the reluctant landlords? a history of public housing in

Urban Policy and Research

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THE RELUCTANT LANDLORDS? A HISTORY OF PUBLIC HOUSING IN AUSTRALIA David Hayward To cite this article: David Hayward (1996) THE RELUCTANT LANDLORDS? A HISTORY OF PUBLIC HOUSING IN AUSTRALIA, Urban Policy and Research, 14:1, 5-35, DOI: 10.1080/08111149608551610 To link to this article: https://doi.org/10.1080/08111149608551610

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Research Articles THE RELUCTANT LANDLORDS? A HISTORY OF PUBLIC HOUSING IN AUSTRALIA David Hayward

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his paper explores the history of public housing in Australia. Four key phases are identified. In each phase I examine the degree of support Commonwealth, State and Local governments have given to public housing, and the various pressures that have helped shape the formation of public housing policies. The paper takes as its point of departure the popular view that the golden age in public housing was the period from 1945 to 1956, during which time the first Commonwealth State Housing Agreement (CSHA) is said to have laid the foundation for a large scale, viable public housing system. A succession ofCSHAs since that time are said to have crippled the history of public housing in this country, with the emphasis of housing policy being shifted toward support for home ownership. This paper takes issue with this view. By following the quite different paths of development of the State Housing Authorities, we see that the decade to 1956 was neither as significant as some claim it to be, norwasita decade to which we were likely ever to be able to return. The long term history of public housing in Australia is one in which successive Governments have at best been reluctant landlords, and the period from 1945 to 1956 is best understood as a partial exception to this general trend. Keywords: Public housing, The Commonwealth State Housing Agreement.

Introduction The 19th of November 1995 marked a very significant milestone in the history of Australian housing policy. On that day fifty years earlier, all of the States signed an agreement with the Commonwealth Government under which the Commonwealth would provide cheap loans to the States for the purpose of building public housing. This agreement was known as the Commonwealth State Housing Agreement (CSHA). Although renegotiated on a number of occasions since its inception it remains in place today as the financial glue binding together our State based public housing system.

The CSHA forms the starting point of most histories of public housing in Australia. In his influential account of the history of Australian housing policy, for example, Jim Kemeny talks fondly of the first CSHA, suggesting that it coincides with the golden era in the history of public housing (Kemeny, 1983). Kemeny points out that under the first CSHA, which operated from 1945 through to 1956, the stock of public housing increased from virtually nothing to 100,000 dwellings (1983: 9) This golden era, according to Kemeny, began to crumble on the election of the Menzies Government in 1949, which sought to encourage the growth of home ownership instead. When the CSHA was renegotiated in 1956, the Menzies government redirected 30% of monies previously ear-marked

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for public housing into schemes designed to promote the purchase by public tenants of the homes they rented. It also enabled the States to sell public housing on whatever conditions they saw fit. Under these policy settings, the States duly went about dismantling the public housing system through an aggressive sales policy. This shift from public housing to home ownership, which was reinforced in the 1961 and 1966 CSHAs, is portrayed by Kemeny as the effective end of a genuine public housing system in Australia, which was sacrificed on the alter of home ownership. In many ways, this focus by Kemeny on the CSHA is an understandable one, for its introduction does represent the first significant attempt by the Commonwealth and the States to develop a unified national approach to public housing. However, the CSHA forms only one part of a full account of the history of public housing in this country. A question overlooked or downplayed by those who focus on the CSHA is why it took so long for the Commonwealth and the States to move in this direction. During the first three and a half decades of this century, the Commonwealth and the States had been active in the housing policy field, yet, while their concern was with providing housing for workers, their eyes were firmly fixed on the promotion of another tenure not often associated at that time with working class housing solutions, that of home ownership. Understanding why this was so helps shed light on why it was so easy for the Menzies government to emasculate the public housing system that had begun to flourish under the auspices of the first CSHA. It also gives a very different light to the first CSHA, for rather than mark the beginning of a golden era, in actuality it signifies a hiccup in a longer-term trend in which Australian governments have played the role of reluctant, rather than willing, landlords. It is with these thoughts in mind that this paper casts a wider historical net than is evident in analyses like those developed by Kemeny. An attempt is made to periodise the history of public

housing in a way that captures quite distinct phases. Each phase is distinguished according to key economic and political forces affecting housing outcomes, and the pressures from within and outside of the housing system shaping the formation of housing policy. I explore the approach taken by Governments toward public housing during each of these phases, from one of disdain during the early decades through to one of targeting and new forms of residualisation in more recent times. I examine allocations policies and approaches to rent setting. I also assess the role public housing played in facilitating industrial, political and social development. The paper draws heavily on a variety of incomplete secondary sources to paste together a history of public housing in Australia. By definition the story that follows will be partial, emphasising those SHAs that have been the subject of previous historical analysis, while those still awaiting such treatment (Queensland, WA, the ACT and the NT) will figure less prominently. Anything but public housing. 1900-1937 The Economic, Political and Housing Context At the beginning of the twentieth century, Australia had just begun to shake off the effects of the savage depression that had enveloped the nation during the 1890s. The virtual absence of a welfare state expanded considerably the ranks of the large minority of the population already living in very austere conditions (cf Fitzgerald, 1987). There was no public housing, so the only tenure options available were private renting - which accounted for 45% of households in 1911 - and home ownership - which accommodated 50% of households. A cessation of new house building combined with depressed living standards left a large section of the working class at the mercy of private landlords. To get by, many inner city families sub-letted or lived in over-crowded conditions, and 'the moonlight flit1 became a common method of avoiding overdue rents. Dreadful housing

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conditions meant not only discomfiture, but also the spread of major diseases including an outbreak of bubonic plague and cholera in the Rocks in Sydney at the turn of the century (Williams, 1981; Troy, 1992). Economic recovery gathered pace during the 1910s, only to be set back by the outbreak of World War I in 1914. The 1920s saw a return to the conditions of the 1880s, with housing activity reaching record levels, fuelled once again by much speculative activity on the urban fringes of the capital cities (Berry, 1984). During the 1920s, the proportion of households renting privately fell, while the home ownership rate in urban areas is likely to have exceeded fifty percent for the first time in Australiafs history. As was the case during the nineteenth century, the boom conditions were soon followed during the early 1930s by a major economic depression. New dwelling construction came to a standstill, and the repossession rates of owner occupied housing increased to levels not seen since the darkest times of the 1890s. Unemployment rose to levels exceeding 30%. A dramatically rising incidence of poverty combined with a cessation of new dwelling construction once again left a large minority of working class households at the mercy of private landlords. Housing conditions deteriorated through poor maintenance of the existing stock, a significant minority of people found themselves living in hastily constructed huts, tents and humpies, and the private landlord became a frequent object of local working class protests (Williams, 1981). Within the Labor movement, it was popularly believed that there were two main villains operating with the housing system. First were the landlords who owned the poorly maintained and relatively expensive private rental accommodation, whose dubious practices throughout the late nineteenth and early twentieth centuries had rendered them a long standing foe of many working class people. (Connell and Irving, 1981). This was exacerbated by the privileged

position landlords enjoyed within the legal system. Despite the inadequate nature of the rental accommodation provided at the time, landlords enjoyed a remarkably privileged legal position. At the turn of the century in NSW, debts owed to landlords took precedence over any other debts a tenant might have. Landlords had the right to withhold the property of tenants as a means of covering unpaid rent, and they could do this without having to take any legal action prior to enforcing this right (Troy, 1992: 217ff). The other main villain within the housing system were the finance institutions, which were popularly believed to be the cause of the speculative frenzy of the 1880s and the subsequent crash in the 1890s. Thirteen banks closed their doors in 1893 following a rush by depositors to withdraw their funds. The banks were seen to enjoy a cosy relationship with the State Governments and, together with other perceived economic villains, such as the large landowners and large industrialists, they formed the cornerstone of a populist, socialist critique of Australian capitalism encapsulated in the notion of 'the money power' (Love, 1984). The terrible social conditions to be found within the inner cities was not just a cause for concern amongst those within the labour movement. Also concerned were a variety of social reformers who, during the 1920s and 1930s, became increasingly active, often with one eye on the potential threat posed by the nascent, yet growing, Australian Communist movement. Their concern was as much about housing as it was poor health, low morals and radical, socialist ideologies, which were seen to be caused by slum housing conditions. One potent source of reformist ideas was the newly emerged town planning movement, with its strong faith in the potency of the urban environment as a determinant of social behaviour. Drawing on the ideas developed by the garden city movement in the UK, the early town planners argued strenuously, but unsuccessfully, for a considerably expanded government role in integrated development planning. The science



the causes and remedies to the situation. The Victorian reports tended to focus on the need for tighter local government building regulations and State government health standards, while the NSW study tended to be more supportive of direct government provision of housing (Troy, 1992; Harris, 1988).

of planning could be used to eradicate both the the slums and the speculator, while simultaneously ensuring a rational process of urban development (Sandercock, 1977: Part 1). The reform movement also found support amongst those from the right of the political spectrum. For example, in South Australia in 1929, a group of concerned middle class men and women drawn from the Adelaide establishment formed the Political Reform League, one member of which was Horace Hogben. Hogben, a member of the Legislative Assembly in South Australia, was instrumental in advising the South Australian government on housing reform during the 1930s. He eventually became the deputy Chairperson of the South Australian Housing Trust from 1941 until 1967 (Marsden, 1986: 18ff; Stretton, 1975: 138-139). Another prominent and very active housing reformer of this time was Oswald Barnett, a Christian socialist with strong Methodist Church connections. Barnett played a leading role during the 1930s in laying the research and policy foundation for the eventual formation of the Victorian Housing Commission in 1938 (Howe, 1988a and b).

One early, unsuccessful outcome of these reports was for the States to try to pass the responsibility for housing policy onto local government. Acts such as the Workers Dwellings Act introduced in Victoria in 1914 and the Sydney Corporation Act introduced in NSW in 1905 were promulgated with the intention of encouraging local government to take up this challenge. The invitation was steadfastly refused, in part because of the disinterest in the proposal shown by the propertied interests which dominated local councils at the time (Troy, 1992; Harris, 1988). Another response was to address specific problems within the private rental sector through minor legislative changes to landlord tenant legislation, and, in NSW, the short-lived imposition of rent controls (Troy, 1992; Harris, 1988: 15).

The Housing Policy Response It was not until well into the first decade of the twentieth century that Governments began to respond to the housing problems that were clearly evident throughout the country. At the State level, one response was the commissioning of a number of reports to investigate the extent of the housing problem, including a variety of Parliamentary investigations. In 1912 the NSW Government commissioned Professor Irvine of Sydney University to report on the provision of housing for workmen, and in 1913 a Joint Select Committee of the Victorian Parliament examined housing conditions in Melbourne. In 1920 a NSW Legislative Assembly Select Committee reported on slum housing in parts of NSW, and between 1914 and 1918 a Victorian Royal Commission produced a three volume Report on housing conditions in the State. These reports confirmed the terrible state of housing conditions within the inner cities, but differed in their interpretation of

These relatively innocuous attempts to regulate the private rental market reflected working class hostility toward one of the two main housing villains, the private landlords. The other main housing villain, the banks and finance institutions, were the focus of another set of policy initiatives. Unlike those directed at the private rental sector, these programs were significant in their effects. During the decade to 1920, each State Government and the Commonwealth Government established various financial schemes offering cheap housing finance to workers seeking to buy their own homes. It is here, in these schemes that Australia's 'public housing' policy really began. Queensland began this wave of policy initiatives with its Workers Dwellings Act in 1909, which provided cheap loans to the value of up to 70% of the purchase price. A 30% deposit was beyond the reach of many workers, and the Government subsequently introduced in 1919 a Workers' Homes Scheme (Hill, 1959), which

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lowered the deposit requirement to 5%, and enabled the sale of dwellings to eligible applicants at cost price. In 1912, the Western Australian Government introduced a Workers' Homes Act, under which land and dwellings were offered for sale on a leasehold and freehold basis to eligible workers (Hill, 1959). State Banks were also significant housing policy instruments. The Victorian, New South Wales, South Australian and Tasmanian Governments all used their State Banks as a major instrument of housing policy during the first three decades of this century. They did this in two main ways. First was through legislative changes that enabled the State Banks to provide home mortgages on terms that were commercially feasible for the Banks yet affordable for a significant minority of better paid working class people.' Legislation of relevance here include the Advances for Homes Act passed by the South Australian Parliament in 1910 which empowered the State Bank to provide cheap housing loans to workers (Marsden, 1986); the Victorian Government's Housing Reclamation Bill of 1919 (Harris, 1988); the Tasmanian Government's 1919 Homes Act, which empowered the Agricultural Bank to offer cheap housing loans and to build dwellings for sale on a rent-purchase basis (Martin, 1988); and the amendment to the Government Savings Bank Act in NSW in 1913 to enable the Bank to provide mortgages to workers (Troy, 1992). The second major way State Banks became active promoters of home ownership schemes was by Governments allowing them to develop as well as finance housing estates with a view to lowering housing costs in order to make home ownership feasible for a broader range of working class people. Three excellent illustrations of the latter are the Colonel Light Gardens development in Adelaide, which was made possible by the Garden Suburbs Act of 1919; the Thousand Homes Scheme launched by the South Australian State Bank in 1924; and the Victorian State Bank's Garden City housing development in Port Melbourne that was made possible by virtue of the Housing Reclamation Act passed by the Victorian Parliament in 1920 (Sandercock,

1977; Marsden, 1986; Harris, 1988). Under these schemes, the State Savings Banks purchased large tracts of land, and planned and developed integrated housing developments using the garden city design principles being promoted by the town planning movement. The Commonwealth Government also played an important role in promoting home ownership during this time. It did this through two main avenues. The first and least significant was through the formation of the Commonwealth Savings Bank as a separate entity to its trading bank arm, and the subsequent encouragement of the Savings Bank to lend for housing purposes, a task the bank began to undertake in 1928. Lending for housing purposes was directed to State housing programs, such as those that had been established under the Housing Boards mentioned above. Before the scheme could have an significant impact, however, the Depression brought it to an untimely end. Of much greater significance was the War Service Homes Scheme, which was established in 1919. The War Service Homes Scheme offered to returned servicemen generous loans for the purpose of purchasing a new dwelling or for constructing a new one. Loans were also available for the purpose of purchasing existing dwellings. The generosity of the scheme was threefold. First loans were offered at consessional rates of interest. Second, they were over a relatively long time period. And third, they required applicants to have minimal deposits. Between 1919 and 1945, 38,000 dwellings were financed under the Scheme, with all but 1,000 being financed in the eleven years to 1930 (Hill, 1959: 52-53). This dramatic reduction in activity was a direct consequence of the Depression, and the Commonwealth Government's decision to suspend the financing of the scheme in 1931. The Depression also led to a significant increase in the number of mortgagees falling into arrears and, eventually, having their dwellings repossessed. By June 1936, 10% of the properties administered under the scheme were 'reverted' properties (Hill, 1959: 50).



The option of establishing large scale public housing systems was ignored by Australian governments right up until the end of the 1930s. One important exception to this was the Daceyville Housing Estate built by the NSW Housing Board, which had been established by the NSW Labor government in 1912. The Board's initial task was to develop an integrated housing estate to provide low cost rental housing for workers. Daceyviile was to be a garden suburb, with affordable housing situated in rationally designed, controlled settings in which public and private gardens would help improve the health, productivity and social behaviour of its working class residents (Hoskins, 1994). The scheme was not successful, however, and the Board was abolished in 1924 with only 309 dwellings having been built in the preceding years. In 1919 the Labor Government empowered the Board to move into the construction of dwellings for sale using mortgage funds provided by the Government Bank. Some 1,330 dwellings were provided under this scheme, which is more than four times the number of dwellings provided for rent (Troy, 1992). Once Australia had begun to emerge from the 1930s Depression, it was clear that a housing policy focused on the promotion of home ownership through subsidised housing finance was unable to solve Australia's acute housing problems. A flurry of reports during the 1930s reinforced the extent of the housing crisis. That the atrocious housing conditions in the inner cities had worsened during the 1930s was amply evidenced by the reports of the Victorian Government's Housing Investigation and Slum Abolition Board (1936), the NSW Parliament's Housing Slums Investigations Committee (1936), and the South Australian Government's Building Act Inquiry Committee (1937). These reports documented in some detail the degree of slum housing in the capital cities, drew attention to what seemed to be an enduring inability of the private housing market to adequately house low income people, and concluded that 'the only adequate solution at the present time is for the State to assume the burden' (Housing

Improvement Board, 1936, quoted in NSW Housing Commission, n.d.: 4). At the same time, it had become clear that the promotion of home ownership was not without risk. As was pointed out above, the War Services Home Scheme had run into financial difficulty during the 1930s as a consequence of the Depression. But even more dire was the position that the South Australian State Bank had found itself in due to its Thousand Homes Scheme. Originally envisaged to be a profitable venture, the Thousand Homes Scheme began to strike trouble in the mid-1920s, when the builder who had been contracted to construct the dwellings on the estate went broke. Significant delays in completing dwellings led to frustrated purchasers camping on their allotments, and eventually led to the formation of a Royal Commission. The State Bank reported a loss of 95,242 pounds on the scheme in 1926. Problems with the scheme also had some significant political costs, contributing significantly to the defeat of the Labor Government at the next elections. Neither the Royal Commission nor Labor's loss of office could stop the scheme from continuing to be plagued by financial difficulties, with the onset of the Depression taking a heavy toll on Thousand Homes purchasers (Marsden, 1986: 7-8). It was a combination of all these factors that, by the tail end of the 1930s, led the State Governments to turn their housing policy gaze reluctantly in the direction of public housing. Spurred on by a combination of working class pressure and the active campaigning by middle class social reformers like Oswald Barnett and Horrace Hogben, the South Australian Government established its Housing Trust in 1937; the Victorian Government formed its Housing Commission in 1938; and the NSW Government established its Housing Commission in 1942. In 1935 the Tasmanian Government empowered its Agricultural Bank to establish a separate housing division with the task of providing housing to workers on moderate incomes on a rent-purchase basis. No sooner


(The Commission) argued, in its final report, for a broad-based and comprehensive approach to housing policy, . . . with a national target of 80,000 dwellings per year. Such an ambitious target would require cooperation between government and private sectors and co-ordination between the various levels of government. The federal government was to assume the primary financial burden, in keeping with its greatly augmented revenue-raising capacity . . . The Commonwealth would also monitor and consider housing provision within a comprehensive national economic planning framework,... Public works programs would be coordinated through regular Premiers' Conferences and Loan Council meetings. In this scenario the state governments would be directly responsible for the construction and management of the expanding public housing sector . . . (Berry, 1988: 98).

had these first Housing Authorities begun to take form than World War Two broke out, exacerbating the poor housing conditions that existed at that time.


The Foundations of a National Public Housing System 1937-1956 The Economic, Political and Housing Context The severity of the housing problems facing Australia toward the end of World War Two cannot be overstated. At this point in time housing production had basically been at a standstill for over a decade. There had been a brief respite in the years immediately preceding the outbreak of war when levels of housing production reached their highest levels since the 1920s. Nevertheless, this had not solved the housing shortage that had built up during the severely depressed years of the 1930s. This shortage was estimated at the time to be equivalent to 120,000 dwellings. Compounding problems was a severe shortage of building materials and labour. Much of the inner city slum housing identified in Government reports in the late 1930s largely remained intact, with slum clearance efforts being suspended until the War's end. Exercising the minds of State and Commonwealth politicians was how to plan for the near future, with the eventual flood of returned serviceman putting enormous strain on an already stretched housing system.

The Commission was strongly of the view that the private market was unable to provide adequate housing for people on low incomes. Echoing the findings of pre-War State housing reports, the Commission commented that, 'it has been apparent, for many years, that private enterprise, the world over has not adequately and hygienically been housing the low income group' (quoted in Martin, 1988: 5).

The Federal ALP Government which was in power for most of the 1940s decided to tackle the variety of economic and social problems festering within Australia by setting up some very powerful committees to recommend a set of economic and social policy settings to guide Australia's development once the war had ended. The Commonwealth Housing Commission was established in 1943 to examine the extent of Australia's housing problems, and to make recommendations as to how these might be best resolved. The Commission brought down its findings in 1944. Berry (1988) provides a succinct summary of the Commission's findings:

The Commission endorsed the view that all Australians have a right to decent housing: every citizen of the Commonwealth is entitled to a good standard house and this should not depend on his economic position or the policy of the particular state in which he (sic) resides.

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These universalistic sentiments implied that public housing should be available to all Australians irrespective of income, simply by virtue of being citizens of the Commonwealth. Public housing would then have the same status as other publicly provided services such as education, which was to be provided to all as a right. The Commission did not endorse this social democratic vision, however. It recommended that support should be targeted to those on modest incomes. And unlike public education, it advocated that public housing should be provided on a user pays basis, albeit under arrangements which would make housing affordable to those on modest means. The Commission proffered a detailed set of 95 recommendations, which sought to develop an integrated system of housing provision, land use planning and community development (Troy and Lloyd, 1981). The Housing Policy Response

As we have seen, the nation's first SHAs were formed in South Australia (1937), Victoria (1938) and NSW (1942) during the late 1930s and early '40s. The South Australian Government formed the South Australian Housing Trust, a statutory authority that was meant to operate at arms length from the Government of the day. Victoria and NSW formed Housing Commissions which were directly accountable to a Minister, and in this way operated much like a government department. Importantly, all the SHAs, even the SAHT, were dependent on their State Treasuries for funding. The Tasmanian Government chose not to follow the Housing Commission model, deciding instead to establish a separate housing division within the Agricultural Bank which had been the main vehicle through which the Government had provided home ownership in the preceding decades. Empowered by the 1935 Homes Act, the Agricultural Bank began to construct dwellings for sale on a rent-purchase basis. The Boards of the newly formed SHAs (including the SAHT) were largely composed of part-time Commissioners, implying that the role envisaged for the authorities was to be relatively minor. All

Board members were men, although there was one women on the Victorian Housing Commission. The enabling legislation for the Victorian Housing Commission set it two main tasks: 'a) the improvement of existing housing conditions, and b) the provision of adequate and suitable housing accommodation for persons of limited means' (quoted in Howe, 1988: 34). The Commission set about achieving these aims by identifying inner city slum areas whose inhabitants needed to be rehoused, and by building estates which would accommodated them. One of the first estates so developed was in Fisherman's Bend in Port Melbourne, on a site adjoining the existing State Savings Bank estate that had been developed for home owners during the 1920s. A significant physical and social difference between the two estates was immediately obvious, with the State Bank estate popularly being referred to as 'Nob Hill', and the Commission estate being known as Bagdad (after the 40 thieves) (Howe, 1988b: 46). The New South Wales Housing Commission was established with a variety of objectives. It took over responsibility for existing State Government housing Acts such as the Housing of the Unemployed Act and the Housing Improvement Act. It also was required to investigate housing conditions in NSW, and make recommendations as to how its activities as well as those of the Cooperative Building Societies, and the Rural Bank of NSW could be coordinated to best resolve the housing problems it had discovered in its investigations (NSW Housing Commission, n.d: 3-4). In its early years, War time restrictions prevented it from undertaking a housing construction program of the type run by the Victorian and South Australian housing authorities. The South Australian Housing Trust was charged with a much broader set of objectives that went well beyond housing issues. In its early years, it concentrated on the provision of dwellings for rent to low income workers, but from 1946 it established what was to become a large home


Victoria, tenants had to commit themselves to maintaining their dwellings in a good state of repair, and not to allow their houses to be used for 'illegal or immoral purposes' (quoted in Howe, 1988b: 54). The tenancy agreements also granted the Commission the power to visit or inspect the property at all times, and to carry out repair and maintenance work whenever it felt the need to do so. Second, both housing authorities hired tenancy officers and housing visitors who would visit and monitor tenantfs behaviour and be able to offer advice that would address improper behaviour (Howe, 1988b; Marsden, 1986). Interestingly, while the Boards and the employees of the Commissions and the SAHT were predominantly men, these tenancy positions were filled by women, on the grounds that most of the contact with tenants during the day would be with wives and 'because it was recognised that womanto-woman conversation was most likely to yield an accurate account of the household's needs and difficulties' (Marsden, 1986: 78). In an attempt to encourage neatness amongst tenants, as early as 1938 the SAHT had put in place a gardens competition, with prizes awarded to tenants with the best kept gardens (Marsden, 1986: 153). Victoria followed suit in the early 1950s (Eather, 1988: 76). The paternalism of the South Australian Housing Trust was evident in another dimension of its activities. The first Chairperson of the Trust, Sir William Goodman, used to take his own family on regular Sunday afternoon drives to Trust estates, where he would monitor the up-keep of Trust houses. Often he would drop in for cups of tea (Marsden, 1986: 38, 39)!


ownership scheme designed to meet the needs of more affluent workers. The Trust was also required to help modernise the State's building industry as well as contribute to the economic development of the State. Of the three, it was the latter which figured prominently in debates surrounding the Trust's formation (Stretton, 1975: 138ff). As Marsden explains: Wages were fixed by national institutions, but they were pegged to local costs-of-living. If South Australian costs-of-living could be held down, low money wages could attract industries exporting to higher priced areas, while the low costs-ofliving kept labour content with satisfactory real wages. What local prices could be depressed without depressing local enterprise? 23.8% of the cost-of-living index represented rent. 'Low rent would hurt nobody if the government itself built and let the dwellings' (Stretton, 1977) (Marsden, 1986: 23-24). The economic benefits of such an arrangement were numerous. Low rents meant low wages, which would benefit both the private and public sectors in the form of a lower wage bill. For workers, lower rent levels meant the need for less pay. Even if the public housing scheme ran at a loss, the savings in wages would far exceed the losses on the public housing scheme. In later decades, the Trust expanded dramatically its role in promoting the State's industrial development. But right at the outset it had as a key goal helping to facilitate long-term economic growth.

Between the time of their formation in the late 1930s and the late 1940s, the housing authorities found it difficult to carry out their tasks effectively. The small scale and fragmented nature of the building industry, together with shortages of materials and building labour caused by the war made the task of housing construction a difficult one (Greig, 1995: 3-7). The New South Wales Housing Commission as we have seen caved in to these pressures by focusing its initial efforts on the erection of temporary accommodation

There was one additional implicit objective, which was common to both the Victorian and South Australian housing authorities. This was to improve the moral fibre and health of tenants. Although not formally stated, this objective was pursued in a number of ways. First, was a series of requirements in tenancy agreements. In



(NSW Housing Commission, n.d.). Victoria, South Australia and Tasmania, however, were more determined in their efforts. In Victoria, the Housing Commission was keen to continue its construction programs and, while wary of cartel-like behaviour in private building and house materials (Howe, 1988b) contracted a small number of private firms to do building work for them. AV Jennings, which was later to become Australiafs largest house building firms, was a major beneficiary of these contracts. By building on a large scale for the Commission, Jennings was able to mass produce dwellings, and thereby lower unit costs. Between 1938 and the end of the 1940s, most of Jennings work came from the construction of public, rather than private, housing built for the Housing Commission (Garden, 1992: 68-75). In South Australia, the Housing Trust was determined to build dwellings at the cheapest cost, and felt that the only way to do this effectively was to use a single private housing contractor who, because of the scale of the projects involved, would benefit from economies of scale in much the same way that Jennings did in Victoria (Marsden, 1986). Frank Marshall won the initial tender to supply the Trust with dwellings in June 1937, with a quote significantly lower than the other 26 tenders. For the next 7 years he was the Trust's sole house builder (Marsden, 1986: 57ff). In contrast, Tasmania relied heavily on the use of a daylabour force, which was established in 1946 because of difficulties the Agricultural Bank experienced finding builders to do contract work for it. The labour force was housed at the Commonwealth Government's shipyards in Hobart, which had been closed down in 1946 (Martin, 1988: 6). The Victorian Housing Commission experimented with the development of its own building materials division that would provide the materials necessary to build prefabricated metal and concrete houses. In 1945 the Commission purchased a factory at Homesglen built for the manufacture of munitions to mass-

produce concrete houses...The commission also investigated a prefabricated metal house to be produced by the factory that had made the Beaufort aircraft. A prototype Beaufort house was built in the Treasury Gardens, and in June 1946 the Commission planned to order 11,500 houses over three years (Howe, 1988b: 56) Neither scheme proved successful. The concrete houses were clearly inferior to those built using conventional materials. They were cold in winter and hot in summer. They were also prone to cracking. Nevertheless, the Commission remained committed to concrete as a construction material until the late 1970s. The steel house project came to nothing, largely as a consequence of the amount of steel that was required at a time of war time materials shortages (Howe, 1988b: 56-57). During the 1940s, the State Housing Authorities were overwhelmed by applicants, particularly once the War ended in 1945. The State Housing Authorities were ill-prepared for this flood of interest, with no clear cut eligibility and allocations criteria having been put in place to ensure that dwellings were provided to those most in need of assistance. Until the end of the War, the South Australian Trust sought to allocate its public housing to workers on modest incomes. Families with children were preferred. Applicants were required to have permanent employment, and tenants who became unemployed were officially treated severely, being told they must maintain their rent payments or face eviction (Marsden, 1986: 59-66). Although a generous means test was applied to applicants until 1948, the early years of the Victorian Housing Commission were devoted to clearing away slums, and rehousing the inhabitants in Commission properties. This meant by definition that many of those being rehoused were poor, with preference being given once again to large families (Eather, 1988; Howe, 1988b). Those who became single due to a death


was put in place 1945. The significance of this Agreement was two-fold. First it recognised a clear division of labour within the Australian Federation with respect to the provision of public housing. The States would be responsible for service delivery, while the Commonwealth would provide, through cheap loans, the financial support necessary to make the program feasible. Second, it signified for the first time in Australiafs history a willingness by the Commonwealth to back the provision of public housing as a viable tenure.


of a relative or because of a marriage breakdown were required to vacate their dwellings in favour of families with children (Jones, 1972:69). In 1945, Victoria introduced a ballot system for allocating dwellings. Those seeking assistance attended ballot sessions at the Melbourne Town Hall, with the winners being required to sit an interview to ascertain their degree of need (Eather, 1988). By the end of the War, three of the States had demonstrated a willingness to develop public housing systems, but Queensland and Western Australia remained reluctant to do so, focusing their efforts around the construction of dwellings for sale to home owners on generous terms. While Tasmania had established a housing department within its Agricultural Bank its emphasis was on providing dwellings for sale on a rent purchase basis. Moreover, a stable longterm funding had yet to be found, with the established housing authorities being dependent upon tight fisted State treasury allocations, or on other sources of loan monies. There was a fear that housing people on low incomes would be a long term drain on already stretched state finances. South Australia was the exception here, having signalled its preparedness to run small losses on its rental program in order to facilitate other economic objectives. Also, the SAHT could see in its nascent home ownership program a source of profits that might place the Trust on a surer financial footing (Marsden, 1986; Peel, 1994; 1995).

There were five main features of the 1945 CSHA. First, it offered to the States annual loans under the life of the Agreement (ten years) at interest rates comparable to the long term bond rate (3%), with a long pay back period of 53 years. Second, the Commonwealth agreed to underwrite up to 60% of any losses the States might incur in running their public housing programs. Third, while the CSHA did not in principle prevent the States from selling their public housing into owner occupation, in reality it made it difficult for them to do so by requiring the full value of the loans on any sold dwellings to be repaid at the time of sale. Fourth, while the Agreement did not impose a common means test for people seeking entry to public housing, it did require the States to allocate dwellings 'amongst persons who are in need of proper housing accommodation' (quoted in Berry, 1988: 98). It also required 50% of dwellings to be allocated to ex-servicemen (Jones, 1972: 23). Finally, the Agreement also made provision for rebates, although no means test was applied. Rents were to be set at economic levels, which meant payments sufficient to cover the cost of loans plus interest as well as a sum sufficient to cover costs associated with maintenance, administration and vacancies (Berry, 1988: 98).

For its part, the Commonwealth Government had begun to act on some of the recommendations laid out in the Commonwealth Housing Commission's final report published in 1944. Troy and Lloyd (1981) point out that most of the Commission's recommendations were either rejected or ignored. The main exception to this was the acceptance by the Commonwealth of the Housing Commission's recommendation to establish a mechanism for funding the provision of public housing. This took the form of the first Commonwealth State Housing Agreement, which

The first CSHA successfully encouraged the Queensland (1945) and Western Australian Governments (1946) to establish Housing Commissions which, in addition to taking responsibility for existing sales schemes, began to provide publicly rented dwellings. Tasmania



expanded its housing sales program to include the provision of dwellings for rent. By encouraging the use of rebates for low income tenants, the Agreement also ensured that the SHAs became more concerned with the housing needs of low income tenants. It also succeeded in increasing dramatically the level of public housing completions, and in the process enabled the SHAs to pursue another implicit objectives not formally stated in their charters. This was to resolve in as short a time as possible the housing shortage that was evident throughout the nation by maximising the number of dwelling completions within a given budget. Under the first CSHA the number of public dwelling completions rose from 4,028 in 1945/6 to a high of 14,317 in 1954/5. In total, 96,292 dwellings were added to Australiafs housing stock through the CSHA, a considerable achievement on any criteria. Less satisfactory was the quality of the dwellings that were built. Such a frenetic pace of housing production in a context of a shortage of building materials inevitably meant sacrificing quality standards. The rental systems put in place by the SHAs following the introduction of the CSHA produced curious inequities (cf Jones, 1972). The CSHA required the States to charge economic rents, which meant setting rents to cover the cost of capital plus interest, as well as the variable costs of maintenance, administration and vacancies. This meant that the longer a tenant resided in public housing, the lower their rent, with the effect of inflation lowering the rent needed to be charged to cover the capital costs of that dwelling. Effectively, falling real rents provided tenants with an economic incentive to remain in their dwellings as long as possible although, as we will see below, this was off-set by other non-financial considerations. Falling real rents to tenants were especially noticeable in Victoria, New South Wales and South Australia because the housing authorities in these States were reluctant to increase rents in line with increased administrative and maintenance costs until a dwelling was vacated. The reason for this was that it was considered to be politically difficult to raise rents on publicly rented housing at a time when rent

controls, which continued to operate in some States until the 1970s, prevented private rents from being increased. This meant that the properties with the highest rents were those that had been recently vacated (Jones, 1972: 154ff). This was less of a problem in Queensland, because of the determination by the State Government not to subsidise public housing tenants any more than was required by the CSHA. The Queensland Minister for Housing commented in 1962 that, 'I am the Treasurer as well as the Minister for Housing and any element of subsidy in Housing Commission rents in this State will be over my dead body. We get the full rental' (quoted in Jones, 1972: 155). Despite these problems, the period between 1937 and 1956 will remain a significant one in the history of public housing. At the beginning of the period no Australian State had a public housing system in operation. By its end, all the States had established their own State Housing Authorities, with the Commonwealth Government, through the CSHA, providing the financial glue necessary to give the system some coherence. Importantly, however, the running of the public housing systems was left in the hands of SHAs, which had assumed responsibility for administering the various various State-based schemes to promote home ownership. The States were still very keen to promote home ownership, and some saw public housing as another way of doing this (Jones, 1972; Berry, 1988; Martin, 1988), providing the dwellings could be sold to tenants on terms which made them affordable. A tension was burried deep inside some of the SHAs between administering a viable public housing system and promoting home ownership, a tension that was not resolved until the signing of the second CSHA in 1956. Public Housing for Home Ownership. 19561973 Economic, Political and Housing context Between 1945 and 1973, Australia, like most other western countries, experienced a period of almost uninterrupted economic and employment



growth and low unemployment. Within the context of these generally buoyant economic times, the private housing system, which by the late 1950s had recovered from the Second World War, become progressively more important as a source of new housing. During the 1950s, shortages of building material and labour gradually subsided. Owner building, which had come to account for over one third of dwelling completions during the 1950s, shrank in significance, with private builders gradually resuming their dominant position within the housing system. Almost without exception, the annual level of private housing starts continued to grow, reaching a high point of 155,000 in 1972/3.

used to iron out the variety of problems that bedevilled the emerging public housing system. The Liberal-Country Party coalition Government under Robert Menzies was prepared to support public housing, but its main goal was to continue the pre-War practice of favouring home ownership. For its part, the industrial wing of the Labor movement became preoccupied with improving pay and conditions of those in work, and with the private housing market growing substantially each year, any substantial pressure from the Left for an expanded public housing system to meet social needs subsided. Even the Communist Party of Australia supported home ownership, arguing that, 'ownership of property, for the purpose of extracting a profit out of others causes injustice, but not the ownership of property

The Labor Party lost office Federally in 1949. With it went any real hope that the CSHA might be

Table 1: CSHA Dwelling Sales by State Housing Authority, 1945/6-1968/9. Number and % of Total CSHA Sales NSV«r

No 1945/6 1946/7 1947/8 1948/9 1949/50 1950/1 1951/2 1952/3 1953/4 1954/5 1955/6 1956/7 1957/8 1958/9 1959/60 1960/1 1961/2 1962/3 1963/4 1964/5 1965/6 1966/7 1967/8 1968/9 Total

15 98 122 338 528 403 165 733 3,197 3,679 2,507 2,701 2,004 2,303 2,958 1,521 2,361 1,919 1,502 1,872 1,627 32,553

Vic

% of All

No

31% 39% 49% 31%

38% 31% 24% 30% 32%

No

All

0% 3% 17% 9% 24% 52% 69% 38% 25% 52% 52% 38% 39%

6 39 26 13 6 -

1,289 1,732 1,336 2,506 2,672 .2,704 ,2,125 1,791 1,799 -2,028 .2,219 1,859 1,794 1,404

37% 27,348

Qland % of

SA

% of

% of

No

All

All

-

-

-

-

1% 3% 2% 1% 1% 45% 28% 19% 38% 39% 42% 36% 30% 37% 33% 36%

-

-

-

-

1 7 275 231 259 252 140 88 33 96 457 812 886

0% 2% 10% 4% 4% 4% 2%

30% 1 ,002 29% 27%

813 640

31% 5 ,992

WA No

All

Tas

% of

No

% of All

No.

-

-

• 391 545 591

-

-

All

530 372 726 569 159 77 170 404 466 674 837 760 699 567 310 442 287 536 742 667 515

391 100% 97% 63% 115 52% 508 40% 480 16% 309 13% 94 39% 96 14% 177 8% 294 10% 737 13% 222 11% 324 11% 572 10% 555 5% 590 9% 210 5% 180 9% 203 12% 567 481 11% 373 10%

19% 36% 34% 31% 16% 22% 6% 5% 10% 3% 5% 9% 9% 10% 4% 3% 3% 9% 8% 7%

• 206 398 247 311 329 354 311 431 532 464 460 595 601

3% 6% 4% 5% 5% 6% 5% 9% 9% 7% 8% 10% 12%

2,878 6,126 7,083 6,571 6,908 6,396 5,937 6,056 4,860 6,200 6,227 6,132 6,222 5,160

7%10 ,900

12% 7,087

8%

6,880

8%

89,119

1% 1% 2% 9% 13% 14% 16% 13% 12%

-

Source: Jones, 1972: Tables 68-73.

17 Urban Policy and Research V o M 4 N o 1 1996

-

1.395 1,413 1,009 581 438


for one's own use' (Communist Party of Australia, 1957: 16). The Housing Policy Response In 1956, the Menzies Government negotiated a new CSHA. Four main changes were made. First, the Commonwealth no longer agreed to subsidise losses on rental operations. Second, the Agreement no longer made any mention of rental arrangements (the first Agreement referred to the imposition of economic rents). Third, 20% of CSHA monies were initially redistributed away from the SHAs public housing programs toward a Home Builders Account, which was used to fund low income home purchase schemes run through building societies and other approved finance institutions. This proportion was later increased to 30% in 1958/9. Fourth, conditions governing the sales of public housing units were relaxed. Instead of the dwellings having to be sold at market values so that the outstanding debt could immediately be repaid, the States were now able to sell on whatever terms they wished. Of the changes, the encouragement of public housing sales were undoubtedly the most significant. These conditions were basically retained in the CSHAs put in place in 1961 and 1966, although the 1961 CSHA also formally acknowledged high rise estate development as a legitimate use of funds. The changes to the CSHA immediately resolved the tension within the SHAs between adminstering a public housing system and promoting home ownership. Under the new CSHA, the SHAs could building public housing, but they could now use cheap Federal funds to finance the sale of public housing into home ownership. Public housing effectively could become another way to promote owner occupation. This opportunity was not wasted by the States, which endorsed the sales policy thrust of the new CSHA, but the degree of support varied from State to State. Tasmania immediately rejoined the CSHA, and used CSHA funding to expand its already existing sales program. The Queensland Housing Minister nicely captured his Government's views of the

new arrangements when he commented in 1962 that 'we build to sell. What we don't sell we rent' (quoted in Jones, 1972). NSW and Victoria took the opportunity to introduce and substantially expand the sale of their CSHA funded public rental stock. SA was again the exception in that although it introduced alongside its existing home purchase scheme a rent-purchase proram under which applicants could purchase CSHA funded stock, it did not seek to promote home ownership at the expense of public housing (Stretton, 1975; 1987: Chapter 10). Unlike the other State Housing Authorities, it sold dwellings at their replacement rather than historic cost, and generally with less concessional finance (Marsden, 1986: 234). Table 1 shows the total number of CSHA dwellings sold by each of the States between 1945/6 and 1968/9. During these years, almost 90,000 CSHA dwellings were sold Australia-wide, with all but 3,500 being sold after the 1956 Agreement. NSW and Victoria accounted for almost two thirds of total dwellings sold. In some years in Victoria (1959/60 and 1960/61) and NSW (1956/7 and 1957/8) the number of CSHA dwellings sold exceeded the number being built. By the end of the 1960s it is estimated that Victoria had sold 43% of its public housing stock (Burke, Campbell Hayward, and Nisbet, 1985), while Tasmania had disposed of 67% (Martin, 1988). For much of this period, the housing authorities concentrated on broad acre estate development in much the same way that they had done since the mid-1940s. The emphasis was on the mass production of modest detached and semidetached dwellings, with the scale of building work enabling economies of scale in construction costs to be reaped. Some of the larger estates built include Broadmeadows, West Heidelberg, and Doveton all built in the mid-1950s in Melbourne, and Warrane (1956), Chigwell (1956) and Claremont (1963) in Tasmania (Lemon, 1982; Martin, 1988). Someof the SHAs embarked on bold new town developments, such as those undertaken by the SAHT in Elizabeth, Christies Beach and Ingle Farm during the 1950s and 1960s.

18 Urban Policy and Research Vo! 14 No 1 1996

Table 2 Block clearance schemes in the NSWHC and the VHC up to 1958 and 1970 New South Wales Up to 1958 Total area cleared (acres) Number of houses demolished in cleared areas No. of public housing units built on cleared sites

Victoria

Up to 1970

Up to 1958

Up to 1970

31

74

47

275

720

1,430

568

3,788

1,411

3,472

1,371

8,635


Source: Jones, 1972: Table 40

costs of the high rise flat program (Jones, 1972: 156).

In NSW and Victoria in particular, construction activity during the. 1960s took a new dimension, with the redevelopment of inner city 'slum' areas into high rise flat developments (Table 2). The Victorian Housing Commission was the most vigorous - and notorious - in this regard in at least two ways. First was the method it employed to identify slum areas for reclamation. Here Commission employees drove around inner city areas in cars and identified areas for slum reclamation without leaving their vehicles. Second, was the sheer scale of some of the flat developments, which were built using concrete slabs made at its factory in Homesglen. Massive projects were undertaken in parts of Melbourne, culminating in the construction of the Atherton Estate in Fitzroy composed of twenty-story blocks of two and three bedroom flats, and Park Towers in South Melbourne consisting of thirty stories of one, two and three bedroom flats (Tibbits, 1988).

The SHAs consciously chose not to increase rents paid by tenants whose economic standing had improved after having been allocated their dwellings. It was felt that to do to this would be to punish behaviour that should be encouraged. It was also felt that a better income mix in public housing was not to be discouraged. As the Minister for Housing in Victoria in 1968 explained: We think that it is a wholly good thing that people who start off with a low income eligibility and in a fairly poor environment should improve themselves and so have an incentive to improve the properties in which they live. It provides a better balance in the type of people living in this accommodation. We do not ask them to move; we are in favour of them improving themselves (quoted in Jones, 1972: 153)

In 1963 Victoria altered its rental system, as did WA in 1965. Instead of charging historic rents, it now charged average rents. This new system meant charging the same rent for all dwellings of a similar type rather than the historic cost of provision of each dwelling. Rents varied according to whether the dwellings were houses or flats, and according to the number of bedrooms. When this system was introduced, tenants of older dwellings had to pay more, but new tenants paid less. The purpose of this reform had little to do with equity considerations. It was an attempt to balance the books, as well as hide the increased

The SHAs were of the view that there was no need to implement a monetary incentive through rent increases to encourage the better off tenants to move out when their fortunes improved. SHA dwellings were always at best modest. They also tended to be under-maintained and poorly served by community facilities. This meant that public housing was kept very much a second best option to home ownership. In 1962, Premier Playford made his thoughts on this subject very clear:


Table 3 Rent payable on assessed family income under the NSW Housing Commission, 1968 Assessed family income not exceeding:


$10.35 $15.15 $20.15 $25.15 $30.15 $35.15 $40.10 $45.05 $50.15 $55.10 $60.05 $64.40

Maximum rent payable

Rent as a percentage of income

8 13 16 18 20 20 21 23 24 25 25 26

$0.8 $2.00 $3.25 $4.50 $5.75 $7.00 $8.60 $10.25 $11.95 $13.60 $15.25 $16.70

Source: Jones: 1972: 161

We do not want to make housing more attractive to the detriment of home purchase. Home purchase is what we all strive to foster. If you allow people with big incomes to rent houses at very attractive rents they will never buy. (quoted in Jones, 1972: 24). In 1970 the then General Manager of the Trust reasserted this view: . . . the rental houses are not unattractive but very modest, and as they are basically in the industrial areas it is usually found that when the family moves up the social scale the attitude is, 'it is about time we move somewhere else, to be among rightthinking people' (sic). This idea of making sure that the rental properties are not mansions does have that effect. It makes sure that people just do not camp in low-rental houses all their lives, when they can well afford to buy something for themselves, and we have found it better as an approach than the family income (quoted in Jones, 1972: 24).

All of the States offered rebated rents to tenants on low incomes. Rebates were available to tenants whose incomes fell below a predetermined level. In working out how much rent was to be paid, family incomes from all sources were taken into account. Affordable rents were calculated by first working out the level of rent that would be charged using the prevailing rental formulae of either historic rents or average rents. This rent was then compared to family income, which in turn was related to the basic wage. Families on incomes equal to the basic wage would pay 20% of their income in rent. Those on more than the basic wage would pay more than 20%, while those on less than the basic wage would pay less. Table 3 shows rent payable and rent as a percentage of income for families on different incomes in NSW in 1968. Table 4 shows the proportion of tenants in each State on rebates in 1968/9. Dwellings were allocated on a needs basis, but the criteria used were poorly developed, and often made only passing mention of income. South Australia was the only SHA not to impose a means test of some description. In 1955, the VHC discontinued its ballot system for selecting tenants. In its place was a fairly generous means

Table 4 Proportion of tenants on rebates, 1968/9 NSW 13%

Vic 19%

SA 7%

WA 14%

Qld 11%

Jones, 1972: 161ff


Tasmania 20%


who had very different ideas about the objectives and priorities of the Commission. At the same time, the Homesglen concrete factory (referred to as the Homesglen Project) became increasingly influential within the Commission. The engineering skills required to develop high rise estates were highly valued, as were those parts of the Commission responsible for their construction (Dalton, 1988). Downplayed under these arrangements were tenancy management and tenancy issues in general (Dalton, 1988).

test governing eligibility, but allocations after 1957 were made using a priority system based on current housing circumstances. Those in most need were those facing eviction (Eather, 1988: 78-79). The eligibility criteria in Victoria related almost solely to income, while the NSW system took into account whether or not applicants could acquire adequate accommodation privately without having to pay more than 25% of income in rent. A prominent consideration was whether in order to afford private rents applicants were forced to live in overcrowded accommodation. The WAHC employed a mixture of the Victorian and NSW systems, with applicants being means tested on an incomes basis, and then subjected to a 'housing test' similar to that used in NSW to assess the adequacy of current living arrangements. Queensland developed a comprehensive allocations points system, which took no direct account of income, but which weighted applicants on the basis of the quality of dwellings in which applicants lived. The highest points were awarded to those who were homeless, or were living in temporary accommodation, with no points being awarded to applicants adequately housed and not facing eviction (Jones, 1972: 2126). All the State Housing Authorities gave families with children preferential treatment.

In some States, the paternalism of the earlier period continued, this time in even more bizarre forms. The arrival of television caused much contention within the Queensland Housing Commission, which became worried about the effect of TV purchases on the ability of tenants to meet their regular rental commitments. In 1965, the Queensland Treasurer explained the problem in this way: When the advent of TV was imminent, enquiry was made into its effects on tenants in other States. We were advised that it had a very adverse effect on arrears. Rent arrears have been fairly level at approximately $160,000. Even at that level the Commission finds it necessary to eject a few tenants for unpaid rent. Should the level of arrears be allowed to rise it would have two equally unfortunate effects. There would be less money available for new homes; some existing tenants who are already struggling would have to be evicted. Accordingly, the Commission has sought in the interests of the tenants as well as the State to restrain people who cannot meet the present rental obligations...from burdening themselves with new obligations. We cannot afford to allow rental arrears to finance television (quoted in Jones, 1972: 163).

The move toward high rise housing construction and the need to maintain relatively high rates of construction meant important organisational changes within the SHAs. Dominant within them was the public works section, responsible for the housing construction programs. In turn, this meant that organisational power shifted internally toward employees with construction experience, or who were qualified engineers. This trend was especially noticeable in the VHC. During the 1950s a number of the liberal reformers who had helped form the Commission back in the late 1930s retired. In 1948, Oswald Barnett was not successful in being re-appointed to his post of Commissioner, under acrimonious circumstances. During the 1950s other founding members of the Commission also departed due to retirements. Their replacements were engineers and builders


Table 5 Public housing units as a percentages of the total stock of occupied dwellings, 1947, 1954, 1961 and 1966 1947 1954 1961 1966

NSW 1% 3% 5% 7%

VIC 1% 4% 5% 6%

SA 1% 9% 15% 18%

Qld 1% 3% 6% 8%

WA 1% 6% 10% 14%

Tas 1% 4% 8% 10%

Aust. 1% 4% 7% 8%

Source: Australian Bureau of Statistics Census of Population and Housing, 1947, 1954, 1961, 1966


The Tasmanian Housing Commission took a similar view of hire purchase arrangements. In 1961 it deducted from rental rebates an amount equivalent to tenant's hire purchase payments (Jones, 1972: 162). By the end of the 1960s, the size of the public housing system in Australia had expanded both absolutely and relatively compared to the mid1950s. However, the sales policy had limited the extent of the expansion (see Table 5). Differences in State Government promotion of the sales program found its expression in significant differences in the relative size of the public housing stocks in each of the States. By 1966, public housing accounted for 18% of the total dwelling stock in SA and 14% in WA. In Tasmania it accounted for 10%, in Queensland 8%, but only 7% and 6% respectively in the two largest States of Victoria and NSW. The public housing system was riddled with inconsistencies and contradictions. In Tasmania, Victoria, NSW and Queenland in particular the dwellings sold by the SHAs tended to be the best dwellings in the best locations, while those which remained with the SHAs included both the hastily built and maintenance intensive dwellings constructed between the late 1930s and late 1950s as well as the very unpopular high rise estates. The impact on the cost structure of the SHAs that had enthusiastically embraced the sales program - Victoria, NSW and Tasmania was considerable. A key assumption of an historic cost rental formulae that had been embedded in the first CSHA was that, over time, rents would be able to fall, with the higher costs of new dwellings being compensated by the declining capital costs

of the larger pool of older dwellings. This assumption was rendered obsolete by the practice of selling in large numbers the best dwellings in the best locations. In addition, the liberal reformers who had been so influential in establishing the first SHAs had been replaced by engineers, builders and architects, with a very different set of objectives and concerns, foremost amongst which was dwelling construction and, to a lesser extent, design. Tenancy issues slipped to the bottom of the policy agenda. Reflecting the criteria used for allocations, a disproportionate number of tenants were families with children, and while most tenants were on modest incomes only one fifth were on incomes so low that they were in need of a rebate. Housing policy more generally had come to be structured on the assumption that high rates of economic growth would continue to deliver ever higher standards of living and housing conditions. A marginalised public housing system in this context was of little concern. As we are about to see, such complacency was shattered by the onset of a prolonged period of economic uncertainty during the next couple of decades.

The last throes of public housing? 19731995 The Economic, Political and Housing Context The single most important economic contextual factor of this third period in the history of public housing is the boom-bust performance of the Australian economy. In contrast to the buoyant conditions of the post-War boom years, the Australian economy experienced deep recessions on three occasions. The first was in 1973/4, the second in 1982/3 and the third, most recent one, in 1991/2. During these recessions unemployment

22 Urban Policy and Research VoM4 No 1 1996

in women (and their children) losing access to male incomes, and becoming dependent on payments made through Government departments or child support payments.


has progressively climbed to higher levels, rising from 6% in the mid-1970s to 10% in the early 1980s, and to 12% during the early 1990s. At the same time, the ranks of the long term unemployed have swollen. In between these recessions, Australia has experienced periods of rapid economic growth, the most significant of which occurred in the late 1980s. Another significant economic factor has been the emergence of high rates of inflation, which rose from 2-3% per year at the beginning of the decade to reach 13% by the mid 1970s. Although it subsequently declined in the late 1970s and early 1980s, until the onset of the early 1990s recession, prices continued to increase on an annual basis by more than 5%.

A significant change has also happened within Australian politics. The post-War Keynesian consensus which emphasised market failure and the need for remedial government action was replaced by a new ideology, popularly known as economic rationalism (Pusey, 1991; Toohey, 1994). Whereas Government involvement in the economy was once heralded as a necessary virtue, it was now viewed as an unnecessary sin. Whereas Governments were once seen to have the cure to unemployment, they were now seen to be major contributors to the problem by encouraging inefficiencies. Governments of all political persuasions became enticed by the notion that competitive markets with minimal government regulations offered the best solution to Australia^ economic woes. Accordingly, social spending has been pared back, and strongly targeted to those on low incomes; tax rates on high income earners have been reduced to levels not seen in the postWar era; protective tariffs on Australian industry have been reduced dramatically; the financial system has been deregulated; many public sector businesses have been privatised, while those that remain have been required to emulate private business practices under the process of corporatisation. In the latest stage, governments are re-writing their statutes in order to facilitate competition, particularly those that relate to government business undertakings.

The private housing market during these times has also fluctuated wildly. Significant house price increases occurred in the early 1970s, although they subsequently fell in the late 1970s. Another period of house price inflation took place following the end of the early 1980s recession. After a slight slump in the mid-1980s, prices skyrocketed during the late 1980s, with house prices throughout the nation increasing by almost 20% per annum. Interest rates have also fluctuated wildly, although the general trend up until the onset of recession in 1991/2 was in an upward direction. From 4% at the beginning of the 1980s, long term interest rates steadily rose to average 8-10% during the 1980s. Home mortgage interest rates exhibited the same trend, but peaked at 17% during the late 1980s - another post-War record. Another important influence on the housing market has been patterns of demographic change. During the 1960s, the traditional family was the fastest growing family type. During the 1980s, the traditional family was replaced by single parents, singles, and shared households as the fastest growing household types. The growth in the number of single parents - largely a consequence of rapidly rising divorce rates - has been especially significant. This is because single parents have the highest incidence of poverty of all household types, with marriage breakdowns often resulting

During these decades of tumultuous change, the SHAs have been the subject of numerous State and Commonwealth reviews, and, through a variety of changes to the CSHA, have been required to reform and restructure on a number of occasions. Almost all aspects of their operations have been under review, from allocations policies and rent setting, through to funding mechanisms, tenancy relations and construction policies. The SHAs have not fared well in this period of review and restructure.


The first salvos to be fired against the SHAs were launched by the Royal Commission into Poverty in 1975. It pointed an accusing finger at large numbers of public housing tenants not living in poverty, commenting that: Of the total 183,000 housing authority tenants the total poor numbered only 51,000; 132,000 housing commission rented dwellings (72%) were occupied by pople with incomes more than 120% of the poverty line (quoted in Paris, Williams and Stimson, 1985: 108)

States. In 1992, the NSW Government undertook a detailed review of the NSW Department of Housing (Mant, 1992). It was highly critical of almost all aspects of the Department's performance, from tenancy relations and construction policies through to organisational arrangements and even the location of Head Office. In 1993, the Industry Commission was required by the Commonwealth Government to review the performance of the SHAs. Although supportive of the concept of public housing, it too was highly critical of the SHAs performance and recommended a wide ranging set of reforms.


The Housing Policy Response

In 1972, Michael Jones (1972) published his very influential study into the relationship between housing and poverty, and the role of the SHAs in helping those in most need of assistance. Jones also drew attention to the relatively small proportion of public tenants on austere incomes, and contrasted this with the larger proportion on higher, albeit modest, means. The social and economic costs of the high rise housing estate developments also figured prominently in his analysis. In 1975, the influential Commonwealth Government's Priorities Review Staff Report into Public Housing argued strongly for a wide-ranging set of reforms involving market rents, housing vouchers, means tested rebates, and a redirection of public housing acquisitions away from new construction on the fringe to the purchase of existing stock in existing areas (Priorities Review Staff, 1975: Chapter 6). From the mid-1980s onward, the SHAs once again came under review, this time in a more focused way. In 1988, the Commonwealth Government instituted a housing policy review, which drew attention to the SHAs relatively high debt levels, and the impact of this on SHA budgets. High interest rates had combined with substantial debt to ensure that a progressively larger proportion of SHA income needed to be devoted to debt servicing, making it difficult for them to run operating surpluses. Attention was also drawn to low levels of grant funding to the SHAs by the

During the two decades to 1995, public housing policies have been almost as volatile as the economy. The CSHA has been renegotiated on five occasions, and is in the process of being renegotiated during the latter part of 1995. The newly elected Whitlam Government increased significantly the funding of public housing in 1972, but simultaneously imposed a stricter means test for public housing tenants in the 1973 CSHA, defining eligible families as those whose main breadwinner earned less than 85% of average weekly earnings. In 1978, the Fraser Government, as part of a broader austerity package, reduced considerably the amount of funding for public housing, and dramatically restricted the scope for public housing sales by requiring sales to be at market prices, rather than historic costs. It also proposed a phasing in of full market rents during the life of the Agreement. After falling to very low levels in the early 1980s, the funding of public housing was dramatically increased by the newly elected Hawke Government between 1983 and 1984. This high level of funding was maintained under the 1984 CSHA, which also signalled a return to cost rents, although the States were able to charge market related rents if they desired as long as the revenue generated was sufficient to cover the pooled costs of the dwellings being rented. In practice, the basis for determining rents did not matter because an increasing majority of tenants were on such low incomes that they qualified for rent rebates. From 1986/7,



as part of a significant reduction in the level of government spending, the Commonwealth reduced the level of funding for public housing. It also began to replace loans with grants, in order to alleviate the interest payment pressures being experienced by the SHAs. Under the 1989 CSHA, the Commonwealth agreed to replace all loans with grants.

have simply changed their form. By successfully targeting public housing to the poor, the SHAs have rendered largely ineffective the financial impact of market rents. With most tenants now eligible for rebates, rents paid by most tenants are a function of their income rather than the rents actually charged. Similarly, while one of the objectives of setting market rents is to encourage better paid tenants to leave public housing, the existence of rent rebates provides an economic incentive for tenants not to increase the incomes they earn from working. This is because as incomes rise, rebates fall and rent paid increases. Some tenants now face effective marginal tax rates exceeding 140%, with incomes actually falling by 40 cents as a consequence of the loss of rebates and other social security benefits for each $1 of extra income earned. Rental rebates in conjunction with market rents not only discourages tenants from increasing their private incomes. It also provides a financial incentive for better paid tenants to reduce their private incomes in order to benefit from the subsidies paid to those less well off (Wulff, Pidgeon and Burke, 1995).

Although there had been moves in the 1973 CSHA to restrict the sale of public housing, a loophole enabled the States to continue selling public housing right through until the early 1980s. In the ten years to June 1981, Victoria sold 9,418 dwellings, which was equivalent to 84% of the dwellings added to the stock during the decade. Queensland was another significant seller of public housing during the 1970s (Industry Commission, 1993). The very different financing arrangements, allocations policies and rental systems which were put in place during the 1970s and 1980s together with a significant increase in the number of low income households produced two significant effects. First, the recessed economic conditions effectively doubled the number of households on public housing waiting lists, with number waiting increasing from 125,570 in 1982/ 3 to 216,339 by 1991/2 (see Table 6). Second, better targeting of new lets to low income households together with the charging of market based rents for higher income tenants produced a marked shift in the income profile of tenants toward the lower end of the income distribution. Public housing became the tenure for the poor (see Table 7). Third, by targeting public housing to low income households, the overwhelming majority of tenants became eligible for rental rebates. Whereas in the late 1960s, less than one in five public tenants were on rental rebates, by the early 1980s 62% were receiving rebates, and a decade later over 80% were in this situation (Table 8).

Organisationally, the SHAs underwent a considerable restructure. During the late 1970s, the Housing Commissions were replaced by Housing Departments, organised along traditional public service lines. In Victoria and NSW the construction of high rise towers was brought to an end in the early 1970s. Some SHAs continued to build large outer urban housing estates during the 1970s, particularly the Tasmanian SHA. The large Tasmanian estates built during this time include Bridgewater (begun in 1972), Clarendon Vale (1976), Gagebrook (1978), Ravenswood (1979) and Rocherlea (1980) (Martin, 1988). By the early the 1980s all the SHAs had abandoned this policy. The emphasis began to shift away from the construction of whole suburbs toward infill housing and spot purchase programs, often in inner and middle ring locations. Allocations policies were also liberalised, with new programs being adopted which began to accommodate the needs of singles as well as youth. This shift

Rather than resolve the anomalies of the past, these new rebate and rent setting arrangements


Table 6: Public Housing Waiting Lists by State, 1982/3-1991/2


Year to June:

NSW

Vic

Qld

WA

SA

Tas

ACT

NT

Aust

1983 1984

51432 53259

17718 24102

10238 10304

8243 10326

28774 32800

3703 3909

1863 2141

3599 3843

125570 140684

1985

58501

23729

8826

8543

35000

4346

2318

3344

144607

1986 1987 1988 1989 1990 1991 1992

57437 60771 85972 83429 75520 64895 71458

28722 30076 33000 31806 33130 38935 45791

9328 9208 11984 15843 19168 22507 24498

11190 13485 13173 15552 15143 17784 14694

39600 44430 43760 42143 41291 43520 41892

4398 4206 4031 4302 4226 4695 4539

1781 3019 2693 3534 2271 3832 6615

3744 3457 3450 4332 4270 6167 6852

156200 168652 198063 200941 195019 202335 216339

Source: Foard et. al. 1994: Table 9.1

Table 7: Household Income by Tenure, 1990/1 Gross weekly household income % AWE