Australia's affordable housing crisis: the price of poor public policy

On the other hand, the Allen Consulting Group Report shows that developer charges actually cost jobs and inflate prices. In Sydney, the first $90-$130,000 of a new home project comprises taxes, a big chunk of which are developer charges. In an era where the Australian bond market is crying out for a role, the Allen report shows how vital infrastructure can be funded without sacrificing precious AAA credit ratings (to see the report visit www.propertyoz.com.au).

Poor governance and archaic development approvals processes also decrease home affordability. The cost of delays are quickly built into home prices. We need an approval process that both delivers a better-quality built environment and is legitimate in community's eyes. This is not as hard as it seems, and there's plenty of momentum to make it happen. For those interested in this issue, the work of the Development Assessment Forum is worth exploring.

It would be impossible to design a system worse than the current one where local parliaments (councils) also act as judiciaries (approval authorities). One controversial solution is to apply the separation of powers doctrine to the development approvals process. However, that is a topic for another day.

The list of house-price-inflating policy failures is getting tedious, so let's finish on this point.

Assuming we could create decent planning systems, infrastructure funding vehicles, decent governance and a development approval system that the community actually applauds, where do we find the money to shelter the critically needy - the homeless and welfare dependent? The bond market is one answer. However, an ideal vehicle for funding affordable housing is securitised property investment. Social commentators rarely refer to them, mainly because they know virtually nothing about the capital markets.

Nevertheless, a listed affordable housing trust vehicle could deliver thousands of homes (close to a billion dollars worth, in fact) for about $30 million of public funds. Such an approach could also provide tenants with equity in return for paying rent and maintaining premises. Although unfamiliar to many, such a trust is simply a collective investment vehicle, similar to those used everyday in Australia. Indeed, a large chunk of our super money is invested in them. There is no reason such methods should not be applied to creating a tangible version of that much-abused phrase "social capital".