February 11, 2008

Development and Sustainability – Contradictions in Australian Federal Policy

With the recent international emphasis on the credit crisis and related issues such as slowing economic growth, interest rates, inflation and stock market routs it is not surprising that attention has turned away from climate change and sustainability.

However it also seems that Governments worldwide are turning to the same remedies for problems that may have significantly contributed to our current global woes. The USA experience of offering incentives and low cost finance for low income earners to own their own home is one such key driver.

So what is Australia doing . . .

On October the 14th 2008 Australian Prime Minister Kevin Rudd, in a joint media release with Treasurer Wayne Swan and the Minister for Housing Jenny Macklin, announced a boost to the First Home Owner Grant program. The specifics of the release include:

  • First home buyers who purchase established homes will have their grant doubled from $7,000 to $14,000
  • First home buyers who purchase a newly constructed home will receive an extra $14,000 to take their grant to $21,000.

This boost is a component of a $10.4 billion (AUD) strategy to “strengthen the Australian economy during the global financial crisis.”

The press release points out that all newly-built homes will need to meet “relevant State and Territory energy efficiency and sustainability standards”, and that this strategy builds upon a previously announced $2.2 billion (AUD) of housing initiatives, which includes the building of 50,000 new and affordable rental properties.

So, what’s the problem here?

The issues with housing availability and affordability are indeed significant problems across Australia, and particularly in the coastal metropolitan areas. As an economic stimulus and measure to encourage real estate investment, this plan has some level of merit. Indeed, some political capital may also be derived from increasing a grant which in essence targets the young, the middle and lower classes, and ‘Howard’s battlers’. 

However, the implementation of this plan also seems to contradict the primary thrust of Rudd’s purported agenda of addressing climate change and sustainability as the primary issues facing Australia (and the world) today. Indeed, aspects of this boost seems to be absolutely contrary to a sensible approach to sustainability. Let’s unpack the issues arising from this plan in some degree of detail.

Sustainability and Suburbia

 Let’s start with some simple assumptions about patterns which might arise from such a policy.

  • Those with a suitable income and cash flow, if possible, may attempt to purchase in inner city areas where housing and services are already established. No real issues here.
  • Those with lesser incomes and cash flow, seeking to maximise the benefits of this grant boost, will look towards the outer suburban areas where 1) land is cheaper, and 2) houses may be built allowing access to the highest grant amount available ($21,000 AUD). 

It is this second assumption in particular which runs contrary to a fundamental understanding of sustainable development in modern cities. Let’s break this down further.

Suburbia is underpinned by cheap fossil fuels

The Government of Western Australia’s State of the Environment Report 2007, Human Settlements – Transport section, points out that in terms of Vehicle kilometres travelled per capita inner city residents travel about 25-27km per day while residents in outer areas such as Joondalup or Armadale travel an average distance of 36-37km per day [Indicator HS10]. In other words, residents in outer suburbia travel approximately 40% greater distances by car daily. It should also be taken into account that many households will include more than one vehicle traveller per household. 

This trend is correlated in other Australian cities. Western Sydney data is more extreme, where residents can travel 60% to 70% greater distances than inner city dwellers.

As services such as shops, educational facilities, and community facilities tend to be more widely distributed in outer suburban areas, it is no surprise that residents in inner city areas commute over much smaller distances (as services may be closer and within walking distance, and public transport infrastructure more mature). 

It seems nonsensical, considering the economic climate and future costs of fossil fuels such as petrol, that government policy encourages the poorest prospective home buyers to buy land and build homes in outer suburban areas where they will be most exposed to inevitably rising fuel and transportation costs.

Clearly the increase / decrease in CO2 emissions from all these extra “vehicle kilometres” needs to be incorporated into the inputs / outputs of such policy decisions taken by national Governments.

Further, the SOE 2007 Report referenced above outlines the following objective for reducing environmental impacts of transport

Reducing total vehicle kilometres travelled

and goes on to state that 

Expansion of the existing road network will further impact native vegetation, wetlands and contribute to isolation of many ecological communities and wildlife. 

The Federal Government’s plan to offer the maximum grant to home builders is contradictory to these aims, and will only exacerbate the environmental and economic issues arising from outer suburban vehicle travellers.

Services in Outer Suburbs

As mentioned above, it is almost always the case that services in outer suburbs are both less mature and more widely distributed than in inner city areas. Costs relating to basic infrastructure and energy distribution increase with distance, and emerging areas of habitation often require significant investment in such services, public transportation, and critical enabling services and technologies such as high speed broadband. The question must be asked: how much will it cost to provide new, basic services to the areas where land is cheap enough for the ‘battlers’ to build? 

Looking towards a better solution

We would suggest that a better solution for sustainable housing development would encourage an appropriate increase in inner city and inner suburban housing density. With pre-existing services, the costs of development in such areas would be significantly lower than outer suburban development.

Quarter-acre blocks in inner city areas may be rezoned and redeveloped, within reason, to allow an increase in density of up to 50% without affecting living standards or environmental quality. Less kilometres would need to be travelled, less services built, and existing services improved; councils would see an increase in ratepayers which would then be translated into even better community services. A greater sense of community should also develop out of such an approach to housing, resulting in benefits not only in terms of sustainable eco-friendly development but also in quality of living and service costs. As the ‘crunch’ of climate change becomes more severe, the implementation of newer, greener technologies in energy and transportation will become both cheaper and more easily implemented. 

The Australian Federal Government should adjust their policies to encourage current inner-city landowners to subdivide or redevelop in ways that will provide affordable (read: not luxury) housing, instead of a simplistic approach to encouraging home ownership. Policies such as this home owner grant boost take away from Australians, with one hand, what is offered with the other: a sustainable, green, and high living standard future.