Taming the concrete jungle, 1973

7. People without homes

Pete Thomas

Source: Australian Building Construction Employees and Builders Laborers Federation, NSW branch, July 1973
Source: Book, 135pp, July 1973
Transcription, mark-up: Steve Painter

To build homes for people is one of the building industry’s greatest social contributions. Under any system that gave human needs a priority above private profit, home-building would head the list of the industry’s assignments. But in Australia, misdirection of the industry has created a chronic housing shortage. The housing plight of people with limited means — including the aged, and young couples — is a state of heartbreak.

Saying that there were then 93,000 applicants throughout Australia for Housing Commission or public housing, Housing Minister Les Johnson, in March 1973 estimated on that basis there were some 400,000 persons seeking a decent, adequate home.

The housing crisis, he said, was a major contributing factor to many of the appalling ills suffered by the community. The connection with poverty was obvious. It could be speculated as to how much sub-standard housing contributed towards poor education, poor health, poor emotional development of children, poor marriage relationships. Poor housing was a major factor in the deterioration of the social fabric, especially in urban areas.

A report in July 1973 said Australia had an estimated 25,000 homeless people. A Besser advertisement earlier in 1973 said that “one- sixth of Australian dwellings were not habitable by any reasonable standard.”

Authorities cannot even find accommodation for people who are in dire need; in 1971-72, 633 of the applications in Sydney to the NSW Housing Commission for low-cost housing were recognised to be desperate cases, but immediate accommodation could be provided for only 213 of them.

In July 1972, the NSW Housing Commission chairman, Mr J.M. Bourke, said he was “sick with worry” about the housing situation for low income earners. The Askin government responded promptly: “Cabinet gags housing chief,” said a Sydney Morning Herald headline, and it reported that the cabinet had directed Mr Bourke not to make further public statements on the matter.

The NSW government’s own record is deplorable, in housing as in so many other things. An editorial in the Australian Financial Review on August 8, 1972, said:

The housing situation in Australia has now got to the stage where it can only be described as scandalous … It is the avoidable result of state government incompetence, particularly in NSW.

In Sydney, the monumental lack of government imagination and forethought has brought about … a sad and socially dangerous sense of frustration on the part of young married couples, lower income families and migrants alike.

In July 1972 there were 28,088 families in the Sydney area alone who had been on the NSW Housing Commission’s waiting list for up to four years. Throughout NSW, the waiting list was 40,000 families, with new applications constantly swelling the backlog.

In one case, an elderly couple had a six-year wait, which took them near their seventies. They had been paying $28 a week (from a weekly income of $40) for one room and sharing the bathroom. They had to limit themselves to two frugal meals a day.

Aborigines’ needs

In housing, as in so many other aspects, Aborigines are grossly deprived. In June 1973, federal Minister for Aboriginal Affairs Gordon Bryant told a Senate committee that it had been estimated that up to 20,000 Aboriginal families had immediate and urgent housing needs. Housing, for Aborigines, was probably their “most crucial need.”

It was against that background that the Redfern (Sydney) Aboriginal Community Housing Scheme was launched: a project to reshape a whole block in this inner suburb to provide a new Black community area, with homes, recreation area, cultural centre, co-operative shop and medical, preschool and other centres. The whole project is to be managed by an elected co-operative committee.

Support and practical help for this came from diverse sources. Among these have been federal ministers, some young radical Roman Catholic priests, and trade unionists. The Builders Laborers Federation, and particularly its state president, Bob Pringle, have been forefront supporters.

The support from these and others has been in contrast to the hostility that the project encountered from various sources with entrenched attitudes on Aboriginal questions. These include various right-wing Labor elements in parliament and the South Sydney Council, who at the 1973 NSW conference of the Australian Labor Party were exposed and attacked for this by Bob Pringle in what Tribune called “one of the few fighting speeches of the conference”.

High-rise phobias

Efforts to alleviate housing needs by building high-density inner-suburban flats have had some disturbing side-effects. Up to a quarter of psychiatric patients treated at Australian institutions have “high-rise phobias”: the problem of being cut off from normal living and being cut off from neighbours and community services. Symptoms include fearfulness, inability to cope, loneliness and difficulty in sleeping and eating. Many housewives in high-rise conditions have an irrational fear of going out.

There is increasing mental ill-health among “high-rise babies” who grow up looking downwards on trees, peoples and cars and “see everything from the vertical.”

One report said that the psychiatric admissions in the Sydney local government area, with its many high-rise homes, was 1.4 per cent of the population. This was more than three times the rate in the “backyard and fence” suburbs.

Consequences of that kind had obviously been unforeseen. But wouldn’t they have been foreseen if people’s housing, in all its implications, had been given the full study that it merits?

But money and resources have been directed elsewhere. Referring to the scarcity of money for home-building, a statement in November 1972 by Mr R.D. Williams, federal secretary of the Australian Council of Salaried and Professional Associations (ACSPA, the white-collar equivalent of the Australian Council of Trade Unions) spoke of the fact that “recognised financial institutions, such as banks, for various reasons including the profit motive have diverted their lending into more remunerative investments”.

For that “profit motive,” housing is far outranked by city commercial construction.

So, while 160,000-odd people in NSW alone wait despairingly for a Housing Commission home, the Sydney Morning Herald on November 13, 1972, said that, in the 17-year building boom, 185 new buildings, mostly office blocks, have been constructed in Sydney’s central business area. It went on:

Today there are 41 buildings under construction; demolishers and excavators are preparing sites for many more; and there are scores of development applications on the City Council’s books. Most of them have been approved.

It has been estimated that the value of buildings under construction and those likely to go ahead is more than $600 million.

Back in July 1970, the financial editor of the Sydney Morning Herald wrote an article on building trends, headed “Fewer homes for more skyscrapers.” It pointed to the fall in dwelling construction so that activity in other areas of construction could rise.

According to an estimate in 1972 by BWIU Queensland secretary Tom Chard, about 60 per cent of the building workforce is engaged on commercial building, leaving 40 per cent for dwellings and repairs.

What’s being built

The latest available (1969-70) annual bulletin Building & Construction issued by the Commonwealth Bureau of Census and Statistics gives a breakdown of the annual value of all new construction completed in Australia. Here are comparative figures over an interval of ten years (figures rounded):

Those figures show that, over the 10-year period, the value of new flats and houses constructed in a year went up by 141 per cent, but the increase for offices was 217 per cent. Overall, housing and flats, as a percentage of total value of all new construction fell from 58.6 per cent to 57.9 per cent, while non-housing rose from 41.4 per cent to 42.1 per cent.

The change in those figures (housing down 0.7 per cent; non-housing up 0.7 per cent) may seem slight, but if residential buildings had maintained their earlier proportion of 58.6 per cent, then on the 1969-70 total value there would have been over $16.6 million more residential building than there actually was.

The cost of getting land and house is daunting.

Mr Tom Uren MHR (now Minister for Urban and Regional development) wrote, as an opposition spokesman, in the Australian Financial Review on April 24, 1972, that the average price of a block of land and dwelling in Sydney was $20,000.

For this, he said, a young couple would need a deposit of about $5000. Then, to get a building society loan of $15,000, they would need to be in the $110-$120 income bracket, whereas 70 per cent of wage-earners were below the average (at that time) of $91 in weekly earnings.

Prices zoom

Since 1949-50, Mr Uren said, land prices in Sydney rose fourteen-fold, but average weekly earnings rose only about 4.3-fold. So land rose 3.25 times faster than weekly earnings.

Information secured in parliament in March 1972 showed that, in the three years to the beginning of 1971, home-building sites in the Sydney area rose in price at an average annual rate of 23 per cent. Here are average figures of 1968 and 1971 prices in the capitals for various categories of blocks:

In only one case (modest block in Perth) of all those did the price stay stationary over that period, but it was stationary at a level that in 1968 was the highest of any capital and that in 1971 was still higher than any other capital except Sydney.

As for building costs, NSW Water Board reports show that the average cost of building a home in the Sydney metropolitan area rose from $9657 in 1967-68 to $12,962 in 1971-72.

ACSPA federal secretary Mr R.D. Williams said in November 1972: “The mammoth cost of land and huge interest on house loans are combining to create an intolerable burden on young people and others trying to obtain their own homes.”

The wages bogey

Why have costs gone up so? There is, as everyone knows, inflation throughout the whole economy, which over the years has been spurred by policies directed to suit the requirements of big business. But it is necessary to identify some of the special factors in the housing costs.

Some interests, to suit their own purposes, make out that workers’ pay is to blame. This tale won’t stand examination. Wages make up a very small proportion of what people have to pay to get their home.

A publication Home-buying by the NSW branch of the Building Workers Industrial Union a few years ago gave a breakdown of housing costs. The figures would have gone up since then, but the proportions would not have materially altered.

In an assumed case given in that BWIU booklet, a couple had $3000 towards a $5500 block of land and a $9500 three-bedroom brick veneer home.

They obtained an $8000 26-year loan from the Commonwealth Bank and a $4000 ten-year second mortgage from a finance company. Then their total outlay would prove to be $24,861, including $9861 interest. For the first ten years, payments of interest and loan would be $84.86 a month then (with the liquidation of the second mortgage) the payment would be $60.82 for the next 16 years.

On the $24,861 total cost, interest ($9861) was the biggest item. Next were land ($5500) and materials (also $5500). The remaining $4000 was about equally divided between wages and builders’ profit and overheads.

So wages represented only about one-twelfth of the total cost. If building workers got an extra $8 a week, it would add only $260 to the $24,861 cost of the house whereas, if interest rates went up by 0.5 per cent, that would mean (on an $8000 loan) an extra $750 cost to the home-buyer.

Incidentally, it is building workers’ skills and talents that build the houses but, to pay that $24,861 for the house if he wanted it for himself and his family, a building worker on, say, $100 clear a week would have to put in the equivalent of every cent of his pay for over more than 4½ years.)

Mr Tom McDonald (NSW BWIU assistant secretary) told the NSW Labor Council in October 1971 that the 10 per cent increase in building workers’ wages over the past year would at worst, add overall less than 3 per cent to the total construction cost but, in fact, the continuing increase in productivity should absorb the increased wage level. He said governments, instead of trying to unload the blame for housing costs on to workers, should hold down interest rates and apply price control on cement, concrete and other monopoly-produced items that sent housing costs up.

Statistics tell story

Calculations from figures in the Commonwealth Statistician’s latest available annual Building & Construction bulletin (for 1969-70) show that rises in wages lag behind the rises in building workers’ productivity. That is, the value of the work they do has gone up more than has what they are paid for it.

This is what emerges from the national figures in that bulletin, relating to value of work on new buildings:

But, while average value per wage-earner more than doubled in that ten-year period, wage rates didn’t. The Commonwealth Year Book shows that, in the ten years from 1960 to 1970, the index figure for the weighted average minimum weekly wage rate, without overtime, in building and construction rose from 126.6 to 200.5 (these are index figures; not dollars). So value per wage-earner went up by about 108 per cent but the wage index went up by less than 60 per cent.

Building & Construction gives a break-up of money aspects in the building and construction industry over a period from 1960-61 to 1969-70. These include such categories as wages and salaries, supplements to wages and salaries, and operating surplus.

These show that the net operating surplus (profit), in proportion to wages and salaries and supplements to these, has been increasing over that period. In other words, the boss’s share is going up and the worker’s share is going down; even though the actual pay the worker gets may be more than it was before, he is being chiselled more by getting a relatively lesser share of the chips.

Obviously then, any story about blaming wages for housing costs is phoney. For the source of the upward leap in costs we must look elsewhere than the harassed building worker, forced mostly to work a six-day week to get by.

Interest rates are a big factor. These fluctuate, but any rise hurts those who have borrowed for their homes. Higher prices have meant that people have had to borrow more money; then they have to pay interest on this heavier borrowing. Rises in interest rates increase the burden; at the time of one rise of 0.5 per cent in the interest rate charged by permanent building societies, it was estimated that this would mean that a recent borrower of a $12,000 25-year loan would have to pay an extra $1200 altogether (if the borrower decided to increase the rate of weekly payment immediately) or about $4300 (on the alternative scheme of increasing the period of the loan, by four years).

There have, too, been substantial rises in costs of materials needed in house-building. In particular, Broken Hill Pty — with its monopoly in steel, as well as its range of other interests (oil, natural gas, coal, iron ore, shipping, shipbuilding, and a few other sidelines — has over past years rewritten its price tickets for steel about once a year.

These rises in steel prices have sent a shuddering jolt throughout the whole economy, including housing construction. As well the price rises for products of the BHP network, which are directly used in construction, the BHP steel price rises have their damaging indirect effects. As just one instance, Mr Bill Griffiths of National Paint Products has said BHP steel price rises have substantially increased the cost of steel paint cans; at least 10 per cent to 12 per cent of the price of a gallon of paint is steel-can charges.

Prices of other house-building materials constantly rise, with various pretexts. The rises all finish in the home-buyer’s lap, and usually the original rises get a bit more added to them along the way, with a bit being added for profit margins at each successive stage.

The NSW State Brickworks prices increase of 8 per cent to 10 per cent in September 1972 was expected to add $50 to $100 to the price of a house.

Governments such as that in NSW by failure to restrain prices and so leaving it to “private enterprise” to name its own prices, encourage the robbery of the people on building materials, as on other needs.

Inflated land prices

This applies also to the price of land, which has been allowed to soar dizzily. The NSW Government has done nothing effective to curb this, and has in tact contributed pressures of its own to aggravate it.

As a result, there have been forecasts of worsening inflation in land prices. A Hooker Rex Estates executive in 1970 predicted increases “such as we’ve never dreamed o’ in land prices, with a steadily growing number of people unable to own their own home.

Federal Labor leader Gough Whitlam said in 1970 that “land speculation has been the greatest social disaster and public scandal of the postwar period”.

The NSW Housing Commission is among the sufferers from the inflation of land prices. It has not had enough money to buy, at current prices, the land it needs for satisfactory programs of residential development.

Developers, having acquired big areas of land, have a vested interest in putting it on the market only in parcels calculated to exploit the demand situation to the utmost.

To let it go in greater quantities would tend to lower the price. This would mean that more homeseekers could afford to buy it. But that’s not what developers are in business for; they’re in it for the most they can get out of it for themselves. It suits them to keep supply limited so as to cash in to the maximum on the unsatisfied demand.

In this situation, a Financial Review editorial on August 8, 1972, expressed concern for the “moral fibre of the community.” It said:

Almost everyone has been tainted by a self-administered virus of greed fuelled by spiralling land prices which give those who already own property steady capital gains and those who struggle to buy property an even stronger vested interest in ensuring that the spiral will continue.

In such a situation, the pressures on both individuals and professional real estate developers to become out-and-out land speculators become intolerably strong.

While there are (as the Financial Review said) pressures on individuals, it is not the individual with a bit of dirt who is responsible for driving up overall land prices. The guilt lies with those who are in the business, in the big time.

The ordinary individual who might get himself a bit of money from a land sale could hardly be compared, for instance, with the case of a firm quoted by Mrs Edna Roper, MLC, in the NSW parliament in 1972: having obtained a Sydney property from an institution for $500,000, the firm resold it immediately for $1.25 million.

Greedy government

The Askin government of NSW maintains an indulgent inaction on this situation. More than that, the government itself, by its policies on auctions of Crown land, helps to stir inflation of land prices.

The NSW government was accused by the Review (now Nation Review) in April 1972 of letting Crown land go to auction in only small dribbles (about 25 or 30 blocks at a time) so as to maintain the shortage and so stimulate competitive bidding and keep prices up. It sets its own reserves at anything from $10,000 to $22,000, “so bidding always starts at about twice the gross annual income of the average worker”.

A Crown land auction of 23 blocks in toney Wahroonga in March 1972 grossed $399,000. Another 28 blocks at Maroubra and Malabar in April 1972 brought $649,000. So, for 51 blocks, more than $1 million.

At the end of January 1973, a letter in the Sydney Morning Herald accused the NSW government of “acting exactly like an overgrown and avaricious land developer” in its auctions of Crown land. The writer of the letter said that, for an auction scheduled for February, reserve prices varied from $11,000 to $15,000, with 25 per cent required as deposit and the balance repayable over three years at 6.75 per cent interest annually.

He calculated that, for a $15,000 block, it would need $3942 deposit and the balance at $81.50 a week. To pay that, he estimated, a person would need to be on $156 a week net, or virtually $200 a week gross. He concluded:

The purpose of Crown land auctions was to help the lower-income earner, and there is no way a person earning $200 a week can be so classified.

There is no doubt that the state government has lost all track of its duty and is blatantly selling land at the highest possible prices.

By using others as fronts for them, builders or real estate interests have been able to get at least some of the Crown land that rightly should have gone to home-seekers. Former Crown land has then been sold, with houses built on it.

The land situation has perturbed at least one of the more responsible and forward-thinking of the developers: Mr G.J. Dusseldorp, of Lend Lease. He told an ABC TV Monday Conference in 1972 that he believed land ownership should be “in the hands of the public at large, whatever particular instrumentality is chosen for that”, and he didn’t want it to be the state government.

With qualifications, Mr Dusseldorp favoured a system such as in Canberra, where the land is publicly owned and is leased to commercial developers and private individuals. Planning powers and ownership should be in what he called “one particular focussed organisation”.

With Labor in office

The federal Labor Party policy, as put by Mr Whitlam in the 1972 election campaign, could alleviate some of the problem. This policy included a commonwealth-state Land Development Commission in each state, to buy substantial tracts of land in areas being opened for housing and to sell it at cost or lease it as fully serviced housing blocks. It included, too, tax deductions for interest payments on housing loans.

Workers look for Labor’s policy to be put into prompt effect, as a minimum, and that it be taken further.

With Labor in office in Canberra from December 1972 for the first time in 23 years, the new federal Housing Minister Mr Les Johnson vigorously set about measures to grapple with the housing crisis and to overhaul some of the accumulated lag.

He had to try to cope with the fact that some of the state governments, such as that in Victoria, continued to drag their feet, neglecting the needs of low and middle income families. One of the propositions put forward by Mr Johnson was that the commonwealth would reduce the interest rate on money that it provides to the states for low-income housing. This would make it possible for the states to reduce the cost of its home-building and so offer homes at lower rentals.

In return for this, and to ensure that the benefits go to those who are most in need of them, the commonwealth required stricter terms of eligibility for those occupying the homes. It also required that at least 70 per cent of the homes be maintained as rental housing, with no more than 30 per cent being sold to tenants: a requirement intended to protect the rights of those who can afford only to rent accommodation, and also to reduce the opportunities for buying Housing Commission homes and then cashing in by selling them again at a profit.

At a Canberra conference in June 1973, housing ministers from all states except Victoria agreed to this scheme. Even the Victorian minister muttered that his state government might sign.

So, while the housing Cinderella is still a very long way from getting a ball dress, she might at least, under the pressure of Labor’s federal housing minister, be about to get a facewash.

Meanwhile, in New Zealand in 1973 the new Labour government there hit at property speculation by bringing in a tax on the sale of properties which have been held for less than two years.

But the efforts of the Australian and New Zealand Labor governments to swing some of the emphasis in the building industry back on to housing must run head-on into a powerful force operating in the opposite direction. This is the profit motive.

It is in the pursuit of the highest attainable profit that the building and development companies have chosen the way in which they’ve been going. The fact that profit obsesses the companies, subordinating all other considerations, is the reason why the values and priorities in the industry have been so grossly mangled.

City skyscrapers offer the prospect of more profit than does home-building. That is why — under a system, capitalism, that elevates profit above everything and that produces governments of the type of the Askin government in NSW — Australians are being engulfed in high-rise cities while the shortage of housing and of other socially needed buildings continues to afflict us.

8. An industry deformed | Table of contents