Do you know how much the Federal Government spends on housing each year? How about where that funding goes? And to what end?
Turns out, no one does.
Every year, billions of dollars are dispensed through the Federal Budget on direct support to households and housing service providers. This includes Commonwealth Rental Assistance Social Housing, Homelessness Services, Help to Buy Schemes like the First Home Buyers Grant, Indigenous Housing Services, and Defence Housing.
Meanwhile, on the tax side of things, billions in revenue are forgone by the provision of tax concessions to investment property owners via negative gearing and the 50% capital gains tax discount for investors.
We are talking billions of dollars in both spending and taxes. But how much exactly? And how effective are our housing budget and tax policies?
It might surprise you to hear, but there is no cohesive, publicly available federal budget document that properly details all government expenditure on housing or that seeks to evaluate the impact of tax concessions on the housing market.
Australia does not have a Department of Housing. In fact, the major program to support low-income households, Commonwealth Rent Assistance, is administered by the Department of Social Security and, as such, is part of the welfare function of government.
Without a dedicated Department of Housing, or any consolidated housing policy and portfolio budget statement, there is no way for the public, or even for policy makers, to understand whether our tax and transfer system is operating effectively in the housing system.
How could we know government spending is geared towards securing affordable housing across both the rental, owner, and social housing market? Or if the government is actually in the business of helping people build asset wealth through property?
What we do know is that, when we include key housing support measures like Commonwealth Rent Assistance and tax concessions for property investors with the housing expenditures included in the Federal Budget, the actual federal expenditure on housing in 2021-2022 balloons from $3.5 billion to an estimated $27 billion.
We also know that the share of federal housing spending going to the lowest 20% of income earners declined from 44% to 23% in the last 30 years, while the share going to the top 20% jumped from 9% to 43%. That means the difference of around $1715 more going to high income earners over low-income earners this year.
In 2023-2024, we estimate that federal investor tax breaks will be worth more than 10 times the amount spent by the Federal Government on social housing and homelessness services. Mind you, only 7% of total federal housing expenditure goes toward social housing and homelessness services in a time where more and more people are at risk of homelessness in Australia. Once upon a time, that number was well over 50%.
Housing in Australia is at crisis point. And the lack of oversight on spending and tax concessions simply adds to our predicament.
It is absolutely critical that we address this lack of oversight, with immediacy and urgency. A comprehensive review of all federal housing expenditure is essential. Ultimately, the Government establishment of a dedicated Department of Housing should be strongly considered to implement the clear, cohesive and wide-reaching policy changes required to solve our current crisis. .
What is clear is that it’s time to get our policy makers to understand – and be upfront about – these inequities, and to demand housing policy that will see taxpayer money spent in the pursuit of secure, safe, comfortable and affordable homes for all Australians.
Find out more from the Centre for Equitable Housing’s latest report, here.
