A coordinated approach to housing and employment is needed

Daniel Rose is a member of the Left in the Northern Territory ALP

Despite a keen interest from progressives in the policy areas of employment and housing, we are yet to see policy solutions that balance both sides of this equation. It is well and good for the ACTU to run their “Change the Rules” campaign on reforming federal industrial relations, and for the myriad of interest groups to suggest changes to land taxation, negative gearing, capital gains tax discounts, social housing, rental legislation, and rent control, but without a coordinated approach to this policy problem we are doomed to continue pushing this boulder uphill.

We know that housing prices rapidly outpace wage growth, and this should provide a good first principles example of how these policy areas are linked. To rent or own a house you need to have capital. To rent or finance a house, you will generally need to be able to demonstrate that you are able to make regular payments. 

In the case of renting the standards are lower than financing: you tend only to need to prove you have a job and that the wages from that job can cover rent. While workers with permanent jobs tend to have houses leased to them at a higher priority, a casual job does not lock you out of the rental market, but it may push you into semi-legal or illegal tenancy situations.

For housing finance, unless you have permanency or a very high wage, your prospects of securing finance on housing is much lower. You need a cash deposit, a good credit rating, and permanent, well-paying work.

We know that for some decades there has been a tendency in the economy towards casualisation, non-ongoing employment contracts and the use of ABN employees in the “gig economy”.

Couple the rising insecurity of work, especially for younger workers, with a housing market that is overheated beyond the point of affordability, and you have a recipe for declining rates of home ownership among workers on average or sub-average wages. 

There are some sectors of the working class who are and will increasingly be locked out of the housing market. 

This leads us to the current problem of treating housing and employment as separate policy areas. If you just address housing affordability, you do not address the barriers to attaining finance. If you just address industrial relations problems such as wage growth or insecurity, there are still going to be workers locked out of housing by price alone. If you address both problems separately, there will not be coordination between the relevant policy agencies needed to deal with these problems in a timely manner.

This is why we need to look at these macroeconomic issues as one. If you address supply side issues by, for example, deflating the housing market, you need to be able to anticipate the effect this will have on the employment market. 

If we are going to seriously tackle the issue of insecure work, we need to ensure that the housing market is ready to uptake hundreds of thousands of people who might now be able to purchase or mortgage a house.

Any government with an appetite for reform, whether out of genuine concern or because they are dragged to the table, needs to be able to address both sides of the equation.

Even if we took the standard progressive policy solution of building more public housing, and we built enough to clear the wait list plus replace the older stock that is near or beyond economic repair, we would still need to grapple with our tenancy laws that make home ownership the housing of choice for Australians.

The long term view on this is to avoid income-segregated housing, whereby the small few who can afford housing or were lucky enough to inherit some from their parents, own their own home and operate a portfolio of rental properties and the rest of Australia is forced to rent. If current trends continue, they will be renting poor quality, overpriced stock under tenancy laws that favours landlords.

The poorer quality the rental candidate is, for example, an Uber driver, the more they are currently forced onto the margins of the rental economy, where they pay more money and have less tenancy rights than somebody renting through an agency with rental agreement. 

The situation of workers in insecure work is not going to get better, even if the housing market bottoms out and by a stroke of magic this does not put tens of thousands of Australians out of work and allow the wealthy to buy up foreclosed properties.

This is why we need a coordinated policy agenda that does both: on the one hand addressing low-paid and insecure work, and on the other dealing with the cost of housing and state-based tenancy laws.

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  • published this page in Home 2018-04-04 19:53:49 +1000