To get 90% of households owning their own home, every policy at the federal government must favour home ownership (with sufficient money for 10% of the households needing social housing).

The current federal government, as with all since Whitlam, has no ideological commitment to homes or housing. Rather, it’s all about money: taxes and funding. It’s failed in so many ways.

Today’s taxes – two times terrible

Australia’s tax regime, developed over a long period of time, turned the provision of homes into a property development industry, favouring investment over home ownership, driving inequality. Governments promoted housing as ‘property’, with tax regimes that favour the wealthy, who benefit with multiple houses, discriminating against those who rent.

Negative gearing, capital gains tax discounts (CGT), no inheritance tax, and no death duties promote the idea of housing as an instrument for profit. It encourages those who already own homes to further invest in housing. Those with one home get more, whilst those without one get none.

Two perverse outcomes occur: we lock a third of Australians out of home ownership, and we overinvest in an unproductive sector at the expense of real progress.

Owners good, renters bad

In Australia, every household pays a mortgage. It’s unjust that one third pay for someone else’s. All the benefits to the owner, only a deficit to the tenant. The ‘property portfolio’ of the wealthy grows at the expense of renters, who can't get started on the ‘property ladder’. The banks and finance industry responds by favouring investors over first home buyers.

Two thirds of our population think this “I'm all right, Jack”, approach to housing is OK. The majority rejoice in the gravy train or hope to get on board. Politically, one-third of renters have no voice; witness the vilification of the Greens' Max Chandler-Mather, who spoke on their behalf. Hence, there are still no federal rental safeguards, let alone a policy to turn them into owners.

This is the principal driver of inequality in Australia; it's why children are worse off than their parents and grandparents, a reversal of the post-WW2 social improvement.

Rubbish investments

Secondly, all this housing investment does nothing to advance Australia's wealth. Proportionately, Australia has more money tied up in property investment than any other OECD country.

Which does nothing effective for the country; no benefit to the GDP. All our money directed to property is the principal reason we lack investments in manufacturing, services, creativity and progress generally.

We’ve built the largest sector of the economy to create a dead end. Politicians, banks, the finance industry, developers, landowners, and real estate agents all have a selfish reason to continue the current schemes whilst sobbing crocodile tears that their children can’t join the beneficiaries.

A lack of funding

The second area of government policy in housing is funding, or rather a lack thereof. The reason is simple, if never discussed: the government of this country is broke. It doesn't raise enough tax or make enough money to provide all the social services that its citizens desire.

Our Tax/GDP ratio, at about 29%, is in the lowest quartile of the OECD. The UK and European countries have a tax/GDP around 35%, rising above 40% in Scandinavia. Those countries have strong social services, and their citizens understand the role of government in providing them.

By contrast, we have endless demands for tax cuts. 50 years of government giving its resources away to private citizens. At every election the right-wing cheer squad demands smaller government, fewer taxes, and more private wealth, all the while wanting better services. The left-wing long ago lost its voice.

We lost the culture of government: to provide services for the whole of society, particularly for those who can't provide for themselves. To regulate safely and ensure a level of equity, if not equality. At 25% tax/GDP, we are now reliant on two alternatives: privatisation and philanthropy.

To provide a semblance of the quality of life we expect, or aspire to, we've privatised everything: education, health, hospitals, public transport, and even the very government bureaucracy. This is the reason that the government can't or won't directly support social housing.

Labor under Albanese invented an absurd ‘semi-privatised’ system to fund housing (but not defence, health, education or any other responsibility). The Housing Future Fund (HAFF) relies on profits from its own investment arm. This ridiculous approach in uncertain times means it does not have sufficient funds for housing in a social democratic country.

We have 3% social housing; we need 10%. Never going to happen until housing is as important as AUKUS subs.

Will these terrible taxes change?

Reversing the tax system to support homeownership goes a long way to making us a better society. We were one of the few countries to try negative gearing and CGT discounts in order to raise housing supply. It failed here, as everywhere. It skewed to the property-owning gerontocracy. But we’re one of the last countries to retain it. It’s not enough to delete both, although that’s an essential start.

We should promote lower taxes for those buying their first home and raise taxes on multiple investments and properties. Many jurisdictions have tax breaks on mortgage payments (for the principal home) or home improvements, particularly for sustainability. We haven't even explored either.

We need a federal government with courage. It could change the inequity at the stroke of a pen. Unfortunately, not what we have. Don’t expect it in this May budget.

Can we fund social housing?

We are so broke we will never build anything like the number of homes we need for social housing, let alone to address homelessness. Other countries have massive programmes to reduce domestic violence and family trauma. We need to raise our tax base.

Imagine a political party having the courage to say the tax base should rise from 29% to 35%, so we provide all the services that people expect in a civilised society. A properly maintained public health system, promoting good public education at all levels; reducing the reliance on private cars with a public transportation system; and supporting child care, aged care and NDIS (not either / or).

And we would then house all people where they want to be. Provide a house and look after the poor, the socially waged, and those with social or mental health difficulties. That's a government manifesto I'd like to see.

Unfortunately, the timid politicians we have are so far away from the future. On home ownership the Labor Party wants to do nothing. The LNP less. One nation, nothing. Our sovereign wealth is squandered.

‘Housing Australia – Noun + Verb' is a forthcoming book by Tone Wheeler, collecting fifty years of work on philosophy, policies, projects, planning, processes and the practice of housing.

Tone Wheeler

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