By Professor Patrick Troy*

In the darkest depths of World War II, the Commonwealth chose to review the social security system in Australia. It was a remarkable commitment, especially when the outcome of the war was unknown, to review the effects of the ravages of the Great Depression.

Following the failure of the speculative developments of the 1920s, housing conditions emerged as one of the most important elements that needed urgent attention if Australian society was to become fairer and ensure that following the peace there would be a national commitment to building a fairer Australia.

The housing conditions of lower income households left much to be desired. Houses were overcrowded; rents were high and in the major cities home ownership hovered around 35 per cent.

Inner areas of Sydney and Melbourne were covered with extensive slums. These conditions attracted the attention of a range of social reformers and culminated in the creation of the Commonwealth Housing Commission (CHC) as one of the initiatives of the Department of Postwar Reconstruction.

The Commission’s report was the basis of the development of the Commonwealth State Housing Agreement (CSHA) under which the Commonwealth undertook to provide funds to the States to undertake a public housing program.

The Commonwealth offered funds at a low interest rate for 53 years and undertook to share in any losses arising from the operation of the Agreement – with the stipulation the states should each establish a town planning capacity to ensure that the housing was provided in accordance with sound development practices.

Although the scheme was intended to be a public housing program with the possibility that dwelling might be sold, it was understood that initially dwellings would be for rental only with preference being given to returned servicemen and for households in greatest need. In the early years of the Agreement, production was constrained by the supply of building materials.

Initially Queensland did not sign up to the Agreement due to its limitations on the sale of houses. South Australia refused to sign because it argued that its own housing scheme initiated in 1936 was superior.

Tasmania signed but withdrew because of the limitation on the sale of houses, although the state re-signed once the Commonwealth agreed to sale of houses in 1954.

In the early years of the CSHA, owner built houses exceeded the numbers built under the Agreement. Prime Minister Robert Menzies (1939- 1941 and 1949-1966) had made clear his view that the only class of people that should receive public support for owner occupation were middle income, white collar workers.

Menzies initially left the CSHA undisturbed following his election as Prime Minister in 1949. By 1954, he began the process of unpicking the CSHA by permitting tenants to buy the houses built under it.

State housing authorities struggled to maintain traction as an increasing proportion of their houses were sold. Multi-unit housing had been a part of the CHC proposed solution to the housing ‘problem.’ But faced with the continuing loss of houses as rental stock state housing, authorities were forced to develop more flats than could be easily be sold.

The Commonwealth increasingly involved itself in deciding how the funds available under the CSHA could be employed.

In 1956, Menzies diverted CSHA funds, initially 20 per cent rising to 30 per cent, to a Home Builders Account to encourage more middle income households to buy their own home. It also pressed the States to reduce the standard of public housing. William Spooner, Minister for National
Development (1951-64) was responsible for the Agreement. He sought to encourage state housing authorities to build more flats in slum clearance areas to reduce their capacity to build houses in the suburbs out of a belief that those who bought or lived in public housing in the suburbs were more likely to vote Labor.

By 1961, the level of owner occupation had reached new heights as the activities of owner builders, the sale of public housing and the vigorous encouragement of returned servicemen to exercise their rights to take out loans on favourableterms to buy their own homes changed the housing market. At the same time, the supply of easily serviced land faltered. The speculative sub-divisions of the 1920s were all built on. The states ran into increasing difficulties providing services, especially water and sewerage.

The steadfast refusal by the Commonwealth to help them in spite of the fact that increasingly the failure to finance the provision of services was largely due to growth pressures caused by Commonwealth migration policies.

The states resorted to ‘developer charges’ as a way of funding the provision of services. This quasi-privatisation of service delivery and corporatising of development had the immediate effect of massively increasing the cost of housing. Public housing authorities were faced with increasing intervention by the Commonwealth in what they could build and to whom they could rent.

By 1978, the Commonwealth decided to reduce public housing to welfare housing and later to residual social housing. The Commonwealth insisted that funds would only be provided on the condition that public housing was rented on market related terms.

This had the effect of transforming large housing estates that the states had resorted to building – but with the stricture that they could not invest in community facilities – to extensive estates of households with multiple disadvantage, quickly revealing the degree of alienation and anomie evident in the estates on the fringes of Sydney, Melbourne and Brisbane.

During this process those who lived in public housing were increasingly demonised and stigmatised. The social destruction of public housing became a self-fulfilling prophecy.

The disengagement by the Commonwealth in public housing was accompanied by a focus on the housing needs of specific group whose housing needs were acknowledged. The Commonwealth offered limited support for a variety of small scale programs designed to provide housing for the elderly, for Aboriginal people and so on.

While each of these programs have made a modest contribution to the housing needs of their clients in sum, they do not approach the scale of the programs implemented by the states.

They usually are delivered by a welfare agency as an extension of its range of activities which might salve the conscience of activists – but leaves the larger number of those in need at the mercy of the private suppliers of shelter.

Although the states had resisted the changes forced on them, they were in no position to counter the Commonwealth. Following WWII, the transfer of taxing powers to the states quickly shifted economic power to the Commonwealth, making it harder for states to go it alone as South Australia had for twenty years since 1936 (in the process produced the highest general standard of housing in Australia). But that situation was no longer feasible in other states.

The Commonwealth insistence that housing developments should be the outcome of intelligent planning, while sound in practice, failed because the planning laws and procedures never addressed a fundamental problem: that of planning in a situation where land was privately owned and where the benefits of sound planning accrued to private land owners who could engage in rent shifting or delaying development until it suited them.

By the end of the CSHA, the state housing authorities were in dire financial straits with no capacity to respond to increasing levels of rents, increasing homelessness and increasing house and flat prices.

The destruction of the public housing initiatives of Postwar Reconstruction has been accompanied by the re-emergence of the housing situation that the CHC of 1944 sought to resolve.

*Patrick Troy is Emeritus Professor and Visiting Fellow, Fenner School of Environment and Society at the Australian Nat ional University. He has worked as an engineer and planner in State and local government and served on State and Federal Government urban development agencies and as a consultant to the OECD. His latest book Accommodating Australians – Commonwealth Government Involvement in Housing (2012) is published by Federation Press.