Wednesday, 19 October 2016

Homelessness in NSW - Submision

The Department of Family and Community Services have been seeking submissions under a new strategy, Foundations for Change, to tackle homelessness in NSW; the introduction explained, 
'The new strategy aims to broaden the conversation about what homelessness means and how we can prevent it.'
This was my submission which, in out line, is a plea to find a way - via Planning consents - to duplicate the way the Canberra Land Rent Initiative can be applied to land that is privately owned. Submissions closed on 14 Oct 2016.

Foundations for change –
Homelessness in NSW   

Thank you for the opportunity to make a submission on this paper; I refer particularly to the topic on page 10 under the heading, Potential opportunities to create better pathways into housing include:
 investigating planning opportunities to increase the supply of affordable housing
and the Discussion Question on page 11
What needs to change to get greater private sector involvement in delivering social and affordable homes?

Affordable Housing is almost entirely a matter of affordable, secure access to land – the size and nature of the dwelling is secondary. The supply of land per se is not the controlling factor because the real estate/developer sector only ‘releases’ the land at a rate to minimise their risk and maximise their return; this can be seen in their promotions of ‘Land Release  Stage1’, ‘Land Release Stage 2’ , etc.

I would, therefore, draw your attention to the Canberra Land Rent Initiative; it is a marvellous demonstration of the importance of affordable, secure land access. Under this scheme, land is made available to owner residents with limited resources at a 2% Ground Rent subject to certain conditions, see Land Rent Scheme click here
Excellent background of the scheme in action is give in a radio interview with Simon Tennent, Director of ACT Government Affordable Housing Plan – CLRI see Renegrade Economist here.

From these references it will be seen the scheme does work and indeed does create a ‘better pathway into housing’ for a significant sector of the community. Many leasees convert to freeholders once they have been able to get established in life with the benefit of a secure, affordable roof over their heads.

The scheme is possible because the ACT Government owns the land. So the question arises as to how a similar scheme might be possible in NSW particularly where residential development takes place on privately owned land.

To this end secure covenants would need to placed on the land when a ‘change of use to residential’ development application is granted. Covenants to ensure that a certain percentage of the land/number or percentage of blocks /’an indisputable requirement’ etc be available at a discounted ground rent to owner/long term occupiers.

If this is done, nobody is carrying an extra financial burden, no one is subsidizing others but the windfall capital gain normally associated with such a ‘change of use’ bestowed by successful application, would be less than otherwise. In short, the planning applicant would still be lucky in getting a significant windfall from simply owning land in a desirable location – just not so much as they might have done.

(If the TPP is ratified and the landowner is a foreign entity, the planning authority could be sued under the ISDS provisions. A very good reason for parliament to not enable the TPP!)

In these times of litigation favouring the wealthy and powerful and the private equity funding of ‘promising’  compensation claims, it has to be recognized that social matters of unfairness and inequity can only be attended by some loss of potential wealth for the already wealthy. One does not need to reflect too long to realize that the gap between the poorer echelons of society and the top wealthy, cannot be solved by a great transfer of assets to the former. The rate of increase of social inequity can only be slowed, fairly, by slowing the rate of wealth accumulation by the already wealthy.

Recognizing this, the covenants placed on development land at ‘change of use’ must needs be very well drawn and able to withstand powerful challenges. I do not under-estimate the legal, technical difficulties here but no well-established problem yields to an easy solution.

What needs to change to get greater private sector involvement in delivering social and affordable homes?
The political will to ensure that at least a part of the potential increased valuation that the community bestows on granting ‘change of use’ be captured to allow a proportion of residential blocks to be available leasehold, some at discounted ground rents. The benefits to society would be huge in so many ways – more stable families, less crime, fewer homeless, better citizens, lower social costs etc.

Colin Cook,
19 Sept 2016

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