsidies into a variety of options that people can have to move into other tenure.

JENNY BROCKIE: So review it, have a whole look at it again?

MICHAEL LENNON: I think target it. All the evidence suggests we can get more out of the money. There is an argument for considerably more money to be spent as well.

JENNY BROCKIE: Mark.

MARK O'BRIEN: I think if you have a look at the figures Bill quoted before, 590,000 low-income renters in housing stress, only 333,000 of those receive CRA. There's clearly another group

JENNY BROCKIE: What's CRA? Commonwealth rent assistance, sorry.

MARK O'BRIEN: Yep, keep the jargon to a minimum.

JENNY BROCKIE: Keep the jargon to a minimum.

MARK O'BRIEN: So there's clearly a whole significant other group that don't receive any assistance but are in significant housing stress.

JENNY BROCKIE: So are you saying it should be increased?

MARK O'BRIEN: We think there is a number of things you can do. We can certainly increase the quantum. You could broaden the base for who gets the payments, you could shift around who currently, you could change the eligibility for who currently gets payments, so some people who get it now don't actually need the subsidy, they're already in affordable housing.

JENNY BROCKIE: Tanya, is it worth reviewing, rent assistance program?

TANYA PLIBERSEK: Of course it's worth looking at, but I have to say what we have to be cautious of is that if we just tip more money into rent assistance on the same model that it's working on at the moment, what you see is a $5 increase in rent assistance and a $5 increase in rent.

JENNY BROCKIE: But that's not what people here are arguing for. They're saying review it, target it better, some people maybe shouldn't be getting it.

TANYA PLIBERSEK: There's about a million people a year who receive some rent assistance during the course of the year that really need it. I don't know when you're talking about tighter targeting, there's not many people who would say that they don't need that rent assistance.

JENNY BROCKIE: Ross?

ROSS GITTINS: If I was the Federal Government I wouldn't put any more money into rent assistance. I think any more extra money you put into rent assistance would go straight to the landlords. Adding to the supply of rental accommodation, that can make a difference. Giving people money to pay more rent I don't think helps. Looks like it helps, people love to have more money, but I don't believe it does.

JENNY BROCKIE: So you think it will just push rents up?

ROSS GITTINS: Yes.

TANYA PLIBERSEK: The trouble is, it pushes..

MARK O'BRIEN: No, I think it's a case of being able to chew gum and walk at the same time. So clearly supply solutions take a long time to have an effect, so in the meantime you have to do something for people that are significantly disadvantaged in the market. Otherwise we're just kind of holding them to ransom for a future benefit.

ROSS GITTINS: If you've got a situation where there are more people on rent assistance wanting that accommodation than there is accommodation available, any extra you do to help those people will go straight into higher rents. You'll be doing a wonderful thing for the landlords who rent out to low-income people. That's about the best you can say for it.




JENNY BROCKIE: We're going to talk a bit more about solutions in a moment and we're also going to look at how much we are all to blame for housing being unaffordable, how it's increasingly out of reach for many Australians and what might be done about it. Alicia, you're 27 and you're renting in Sydney. Do you think you'll ever be a home owner?

ALICIA: I think if I wanted to buy somewhere in Sydney close to the city, close to where I work, it would be virtually impossible for me to buy anything. I think if I wanted to buy out on the outskirts of Sydney, out in the suburbs and commute for hours and hours a day on end, I could probably afford something

JENNY BROCKIE: And you'd probably go broke buying the petrol to do the travelling as well.

ALICIA: Exactly.

JENNY BROCKIE: How do you feel then about being a permanent renter?

ALICIA: Yeah, it's really scary, I don't really want to..

JENNY BROCKIE: Why is it scary?

ALICIA: I don't know, it's just the great Australian dream, isn't it, to own your own piece of the land and have your own backyard and be able to paint the walls if you want to, which you can't do if you rent.

JENNY BROCKIE: So it's very, very important in your psyche to feel like you one day will buy a house.

ALICIA: Yeah, I think so, yeah.

JENNY BROCKIE: Irene, you work as a bank teller and you have a $300,000 mortgage, is that right?

IRENE: That's right, yes.

JENNY BROCKIE: Are you living the great Australian dream?

IRENE: I'm struggling a little. My daughters live with me and it's just on a week-to-week basis you just try and do your best to sort of make ends meet.

JENNY BROCKIE: Is it worth it?

IRENE: I think it is, because it's your own place and you're not renting, you don't have someone coming over to say, "OK, well, you've got to clean this, or You've got to do this," whereas in a rental place they do do spot checks and things like that, whereas in your own place you do what basically you want to do or keep it the way you want to keep it.

JENNY BROCKIE: So more interest rate rises, would that worry you, would that tip you over the edge?

IRENE: That would probably kill me, but yeah, I'm just doing the best I can and making sacrifices.

JENNY BROCKIE: And hanging onto that dream.

IRENE: And hanging on to that dream, it's right.

JENNY BROCKIE: Ross Gittins, it's in the DNA of Australians this dream, isn't it?

ROSS GITTINS: I think it is, yes.

JENNY BROCKIE: It's so much part of the psyche of Australia. How do we deal with a situation where we're in a mess and that dream just won't be a reality or isn't a reality for a lot of people?

ROSS GITTINS: Well, it isn't, but you've got to remember that if house prices rise to the point where no one can afford to pay them then they fall, because house prices can't rise to a point where nobody can afford them. But you do have to remember that this is partly a cyclical event. We've had plenty of these housing crises in the past, we'll have more in the future. Interest rates go up and they go down. They're up at the moment, they may have a little bit higher to go, but eventually they'll come down and that will help a bit. It's also possible that when the economy slows down, house prices will actually fall a bit. Certainly you'd expect that they would stabilise and not keep rising.

JENNY BROCKIE: Julian, is there a response that can make that great Australian dream a reality for more people?

JULIAN DISNEY: Well, there are things that can arrest the deterioration. I think it's important to realise that this won't right itself. We won't go back to prices anywhere near, relative to household income, what they were a decade ago, but I do think prices will eventually fall a little bit and therefore the extent to which things are going to get worse than they are now, because they are going to get worse, some of that will be reversed. There are things that we need to do partly in the tax system, the tax system, I think, inflates house prices.

JENNY BROCKIE: What aspects of the tax system?

JULIAN DISNEY: Well, the total exemption of so-called family home from the capital gains and land tax means that it's really for many people in middle and higher levels, it's the best thing you can do if you've got a spare $500,000, and that means they've been inflating the house prices and been competing against people who actually want to buy somewhere to live rather than somewhere to shelter their income.

JENNY BROCKIE: So are you suggesting that there should be a tax on the family home?

JULIAN DISNEY: It's only at the very high level, you don't need to do it - 99% of the population wouldn't be affected by it now, and in the future, future generations would benefit from it. The current system isn't pro - home ownership. It's pro - current home owners and it's actually reducing the rate of home ownership.

JENNY BROCKIE: OK, so taxing the family home, is that the only tax , major tax change you'd make?

JULIAN DISNEY: It isn't taxing the family home, it's actually taxing a few people who are sheltering their tax dollars in a house.

JENNY BROCKIE: So taxing the top end, what about negative gearing?

JULIAN DISNEY: Over the longer term you need to limit it in the same way as the roving radical Ronald Regan did 20 years ago in the United States. It's not - it's often portrayed as a crazy left thing, just as the proposal to put a cap on the exemption is, but many economists, the OECD very recently in a report on the United States said exactly what I'm just saying about the impact of excessive tax breaks on house prices. So we need to move on it.

JENNY BROCKIE: Tanya, can I..

JULIAN DISNEY: But it's for the medium to longer term. I think it's really important to focus..


JENNY BROCKIE: Swinging to you, Tanya.

TANYA PLIBERSEK: Your question, the negative gearing in particular, we've got a serious problem with availability in the rental market at the moment. If we change negative gearing you'd see people, investors, fleeing the rental market, we'd make that problem worse. So I've got no intention of doing anything.

JENNY BROCKIE: What about the top end?

TANYA PLIBERSEK: We've got no plans to do that

JENNY BROCKIE: No tax on the family home.

TANYA PLIBERSEK: But what I'd like to talk about.. we've got no plans to do that what I want to talk about is that you're talking about how hard it is for first home buyers. We're looking at a generation moving through their whole lives with lower home ownership unless we do something. So we've got these first home saver accounts that will help people save a much bigger deposit for their first home. It also means that they're not borrowing 95% or 100% of value of the property.

JENNY BROCKIE: First home owner's saving scheme that the Government's announced, what do we think of that? What do people here think of that? Ross?

ROSS GITTINS: I'm sorry, but I don't think it will help. I think that anything you do that makes it easier to afford housing just makes it easy for prices to stay high and go higher. You've got to add to supply and this doesn't add to supply.

TANYA PLIBERSEK: But what it does do in four years time, it means people might have a substantially larger deposit and instead of borrowing 100% of the value of their property they borrow 80%.

MICHAEL LENNON: I would certainly say that incentives for saving are a better use of public resources than un-means-tested first deposit assistance. It just seems to be

JENNY BROCKIE: You're talking about the first home owner's grant which is $7,000.

MICHAEL LENNON: Indeed, if we're looking at scarce resources - but Ross's point is the fundamental one. If we're focusing upon where the pain is, we need to put more affordable housing stock into the country.

JENNY BROCKIE: What do other people think about the first home owner's grant? Rod?

ROD FEHRING: Well, not just the first home owner's grant, but I think it just comes back to this supply side of focus and market's response. We've got a bunch of other things that are happening in the housing sector that constrain its ability to supply. Over the next 10 years I think the HIS is saying about 140,000 trades will leave the trade, with only 40,000 recovering it, re-entering it. In addition to that, markets also change, as Ross and others have mentioned, but also we have to start to change aspirations. Everyone can't live in central Sydney. Everyone's job isn't in central Sydney. Jobs have been migrating into the suburbs for 30 years and housing is effectively following it in terms of affordability and density, and I think a lot more investment, particularly in the middle ring suburbs, to try and encourage the sort of social infrastructure, transport systems, etc, that are going to enable a lot of the infill aspiration, which is literally aspiration at the moment, not reality.

JENNY BROCKIE: Getting back to the first home owner's grant, you, Michael, say the $7,000 should be means-tested. Is that your view?

MICHAEL LENNON: I think if we have a limited range of resources and to apply to need giving a blanket subsidy to everyone, irrespective of their or their family's circumstances.

JENNY BROCKIE: Deb.

DEB TSORBARIS: There is a massive shortage of supply of affordable safe housing for these people to leave our homeless services into. They leave the private rental market, they come to the homeless services and we have nowhere to send them.

JENNY BROCKIE: But on the first home owner's grant, you don't like it?

DEB TSORBARIS: No.

JENNY BROCKIE: Mike, what do you think of it?

MARK O'BRIEN: I think all the evidence is that the first home owner's grant has actually assisted in driving prices up, so I think that's the evidence out in there in the world, so I don't know why we'd still do it.

JENNY BROCKIE: Julian?

JULIAN DISNEY: Yes, I would at the very least means-test it, and I think bringing the ideal opportunity for doing that was when the Government brought in the first home saver's account, because that was providing some assistance for first home buyers and we could have cut back what is very widely recognised, even within industry, as a wasteful and in fact counterproductive grant.

JENNY BROCKIE: Tanya, can you tell me whether you think it's fair that somebody with rich parents who's buying a $2 million house still qualifies for a first home owner's grant of $7,000?

TANYA PLIBERSEK: I don't know that there are that many examples of that, Jenny. I'd be very surprised if..

JENNY BROCKIE: But it's theoretically possible, the way the system exists, it is possible, is that fair?

TANYA PLIBERSEK: Well, I think you're using very extreme examples.

JENNY BROCKIE: Let me use a less extreme example. Let me say, you know, a $900,000 house, a $1 million house, which is not that unusual in our big cities these days.

TANYA PLIBERSEK: I'd be very surprised if there are many first home buyers buying million-dollar houses.

JULIAN DISNEY: If you means-test it you could easily generate the amount of money necessary to restore the cut in public housing funding that the Minister referred to, a few hundred million dollars a year, you could easily recover that because the first home owner grant is a billion dollars.

JENNY BROCKIE: A billion dollars.

TANYA PLIBERSEK: So that's saying a third of people who get it now wouldn't get it under that model. I think that that's a bit rough. If you're saying that a third of first home buyers don't need it, I think you'd be undermining the housing aspirations of a lot of medium income and quite moderate income people.

JENNY BROCKIE: Getting back to the questions about the tax system, Tanya, are you ruling out any changes to the tax system on housing?

TANYA PLIBERSEK: Well, we've got our own changes to the tax system. We've got our national rental affordability scheme, which is a fundamental tax change, and our first home saver accounts which uses the tax system to support savings, but we're not planning changes to any of the other existing schemes that we've talked about today.

JENNY BROCKIE: Michael.

MICHAEL LENNON: Can I say I think the opportunity that's presented in the next 12 to 18 months is, in a sense, to have these debates for the first time in 10 or 15 years. The Government has committed itself to a very historic renegotiation of a national affordable rental agreement, which for the first time allows some of these major expenditures to be sided up against each other because this is all long-term stuff, these assets last for 60 years, nothing can be done very quickly.

JENNY BROCKIE: Julian, I know you'd like a total rethink aside from negative gearing and taxing that top end with the family home, I know that you're also a bit concerned about where we tax people, the point at which we tax people, things like stamp duty. Can you explain how you'd like that changed?

JULIAN DISNEY: Sure, one of the problems in the tax area is we've got an upside-down and back-to-front system. Upside down because it massively subsidises the rich and is of no value to the poor in the tax breaks I was talking about. But back-to-front because we tax people when they're coming in, we tax them with stamp duty and then they're literally home free. There's nothing else they will pay even though they'll have enjoyed, as people have over the last 10 years, huge windfall gains. So in addition to doing what I suggested of putting a cap on the land tax exemption, I would drop or substantially reduce stamp duty at the front. Let people get into housing more easily than they can now, but then when they've got in and they're starting to enjoy the benefits of housing, ask them to contribute on the way through.

JENNY BROCKIE: On the back end. Bill, what's the future for the next generation, for the current generation of young people looking for housing and for the next generation?

BILL RANDOLPH: Well, it could be quite bleak. I mean, for those Gen X, Ys who are not in the house buyer market yet, they could be renters for a very long time and that's one of the fears, I think, from those of us who are involved in affordable housing debates, we are going to have a long-term cohort of renters coming through.


JENNY BROCKIE: Quick, lady up the back, we're going to have to wrap up.

WOMAN: The fact is the future is looking quite bleak for people in our generation and under. One thing that we could possibly look at is a long-term rental solution like they use in Europe. Instead of being locked into a 6-month or a 12-month, they've actually got areas where you can actually rent for 10 years or 15 years, and, you know, that can actually also then maybe take some of the heat out of the market, people might not be so worked up about having to own their own home if they know they can hold something there.

JENNY BROCKIE: If they have that security. Michael, what would you like to see happen over the next few years, given that housing is up for grabs a little bit at the moment that we've got a new government, we've got reviews on. What's the most important thing you think should happen?

MICHAEL LENNON: I think we do have to do everything to increase the supply, response of affordable housing as quickly as we can. Secondly I think we need to make more out of the subsidies we currently provide. There are $4 billion spent annually in federal programs. I think they can be targeted and sharpened. And thirdly, I genuinely think that for many people home ownership will be difficult for a period of time. Who knows what the economy will be in five years time, but I think we need to diversify the range of affordable rental accommodation that is currently available and that is probably the biggest short-term thing we can do.

JENNY BROCKIE: Rod, what do you want, what does business want?

ROD FEHRING: I think we need a bit of certainty about what the rules are and I think some telegraphing of those. I'm more optimistic about the future. I think that the market cycles, as Ross has mentioned, will create some adaptability, but I also think there is an opportunity for a new collaborative opportunity to emerge with particularly the community housing sector, the private sector and the public sector, which hasn't really existed before.

JENNY BROCKIE: Shane, will you get out of that caravan?

SHANE HOLLIDAY: Oh, we'll get out of there, I can guarantee you that. But I've just been listening to all this and really wanted to say something, but I'd like simple things like my award wage reviewed. I mean, when's that going to happen? I mean, I've been working 20 years as a cook and I'm still not getting $20 an hour and I'm cooking 3,500 meals a day. You know, that's a big focus of mine. I mean, we just got told recently the average minimum wage in Australia is $1,000 a week in the hand. I don't even get that a fortnight in the hand, you know, I wouldn't know what a grand a week looks like.

JENNY BROCKIE: Tanya, can you guarantee that housing's likely to be more affordable at the end of your first term as a Labor Government?

TANYA PLIBERSEK: Well, I've said so many times, Jenny, there are no overnight solutions. We're putting things in place that will make housing more affordable over time, but there's no silver bullet, there's no overnight solution, there's no single solution to this, it will take time.

JENNY BROCKIE: How long?

TANYA PLIBERSEK: I can't, I can't give you a date when housing in Australia will be affordable and I think it would be foolish, foolish, to try and do that.

JENNY BROCKIE: Kaye, final comment from you.

KAYE CAREW: I just wanted to say I've listened to everybody here tonight and it seems the majority seems to be focusing on people in the rental market and what we're going to do to fix the rental market. My question is, I'm not in the rental market, I'm in the try hard home owner market, and would really like to stay there. But it's great and wonderful that we want to put all these processes in place to help people get into a house to start with, to help them find affordable renting. What happens to people like me who have virtually three incomes, I've got two jobs, my husband's got a job. The wages that come in from all those jobs are outweighed by $100 a week by expenses and mortgage payments. What happens to the people that are then thrown out of their houses because they can't pay their mortgage, and this is only going to accentuate they've got to get into this rent market as well. What happens, you've got to solve one problem first otherwise it's going to make it bigger.

JENNY BROCKIE: And it sounds like a program on wages might well be our next forum, actually, coming out of this. I'm sorry we are going to have to leave it there. I take your point, we did focus very much on renters tonight because that's where a lot of the research was leading us. We have talked to home owners a lot in the past and I'm sure we will in the future, but I do take your point, Kaye, and thanks very much for joining us, and thank you everybody else too for joining Insight tonight.