Homelessness and its friends

Homelessness is an issue with a high policy profile.  The Rudd Government had ambitions for halving its level by 2020.  The ABS established a Homelessness Statistics Reference Group (HSRG) with 26 members drawn from academia and welfare agencies and there was support from various state and Commonwealth departments.

Getting a grip on the extent of the problem is difficult.  An ABS study suggests that over one million people have suffered homelessness at some time in the past 10 years.  This is about 7 per cent of the population.  The estimate may be based on a more expansive definition than that commonly used since the last Census placed the number of homeless households on census night at 74,000 (105,000 people or one in 200 Australians).  A little under half of these were younger than 25.

Significant numbers of the homeless on the night of the 2006 census actually had jobs earning over $800 per week (8 per cent in boarding houses, 42 per cent living with others and 27 per cent sleeping in tents or improvised dwellings).  Presumably most of these would have proved to be temporarily homeless.

The major issue is with the long term (one year plus) homeless, who comprise about half of the total.  Of this group about 30 per cent have forms of mental illness (compared to 8 per cent of the population as a whole).  Many of these would find difficulties in achieving the goal of “social inclusion”.  Around 43 per cent of the long term homeless in one survey were heavily into substance abuse, with methamphetamines (ice) increasingly favoured.

Only about 30 per cent of the long term were estimated to be currently looking for work but overwhelmingly, the 70 per cent of people who are not suffering from mental illness aspire to live what they characterise as a normal life.  This fundamentally means their own place to live in and a job.

The welfare agencies campaign for more government money to be spent on homes and transition plans. Given the range of priorities and the chronic budget system, these measures are unlikely to find favour.

But employment and housing are two areas where government policies are inimical to the interests of the unemployed, and in the case of those whose work place skills have not developed or have atrophied, this is especially critical.  The minimum wage, especially at Australia’s world record $18 per hour, hits the people on the lowest rung of the productivity ladder particularly hard.  Almost every worker rises above the minimum wage once they have acquired skills in the job they are doing and demonstrated sufficient work disciplines.  But they have to get the job in the first instance and the high threshold shuts them out.

Similarly with accommodation.  The housing land rationing that takes place increases the basic cost of new housing by up to $200,000 per house.  This impacts existing housing and rents, adding to the difficulties people at the margin have in ensuring adequate shelter from which they can enter the mainstream.

Efforts to deregulate wages and land are better routes to resolving homelessness than more subsidies and an increase in the number of facilitators.

 

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24 Responses to Homelessness and its friends

  1. Elizabeth (Lizzie) B.

    Homelessness is relative. It is often a state of mind rather than the physical lack of shelter and a bed. I have lived alone in boarding houses in my youth but never thought of myself as homeless even though at times I struggled to pay the rent. But I always had work, never welfare.

    Now, much homelessness is due to mental problems and drug use, often both together. Housing provision is urgently needed here and should be the only public housing (and not in great estates) that governments need provide. Cheaper subsidised hostels (replacing the old boarding houses) would be a better solution for people seeking employment or on low incomes, where, as with boarding houses, there is an incentive to make the stay short-term by saving to get out into the private market (which could be improved by less restrictive land and investment policies).

  2. James B

    The big issue is restrictions on subdivision of land and various other restrictions on building housing on land. Why the fuck is EVERY state government still doing fuck all about our housing shortages? I understand Labor/Greens will not do anything because they’re anti-family, and expensive, dense housing means less kids born to white parents, and less traditional (mum at home, dad at work) families.

    But how about the Liberals in WA? How about the NSW Liberals? Vic Liberals? Why is Matthew Guy still pushing ahead with bullshit densification?

    I need someone to explain this to me.

  3. Johno

    One of the many disappointments of Victoria’s Green Labor lite Liberal government is that it has been sucked in by the socialist who run urban planning in Victoria. While they claimed ‘contractual arrangements’ as their excuse for maintaining many of Brumby’s failures (de-sal plant, myki), they have no such excuse for maintaining the artificial boundary around Melbourne that stops new development. Melbourne’s high house prices are caused by government. Any wailing and gnashing of teeth by Victorian Liberals about housing affordability should be laughed at. They know what to do, they are to gutless to do it.

  4. H B Bear

    Any wailing and gnashing of teeth by Victorian Liberals about housing affordability should be laughed at. They know what to do, they are to gutless to do it.

    I wouldn’t bet on it. Victoriastan gets the government it deserves.

  5. Baldrick

    Some people will accept help and recover from a blip in their life and therefore a limited safety-net is worthwhile to help those, who want help, back of their feet.

    For those who don’t want to accept any help, nothing will change, no matter how much money you throw at them.

  6. The truly homeless are a small number of people a lot like the very-long-term unemployed.
    They often have intractable personal problems such as physical and mental health, disability, low IQ, or in some cases language or cultural barriers.

    The homelessness problem exploded in tandem with the policy to de-institutionalise mental health. That was a good idea, but for the seriously mentally ill, I don’t think we’ve figured out what to do instead.

  7. The minimum wage, especially at Australia’s world record $18 per hour, hits the people on the lowest rung of the productivity ladder particularly hard. Almost every worker rises above the minimum wage once they have acquired skills in the job they are doing and demonstrated sufficient work disciplines. But they have to get the job in the first instance and the high threshold shuts them out.

    This is such an excellent, cogent summary of the argument against minimum wage I will be shamelesly copying and pasting it at will. I might also etch it into a wall or two.

  8. Gavin R Putland

    The minimum wage would not price jobseekers out of a job if employers only had to pay that component of the minimum wage which the workers can actually take home and spend: http://www.macrobusiness.com.au/2013/09/fiscal-devaluation-on-steroids/

    The Right complains too much about workers’ wages and conditions, and not enough about the taxes and tax-like imposts that cause the cost of labour for employers to exceed its benefit for employees. Which is ironic in view of the Right’s professed interest in lower taxation.

  9. Empire

    Unemployment is the single greatest threat to a peaceful liberal nation. Those who support wage controls are traitors.

  10. Gavin R Putland

    If those who want to regulate wages are traitors, what shall we make of those who want to tax wages?

  11. Driftforge

    They’re simpletons.

  12. .

    http://mises.org/daily/5871/

    The Housing Record of San Francisco

    In a particularly penetrating article Milton Friedman and George Stigler examined the housing record of San Francisco.[1] After the earthquake of April 18, 1906, the heart of the city was utterly destroyed by fire. Some 225,000 people were homeless. “Yet,” say the authors, “when one turns to the San Francisco Chronicle of May 24,1906 — the first available issue after the earthquake — there is not a single mention of a housing shortage! The classified advertisments listed 64 offers (some for more than one dwelling) of flats and houses for rent, and 19 of houses for sale, against five advertisements of flats or houses wanted. Then and thereafter a considerable number of all types of accommodation except hotel rooms were offered for rents.”

    In 1906, San Francisco allowed the free market mechanism to allocate accommodation, allowing rents to find their own level after the disaster. Even so, there was a great deal of low-cost accommodation available in San Francisco at that time. (Friedman and Stigler quote the 1906 advertisement “Six-room house and bath, with 2 additional rooms in basement having fire-places, nicely furnished; fine piano; … $45.”)

  13. Perfidious Albino

    There is some logic to making better use of suburban infill sites to provide housing in preference to endless subdivision on the periphery, no?

  14. Empire

    There is some logic to making better use of suburban infill sites to provide housing in preference to endless subdivision on the periphery, no?

    The key is preference. Individual preference.

  15. Rodney

    You ignore the fact that programs to help the diverse disadvantaged provide jobs for otherwise unemployable and potentialy homeless Liberal Arts Graduates.

  16. Aussiepundit

    There is some logic to making better use of suburban infill sites to provide housing in preference to endless subdivision on the periphery, no?

    No.
    There is no logic to that.
    There are some advantages to infill, but there are also advantages to greenfield. Let people live where they want to live. Stop micromanaging us!

  17. James B

    There is some logic to making better use of suburban infill sites to provide housing in preference to endless subdivision on the periphery, no?

    No. Not at all. We need LESS density, not more. Why are you so insistent on turning back the clock? Fucking moron.

  18. Infidel Tiger

    There is some logic to making better use of suburban infill sites to provide housing in preference to endless subdivision on the periphery, no?

    Only if that is the preference of the market.

    The demand driver for housing is young low to middle income families. I don’t know many families who want to live in apartments. And those that do are usually only doing it because they can’t afford or find a house in the suburbs with land.

    If tens of thousands of 1/4 acre blocks were released tomorrow on the fringes of every city in Australia, there’d be traffic jams of buyers heading to them. It’ll never happen though. State Governments are completely dependent on stamp duty and artificially inflating maintaining the price of existing homes.

  19. Grandma

    While I’m all in favour of increasing the housing supply and reducing its cost, I’m not clear how releasing more land helps runaway teenagers, alcoholics, drug addicts and the mentally ill straighten out their lives, which is really what’s keeping them from employment, housing and all other forms of non-criminal social inclusion. Otherwise there will always be a hard core of the intractably “homeless”. First things first.

  20. Perfidious Albino

    JamesB, happy to hear your counter-view, even happier if you can manage to present it without resorting to abusive language.

    To be clear, I am not advocating higher density living as the only or best option, nor that people shouldn’t have a choice in where or how they live. Only that ever expanding green fields development on the periphery has its own costs in terms of supporting community infrastructure – which people ultimately expect government (taxpayers) to provide (compulsory developer contributions currently don’t reflect the actual cost and are passed on to home buyers anyway).

    At the same time, there are a multitude of infill sites in and around most of our major cities, where land can be recycled to provide a range of housing densities to suit the preferences and budgets of those who choose that lifestyle and location. Apartments, town houses, villa units etc may not be the preference of all young families, but I would argue there are plenty of young people (pre-family) and downsizing older folk who prefer to live closer in and are taking up those opportunities.

    I am no statist, but i do believe there is a role for government in urban planning that doesn’t involve micro-management (we can leave that to local government…)

  21. James B

    A 200m^2 house on a 1/3 acre block need not cost more than $150,000. A modern, fully code-compliant one, that is. That’s what the cost would be in Australia without government meddling in land use.

    There is no need for any semi-detached dwellings or apartments, whatsoever.

  22. See Public policy, perverse incentives, and the homeless problem by William Harris Troutman, John D. Jackson, and Robert B. Ekelund Jr. “Public policy, perverse incentives, and the homeless problem”, Public Choice January 1999

    Abstract
    Is homelessness a housing problem per se?

    In this paper we employ a HUD study from 1984 and Census data from 1990 within the context of simultaneous empirical models to examine this and other issues relating to homelessness in the United States.

    Our central conclusion is that homelessness does not appear to be a national housing problem as such and that, given untoward incentives among actual and potential homeless populations, policies addressing homelessness should be directed at other instruments of change (such as mental health funding and expenditures to treat substance abuse).

  23. Perfidious Albino

    James, you must know some very cheap builders… And what about the people who don’t want to have to mow 1,000 m2, or own goats?
    Not everyone wants to live 30+ km from the city, their jobs, family members etc and even if your costing was realistic, it doesn’t include the public infrastructure cost to provide community amenity or utilities. My tax dollars go to funding that, so I expect government to spend it as effectively and efficiently as possible (I know, wishful thinking). That means making better use of land in existing urban areas as well as managed growth on the periphery so that essential services and utilities can keep pace with demand.
    That’s before you even get to arguments about the loss of fertile agricultural land to what used to be described as urban sprawl.

  24. James B

    Perfidious, new houses in Houston are about $150,000. 200 square metres.

    Why do you assume everyone must work in the CBD? Why can’t a city be decentralised?

    Statist, communist urban planning is the reason that there isn’t more employment in the suburbs.

    Now, if builders want to spend a lot more money to build far smaller houses without backyards (that is, apartments, which are only economical now because of our extortionate land costs for fully subdivided, urban zoned and planning approved land), they can.

    I don’t think they will though. Early Queensland houses are essentially just small, cheap houses on relatively big blocks. The state government mandated a minimum block size, no biggie, plenty of land. But people in the 1920s still couldn’t afford large houses, so they made smaller ones. But they had backyards, and people had space.

    There is no need for anyone in Australia to have less than 1/3 of an acre if they do not actively wish for it.

    In terms of infrastructure, it costs fuck all. Fitting a standard lot with ALL the infrastructure it needs costs about $10,000. Let the developer pay ALL of it and pass it on to the buyers.

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