Australia's Housing Policy: A History of Public Investment and Challenges

The federal government’s first major tax reform in nearly 30 years was a significant achievement that suggests we may have turned a corner on the housing crisis. It is a good time to revisit Australia’s housing history within the broader history of social policy.

This is a story of public investment for economic growth as well as for the needs of citizens. The railways, telegraphs, hospitals, schools and welfare that gave Australia a reputation for a “pragmatic” rather than “doctrinaire” approach to national development are well known. But governments also invested in housing despite some powerful resistance by interest groups.

This public investment in housing shows how democratic processes worked in this difficult policy area. Most was initiated by Labor governments, some by conservatives, but it all recognised the social and economic value of decent housing, and the difficulties of low-paid workers accessing it via the market. When the eminent architect John Sulman declared in 1914 that “the unsolved problem” in Australia was providing housing at a price that “the living wage workers can pay”, he articulated a “big truth” that remains largely unchanged.

Some public investments were easier to pull off than others. Australia’s first public housing in Sydney’s Rocks district supported the needs of commerce and shipping when it was constructed in the early 1900s. Part of the redevelopment of the wharves following an outbreak of the dreaded bubonic plague, The Rocks project gave licence to the conservative state government to fund more than 100 new dwellings because wharf labourers needed to live nearby for round-the-clock work.

But most builds were more contentious, pressured by citizen protest and supported by advocates of the garden suburb who saw inner-city housing as “slums” and a source of social decay. Daceyville, in Sydney’s south-east, was a prime example. Established after the election in 1910 of New South Wales’s first Labor government, it was precipitated by the demolition of swathes of housing for city improvement. By 1912 more than 5,700 people were displaced. Residents, city missionaries and the popular press mounted petitions and led deputations to register their dissent at what journalists were calling inhuman evictions.

Daceyville was not the only outcome of this protest. The Strickland Building in Chippendale was the first of four blocks of inner-city flats erected by the Sydney city council between 1914 and 1927. With resident demand for housing near work trumping anti-slum orthodoxy, they are evidence of how contingent outcomes in this high-stakes context could be.

The largest and best-remembered investment was in the 1940s, the product of an extreme housing shortage and fear of social unrest. Thousands of families were living in boarding houses and various forms of temporary shelter following the Depression. The Commonwealth Housing Commission promised a “new social order”, which also sought to offset the attractions of communism. It broke new ground in declaring housing to be “a right” that should “cease to be a field of investment yielding high profits”. Between 1945 and 1956, more than 96,000 new dwellings were funded through the commonwealth-state housing agreement.

None of these public investments were sufficient but they eased rental pressure on working-class families to a greater extent than any intervention before or since and, leaving behind the orthodoxy of the “economic rent”, it enabled families in greatest need to access it. This investment also underpinned the leap in Australia’s home ownership rates from 53% in 1947 to 73% in 1966.

A downside of this pivot was that the stock that was sold was not replaced. The Menzies government saw home ownership as an alternative to public rental rather than a complement, so support wound down. Between 1958 and 1973 the proportion of new housing that was public fell from 17.8% to 7.7%. The waiting lists have been growing ever since.

In 2007, the Rudd government addressed once again the disparity between low incomes and market rents through a new housing policy. Despite its limits, it enabled thousands of people who would otherwise have remained homeless to access secure housing. This investment, part of the global financial crisis stimulus package, demonstrated how such policy can work to normalise fiscal intervention. It was redeployed early in the Covid pandemic, preventing widespread unemployment, and underpins the government’s recent tax reforms.

Australian governments’ past investments in housing were hard-won. Despite their limitations, they made access to housing more equitable because they recognised its social and economic value. Understanding their complexity and purpose helps expand and strengthen the options we now see as politically feasible.