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Housing Studies
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Housing Affordability and Planning in Australia: The
Challenge of Policy Under Neo-liberalism
Andrew Beer a; Bridget Kearins a; Hans Pieters a
a
School of Geography, Population and Environmental Management, Flinders
University, Adelaide, Australia

Online Publication Date: 01 January 2007


To cite this Article: Beer, Andrew, Kearins, Bridget and Pieters, Hans (2007)
'Housing Affordability and Planning in Australia: The Challenge of Policy Under
Neo-liberalism', Housing Studies, 22:1, 11 - 24
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Housing Studies,
Vol. 22, No. 1, 11–24, January 2007

Housing Affordability and Planning


in Australia: The Challenge of Policy
Under Neo-liberalism
ANDREW BEER, BRIDGET KEARINS & HANS PIETERS
School of Geography, Population and Environmental Management, Flinders University, Adelaide, Australia

(Received February 2005; revised July 2006)

ABSTRACT Housing affordability has once again appeared on the policy agenda of Australian
governments. House prices have risen in response to booming demand and constraints on the supply
of dwellings, especially a shortage of land in the capital cities and skill shortages within the housing
industry. Many young and low-income households have experienced great difficulty in gaining
access to homeownership and in being able to afford private rental housing. This paper briefly
considers the characteristics of public debate around housing affordability in Australia. It examines
the role of neo-liberalism in shaping policy responses to housing affordability problems and assesses
the argument that affordability goals can be achieved through manipulation of the planning system.
It contends that neo-liberal philosophies of government direct policy action to the planning system,
but such strategies have a limited capacity to improve housing affordability. Australian governments
need to adopt more effective housing policies if they are to meet the needs of the 700 000 to 1 million
households who live in unaffordable housing.
KEY WORDS : Housing affordability, neo-liberalism, planning, Australia

Introduction
Housing affordability is a policy concern in Australia today. Since 1945 Australians have
enjoyed high rates of homeownership and relatively low housing costs, a circumstance
made possible through access to cheap and plentiful land for urban development (Stretton,
1989), the evolution of a specialist housing finance sector (Beer, 1992; Hill, 1959) and
significant tax subsidies for owner occupation (Flood & Yates, 1986). However, owner
occupation rates have remained relatively static in Australia since 1966, and there is
growing evidence that young people are either delaying entry into homeownership or not
entering homeownership at all (Badcock & Beer, 2000; Baxter & McDonald, 2004; Yates,
2000). This is a significant trend given that throughout the post-war period 90 per cent of
Australian adults passed through homeownership (Neutze & Kendig, 1991). At the same

Correspondence Address: Andrew Beer, School of Geography, Population and Environmental Management,
Flinders University, GPO Box 2100, Adelaide, South Australia, 5001, Australia. Tel: 61 8 8201 3522, Fax: 61 8
8201 3521. Email: Andrew.Beer@flinders.edu.au
ISSN 0267-3037 Print/1466-1810 Online/07/010011–14 q 2007 Taylor & Francis
DOI: 10.1080/02673030601024572
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12 A. Beer et al.

time there is clear evidence of affordability problems within the private rental sector,
which accommodates just below 20 per cent of all Australian households. There is a higher
rate of affordability problems within the private rental sector and households within this
tenure are now more likely to remain in rental for a longer period. Research by Wulff &
Maher (1998) has shown that fully 40 per cent of private tenants rent for a period of 10
years or more and this represents a significant shift. Previously, private rental housing was
a tenure of transition for young households saving to enter home purchase (Kendig, 1981).
Housing affordability has attracted community and policy attention in Australia over the
last five years. Significant markers of this interest have included the formation of the
Affordable Housing National Research Consortium (AHNRC, 2001), the Australian
Government commissioning the Productivity Commission to undertake an Inquiry into
First Home Ownership (2003, 2004) and individual state governments developing their
own affordability strategies, or establishing affordability targets (for a summary, see
Kearins et al., 2004). In South Australia, for example, the government has committed
itself to halving the level of housing stress in the state by 2008 (Government of South
Australia, 2004).
This paper has four goals: first, it seeks to understand how neo-liberalism affects
housing policy in Australia. Second, it attempts to document and understand the current
policy emphasis on planning instruments as a tool for enhancing housing affordability.
Third, it seeks to outline the tensions that arise in attempting to use planning mechanisms
to achieve affordability goals when other paradigms of development, such as Ecologically
Sustainable Development (ESD), are seen to be as, if not more, influential. Finally, it sets
out to assess the potential impact of small and medium-scale planning interventions such
as planning bonuses and inclusionary zoning on the capacity to achieve societal wide
aspirations with respect to housing affordability. The paper argues that housing
affordability has taken on a particular meaning in contemporary academic and policy
discourses in Australia and that this meaning reflects, in large measure, the historical
development of the Australian welfare state and the ascendancy of neo-liberalism. Policy
engagement with housing affordability debates has also been shaped by the federal system
of government and the position of planning within that structure. The paper argues that
planning approaches per se offer relatively little prospect for improving housing
affordability in Australia, and that the dominant ideologies in planning may exacerbate
affordability problems. The paper concludes with a discussion of the policy directions that
need to be adopted in order to enhance housing affordability in Australia.

Neo-liberalism and the Social Construction of Housing Affordability Debates


in Australia
Neo-liberalism and Housing Policy in Australia
Australia has been profoundly influenced by the philosophies and practices of neo-
liberalism (McGuirk, 2005; O’Neill & Moore, 2005; Pusey, 1991) with government
services either reduced or restructured to meet the needs of a market-oriented economy.
Peck & Tickell (2002, p. 380) argue that it is possible to identify a general model of neo-
liberalism based on free market economic theory and enacted through the processes of
globalization and contemporary state reform. Peck (2001) has argued that this model is
international and characterized by the purging of obstacles to the functioning of free
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Housing Affordability and Planning in Australia 13

markets, restraint in public expenditure, the weakening of social transfer payments and the
“‘inclusion’ of the poor and marginalized into the labour market, on the market’s terms”
(p. 445). However, researchers writing in this area note that neo-liberalism is not uniform
and that its expression at the national, regional or local level is contingent upon historical,
political and geographical circumstances (Peck, 2004) or as O’Neill & Argent (2005) have
argued: “ . . . neoliberalism presents an agenda of possibilities for those with the power to
enact change. But this agenda must be devised and played out in historical and
geographical circumstances” (p. 5).
Housing policy in Australia over the last two decades has been profoundly influenced by
neo-liberalism (see, for example, Beer & Paris, 2005), but it is important to recognize that neo-
liberal tendencies have been added to a housing system already dominated by the market.
Unlike many European nations, Australia did not develop a substantial social housing sector
after 1945, but has instead used a range of direct and indirect subsidies to support private
investment in housing for both homeownership and private rental (Castles, 1996; Flood &
Yates, 1986; Kemeny, 1983; Paris, 1993). Neo-liberalism has found expression in a further
emphasis on market-based solutions to questions of public policy, with the social housing
sector further residualized (Orchard & Arthurson, 2005) and government assistance
programs attempting to keep vulnerable households within the private rental housing market
(Slatter & Beer, 2003). Neo-liberalism has brought with it new challenges for public policy,
including housing, as governments have sought new ‘institutional fixes’ (Peck & Tickell,
1992) to the challenges of social, economic and environmental management.
Our understanding of the debates around housing affordability and planning in Australia
needs to be situated within the context of neo-liberalism and its ‘roll out’. Jessop (1990, 1997,
2002) has argued that it is possible to identify four tendency shifts in the functioning of the
state, and while his ideas have been developed with reference to regional development, there
is sufficient resonance across the housing and regional fields to justify the application of his
concepts here. The first of the tendencies identified by Jessop is the move away from
hierarchical forms of government to more porous forms of governance. Governance is
characterized by the devolution of responsibility to cross-sectoral partnerships and networks
with business leaders and civil organizations integrated into decision making and
implementation of the activities of the state (Beer et al., 2005). Jessop’s second key shift is the
subordination of social policy to economic policy, an outcome all too apparent in many
dimensions of society (Jessop, 2002). A third tendency (Jessop, 1997) concerns the ‘vertical’
reworking of policy powers, away from the pre-eminence of the nation state in economic
management. This has seen power, responsibilities and resources reallocated vertically, both
upwards to bodies such as the World Trade Organization, and downwards to local governance
bodies. This rescaling of policy in conjunction with the horizontal shift of powers to non-
government institutions is sometimes said to have led to a ‘hollowing out’ of the nation state
(Beer et al., 2005). However, Jessop argues that the state has retained its influence through its
ability to set the rules of the game, that is, metagovernance. Rather than the state directly
involved in many areas of policy, it increasingly sets out to determine the regulatory and
policy frameworks for others. In short, it seeks to ‘steer’ not ‘row’, or it directs rather than
directly implements (Beer et al., 2005). The final tendency relates to the internationalization
of policy development and this trend is evident in the increasing tendency for policy solutions
to be borrowed and adapted across national boundaries.
The implementation of policies relating to housing affordability in Australia must be
examined with reference to the impact of neo-liberalism, the history of housing policy and the
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14 A. Beer et al.

welfare state in Australia, and the relationship between the three tiers of government. Planning
clearly represents a rich field of opportunity for the development of housing affordability
policies that are informed by neo-liberalism as planning is, of necessity, an intervention in the
market; planning policies do not carry significant costs for central government and, indeed,
planning policies can be used to transfer costs to the private sector. In Australia planning
responsibilities sit with local government rather than the state or federal governments, making
it possible to vertically reassign responsibilities away from central government.

The Social Construction of Housing Affordability Debates


Research and writing into housing affordability in Australia has been a major endeavour
amongst academics (see, for example, Gabriel et al., 2006); Australian Government
officials (National Housing Strategy (NHS), 1991; Productivity Commission, 2003, 2004);
state governments (Government of South Australia, 2005); industry and the non-
government sector. Concerns around housing affordability in Australia have manifested
themselves in two ways. First, there have been a series of debates and policy interventions
around ‘housing stress’ (Kearins et al., 2004; NHS, 1991; Rossiter & Vipond, 1985) and the
provision of affordable housing for the most vulnerable groups in society. Second, there has
been a general concern with the cost of housing and the ability of younger Australians to
gain access to homeownership. Gabriel et al. (2006) have reminded us that the discourse
around housing affordability is typical of many areas of public policy in reflecting the
interests of particular industries or groups. In this instance, the former has been associated
with the notion of housing stress and is championed by welfare groups, academics and those
providing services to low-income households. By contrast, the house building industry has
served as a vocal advocate for reducing the cost of home purchase and has been an effective
lobbyist for new and on-going subsidies for first-home buyers. A First Home Owners Grant
was introduced by the Hawke Labor Government in the mid-1980s and then again in the
year 2000 by the Howard Coalition Government. Importantly, questions about planning
and its impact on housing affordability have been prominent in debates around access to
homeownership, but have been absent from discussions and policies focused on meeting
the housing needs of the most vulnerable. The 1989 Special Premier’s Conference on
Housing, for example, articulated the view that planning failures were largely responsible
for escalating house prices and diminishing access to homeownership.
The dual nature of policy engagement with housing affordability has generated tensions
in the delivery and promotion of housing assistance policies. At one level, programs of
social housing provision and assistance for low-income private tenants have become an
acknowledged, although contested, feature of the welfare state (Australian Institute of
Health & Welfare, 2003; Orchard & Arthurson, 2005), while assistance with entry into,
and maintenance of, home purchase is perceived to be an entitlement within a property
owning democracy. It is, in many respects, seen to be acceptable ‘middle-class welfare’ as
opposed to ‘welfare handouts’ to low-income groups. This dualism is blind to the
operations of the housing market with measures aimed at assisting low-income tenants
affecting home purchasers and vice versa.

Housing Stress
Housing stress is an important concept within affordability debates in Australia because it
is the lens through which policy makers view the need for assistance. Households are seen
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Housing Affordability and Planning in Australia 15

to be in housing stress if they are within the bottom 40 per cent of the income distribution
and paying more than 20, 25 or 30 per cent of their income on housing (National Housing
Strategy, 1991) and the precise level at which housing stress is seen to occur is influenced
by the values, and often political complexion, of the agency or author (see, for example,
Burgess, 2003; Cass, 1991; NHS, 1991). Critically, the concept of housing stress is income
contingent. That is, only the poorest households are seen to be challenged by housing
affordability as wealthier households spending a significant percentage of their income on
housing are seen to have ‘chosen’ that outcome. The Australian welfare state is seen to
have a responsibility and mandate for dealing with housing stress, but not necessarily
affordability, and increasingly public debates further emphasize the targeting of housing
assistance to those with multiple and complex housing needs because of disability,
Aboriginality, homelessness or age (Baker et al., 2006). By contrast, assistance with
access to homeownership is treated as a question of politics, not policy.
The concept of housing stress has been relatively long lived within Australian public
policy because of the highly targeted nature of intervention that it implies; the political
sensitivities around housing costs, with ‘mortgage belt’ suburbs seen as being critical to
electoral success, and the capacity to seamlessly redefine housing stress by recalibrating
the percentage of income devoted to housing costs viewed as problematic. In the 1980s
low-income households spending more than 25 per cent of their income on
accommodation were considered to be in housing stress (Cass, 1991; Rossiter & Vipond,
1985) but by the 1990s public policy documents proposed a 30 per cent benchmark
(National Housing Strategy, 1991). More recently, some commentators have
foreshadowed the need to focus policy interventions on those experiencing ‘extreme
housing stress’, defined as low-income households spending more than 50 per cent of
income on housing (Baker et al., 2006).
There has been a great deal of research interest in housing affordability in Australia and
the research and policy community is aware that housing stress is more likely to occur in
the private rental sector. Estimates suggest between 700 000 and 1.1 million households
are confronted by this phenomenon (AHNRC, 2001; Chapman, 2006; Gabriel et al., 2006).
The Government of South Australia, for example, calculates that 28 000 renting and 10 000
home purchasing households experienced housing stress in 2001 (Government of South
Australia, 2004). Importantly, housing stress is not short term or an outcome of cycles
within the housing market. Research by Yates (2006) demonstrates that over the last
decade there has not been a period in which housing stress has not been a problem for a
substantial number of Australian households.
The incidence of housing stress in Australia has been fuelled by a number of processes,
including: escalating property prices in Australia over the last five years (Berry & Dalton,
2004); the small and declining role of the social housing sector in Australia; and,
Australian Government policy on the provision of housing support for private tenants
(Burgess, 2003; Yates, 1997). Burgess (2003), for example, demonstrated that the
Rent Assistance provided by the Australian Government to low-income tenants was too
low to have an appreciable impact on the incidence of housing stress, and that a
fundamental shift would need to occur in the conceptualization and calculation of housing
stress if government policies were to be seen to be effective. Significantly, housing stress is
often perceived to be a problem of cycles within the housing market, with buoyant
property market conditions contributing to a wider incidence of housing stress within
the community. Housing stress emerged as a policy concern in the mid-1980s, the late
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16 A. Beer et al.

1980s and again after 2000, although it is important to note that substantial numbers
of households remain in housing stress at all stages of the housing market cycle (Chapman,
2006)

Housing Affordability and Planning


The Relationship Between Housing Affordability and Planning
Planning as a form of regulation has been seen to occupy an equivocal position with
respect to housing affordability debates in Australia. On the one hand, planning is seen to
restrict the supply of land for residential development and impose additional costs on
developers. On the other hand, planning bonuses and similar tools are considered
potentially valuable in meeting the housing needs of low-income households (see, for
example, Government of South Australia, 2005). The ambiguous status of planning within
Australian policy frameworks is perhaps best reflected in the findings of the Productivity
Commission (2003), which concluded that:
. There is some evidence that constraints on land supply at the urban fringe have
added to price pressures, particularly in Sydney.
. Consolidation practices that introduce constraints on fringe development,
including through urban growth boundaries, are likely to have added to the
scarcity value of land.
. Planning approval processes are likely to involve excessive ‘red tape’,
duplication, inconsistencies, unnecessary delays and a lack of transparency.
. There is a need to streamline permit processes, extend ‘as of right’ provisions for
housing developments and speed up appeal processes.
However, despite these criticisms the Productivity Commission (2004) concluded that
planning processes had not contributed in any significant way to the housing affordability
problems in Australia’s cities.
The antagonism of the Productivity Commission (2004) to planning is indicative of a
broader attack on planning by neo-liberal governments in Australia since the late 1980s
(Gleeson & Low, 2000a, 2000b). The Kennett Government in Victoria, for example,
effectively dismantled its planning processes in the name of enhancing efficiency in
development approval processes. More generally, planning reflects the tensions evident in
many areas of policy affected by neo-liberalism with the ‘roll back’ of established
planning policies and practices followed by the ‘roll out’ of new policies and strategies.
While the regulatory impacts of planning polices are often decried by the champions of
market forces, they are also attractive to governments who need to be seen to be
responding to housing affordability problems.
Many of Australia’s states and territories have established housing affordability
strategies that incorporate an explicit planning dimension. The Queensland Government,
for example, endorsed its Affordable Housing in Sustainable Communities Strategic
Action Plan in June 2001 (Queensland Department of Housing, 2001) while the Australian
Capital Territory (ACT) Government released its Ministerial Taskforce on Affordable
Housing ‘Strategies for Action’ in December 2002 (ACT Department of Housing &
Community Services, 2002). Other states and territories have either released similar
initiatives or have them in train (see Kearins et al., 2004). One of the common themes
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Housing Affordability and Planning in Australia 17

across these policy reviews has been recognition that planning alone cannot solve housing
affordability problems. Indeed, the ACT Government concluded that existing planning
policies aimed at improving affordability had negligible impact. A review of the various
housing affordability initiatives put forward by state and territory governments suggests
that they have, through separate mechanisms, also arrived at a shared view that a ‘whole of
government’ approach is needed to ensure adequate and affordable housing for low-
income households. Appropriate planning provisions are seen to be a critical component of
government actions for affordable housing but other policy instruments—such as direct
provision, subsidies, financial instruments and the reduction of development standards—
are considered equally important. Australian developments here mirror the findings of the
Low Cost Home Ownership Task Force (2003) in the UK.

Recent Developments in Metropolitan Planning: Urban Consolidation and Growth


Boundaries
The recent focus on housing affordability has coincided with a new wave of metropolitan
planning within Australian cities (Gleeson & Low, 2000a). These new plans are significant
for this discussion because housing is not the only policy driver shaping these strategies
and these other imperatives may limit the capacity of the planning system to deliver low
cost housing. In their background paper for the Sydney metropolitan planning strategy
development process, Gleeson et al. (2003, p. 48) reviewed five capital city metropolitan
planning strategies and argued that:
There is a consensus across the five metropolitan strategies on the need to address the
car dependent, sprawling morphology of capital cities. The Adelaide, Melbourne, Perth,
South East Queensland (SEQ), and Sydney plans all advocate urban containment and
reduced car dependence in pursuit of sustainability. The strategies include the following
policies:
. Integration of public transport provision with land-use planning;
. A centres policy that integrates transport hubs with mixed intense land uses (high
density housing, employment, retail and recreation);
. The directing of urban growth along existing, extended and new railway spine
corridors;
. Increasing densities both at the fringe and around transport hubs/centres in the
context of falling household size; and
. The need to ensure a supply of affordable housing and use of urban renewal
programs to address the spatial effects of disadvantage.
Over the last five years both South Australia (Adelaide) and Victoria (Melbourne) have
introduced urban growth boundaries. A conference organized by the Department of
Infrastructure and Planning in Western Australia in 2003 saw 70 per cent of the 1100
delegates vote for an urban growth boundary around metropolitan Perth (Kearins et al.,
2004). Urban growth boundaries represent a significant challenge for housing affordability
within an urban system characterized by sprawling cities and the concentration of affordable
housing in the outer-most parts of the urban area. The Victorian Government has
gone further than most other states in articulating what it sees to be the relationship
between housing affordability and urban containment. In 2003 the Victorian Government,
through the Department of Sustainability and Environment, introduced a new planning
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18 A. Beer et al.

strategy ‘Melbourne 2030—Planning for Sustainable Growth’ (Victorian Department


of Sustainability & Environment, 2003). This strategy incorporated five Growth Areas, nine
Transit Cities and an Urban Growth Boundary and was designed to ‘manage not limit’
growth at the rate of 1 million extra people over the next 30 years or 620 000 new households
for the Melbourne metropolitan area.
A key tenet of ‘Melbourne 2030’ is that planning should not exacerbate housing
affordability problems and the plan is designed to improve access to jobs, facilities and
amenity in areas of the city where affordable housing is available. It also emphasizes the
need for mixed housing forms. Housing affordability is addressed at a number of levels,
for example, the Transit Cities program is designed to improve access, amenity and
transport in areas of more affordable housing and to maintain affordable stock in areas
targeted for improvement. The plan is also underpinned by recognition of the need for a
greater understanding of existing and emerging affordability issues; the need to provide
for the restructuring of public housing stock; the need to explore the potential use of
surplus government land, as well as making better use of joint ventures between the private
sector and VicUrban, the Victorian Government’s land agency. The implementation of
‘Melbourne 2030’ is to take place through Regional Housing Working Groups comprised
of local government officials, planners from the Department of Sustainability and the
Environment and social housing officials. Other implementation tools will include an
Urban Development Program, guidelines for Higher Density Design, and the establish-
ment of Committees for Smart Growth.
Not all commentators or institutions share the Victorian Government’s positive
assessment of urban consolidation policies and its capacity to deliver affordable housing.
The Productivity Commission (2003) explicitly cautioned against the uncritical
acceptance of urban consolidation and warned that in the long term it must inevitably
result in higher housing prices. In reviewing its own practice of urban consolidation, the
South Australian Government’s social housing provider, the South Australian Housing
Trust (South Australian Housing Trust (SAHT), 1992), noted that there are significant cost
increases associated with higher densities and medium density housing due to: strong
developer interest in this type of development forcing up land costs; the inherently higher
construction costs for medium density housing; and, the use of relatively expensive and
less efficient techniques such as zero lot-line courtyard housing to save on land costs.

Pro-active Planning Strategies for Housing Affordability


In his book Economics, Planning and Housing, Michael Oxley reviews planning-based
approaches to affordable housing and argues that it is important when attempting to assess
the role of planning-based approaches to housing policy to consider the purposes,
instruments and consequences of planning policy (Oxley, 2004). He examines planning
practice from the perspective that planning systems are called upon to deliver what
markets cannot. Planning is a reaction to market failures, particularly in relation to
externalities (costs and benefits), provision of quasi-public goods and problems of
disequilibrium. Markets cannot guarantee efficiency nor can they be relied upon to make
judgements about fairness and equity. Trading in dwellings and land is fundamentally
about trading in property rights that are endorsed by the state, and land-use planning is
therefore also part of the process of moderating property rights. Oxley (2004) and Gleeson
et al. (2003) both conceptualize planning as an activity of governments that is broader than
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Housing Affordability and Planning in Australia 19

simple development control and one that is part of the wider regulation of political and
economic structure. From their perspective a range of interventions in the development
process are both justified and indicated in order to achieve affordable housing. This
includes: betterment taxes to capture the unearned increment arising out of the transfer of
land from rural to urban purposes; inclusionary zoning that requires the private sector to
provide a percentage of affordable housing as part of every new development; and, the use
of ‘planning bonuses’ which provide development firms with the right to build at higher
densities in return for the provision of affordable housing.
Pro-active planning strategies such as planning bonuses, inclusionary zoning and
betterment taxes have had a chequered history in Australia (Hamnett & Freestone, 2000;
Stretton, 1989). In large measure the latter two approaches have failed because of private
sector opposition, while the former is seen to result in relatively few opportunities for
affordable housing (Beer et al., 2006). Inclusionary zoning and betterment taxes are both
perceived to be forms of taxation that add to the cost of providing housing to the broader
community of home purchasers. Advocates of such strategies have had difficulty justifying
why new home buyers, rather than the community as a whole, should subsidize the
housing of low-income earners (Productivity Commission, 2003, 2004). The problems of
implementing such strategies are recognized as significant, such that the ‘Melbourne
2030’ planning strategy considered and rejected inclusionary zoning schedules because of
the evident failures of such approaches in other Australian states (Kearins et al., 2004).
Interestingly, the South Australian Government embraced inclusionary zoning in its 2005
State Housing Plan (Government of South Australia, 2005).
Planning bonuses and public sector-private sector partnerships represent a second type
of pro-active planning strategy for affordable housing. However, recent Australian
experience suggests that such strategies have a limited capacity to deliver affordable
housing in any significant volume. Landcom is the affordable housing body of the New
South Wales Government and its Moderate Income Housing Strategy provides a practical
illustration of these approaches. In the year 2000 Landcom sponsored the Smart Housing
Project competition in Parklea, Blacktown, which challenged developers to create a
development that provided housing for people with varying needs and modest incomes
(Landcom, 2004a, 2004b). The development was located on three hectares and comprised
63 detached homes. Dwellings varied in size from two to four bedrooms on lots from
220 m2 to 750 m2. The local government granted the project some flexibility on design
rules (on the condition that affordable homes be provided and maintained) and this
together with innovative design, construction and waste minimization, provided the scope
to build a greater number of dwellings at reduced cost than would have been possible
otherwise. Of the 63 homes, 20 per cent (13 dwellings) were targeted to moderate income
homes. These dwellings were distributed throughout the site and were not identifiably
different from the broader stock of dwellings. They were allocated via a balloting process
and were sold with restrictions on re-sale: “a restrictive covenant, deed of agreement and
second mortgage (nominal dollar) which together act as a control package”. Moderate-
income homes were sold for between $156 000 to $220 000 and prices for the balance of
the homes ranged from $270 000 to $415 000. Landcom (2004a) reported that both they
and the developers secured a surplus from the project.
Demonstration projects such as Parklea offer important insights into the limits
and potential of ‘planning bonus’ approaches to housing affordability. Very few dwellings
for moderate-income households were produced at Parklea and the high rate of
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20 A. Beer et al.

over-subscription by the target group suggests that the capacity of this style of initiative
to deliver significant quantities of affordable housing is limited. This low impact also
applies to other projects that require a proportion of the unit yield to be sold as affordable
homes. Landcom’s affordable housing target (where commercially feasible) is set at
between 5 and 7.5 per cent of the total number of land and/or housing products it produces
each year. Total unit production has been estimated at 1500 dwellings, resulting in the
production of approximately 113 units considered affordable for moderate-income
earners. This level of supply has to be understood with reference to the 700 000 low-
income households in metropolitan Sydney who meet the income criteria for assistance
from Landcom. Clearly, such policy interventions have a negligible impact on the
provision of affordable housing.

Conclusion
This paper set out to address four goals. In the first instance it set out to understand how
neo-liberalism has affected housing policy in Australia. Second, it sought to document and
understand the current policy emphasis on planning instruments as a tool for enhancing
housing affordability. Third, it sought to outline the tensions that arise in attempting to use
planning mechanisms to achieve affordability goals when other paradigms of
development, such as Ecologically Sustainable Development (ESD), are seen to be as,
if not more, influential. Finally, it has aimed to assess the potential impact of small and
medium-scale planning interventions such as planning bonuses and inclusionary zoning on
the ability to achieve societal wide aspirations with respect to housing affordability.
It can be concluded that neo-liberalism has clearly both influenced the direction of
housing affordability debates in Australia and played a determining part in the ‘roll out’ of
planning policies as a mechanism for boosting the supply of affordable housing. In many
ways, planning solutions are seen to be the low cost ‘technical fix’ to the challenge of
providing affordable housing in high cost metropolitan housing markets where the
capacity to significantly increase the supply of land on the fringe is limited and where
governments are reluctant to release large volumes of land for urban development because
of the detrimental impact on ESD. It is worth reflecting on the fact that as a consequence of
the work of the Affordable Housing National Research Consortium (2001) and other
initiatives, governments have been fully aware of the limitations of planning policies in
pursuing their affordability objectives. Nevertheless, they have continued to rely upon
these policies, often using them as the primary policy instrument. The Australian
geographer Greg Heys is quoted as saying that “neo-liberalism lurks” (O’Neill & Argent,
2005, p. 5, original emphasis) and it is argued that it is the unseen hand of neo-liberalism
that is guiding governments to adopt ‘technical’ planning solutions to affordability
problems, despite their demonstrated lack of success. Governments are forced, or choose,
to turn to planning strategies because the philosophies of neo-liberalism effectively rule
out the actions and programs—such as the expansion of social housing—that would be
more likely to deliver affordable housing.1 Therefore, Australian governments have
adopted neo-liberal policies and institutional structures that display many of the features
Jessop (1998, 2002) has discussed: the transfer of responsibilities vertically to local
governments and the private sector; the creation of governance bodies such as Landcom to
deal with the challenges of affordable housing; the sub-ordination of the social policy
objective of providing affordable housing for all to the objective of higher rates of
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Housing Affordability and Planning in Australia 21

economic growth; and, the international search for planning models that can deliver
affordable housing. For example, the South Australian Government announced a policy in
2005 requiring all new urban development of 20 properties or more to include 15 per cent
affordable housing of which 5 per cent is to be ‘high needs’ accommodation (Government
of South Australia, 2005). Clearly, such a strategy mirrors the inclusionary zoning policies
of the UK and Ireland discussed elsewhere in this special issue.
This paper has shown that there are very real tensions in contemporary planning
strategies for Australia’s metropolitan cities between the desire to achieve Ecologically
Sustainable Development on the one hand, and the objective of boosting the supply of
affordable housing on the other. Urban containment policies must necessarily restrict the
supply of affordable housing by raising land prices, an important component in the overall
cost of housing (Productivity Commission, 2003, 2004). Moreover, some studies suggest
that Australian housing markets are significantly unaffordable by international standards
with urban consolidation and ‘smart growth’ policies held accountable (Wendell Cox,
2005). Therefore, at a macro level, planning strategies as a mechanism for delivering
affordable housing have been compromised by this competing policy objective.
It is important to reflect upon the ability of small and medium-scale planning
instruments and policies to deliver significant volumes of affordable housing units. There
is a clear need for effective policy interventions with a range of studies (Chapman, 2006;
Wulff et al., 2001; Yates & Wulff, 2000; Yates et al., 2006) showing that the supply of
affordable housing is low and falling. Estimates based on the Wulff et al. (2001)
methodology suggest that in 2001 only 18 per cent of new private rental tenancies in South
Australia and 34 per cent in 2005 could be considered affordable for low-income
households, and it is likely the percentage would have been lower in the more expensive
housing markets of Melbourne and Sydney. This paper has demonstrated, however, that
planning bonuses and similar schemes do not deliver the low cost ‘technical fix’ to the
challenge of providing affordable housing that Australian governments have been seeking.
As the Parklea example illustrated, these initiatives are small scale, would be expensive to
administer and may require covenants and other legal structures to maintain the dwelling
as an ‘affordable’ property in the long term.
The paper concludes with two observations. First, that there are lessons for other nations
such as the UK in Australia’s experience. It is argued that the outcomes of the Barker
Review (2003, 2004) reflect a shift to the market-based policy instruments that have long
been the primary policy levers in Australia. For more than two decades affordable home
purchase in the UK has been supported by the on-going sale of council housing that
commenced under the Thatcher Governments in the 1970s. The end of the large-scale sale
of that housing will inevitably result in new challenges for UK governments seeking to
provide affordable home purchase or rental. The tensions and frustrations evident in
housing affordability policies in Australia may also emerge in the UK. Second, it is argued
that in Australia governments and planners alike must return to conventional housing
policies if they are to meet the wider social aspirations for affordable housing. This
argument holds particularly strongly for governments, such as the South Australian
Government, that establish ambitious housing affordability targets. Housing affordability
remains a problem of housing policies and governments that seek to sidestep the problem
by directing attention to planning responses will not generate the policies needed to ensure
that all households, and especially low-income earners, can afford adequate and
appropriate accommodation.
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22 A. Beer et al.

Acknowledgements
This work draws upon work completed with the authors’ colleagues Hugh Stretton, Terry Clower, Chris Paris and
Lionel Orchard. However, the views and opinions expressed in this paper are those of the authors. Thanks also to
Emma Baker, Cecile Cutler and Chris Paris for comments on the revised manuscript.

Note
1
It is worth noting that in the period 2000–2005 virtually all state governments in Australia ran budget
surpluses, as has the national government. Indeed, the Australian government has retired all its
debt and at least two state governments have had their international credit rating upgraded from AAþ
to AAA.

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