Australia’s response to the Coronavirus downturn could represents a unique opportunity to arrest the slide in the supply of community and affordable housing, Industry Super Australia chief economist Stephen Anthony says in a new paper.
As the shortfall in community and social housing looks set to rise to 1 million properties nationally by 2036, there is a need for better targeted tax subsidies that will allow community housing providers to build large- scale developments with a strong return rate that is attractive to institutional investors.
The Fixing Affordable Housing Paper in NSW and Beyond, says there is a need for holistic national plan, led by the federal government, which better co-ordinates disparate housing programs spread across all government layers.
The paper, which was commissioned by the NSW Community Housing Industry Council, says housing tax subsidies contribute to the housing gap by fuelling demand and should be redirected to stimulate supply.
Social housing in desirable but high-price suburbs could be unlocked by the government selling its underutilised land to housing providers at reasonable prices.
The paper examines two highly promising proposals that could help bridge the affordable housing gap:
1. Affordable Housing Tax Credit – which allows equity investors – like super funds - to purchase tradeable tax credits in exchange for equity funding directed to regulated CHPs. This embeds affordable housing tax credit into the tax code (just like negative gearing); and
2. The Financial Corporation Investment Fund (FCIF) – an independent entity that could be established by the Commonwealth (or by state or local governments) existing outside of the general government that could invest in affordable housing developments guided by a concrete rate-of-return benchmark.
Some further policies that will contribute to fixing the affordable housing problem include:
-an oversight agency to identify shortages to guide better local planning;
-tax reforms including replacing stamp duties with a broad land tax;
-and coordination of macro policy supporting the goal of normalising unimproved land values over time.