If it’s voluntary for developers to make affordable housing deals with councils, what can you expect?
Housing in Australia is broken. Across the country, only 2% of private rentals are affordable for a person on the minimum wage. There are 650,000 households who can’t afford housing at market rates in Australia right now and this figure is projected to reach over a million by 2036.
The abject failure to meet the housing needs of lower-income households is partially due to decades of underfunded social housing by government. As governments have stepped away from directly delivering affordable housing, more emphasis has been placed on the private sector and market forces to deliver this social good. However, the state of Victoria has very few regulations that encourage or enforce affordable housing or other community benefits in return for development permissions.
In 2018, the Victorian government took some initial steps towards involving private developers in providing affordable housing through voluntary negotiations. Negotiations theory tells us they probably won’t work.