Workers can solve capitalism’s housing crisis

Residents of Barak Beacon in Port Melbourne fought to keep their housing public. It is now being developed as “social” housing. Photo courtesy of Renters and Housing Union.
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Times are tough for working people. Many of us are feeling the cost-of-living crisis very deeply. Fifty-four percent of food-insecure households have someone in paid employment. More than a million people are seeking assistance, per month, from Food Bank Australia. No wonder. Wages have stagnated for decades — pay cuts in real terms.

In my home state, Victoria, there are around 35,000 households in rental stress. The number of affordable dwellings has dropped by over 40% in just a year. Many don’t even meet minimum standards.

As I write this article, I’m sitting in my home with mould that won’t go away, windows that won’t open, cupboards and drawers that are falling apart and a heater that’s been disconnected for two years because it leaks carbon monoxide. So many renters are in the same position and, like me, feeling powerless to assert their rights out of fear of being evicted.

The 2021 census also recorded nearly 123,000 people homeless across the country — a 5.2% increase over five years. And in a recent report by the Australian Housing and Urban Research Institute, older women are the fastest growing group of homeless. The fact that the average superannuation for women is 23% lower than for men is a big factor. The most overrepresented group is younger women, many fleeing violence with nowhere affordable to go.

How did we get here? The public spotlight is on soaring inflation. The Reserve Bank of Australia (RBA) has been quick to blame workers, arguing that wage increases force companies to bump up prices. However the Australia Institute shows corporate profits — responsible for 70% of inflation — as the main problem. And while profits increase, so do CEOs’ incomes, by an average of 15%!

The RBA would also have us believe that since the lifting of COVID border restrictions, Australia has been inundated with immigrants, and they’re driving up the cost of housing. Parroting this old trope are government right-wingers, like Liberal-National Party Coalition leader Peter Dutton. Not only is the premise baseless, the statistics don’t add up. During COVID, for example, when immigration was incredibly low, property values increased by more than 25%. And according to former RBA economist Tony Richards, housing hasn’t expanded in line with population growth since 2001.

In fact, we’re losing housing at an alarming rate. Over decades, successive Victorian governments have demolished and privatised public housing. Remaining properties are intentionally neglected, and many are being sold or leased to “community housing” organisations. The same rules of the market apply, and former public tenants suddenly face rents hikes beyond their means.

Other forms of low-income housing are in danger. Hobsons Bay Council is attempting to evict residents of Techno Park in Melbourne’s west. Located near the disused fuel storage tanks of a former refinery owned by Mobil, these homes are in an area zoned as industrial. Since Techno Park’s construction in 1951 as housing for migrants and refugees, it has become a diverse, close-knit community of low-income owner-occupiers and renters. The council allowed its residential use all this time. But in May 2023, responding to pressure from Mobil, it issued an eviction notice, effective immediately. Techno Park residents aren’t budging, and they’re running a highly publicised campaign to overturn the evictions.

More and more low-income households are being pushed into a market dominated by owner-investors with multiple properties. And property investment is a gold mine, reaping not just exorbitant rents but generous tax breaks: one is negative gearing, which offsets property costs (called “losses”) against other types of income; the other is capital gains, a mechanism of overestimating “losses” for a tax concession.

What got us into this mess is the profit system. Describing England’s housing crisis 150 years ago, Friedrich Engels said that capitalism needs the working class in a perpetual state of housing and employment insecurity in order to function.

Capitalist “solutions.” The 14 interest rate hikes imposed by the Reserve Bank of Australia since May 2023 have hit working class mortgagees and renters like a sledge hammer. And the RBA has been open about its intent: force down workers’ capacity to spend. For the millions reeling from the blows, then RBA head Philip Lowe offered advice: move into shared accommodation.

The federal government’s response isn’t so heartless. Prime Minister Albanese promises to invest $3 billion for 1.2 million new homes over five years, limit rent increases to once a year and ban evictions without reason. But these measures are nowhere near sufficient. First, most states and territories have similar measures already in place. As Kristin O’Connell, from the Anti-Poverty Centre, explains, “It doesn’t matter what regulation is in place if the onus is on tenants to hold landlords and real estate agents to account.” The federal Cabinet says that housing supply is key to bringing down prices. But O’Connell points out that “just having more houses does not improve affordability…What we actually need is a massive investment in public homes.”

The Victorian Labor government’s plans aren’t much better. Some soft changes to legislation — restricting rent increases, banning rental bidding and increasing notice periods — do not help those already feeling the pressure. Its biggest announcement is to sell off and privatise more public land. Ten thousand residents will be relocated across 44 public housing high-rises, which are marked for demolition and replacement with a mix of private “social” and “affordable” housing. There is no clear definition of what “affordable” means, but it’s suggested to be just 10% below market price — definitely not affordable for the 10,000 about to lose their public housing, or the tens of thousands on the public waiting list.

What’s more, “social” housing is not public housing. Controlled by private entities, largely not-for-profit, they operate according to the market. So rents are higher. Although the Victorian government claims that the public housing high-rises are in a state of disrepair — due to decades of neglect — there is no evidence that they cannot be repaired and refurbished. RMIT University’s Centre for Urban Research also points out the extensive harm of displacement and separation for low income-communities. And the question still is: where will these communities go?

This crisis can be fixed. The working class has the know-how and creativity, not to mention the most compelling reason, to do this. Victorian Trades Hall Council recommends expanding taxes on vacant properties, establishing a residential tenancies ombudsman, banning adverse action against renters who assert their rights and legislating a right to shelter. The Construction, Forestry, Maritime Employees Union (CFMMEU) proposes a super profits tax of 40% on companies with over $100 million turnover to fund the building of new homes.

Our demands should go further. We should also be demanding an end to anti-union laws, a living wage for all (including hefty boosts to the wages of low-paid workers), nationalising building- and energy-related industries under workers’ control and tax breaks for working class renters and mortgagees.

How do we fund this? Well the CFMMEU is on the right track: tax the rich! There is plenty of money to fund demands like these, and much more, if we were to restructure the economy to work for people, not profit. Scrapping negative gearing and capital gains would provide $44 billion. Sinking the AUKUS submarine deal would give us $368 billion to spend on working people’s needs.

These are demands that the capitalist system can’t abide, because it survives by exploiting our labour and our desperation. But we outnumber the capitalists! We can win if we unify and fight for what we want. Ultimately we can take power and then build a worker-led economy that shares the wealth and provides for our needs.

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