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  • In The Media
  • 13 Feb, 2024

‘We’ve been here before’: Inside Labor and the states’ response to nation’s housing crisis hamstringing the great Australian dream

It’s no secret that Australia has a housing crisis. Houses are too expensive and not enough are being built to accommodate our growing population. Successive Federal and State Governments have tried to fix this, but real solutions remain elusive.

It may be cold comfort, but we have been here before. In fact, the situation in 1947 was much worse than it is today. Back then home ownership rates in Australia were just 53%. Like now, not everyone saw the benefits of home ownership to the individual, their family and the country. Some, like Labor Prime Minister Ben Chifley, thought renting from the government was a better approach.

Today, like in the 1940s, we are at a crossroad. Do we want to be a nation of homeowners or home renters? The answer to this question will impact more than just the housing market. It will touch our culture and way of life, even our democracy.

In 1949, Robert Menzies was elected prime minister on a platform of lifting home ownership rates in Australia. By the time he retired in 1966, home ownership had risen to 71%. The great Australian dream of owning a home was born.

But this could have turned out very differently. At the same time as Menzies was promoting the benefits of home ownership for individuals, their families and the country, other governments such as those in Britain chose to create a generation of renters through a program of government-built and owned accommodation for their populations. This could have been Australia’s fate too if the electorate had stuck with Menzies’s predecessor Labor Prime Minister Ben Chifley.

From the late 1940s, Menzies did two important things. He identified the huge challenge facing Australia to lift home ownership (we needed 700,000 homes built to accommodate a booming population), and then he did something about it. He renegotiated the Commonwealth State Housing Agreement sending Federal funding to building societies to provide home loans to encourage private investment, and to the state housing authorities to sell the public housing stock they built to private owners. He also exempted building materials from sales taxes and set up the Home Savings Grant Scheme which provided cash payments to help young couples save for a home deposit.

Fast forward to 2024, Australia’s contemporary housing challenges are clear for all to see. While overall home ownership dropped to 67% in 2021 from the Menzies era highs of 71%, the situation for younger generations is depressing. In 1971 the rate for 30–34-year-olds was 64%, compared to just 50% in 2021. For Australians aged 25–29, the decline is similar – 50% in 1971, compared with 36% in 2021.

Treasurer Jim Chalmers has set a target of “one million new homes to be built over 5 years from 2024”, but this figure only matches what is currently being built and so won’t solve the problem of lack of supply, especially with our growing population. With a clogged-up planning regime, rising construction costs, corporate collapses, and a bigger population, the solutions offered by Chalmers and the States do not bode well for the reinvigoration of the great Australian dream for younger generations. Rather, the Federal and State Governments are going down the Chifley route to create a generation of home renters, building state-owned rental accommodation or rolling out a public-private hybrid where the government will own 30-40% of your home through the sneakily named Help to Buy scheme.

While there is no panacea to the housing problem, creating a generation of renters cannot be the answer. Low rates of home ownership among younger generations leave them with less of a stake in the country. Younger Australians are reluctant to settle down with the diminishing prospect of ever owning a home in which to raise a family. It’s no coincidence that it was during the Menzies era of rising home ownership that Australia experienced its highest birth rate at 3.5 in 1961.

The importance of home ownership to our democracy cannot be overstated. Menzies understood that home ownership gives people a sense of independence from the state, engendering free and critical thinking. When you own a little patch of earth in Australia, you have a stake in society and the future of the nation. What does becoming a nation of renters, especially from the state, do to the Australian way of life? It drains our sense of independence, self-reliance, and freedom. In the end, our society moves away from what is at the heart of a liberal democracy. Solving the housing problem is more than an economic issue, it’s a cultural and democratic issue.

By Georgina Downer. Originally published in Sky News Australia on 13 February 2024.

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