Australian housing policy

There had been almost continuous high immigration from 1949-1970 – although immigration from 2009 dwarfs those figures now. Whitlam related population growth statistics to high land prices and the need for more appropriate management of development. Menzies had brought in policies that favoured the private housing industry over the public housing supply. Whitlam would try to counteract this tendency which now drives homelessness and overpopulation.

In 1973 land prices increased by up to 46 per cent in Melbourne and Adelaide and 34 per cent in Sydney. The highest increases were in outer-metropolitan areas where rapid population growth exceeded the supply of serviced blocks. The Whitlam government attempted to establish Federally funded public land development agencies in each State which would "establish a presence in the market sufficient to influence the general level of land prices and the rate of development of particular areas". This was intended to "create direct competition with private developers" "with a vested interest in the escalation of land prices" by "selling to home builders at the cost of production of the block." Whitlam also attempted to stabilise Australia's population numbers and to plan for Australia to become self-sufficient. See the full thesis.

Resistance to Change in the Residential Construction Industry in Australia after 1973

As discussed in an earlier chapter of Sheila Newman, The Growth Lobby and its Absence in Australia and France (2002)_#fnEgw23">23, Australia had been unable or unwilling to educate and train enough skilled tradesmen._{#fnEgw1" id="txtEgw1"> 1} Greater funding and access to education and training were particularly important if the building industry was to change its boom and bust approach to business. The Whitlam Government's policies to improve access to training, combined with urban planning innovation, might have improved this situation, by producing skilled building workers for Australia. Like the French, Australians now had access to free tertiary education and technical and further education and training. This was a revolutionary policy, for, with the Whitlam government's plans for reducing immigration and the Commonwealth funding the States to buy up land cheaply, there would not have been the same opportunities for private speculation. This would have created pressure on the industry to change. With better skilled workers, however, the building industry would have had a greater chance of achieving modern restructuring, which would have assisted its adaptation to new conditions.

Anti-speculation Innovations attempted under the Whitlam Government : the Department of Urban and Regional Development (DURD)

Whitlam writes at some length on these issues in his autobiography and in this, as in immigration, he favoured consolidation over growth. _{#fnEgw2" id="txtEgw2"> 2} The Department of Urban and Rural Development (DURD) was created under Whitlam and was the first federal department of its kind. It was meant to be virtually co-equal with treasury, dealing with the urban budget and co-ordinating departments with urban responsibilities, but competition and tradition within the public service hampered its function._{#fnEgw3" id="txtEgw3"> 3}

Whitlam believed that consolidation of urban development through better planning and services required more Federal intervention, since the Commonwealth Government had more tax funds at its disposal. He believed that part of the problem of high land prices and inappropriate developments had come about through urban planning being a responsibility of State governments._{#fnEgw4" id="txtEgw4"> 4} He also observed that "Government programs for housing renewals swim against the tide of private urban development. In the private housing market the greatest profits are made on the urban fringe".

In his opinion, urban redevelopment of depressed inner city areas would be greatly facilitated by Commonwealth grants for this purpose. He deemed that public acquisition of development land is necessary not only to reduce land prices and provide competition for private developers, but to ensure the orderly and comprehensive development of large areas of land. He was concerned at the sacrifice of previously designated green belts and the environmental and social costs this entailed. It was debatable, he wrote, whether the land should thence be returned to private ownership, but good initial development relied on public participation._{#fnEgw5" id="txtEgw5"> 5}

He commented that land speculation had been allowed to run unchecked as private developers held the supply of land constant so that its price would increase. He wrote that during the 1960s the average price of land in Australia had increased by 182 per cent. He attributed these characteristics of the Australian housing industry and market to the ideology of previous right wing governments._{#fnEgw6" id="txtEgw6"> 6} He also commented that planning was fragmented at State level between various isolated concerns such as education, electricity supply and water supply etc., which used Commonwealth loan money for State and Local Works, with little reference to State and local planning agencies, which were often staffed by innappropriately qualified persons._{#fnEgw7" id="txtEgw7"> 7} He also attempted to introduce a capital gains tax on profits made through land rezoning._{#fnEgw8" id="txtEgw8"> 8}

He deplored the premature development of suburbs like Blacktown and Green Valley in New South Wales, attributing to them later severe social problems, including unemployment (through simple inability due to distance and transport problems of employer to access employee and vice-versa), delinquency and criminality. Blacktown, he explained, had been developed by private developers on the fringes of the city because costs of development were lower there than in land available and zoned for future development closer to the city. Blacktown lacked adequate sewerage, paving, drainage, public transport, shopping amenities and schools and jobs. Green Valley was a public housing estate that had also been built on the fringes of Liverpool. Although this estate contained 20 per cent more blue-collar workers, 50 per cent less white-collar workers, and 15 per cent more children below the age of 16, and lower ownership of private transport than the national average, it was five kilometers from the nearest railway station, had no proper bus service, and was a long way from the location of jobs._{#fnEgw9" id="txtEgw9"> 9}

There had been almost continuous high immigration from 1949-1970. In his book, Whitlam constantly relates population growth statistics to high land prices and the need for more appropriate management of development. In 1973 land prices increased by up to 46 per cent in Melbourne and Adelaide and 34 per cent in Sydney._{#fnEgw10" id="txtEgw10">10} The highest increases were in outer-metropolitan areas where rapid population growth exceeded the supply of serviced blocks. The Whitlam government attempted to establish Federally funded public land development agencies in each State which would "establish a presence in the market sufficient to influence the general level of land prices and the rate of development of particular areas". This was intended to "create direct competition with private developers" "with a vested interest in the escalation of land prices" by "selling to home builders at the cost of production of the block."_{#fnEgw11" id="txtEgw11">11}

This was of course the long-standing policy of the French government.

The success of these policies was patchy,_{#fnEgw12" id="txtEgw12">12} mostly due to opposition from institutionalised vested interests. A South Australian land commission was created in 1973. In New South Wales (March 1975), Victoria (May 1975), and West Australia (May 1975) Urban Land Councils, with inadequate statutory authority and which were obliged to go through other State authorities were created. Queensland was in the process of confirming an agreement to establish one when the Whitlam Government fell. Tasmania reluctantly established an Interim State Land Co-ordination Council in October 1975, which never met._{#fnEgw13" id="txtEgw13">13}

Whitlam compares the impact of the powerful land commission in South Australia with the relatively impotent urban land council in Victoria. The South Australian commission received a total of $28.8 million from the Whitlam Government and $4 million from the Dunstan State Government and acquired 1920 ha of urban land, 1094 ha of rural land and 654 ha of non-urban land between 1973 and 1976. By 1977 it was providing 70% of new residential allotments. According to Whitlam this kept land prices down and guaranteed better land development and planning._{#fnEgw14" id="txtEgw14">14}

The situation in Victoria was much different. The Urban Land Council there only marginally affected land prices, according to Whitlam. He also writes that the Council only purchased land when demand was low, which helped out developers who could not otherwise have capitalised on this land and therefore maintained high land prices. Furthermore, the Land Council resold the land to builders at close to market prices. (We need to remember that in the Australian system developers and builders are usually separate concerns, with the former generally much better financed than builders and the latter working on very small profit margins, due to the initial cost of land bought from developers.) Whitlam's observation is that the Victorian Liberal Goverment (and the New South Wales and Western Australian governments) acted in accordance with the private land market and against the public interest. He provides evidence that, using public money, the Victorian Housing Commission purchased land at well above market price in 1973 under the Minister for Housing in Victoria, Vince Dickie._{#fnEgw15" id="txtEgw15">15}

The Hamer Government in Victoria achieved another remarkable feat, which has not received any critical comment, to my knowledge, although it has been recently documented in Australian immigration literature. This was the successful passing of an amendment to the Local Government Act whereby non-citizens became eligible to vote on council elections and to run for local government election._{#fnEgw16" id="txtEgw16">16}

Leonie Sandercock was moved to write a book about the corrupt Victorian Housing Commission, which engaged in land speculation under the Hamer Government in Victoria :

"... the VHC [Victorian Housing Commission], as much as any private speculator, assisted in the maintenance of the land boom in Victoria by paying to other speculators urban prices for land which was at the time of purchase zoned as farming land, thereby contributing to land price inflation and making it more and more difficult for low income workers to enter the land market, and thereby adding clients to its own waiting list. And this amazingly counter-productive policy was pursued because the State Government, at a Cabinet meeting on 16 July 1973 (after six months' concern at the likely consequences of the establishment of a land commission on the Victorian land market), decided to try to pre-empt this Federal program by allotting to the VHC the role of land banking and development."_{#fnEgw17" id="txtEgw17">17}

These and other speculatory activities under the Victorian government resulted in an Inquiry and criminal proceedings, and such was the extent of this land speculation that it impacted on the Federal Liberal government that followed on from Whitlam's and resulted in the removal of Treasurer Lynch in December 1977._{#fnEgw18" id="txtEgw18">18} This is ironic because it was Lynch, whilst in opposition, who had instigated the events that led to Whitlam's fall from government. One cannot help but wonder if this was pure coincidence or if Whitlam's strategies to frustrate land speculation, combined with his policies reducing migration, had not significantly added to the number and dedication of his enemies in the Victorian Liberal Party. This would be a very interesting and difficult object of future study but is not within the purview of this thesis.

If Whitlam's land development and housing reform strategies had succeeded, in combination with much reduced net immigration and, arguably, policies for lower energy use, it seems likely the housing industry in Australia might have adapted to a much lower rate of population growth and household formation. However these measures were doomed, along with the Whitlam government.

Leonie Sandercock, in her close analysis of the subject in the Transaction edition of Property, Politics and Urban Planning_{#fnEgw19" id="txtEgw19">19} with hindsight almost concludes that the Australian State based political system may make it impossible to reform land speculation traditions. She nevertheless concedes that Whitlam did succeed in influencing State Labor governments, although he failed with State Liberal governments. She also allows the possibility that Whitlam might have succeeded in establishing greater long term changes if the economic problems of rising unemployment and inflation had not undermined the government's ability to finance these changes and if the government had not been brought down. Her introduction to the Transaction edition is of documentary interest in its own right, if you depart from the premise that the she is revising a book that was written on the cusp of an era of great social and environmental optimism and confidence, just as the global effects of the oil shock related world recession had taken hold of Australia._{#fnEgw20" id="txtEgw20">20} Her concluding paragraph is poignant:

"If the left is to put its energy behind practical reforms of this kind, it will need to redirect its thinking away from grand schemes based on the premise that capitalism is about to collapse ... Now that the prospect of a continued, unlimited increase in material wealth has faded, we need more than ever a worked out conception of the good society - that is, an ideological stand - if we are to discuss policies intelligently._{#fnEgw21" id="txtEgw21">21} [My emphasis.]

In this section we saw how Labor, under Whitlam, attempted to curb land and housing speculation. The success of these innovations was limited by external events, the short life of the government, and institutional resistance by those with focused benefits in speculation. If Whitlam's innovations had succeeded, along with the maintenance of low net overseas immigration, according to my argument, then we might have seen a similar picture in Australia to the one in France in Figure 7.3. That is, there might have been a similar huge drop in the number of property development and building companies, to the extent that their ultimate regrouping would have been as a much smaller and more efficient sector, with substantially modified technologies, modes of production and organisational forms. According to this argument, the industry would thereby have lost its dependence on high immigration and a major immigrationist force in Australia would thus have become spent. Without the traditional recourse to population pressure and population competition to drive up land and house prices, property inflation and prices would have become substantially lower. Money might have been invested in new industries. The long-term demographic outlook of Australia might have been stabilisation at a smaller population.

In fact, the property development and building industries did go through a doldrums between 1974 and 1986_{#fnEgw22" id="txtEgw22">22} and these doldrums did coincide with a net fall in overseas immigration between 1972 and 1979.

In the end, however, Fraser reversed Whitlam's innovations and there was ultimately a return to high immigration. This, plus progressively more liberal access to foreign capital, progressively more banking deregulation, and progressively more globalisation of the property market, under successive governments, seem to have restored the old speculative system in good health. I will introduce these changes in the next section and then go into more detail about their nature and impacts in Chapter Eight.

NOTES