“This government won’t waste a day working to meet these challenges,” Housing Minister Julie Collins said on Thursday. That is open to debate when “help to buy” remains a work in progress. To be fair,one action so far is to use the National Housing Infrastructure Facility to put $575 million into social and affordable housing.

The big commitment from Labor is the Housing Australia Future Fund,which is meant to get 30,000 social and affordable homes built over the next five years. It is also meant to provide $200 million to repair housing in remote Indigenous communities,$100 million for crisis accommodation for women and children escaping domestic violence and $30 million for housing for veterans.

The fund looks big because it comprises $10 billion in Commonwealth debt. The annual investments,however,are more modest. The $10 billion will be invested in stocks and bonds to generate a dividend that will be used to pay housing providers a subsidy for social and affordable housing. So everything depends on the debt generating a good return over the long term.

There is a hard limit on how much this can do. The subsidies (called “availability payments” in the jargon) will be paid over 15 years or more and will continue long after the homes are built. The 30,000 homes are meant to be supplied over the first five years. No homes are added after that.

Brendan Coates,the economic policy program director at the Grattan Institute,put forward the idea for a $20 billion fund of this kind two years ago. Labor picked up the idea under its then spokesman on housing,Jason Clare,but it halved the size when it announced the policy in 2021. The stated goal is to build new homes,not renovate old ones. The promise is to build 20,000 social housing properties (which probably require a subsidy of about $15,000 a year) and 10,000 affordable housing properties (which require about $4000 a year).

Will all the homes be built? Coates sees a problem because the world has changed since 2021. Inflation is pushing up the cost of construction. The markets are suffering from lower financial returns. Interest rates are rising on Commonwealth bonds. Land,however,may get cheaper.

‘This isn’t a $10 billion investment in housing,it’s a $10 billion gamble on the stock market.’

Greens spokesman Max Chandler-Mather

“It probably becomes harder with interest rates rising to fully fund the 30,000 homes without a hit to the underlying cash balance,” he says. So the scheme may need to be topped up in a way that deepens the deficit.

Nobody can predict,reliably,how this will turn out. The Future Fund has delivered a return of 9.1 per cent per annum over a decade,but its return last calendar year was minus 3.7 per cent. Like everyone with a superannuation fund,the government is praying for a good return. The entire policy could be done a more transparent and direct way,such as by spending $450 million a year on housing subsidies,but that would deepen the deficit.

Coates makes another important point:this is not an ongoing fix to housing supply. “They’ll need to add another $10 billion to the size of the fund every five years,” he says.

Hal Pawson,professor of housing research at the University of NSW,believes the fund is worth doing but it is relatively modest. “We estimate current unmet need for social housing equates to 437,000 households,” he wrote inThe Conversation this week. Others put even bigger estimates on the problem.

The Senate crossbench will try to shame Labor into doing more and doing it faster. David Pocock,the independent senator for the ACT,wants the fund doubled to $20 billion or modified so it can be topped up more easily. “The 30,000 won’t even come close to meeting demand,” he says.

The Greens do not like the proposed cap of $500 million in spending from the annual dividends because it could limit the number of homes built,and they have fundamental reservations about the whole idea of using a fund rather than direct government spending.

“This isn’t a $10 billion investment in housing,it’s a $10 billion gamble on the stock market,” says Greens spokesman Max Chandler-Mather. “You wouldn’t subject health and education funding to the success or failure of the stock market,so why do that to housing?”

This is just one of Labor’s challenges in a year that is all about the cost of living. Housing was a repeated pledge from Albanese during the election campaign but is turning into a long and difficult problem,just as Ardern discovered.

Right now,the challenge for Labor is that its action on housing looks too slow and too modest. At least that’s not a triple whammy.

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