President’s column

Unfortunately councils too often find themselves in the position of attempting to sort out problems created for them by the actions of State and Federal governments. Take housing affordability.

The new report on housing affordability by the Grattan Institute has a lot to say about the role councils play, suggesting we could be more aggressive in increasing housing densities in our cities, particularly Sydney and Melbourne. It even advocates a "carrot and stick" approach to bring councils into line.

Firstly, for the record, Local Government is not responsible for the rapid growth in population which is putting ever-increasing pressure on housing demand and therefore housing prices, particularly in Sydney and Melbourne. This demand growth has largely been driven by record immigration levels and foreign investment settings and these are very definitely federal issues.

Personally, I am strongly in favour of a sustainable immigration intake. Migration from a variety of backgrounds has fundamentally transformed our nation for the better. But the Federal Government needs to take responsibility for the fact that our population growth rate stands at 1.6 per cent, far higher than any other Western nation.

It is therefore incumbent on the Federal Government to help other levels of government cope with the consequences of their policy settings. They should not be tempted to simply point the finger of blame at Local Government.

State Government rate capping policies in our two most populous states further constrain Local Government's ability to fund appropriate responses to population growth. In exactly the places councils need more flexibility, Sydney and Melbourne, our councils are capped in their revenue raising capacity and are being blamed for the advent of unaffordable housing.

The Grattan Institute report correctly suggests that State Governments control planning strategy, yet the solution proposed is to “fix planning rules to allow more homes to be built in inner and middle-ring suburbs of our largest cities”.  

Unsurprisingly, many local residents do not take kindly to the idea of their neighbourhoods being pockmarked by random demolitions and subdivisions. However, too often Local Government is expected to approve these changes. It is expected to carry the can and explain the decisions and impacts at the local level of the two other tiers of government.

What the Grattan Institute, State Government planners and finger pointing Federal politicians fail to realise is that neighbours vote. Unless convinced otherwise, if local people don’t like what is being proposed next door they will throw councillors and mayors out of office.

And on this issue, they will do so at every level of government until they get what they want. Federal and State governments may keep trying to pass the buck to Local Government, but the buck is coming back their way.

Migration levels, negative gearing, capital gains taxes, stamp duty, land taxes, infrastructure funding, planning regulations, new land supply, construction costs and community attitudes all influence housing affordability. If we are serious about this issue, all need to be looked at in unison, and we should play our role.

And don’t forget to involve people in the resolution: real people, locals, families, singles, young and old – and neighbours! If we don’t, they may reject our good intent and vote for the status quo, which is house prices increasing well beyond salary increases for years to come.