What do YIMBYs want the Federal government to do?

Housing is expensive because planning restrictions limit supply. We need to loosen those restrictions and allow more building. That is the responsibility of State and local governments.

The Federal role is secondary: to encourage, educate and assist. But still crucial. 

Here are some low-cost things that a Federal government interested in housing affordability would do.

1.        Make the case

The simplest and easiest thing the Federal government can do is publicly advocate for more housing. We need a change in social attitudes. Political leaders need to make the case for higher density in their electorates. Everyone needs to do their share.

We recognise that this can be politically challenging, particularly for lower house MPs. However, there has been a dramatic shift in the attitudes of the public on housing policy. NIMBY policies and politicians are coming under increasing scrutiny from the media and voters, and by and large, they are not standing up to it. 

We ask you to be an advocate for housing supply in your community. 

2.   Public Education

There is a great deal of confusion in the community about housing policy. Although a large body of evidence and expert opinion says that extra housing supply would improve affordability, only a small minority of Australians (27%) agree.  That makes selling and sustaining better policy difficult—opponents of housing need to understand the harm they cause.

So there is a vital role for public education. Official reports from NSW and Commonwealth Productivity Commissions and the 2024 Budget papers have made large positive contributions. Unfortunately, institutions responsible for public education on housing policy, AHURI and the National Housing Supply and Affordability Council, have pushed in the opposite direction. These organisations promote the views of supply-denialists and defenders of the planning system. Their contributions to the discussion have been misleading and contradict the expert consensus. The federal government does not fund climate change denialists. It should not fund housing supply denialists. 

We ask you to commit to restructuring federal housing research organizations to ensure their membership and research is consistent with the national and international consensus on housing supply. 

3.       Financial assistance

We recognise that budgetary conditions are tight and there are competing priorities. However, the government must decide whether it is serious about one of our worst social problems.

We acknowledge that the government has been spending a lot on housing programs. But this is not getting us close to the 1.2 million homes target. Spending needs to be redirected from relatively ineffective programs, (especially demand subsidies) towards removing supply blockages.

Grants to new home buyers are counterproductive. They improve accessibility for the lucky recipients who bid up the prices for everyone else. And those recipients are not especially needy or worthy. This money should be better spent.

A large part of the Federal government’s response has been increased support for public housing. YIMBYs support all forms of housing: private, public and social. We need more of all types; the composition is secondary. However, views differ on priorities. Public housing provides the beneficiaries with secure affordable housing and (when used for new dwellings) boosts supply. However, it does not follow that it should be the federal government’s only priority. Repeated government reports (Henry, McClure, Productivity Commission) conclude that increases in Commonwealth Rent Assistance, as in the past two Budgets, are more cost-effective and better targeted to those most in need. 

The government's new programs, like the HAFF and Help to Buy, have large budgets but do not deliver much housing: only 70,000 new dwellings, a rounding error on a 1.2 million target. This low cost-effectiveness is intrinsic to public housing. It costs about $700,000 to supply a new public housing dwelling, and the average public housing subsidy is $15,000 per dwelling per year. To make a significant dent in the housing supply, public housing would need to become one of the largest programs in the budget. It is not clear the taxes to fund this would be politically feasible and values differ on whether it would be worthwhile. Spending directed at troublesome blockages may do more to boost supply and improve overall affordability per dollar spent. 

The other major Federal program is the $3 billion New Homes Bonus, which gives States $15,000 per dwelling within certain thresholds. In principle, that should help to fund necessary infrastructure and allay resident objections. In practice, it is not payable for five years, which weakens its effectiveness. The delay reduces the credibility of the payments, separates the beneficiaries from those incurring costs and is discounted by myopic decision-makers. It would do more to improve incentives if it were paid as new homes are completed.

Even if payment is timely, the effectiveness of cash grants is unclear. The New Homes Bonus is never mentioned in housing discussions, suggesting it does not affect incentives.

Assistance with infrastructure would be more tangible and would directly allay some prominent objections to increased density, especially when the quid pro quo is explicit. Multipliers can be large. For example, UDIA estimates that 70,000 dwellings in Western Sydney would be unblocked with $400 million in infrastructure  -- that is only $6,000 per dwelling.

This need not cost much more money. Current levels of Federal infrastructure assistance could simply be made contingent on housing construction. Closely related, any rail transport assistance should depend on high density at train stations. That increases the financial and social return on Federal assistance. Examples include Melbourne’s Suburban Rail Loop, Sydney’s metro and the Canberra-Woden light rail.

We ask you to commit to:

• Making timely cash grants to state and local governments that build more housing

• making any federal rail transport infrastructure assistance depend on high density at train stations

• grants for critical infrastructure to unlock housing development potential, conditional on zoning reform to accompany the grants

4. A workforce to build Australia

YIMBYs reject immigration restrictions as a solution for housing affordability. At best, it must be acknowledged that immigration restrictions impose significant economic costs for uncertain impact. 

Instead, our immigration program can allow us to enhance our construction workforce to enable delivery of desperately needed housing supply. The NSW Productivity Commission argues that construction trades such as painters, roof tilers, and bricklayers should be on the Core Skills Occupation List.

We ask you to commit to ensuring skilled migration pathways are open to workers necessary to fill skills shortages in the construction industry. 

5. Boosting supply takes precedence before super for housing, reforms to negative gearing, and other tax and transfer system reforms. 

The Coalition advocates using superannuation for housing.  This would boost the demand for housing and, unless supply increases, increase housing prices. Others advocate for the abolition of negative gearing and capital gains tax discounts. 

Whatever the long run merits of these policies (on which views differ), it would be wrong to pursue them before measures are taken to boost supply. 

We ask you to commit to placing supply-side policies as your primary policy for addressing housing unaffordability.