Peter Verwer |
Sunday, 6 July 2008 4:48 PM |
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The recent Senate inquiry into affordability recommended:
"… that state and territory governments introduce enabling legislation for inclusionary zoning to require affordable housing in all new developments …" (our emphasis)
The theory is that 15 to 20 percent of all new homes should be discounted to 20 percent below their market value.
In other words, enact a law that forces developers to slice the market price of each new block of apartments and every new residential community by a fifth and, hey presto, the affordability problem is solved.
Imagine a law dictating a 20 percent discount for every fifth car, every fifth DVD, every fifth airline ticket, every fifth banana and every fifth taxi fare.
Inevitably, the four other car, DVD, airline ticket, banana and taxi purchasers are going to pay for the fifth consumer.
When it comes to homes, inclusionary zoning is a stealthy "tax thy neighbour" approach.
The US, UK and Europe have applied inclusionary zoning for decades.
The result has been a paltry number of so-called affordable homes and artificial price hikes for the rest of the market.
The markets in the US, the UK and Europe still suffer huge affordability problems.
Why import a failed experiment in planning policy to our shores before implementing and reviewing common sense strategies?
Such strategies would aim to increase the supply of land and homes and slice the taxes and red tape that artificially boost home prices.
Like the magic pudding that keeps renewing itself, inclusionary zoning provides a feel good factor that is illusory. On our shores, South Australia is the darling of inclusionary zoning advocates.
In 2005 that state released a policy requiring 10 percent of homes to go to those on low incomes, and 5 percent to those with ‘special needs’.
No one mentions that the South Australian Labor Government soon back-tracked from the mandatory approach.
It sensibly switched to voluntary schemes, except where the government places incentives, such as discounted land, on the table.
This change of heart occurred because inclusionary zoning is flawed on several counts. For starters, few new affordable homes are delivered.
In other words, inclusionary zoning fails in its principal purpose.
A meaningful solution would deliver massive increases in homes across all markets and social strata.
Then, there’s the high compliance costs and artificial price hikes forced on the rest of the market. Finally, a universal mandatory scheme, like that proposed by the Senators, raises huge equity issues.
Who defines the Australians who qualify for the discounted homes? Who actually selects them? What happens when their circumstances change? Who really pays for this stealth tax?
No doubt a universal inclusionary zoning system would require massive new bureaucracies in every state and territory to ensure that developers comply with the new rules.
It is stunning that witness after witness to the Senate inquiry – mainly academics, planning professionals and bureaucrats – thought that it was possible to create something out of nothing.
What they really hoped was that developers would absorb the cost. They want the private sector to pay for the delivery of dividends that are shared by the entire community.
Most people believe we have a tax system to meet these costs.
There was no understanding that investors and developers already take all the risks involved with delivering homes to Australian communities.
Property investors have significant social responsibilities, which they take very seriously.
However, they don’t have a responsibility to cover the shortcomings of failed government policies.
Industry critics also demanded the sector provide a greater variety of homes, including smaller homes.
One witness noted: "We face a problem that, if you ask the development industry about building a greater diversity of housing, they say there is no demand for it …"
Hellooo? Wake up and read the floor plans! The Property Council and our allies are taking ministers to housing estates to observe the tremendous and growing diversity of Australia’s modern housing precincts for themselves.
The nation’s housing affordability crisis is too important to leave to pie-in-the-sky solutions.
We need to attack the source of the problem, which is re-righting the (ever growing) imbalance between demand and supply.
The Rudd Government and several states have recognised the urgent need for supply and demand side solutions. They are working hard with industry to shape new policy approaches following years of neglect.
Peter Verwer |
Sunday, 6 July 2008 4:48 PM |
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