Planning, Development and Infrastructure (Affordable Housing) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 30 August 2023.)

The Hon. J.S. LEE (16:26): I rise today to speak on the Planning, Development and Infrastructure (Affordable Housing) Amendment Bill 2023. While I acknowledge the intent behind this legislation to increase the supply of affordable housing, I must express serious concerns about the unintended consequences that risk undermining the very objective of affordability. Mandating affordable housing quotas on all developments of more than 20 dwellings may seem to seem like a straightforward solution, but in practice it introduces significant economic and planning challenges. By imposing artificial price caps, the bill increases development risk and threatens the viability of many housing projects.

Developers will be forced to offset the cost of subsidised dwellings, only serving to drive up housing prices and make it more difficult for South Australians to enter the housing market. Currently, the planning system provides incentives through the affordable housing overlay. The minimum site area for a dwelling can be reduced by up to 20 per cent, and the maximum building height in certain zones can be increased by one storey where the building includes at least 15 per cent affordable housing.

These mechanisms encourage affordable housing without compromising project feasibility. This bill, however, replaces incentive with mandate, and that shift is problematic. I must also question who will be purchasing the mandated affordable housing stock. Will the SA Housing Trust or social housing providers be compelled to acquire these properties en masse? The potential financial burden on government and providers could be immense, and those are unknown.

While I fully support the goal of increasing housing supply and affordability, I do not believe this is the right mechanism and I am concerned that this bill would introduce a highly counterproductive reduction in housing supply. The proposed approach would risk reducing housing supply, increasing prices and ultimately making it harder and not easier for South Australians to find a home. For these reasons, I cannot support the bill.

The Hon. R.P. WORTLEY (16:29): I drew the short straw. The Hon. Mr Tung Ngo has been traumatised over the last few weeks, being referred to as the Grim Reaper, so I have now been put into that role.

The Hon. R.A. Simms interjecting:

The Hon. R.P. WORTLEY: That is right. On 30 August 2023, the Hon. Robert Simms MLC introduced the Planning, Development and Infrastructure (Affordable Housing) Amendment Bill 2023 in the Legislative Council. The bill seeks to require a relevant authority to impose a condition on development authorisations for significant development that forces compliance with the affordable housing requirements set out in the bill.

This would essentially require developments providing 20 or more dwellings to ensure 30 per cent of those dwellings are maintained as affordable housing. The Planning and Design Code already requires development within the Affordable Housing Overlay that comprises 20 or more dwellings or allotments to incorporate affordable housing. The overlay applies to neighbourhood zones, or zones which envisage residential development where affordable housing is anticipated or where zoning anticipates an increase in housing diversity or urban growth.

The code defines affordable housing as housing that meets the relevant criteria as determined by the minister responsible for the South Australian Housing Trust Act 1995. The deemed-to-satisfy criteria in the code require a development to include a minimum of 15 per cent affordable housing, otherwise it will be performance assessed.

The code provides a number of incentives for providing affordable housing, including—other than in the character area or historic area overlays—minimum allotment size may be reduced by up to 20 per cent; maximum density per hectare may be increased by up to 20 per cent; and building height in specified zones may be increased by one building level, or by up to 30 per cent in other zones.

The state government does not support the bill for the following reasons. The code already adequately encourages developers to incorporate affordable housing in areas where it is appropriate. In its current state, the bill would apply across all of metropolitan Adelaide, and it is not possible to incorporate affordable housing in all locations. Planning and Land Use Services of the Department for Housing and Urban Development already consistently receives feedback that it is not feasible to provide affordable housing in locations where market value is already high, such as apartment buildings along the Glenelg foreshore.

Requiring a minimum of 30 per cent of dwellings to meet the affordable housing requirements in the bill would significantly increase costs for housing development and/or may discourage developers from undertaking housing development projects, thus further constraining supply and worsening housing affordability. There is no consideration in the bill as to funding mechanisms that would enable not-for-profit community housing providers or the South Australian Housing Trust to purchase land or build or directly purchase up to 20 per cent of dwellings in any new development.

The South Australian government is addressing housing affordability through other key measures through the South Australian Housing Roadmap and Greater Adelaide Regional Plan. We are increasing supply through rezoning and investing in critical infrastructure such as water, and we are investing in our Housing Trust and reversing the sell-offs of previous governments.

The government is also undertaking a significant maintenance and renewal program of its existing public housing asset base. We are delivering rent-to-buy programs, ensuring South Australians can enter the property market sooner, and we are working with community housing providers in the community to deliver key social housing projects throughout the state. For this reason, the government opposes the bill.

The Hon. J.M.A. LENSINK (16:34): I rise to place some remarks on the record in relation to this particular piece of legislation and indicate that the Liberal Party will not be supporting this bill. We all agree, I think, that housing affordability is one of the defining issues of our time, with the dream of home ownership slipping further out of the reach of many South Australians, with an urgent need to supply affordable homes across our state. Can I say at the outset that the definition of 'affordable housing' is a different definition for different people, depending on who you speak to.

The gazetted price point for affordable homes for purchase I think at the moment is somewhere in the order of $480,000 but the industry is actually struggling to build homes at that price point because the construction costs both through materials and labour have gone up so much. That is why the government, which has not advertised this very widely, is advertising a lot of the homes through HomeSeeker, which was an initiative of yours truly in the Marshall Liberal government, using shared equity, which means that the effective price point for a lot of those homes is much more in the order of $650,000.

This proposal by the Greens would impose a mandatory quota of 30 per cent affordable and social housing in every new residential development of 20 dwellings or more—if only that was achievable. Ten per cent would be for affordable purchase, 10 per cent for affordable rental, and 10 per cent for social housing.

However, because of these cost increases to build new dwellings, this bill would effectively strangle new housing supply across the board before it even begins because a lot of the affordable homes, whether they are affordable for sale or what the community housing providers provide at 74.9 per cent of market rent, often have to be cross-subsidised through homes which are built at the same time, often in complexes, whether they are units and apartments or groups of townhouses and the like, sort of medium density. They have to have some of those sold on the private market and that is how they manage to make the economics stack up.

This proposal adds to the build cost and complexity and forces the developer to try to absorb the financial burden without any mechanism for making sure that it is actually going to be viable, which is going to lead to fewer developments, delayed projects and high costs for everybody else. So effectively, it is going to strangle supply at a time when we need to be increasing supply.

In recent correspondence, the UDIA has warned that mandatory quotas will drive up construction costs, deter investment and undermine the very goal of affordability. They described the bill, and I quote, as, 'well-intentioned but economically unsound', pointing out that housing affordability is a product of supply, infrastructure and planning inefficiency, not blunt quotas. It is unfortunate that there are a range of economic realities which the Greens ignore. You cannot build houses without capital—that is just the reality. These projects really need to stack up, otherwise they will not take place.

The Liberal Party has a proud record in terms of inclusionary housing and we can go back as far as Tom Playford, who built a large part of the public estate, some of which resulted in home ownership, and more recently the target of 15 per cent—which Jay Weatherill talked about but did not walk the walk—affordable housing within developments, was never actually put into force because it was never enforced. The 15 per cent overlay, which I think Vickie Chapman introduced to make sure that the 15 per cent was actually enforced, has delivered thousands of affordable homes without undermining the financial feasibility projects because it is a practical measure.

The message in this bill is a very simple sell for the Greens, but unfortunately it is not going to actually deliver. Knowing that the Greens will not actually be a party of government, I think they can make these sorts of aspirational but completely impractical suggestions. I am not trying to be disrespectful, but I kind of get a bit tired of having to defend against slogans that we know are not actually going to have the impact they are supposed to.

The Liberal Party is supporting practical measures that will expand supply and opportunity. We support a planning system that encourages investment, rather than punishing it. We are particularly focused on first-home owners. Our policies that we have released thus far have focused very much on first-home owners by scrapping stamp duty for homes of up to $1 million to help first-home buyers get into the market. We proposed additional land through the EPA legislation, which sadly this parliament and the Labor Party rejected, and modern methods of construction to deliver homes faster and more affordably, and we will have more to say in a range of areas.

I will make some more comments in relation to the recent parliamentary forum on housing that we held yesterday, which was attended by SACOSS. One of the SACOSS board members is Professor Dave Adamson and he addressed the meeting via a video link. I think that what he presented is an extremely useful way to look at housing.

I will not table his slide, but he has divided the housing system into eight segments. Some are market segments. They are basically classic supply and demand measures and then there is the non-market housing sector, which is homelessness services, emergency shelters, transitional housing, supportive housing, community and social housing or below market rental, which is the one I referred to, which is affordable rental (74.9 per cent of market rate). Then there are the two that most people are very familiar with, which is market housing that is private rental and home ownership.

He made the point, which I think is very valid and sometimes gets lost in the debate because people always focus on the crisis end, that if you have for instance less supply in the private rental market, as we have seen in South Australia, prices go up and that leads to—which I am very familiar with because I get a lot of contact with people who have experienced this—people who have very successfully been in the private rental market who lose their tenancy for whatever reason and quite a number of them have needed homelessness services because we just do not have enough supply in that middle space.

So it is very useful to think of it as a continuum, rather than a 'us and them' and sort of picking on different groups because picking on different areas and pointing to them and saying they have more than someone else is not going to get us out of this crisis.

There is one thing that I agree with the Greens on: housing is a human right. I think we all want to resolve this issue, but some things will work and some things will not. Unfortunately, this proposal will actually make it worse, so we will be opposing this bill.

The Hon. R.A. SIMMS (16:43): I thank honourable members for their contributions: the Hon. Russell Wortley, the Hon. Jing Lee and the Hon. Michelle Lensink. Naturally, I am disappointed that the Labor and Liberal parties are not supporting this bill, but I am not surprised. I will not reflect on the irony of being lectured about empty slogans by the Liberal Party. Let's not forget the Liberal Party's track record, the party of 'stop the boats', 'end the waste' and every other empty slogan one can think of that was parroted by the Liberal Party over the years.

In the case of the Greens, at least we actually have some policies and we look forward to being able to talk to voters about those in the lead-up to the election. I look forward to seeing the Liberals announce a housing policy at some point. But on the substantive issue of the bill before us—

Members interjecting:

The PRESIDENT: Order! You are attacking the Hon. Mr Simms.

The Hon. R.A. SIMMS: On the substantive point of the bill before us, I think one of the things honourable members are neglecting in their contributions is the fact that the Malinauskas government has really rolled out the red carpet for developers in our state over the last four years. Everything is the developer's way: land releases, getting the community to pay for new infrastructure, and we are now changing the height limits in the CBD so that we can go sky-high with development. The government has even done a code amendment that does away with some of those basic amenities like private bathrooms and kitchens and balconies.

If the developers are getting all of this land release, all of these planning changes that make it easier for them to develop, then surely there should be a return to the South Australian community by way of an increased return of social housing. Let's not forget there is a requirement for 15 per cent affordable housing already under the law. We are proposing that that be increased to 30 per cent: 10 per cent affordable to buy, 10 per cent affordable to rent and 10 per cent public housing. I do not think that is too much to ask in the middle of the worst housing crisis we have seen in generations.

Many members have reflected that we all recognise this as a problem. The reality is, though, some political parties do not want to do anything about it because the policies they support are allowing housing to be treated purely as an investment class rather than a fundamental human right of each and every South Australian. It is one thing to unlock land for development and it is one thing to change planning laws to facilitate development, it is quite another to actually mandate a return of social and affordable housing.

I note the government's announcement on the weekend that they are putting $500 million down so they can act as guarantee for private development. More penthouses in the CBD—million-dollar penthouses in the CBD with views of the ocean—are not going to be a solution to the housing crisis. That is not going to fix the housing crisis. We need to see developers stepping up and investing in social housing. We need to see the government incentivise that investment. We also need to see the government put some money on the table for more social housing, more public housing.

The Hon. Michelle Lensink referenced Thomas Playford, and I am glad she did because he was a visionary Premier. One of the things that he did was set up the South Australian Housing Trust as a public builder, and that was the biggest builder in South Australia during a period of his premiership. We can do that again if there is a political will to do so. I might add in concluding that we heard from the transport minister today that South Australian taxpayers have spent $7.5 billion on the north-south corridor. Imagine what we could do with that money if we invested it in housing. We can solve the housing crisis if there is the political will to do so. That is not a slogan; that is a fact.

Second reading negatived.