An unbroken run of prosperity has created property millionaires, but it’s also left a lot of vulnerable people out in the cold

At first Helen, 55, didn’t realise she was homeless. She was just crashing on friends’ couches until she found something permanent. But as time went on, there was no secure accommodation on the horizon. Helen struggled with an alcohol dependency and she knew her lack of permanent accommodation was affecting her recovery.

She accessed a variety of church and other charity services and was placed in boarding houses that were unsafe or unsanitary. In bedsit accommodation, a man broke into her room while she was away – and the landlord took his time fixing the lock.

She went from short-term place to short-term place, with her name down for government social housing. She was told it might take 10 years. She now lives in privately-funded housing for women, and from that place of stability has been able to tackle addiction and past trauma.

Facebook Twitter Pinterest Peer Education Support Program team member for the Council to Homeless Persons. Photograph: Council for Homeless Persons

Insecure housing has been Helen’s situation for decades now. In many ways it mirrors the story of public housing in Australia. That is, decades of neglect and lack of new infrastructure leading to a patchwork of public and private services which a vulnerable person needs to negotiate to get that most basic of things: a roof over their head.

The story of housing in Australia is also the story of neoliberal economic policy – an unbroken run of prosperity that saw housing transform from a social need into an asset. The nation’s 28-year-long boom has made a lot of mum and dad investors property millionaires – at least on paper. Far from being good for all, however, Australia’s long boom has actually exacerbated housing inequality, creating a shameful legacy of a massive increase in the number of people unable to afford adequate housing, leading to a sharp rise in homelessness.

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According to Brendan Coates, a fellow at the Grattan Institute, “There is a clear link between homelessness and housing prices. The consequences of affordability are felt at the bottom. People with a low income are spending more of their money on housing. Add in disability, substance abuse, mental health, domestic violence – in a world where they are already vulnerable – it increases their risk of being homeless.”

Some of the housing policy experts that Guardian Australia spoke with agree that the neoliberal turn Australia took in the 1980s and 1990s, and the property boom that followed, resulted in a fundamental philosophical shift: property went from being housing – a utilitarian concept – to a financial asset.

In a generation, very little new social housing has been built to cope with demand, in particular one and two-bedroom units. Much of the stock of government housing was built near factories for post-second world war migrant workers and their families. But many of the people now who face homelessness are single or living in two-person households, says Matthew Torney, a director at the consulting firm Nous and the former CEO of community housing provider Urban Communities. Private market stop-gap measures – like rooming houses such as St Kilda’s Gatwick – have closed down, their land too valuable to service the underprivileged. The Gatwick was sold to a television company and turned into luxury apartments for reality TV show The Block.

So how did we get here?

The reasons for the current levels of homelessness thus are complex but the housing boom, coupled with federal government neglect and inaction since the 1980s, has played a large part in what is now a crisis situation. There’s not enough social housing, the waiting lists to get a home can be decades long, and the stock available is not fit for purpose. In the meantime, those struggling lead stressful, fraught lives, cycling between emergency housing, the private rental market, couch surfing and sometimes rough sleeping.

Why experts disagree about the impact on affordable rental accommodation of John Howard’s change to the capital gains tax discount, they all agree on the excitement experienced in the sector over Kevin Rudd’s housing policy. Rudd called homelessness a “national obscenity” and his government worked with the sector to develop a program called The Road Home, which aimed to halve homelessness by 2020. It involved a combination of early interventions, improved homeless services and an increased supply of affordable housing.

Facebook Twitter Pinterest ‘Far from being good for all, Australia’s long boom has actually exacerbated housing inequality.’ Photograph: Cameron Spencer/Getty Images

Kate Colvin, policy manager at the Council to Homeless Persons, says: “It was exciting because it really was a national review. The sector was very involved and the strategy that came out was really innovative at the time.”

The Rudd government’s National Rental Affordability Scheme built 35,000 affordable homes – with discounts of at least 20% to market rents – before being cancelled by the Abbott government.

The Rudd government also announced the social housing initiative as part of the global financial crisis stimulus, which funded an extra 20,000 social housing units over a period of two years, and helped maintain another 80,000 social housing units at a cost of $5.6bn.

Coates says: “The Social Housing Initiative was arguably much more effective in helping those at risk of homelessness than the National Rental Affordability Scheme. The key difference was the Social Housing Initiative actually helped those that were really struggling – more than half were either homeless or deemed to be at severe risk of homelessness, whereas much of the support via NRAS went to those on moderate to middle incomes that were never at great risk of homelessness in the first place.”

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It’s not just that housing has become more expensive. Low wages, low welfare rates, changes to eligibility of welfare and increased “sanctioning” of welfare recipients – meaning they have payments cut – have also led to increasing numbers of homeless people.

Right now, there is not enough affordable stock to house Australia’s bottom 9% of income earners. There is one irrefutable solution to the homeless problem and that is to increase supply by building more housing. Yet successive governments have failed to build infrastructure to keep up with the problem.

Matthew Torney says: “There has been a systemic underfunding from the 1970s and into the 1980s and beyond.”

The stock of social housing – currently around 400,000 dwellings – has barely grown in 20 years, while the general population has increased by 33%, according to the Commonwealth Orange Book 2019, a report released in April by the Grattan Institute.

Housing policy has never been a vote winner. Australians have long seen homeless people as “the other”. And so the sector languished, starved of funds and innovation for decades.

In Australia’s long boom of unbroken prosperity, it was easy to pretend the problem didn’t exist. That is until the evidence was right before our eyes.

From 2011 to 2018, homelessness increased by 14% nationally and rough sleeping – the most extreme form of homelessness – increased by 20%. In Melbourne, homelessness increased by 200% in that period.

In major cities, homelessness was suddenly visible. Tent cities appeared around Flinders Street Station in Melbourne, Martin Place in Sydney and at the showgrounds in Hobart. The Herald Sun reported that homeless people at Flinders Street Station were frightening tourists heading to the Australian Open.

Then there are the legions of invisible homeless – riding trains, sleeping in their cars and couch surfing. They are like Cherry, a mother of two in crisis accommodation in Sydney’s suburbs after leaving a violent partner. She and her children had been sleeping in her car until housing became available. Interviewed by the Guardian in 2017, she was one of the 93% of homeless people described as “hidden”.

According to the Grattan Institute “boosting social housing will be expensive” but it estimates “increasing the stock by 100,000 dwellings [is] broadly sufficient to return the total social housing stock to its historical share of the total housing stock, [which] would require additional ongoing public funding of about $900m a year, or upfront capital cost of $10-to-$15bn.”

Other solutions, such as increasing rent assistance so Australia’s poorest have a better chance of accessing the private rental market, have not been implemented. Rent assistance is indexed to inflation but has not kept pace with increases in the private rental market.

Currently there is a public housing waiting list “many, many years” long, says Torney, and once people move into public housing, they seldom move out, creating a blockage.

In 2016, the Victorian Andrews government announced $218m in social housing and private rental assistance for women and children fleeing family violence, and in Camperdown in Sydney there is a new youth homeless facility being built with 53 beds.

But policy experts Guardian Australia spoke with say what’s being built is nowhere near enough, and there is no overarching national strategy, or political will – at least on the Coalition’s end – to make the investments necessary to overcome the problem.

Instead, vulnerable people move through a contingent, precarious system, shifting between crisis accommodation, periods of homelessness – which can include couch surfing – and the private market, searching for elusive low-cost accommodation such as caravan parks while their names are down on the very slow-moving waiting list.

“If you are in a situation where you are not going to get a roof over your head, in theory you get some kind of access for emergency housing,” says Coates. “But it’s underfunded.”

So what policies are the parties taking to the election?

With an election this week, housing advocates are hoping that things will change. After all, they have to change. If they don’t the flow-on effects – and costs – associated with homelessness, such as crime, mental health problems and addiction, will keep rising.

The Coalition isn’t offering much on housing, and especially to low-income earners that are struggling most with rising housing costs.

The Coalition’s first home loan deposit scheme (matched by Labor two hours after the Coalition’s surprise announcement) is the latest plan that is supposed to arrest the decline in home ownership among younger Australians. But, according to Coates, “it won’t make much difference.” He says: “Even if none of them would have bought a home without the scheme (most unlikely), home ownership would be only 1% higher in a decade’s time.”

He adds: “But a bigger scheme might well be worse. If it ‘succeeded’ in rapidly expanding demand from first home buyers, it would push up prices for everyone, not least all the other first home buyers trying to get into the market. Instead of being ineffective, it’d become counterproductive.”

Its political virtue might be that it sends a signal to first home buyers that government is on their side. Yet the Coalition won’t pursue the one thing that would actually help home buyers the most: letting housing prices fall.

“The reality is that someone has to lose in order for first home buyers to win,” Coates says.

In contrast, Labor’s plan to abolish negative gearing on existing homes and halve the capital gains tax discount “creates losers”, Coates says. Labor would prevent new investors in existing homes from writing off the losses from their property investments against the tax they pay on their wages. And investors would pay tax on 75% of their gains, up from 50% now.

Its plan takes away tax breaks worth $1bn to $2bn a year in the short term, and more in the long term.

Existing homeowners would lose a little: The Grattan Institute estimates that house prices would be 1% to 2% lower under the Labor plan. The commonwealth Treasury and NSW Treasury have reached similar conclusions.

By reducing investor demand for existing houses, Labor’s policy could provide a genuine boost to “genuine” home ownership, by owner occupiers. “Fewer investors would mean more first home buyers winning at auctions,” says Coates.

The Labor party is also promising to subsidise the construction of another 250,000 affordable homes over a decade, which would cost $30bn by the time it’s finished in two decades’ time.

“The original NRAS raises real questions,” says Coates. “A lot of the homes didn’t go to those that needed them most and the scheme cost far more than it should have while providing big windfalls to property developers. It would be a tragedy for Labor to spend such large sums and not ensure most of the money was used for social housing, which is critical to arresting the rise in homelessness in Australia.”

Torney is positive about Labor’s housing policy, saying, “It’s a huge thing and it will create new supply.”

Reporting in this series is supported by VivCourt through the Guardian Civic Journalism Trust