Local Government and the Housing Crisis
Historically, housing policy in Australia has been the preserve of state and federal governments. Local governments, although responsible for scrutinising and approving development proposals and implementing land use plan, have been overlooked in the realm of housing policy and the delivery of affordable and social housing. The very limited fiscal capacity of local governments means that their capacity to deliver affordable and social housing is severely constrained. Julie Collins, the Minster for Housing and Minister for Homelessness, in her foreword to the federal government’s recently released National Housing and Homelessness Plan Issues Paper, states that the National Housing and Homelessness plan will be developed ‘in close collaboration with state and territory governments and local government associations’. However, how exactly local government will be incorporated is unclear.
At present there is enormous pressure on local governments to increase housing density in their local government area. This follows the meeting of the national cabinet in August 2023 where it was agreed that 1.2 million homes would be built in the next five years. The agreement is based on the questionable premise that increasing supply is the key to resolving the housing affordability crisis. Under the plan, state governments would set housing targets and work with local governments to achieve these targets.
In New South Wales, 76,000 homes will have to be built annually for five years if its target of 378,000 homes is to be achieved. This will put local governments under tremendous pressure. They will they need to reassure residents that the additional housing (it will invariably mean higher densities), will not have a negative impact on their quality of life and property values. In addition, councils will also face the possibility of conflict with the state government as the latter endeavours to ensure that its extremely ambitious housing targets are met. In a recent address to the NSW Property Council, the Premier, Chris Minns, said the state government would do whatever it takes to meet the target and that he would not ‘rule anything out’. He went on to state that councils could be overruled if they resist the state government’s plans:
We’ve got the powers inside the NSW government … to enact reform, to pursue housing targets and completions in various parts of the state. We don’t need enabling legislation to make that happen. And there’s a balancing act if we don’t intervene; if councils in particular, don’t meet their challenges.
The state government also has the capacity to remove planning consent from councils that are ruled to be underperforming.
Some local governments have expressed concern that the proposed massive increase in housing supply could be a recipe for undermining years of careful land use planning by councils. The Mayor of the Hills Shire council claimed that the state government’s desire to
turbocharge housing growth [and] … giving itself the ability to lodge, assess and approve its own projects [is] … a Trojan horse for more shoe-box size apartments in suburbs that can barely cope, punishing communities who’ve had enough of the density without the promised benefits.
The Premier is also pushing the City of Sydney to allow for more residential development in the city and the conversion of office buildings into residential accommodation. He noted that he could overrule any resistance by the City of Sydney commenting on a local radio station, ‘The NSW Government has the laws and regulations in place on the books already to make changes’. Clover Moore, Lord Mayor of the City of Sydney, countered that housing in the city centre is expensive and will thus not be ‘the silver bullet for addressing the housing crisis … We have to ensure that the CBD balances all needs, including our desire for a bustling 24-hour economy and sufficient employment floor space’.
It is evident that housing will continue to be a hard fought and challenging terrain for local governments as they endeavour to satisfy their own constituencies and the agendas of state governments and the federal government.
By Alan Morris
Professor Alan Morris is a housing expert at the Institute for Public Policy and Governance UTS.
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