4 - Homelessness

Summary

Homelessness as a major problem in the developed world reemerged in the 1980s. What was the cause of its reappearance? Politicians are keen to blame citizens. Australian Treasurer Joe Hockey in 2015 advised young people wanting to buy their first home to ‘get a good job that pays good money’, while property developer Tim Gurner suggested that young Australians could not afford to buy his developments because they waste money on fancy toast and overpriced coffee. Australian Prime Minister Malcolm Turnbull had another solution in 2016: he suggested that their wealthy parents should buy homes for them.

If indeed the growing homelessness in Australia and other countries is really due to individual or household irresponsibility, then we have to explain why people became more irresponsible at that time. The alternative explanation is that, around the world, governments changed their housing policies. And, by and large, they did. First, they created a massive bias in the tax system that rewarded not only home owners, but also rentiers. Second, governments stopped seeing their role as providing affordable public housing for the poor, both directly and through keeping down private rents through rent control. Governments began to see political advantages in opening up private home ownership, both through the tax system and by selling off public housing on the cheap.

In the UK, for example, there were large stocks of public housing, provided and maintained by local councils. In the 1980s the Thatcher government brought in the ‘right-to-buy’ policy for council tenants. Much of that existing housing stock was sold below market price. At the same time, the government restricted local councils’ capacity to build new public housing, tying up the reserves they had for building. They began to provide incentives for councils to stop directly managing public housing, encouraging the growth of housing trusts, and thereby removing local government from its role in housing provision. Similarly, in both Australia and the US, the social provision of housing has been reduced over time despite growing needs. In the US, $3 billion was cut from Housing and Urban Development between 2010 and 2018 (around 7 per cent of its budget).