Submission to Senate Inquiry into the Housing Australia Future Fund Bill 2023 and other bills

The proposed Housing Australia Future Fund (HAFF) is a bad policy. Its main outcome is to unnecessarily pay millions each year in fees for financial management. If the objective is to make homes cheaper for Australians, it is not clear why the HAFF is better than doing nothing. The basic problem is that the HAFF does not produce new below-market housing of any sort. It instead uses money to buy non-housing assets. Just like forcing households to buy non-housing assets with their income makes it harder for them to buy a home to live in, so too does the HAFF make it harder for governments to invest in housing. The $10 billion could be spent on building or acquiring new public housing directly, or via state public housing agencies rather than on non-housing assets. If financial trickery is desired, these funds can be swapped for equity shares for accounting purposes. What seems to be overlooked it that housing, including public housing, is a financial asset that makes a high return over time. In fact, the total return on the typical Australian home has exceed the total return on the Future Fund, which would manage HAFF investments, since its inception in 2006. The bulk of this housing return comes from capital gains, which are returns that also accrue to public housing agencies who rent far below market prices. This is why public housing is well known to be the most cost-efficient way to provide below-market priced housing to residents, and why instead of a HAFF these funds should be used to directly build more public housing dwellings.