Rob is a qualified engineer and has been active in the property industry for over 30 years, most recently as General Manager of Frasers Property Australia (formally Australand). He is the founder and Director of Housing All Australians, Board member of Summer Housing, and Salvation Army Housing.
With the expected slump in home building on the horizon, state and federal governments are looking at ways to quickly generate economic activity and keep as many people as they can in jobs. The Federal HomeBuilder initiative has been welcomed by the property industry and it’s a good start. And yes, there will always be critics that say it is targeted to the wrong areas and that it will be the wealthy that are going to benefit …….again! It’s hard to please everyone if you are in government (irrespective which political party), but doing nothing is not an option. We need to stimulate economic activity and congratulations to all governments for, uncharacteristically, making decisions and acting quickly.
Encouraging residential renovations and construction of new dwellings by the domestic residential sector is definitely a quick way to stimulate on the ground activity - it does not require the significant level of pre-sales (and bank finance) that would stall the construction of an apartment project. However, there is a significant sector of the construction workforce that is now facing the devastating reality of serious job losses on the horizon.
The domestic residential sector (DRS) and the commercial residential sector (CRS) are very different work forces. The DRS is made up of individual subcontractors, usually small businesses in themselves, and focus, generally, on building two storey homes. The CRS is predominantly a unionised workforce and they do not build houses. They build multi storey apartments.
The two workforces are like oil and water. They do not mix. It is this workforce, though, that also needs to be active post Covid19 if we are to minimise the economic fallout. This can be done by focusing on CRS projects that do not need pre-sales. This can be achieved by activating the build-to-rent sector and by building more public, social and affordable housing. Even the “unholy alliance” of the Master Builders and the Unions issued a joint Press Release encouraging investment in housing vulnerable Australians.
The corona virus does not discriminate. This pandemic has made us all realise that we are equal and, consequently, all vulnerable to the invisible virus that has declared war on humanity. To their credit, governments reacted quickly and the homeless that inhabited out streets were housed in hotels. The business community also responded with Quest Apartment Hotels, through the Salvation Army, offering access to their serviced apartments at 140 locations, nationally, at cost. No profit.
Both business and governments are saying that we should not return to seeing homeless people on our streets. But that means we need to build more housing and that does not happen overnight. At Housing All Australians (HAA is a private sector initiative), we believe that housing for all, rich or poor, has long term economic benefits to Australia, as it will prevent the unintended economic costs that result through a lack of stable shelter. These costs manifest themselves through the development of mental and physical health issues, family violence, policing, justice and then long term welfare dependency.
We believe a strong business case exists for the development of public, social and affordable housing. With the support of organisations like the Capital City Lord Mayors, the City of Sydney, ISPT, Stockland, Plenary, Assemble, Metricon, Simonds, Frasers Property Australia, AV Jennings, Mona, Tract, APD Projects, Minter Ellison, Monash and Melbourne Universities, the Director of Housing (Vic), the Victorian Planning Authority and other corporates we are still in discussion with, HAA is in the process of commissioning a study into the long term economic costs of not providing sufficient public, social and affordable housing. We see this type of housing as the new infrastructure.
It makes sense to invest in projects that will return a long-term economic (and social) benefit to our country as well as creating jobs. In its first major research, the National Housing Finance and Investment Corporation (NHFIC) has confirmed the beneficial impact of stimulating the building sector by highlighting that for every $1 million of investment, 9 jobs are created.
Earlier this year, Reserve Bank Governor, Phillip Lowe, said that we must use this unique opportunity in this economic cycle of low interest rates, to invest in the right infrastructure for Australia that will provide a sound long-term economic foundation for our future. You cannot get a more basic and fundamental infrastructure than housing. And the current and significant shortage of public, social and affordable housing is the place to start.
The economic health of our cities was at crisis point before Covid19 due to the dire shortage of such housing. There are waiting lists in every state. Visionary governments of the past recognised that the provision of housing for all was a fundamental requirement in building the foundations of a prosperous country. Now, it is seen purely as a welfare issue, a view which distorts the central role that stable housing plays in the life of an individual. Without stable housing, the flow on effects on that person’s ability to contribute economically (or not), to society varies greatly.
Study after study around the world has shown that a “housing first” approach works to reduce homelessness and improve the lives of those living with housing insecurity and it is the lowest cost to the economy and consequently taxpayers.
By reframing social and affordable housing as infrastructure, we can start to mobilise the required capital needed to make an impact at scale. The problem is so significant that governments cannot fund it alone. The private sector is ready to participate but needs the appropriate financial settings, and frameworks, in place to achieve their required returns relative to the risk.
By addressing the issue at scale, it will also stimulate the uptake of innovative approaches such as prefabrication, which in turn creates more jobs for the embattled manufacturing sector.
We have everything to gain and nothing to lose. It all starts with changing our perspective and looking at the future with optimistic eyes. Let’s aim to house all Australians and, in the process, establish a new economic platform for our future.
