“People’s panel” proposes higher tax on vacant properties

A randomly selected group of everyday Melburnians has come together to recommend ways the City of Melbourne can address the “severe shortage” of affordable housing.

A group of 40 locals representing an “almost exact” cross section of Melbourne have proposed increasing taxes on vacant properties as part of a range of measures to increase affordable housing in the city.

The “people’s panel”, which met for four separate sessions in late 2023, suggested greater penalties and disincentives for investors whose properties sat empty, arguing the current tax rate of one per cent (of total value of property) should be raised to up to 10 per cent.

The panel made 11 recommendations – endorsed by councillors on March 5 – on how the City of Melbourne could address the “severe shortage” of affordable housing.

Further suggestions focused on the council better lobbying upper levels of government for more sustained funding (given the council’s limited role within a housing context) and generally raising public awareness of the issue.

One of the 40 panel members, Chirag Negandhi, told CBD News that sitting on the panel saw him better realise “the magnitude of the problem”.

“It's a real crisis in this country, and this is a great opportunity for the City of Melbourne to do something about it,” he said of the lack of affordable housing, which is a specific type of housing for very low- to moderate-income earners, where rents are no more than 30 per cent of household income.

“Having sat on the panel, having given information on what the exact situation is on affordable housing, it was really eye-opening, that what you see on the streets, what you see in the news, it's only just one per cent of what actually occurs out there, as far as housing is concerned. And so, the problem is much bigger than we initially thought. And if action is not taken from a supply perspective and from a demand perspective, it might spiral out of control.”

The panel’s recommendation to penalise and disincentivise those “not participating in the affordable housing supply” proved most notable.

It suggested increasing the tax rate for vacant properties from current levels of one per cent (of the total value of the property) to five per cent when it has been vacant three months, and a maximum of 10 per cent at six months or more.

This recommendation forced one councillor, Roshena Campbell, to vote against the motion.

Cr Campbell, who last year lost as the Liberal Party candidate in a by-election for the Federal seat of Aston in Melbourne’s eastern suburbs, said it would not help the issue.

“Our management analysis acknowledges that a tax like this will not improve the supply of affordable housing. And that makes sense,” she said.

“The sorts of private dwellings that will become available would not meet the definition of affordable housing for the most part. There's also no guarantee the state government is going to use that money to invest in affordable housing.”

All 10 other councillors, however, voted for the 11 recommendations by the panel.

Jo Cannington, director of Homes Melbourne – a council entity tasked with reducing homelessness and increase safe and affordable housing in the city – said “deliberative democracy” approaches like the people’s panel could be very effective.

“These processes are best used when there's a really sticky, tricky problem that we're trying to solve and when we need a whole group of people to not just understand the question but have an opportunity to learn and then reflect on that information, to then come up with a series of recommendations,” she said.

“The city of Melbourne's in a housing crisis, and this is a real key priority for us to try and solve. And we are finding that when we go out to general engagement, we have a very split decision on feedback from the community. We have almost 50 per cent of people supporting affordable housing projects, and almost 50 per cent of people then opposing them to some degree.

“So, this provided us a real opportunity to get below those numbers to actually understand the tensions. It wasn't to create an agreement on the position, it was to deeply understand how we could solve the problem.”

The “random, stratified selection process” for the panel saw 8500 invitations sent by post, which generated 211 responses, before a final 40 was selected that reflected “an almost exact representation of the City of Melbourne population demographic profile”.

It featured a number of representatives from the under-35 age group, which Ms Cannington said was a “really important targeted cohort that we often find hard to access”.

The panel met on four separate occasions throughout October and November 2023.

Deputy Lord Mayor Nicholas Reece thanked the members who gave up their time to help produe  an “excellent and thoughtful report”, in particular ideas on public awareness to address NIMBYism (not in my backyard).

“I'm particularly pleased to see the support that the citizens panel has called for around a public awareness campaign to help convert people from NIMBYs to YIMBYs when it comes to affordable housing,” Cr Reece, the council’s planning chair, said.

“You know, you hear people often saying that they support the idea of affordable housing. It’s sort of like saying you support motherhood and apple pie. The real challenge comes when people are asked, well, would you support affordable housing in your neighbourhood, in your street, in your building next door to you? And what we see in the endorsement of the public's awareness campaign is a strong sense from this informed group of citizens that yes, we do welcome more affordable housing into our streets and into our neighbourhoods. And that is quite possibly the strongest takeout from this exercise.”

The council’s deputy planning chair Cr Rohan Leppert commended the report and said there needed to be greater alignment on an issue that was “governed in such a fragmented way across different levels of government”.

“We have sent many letters in all directions saying 'here's a good idea, why don't you do this’ over decades. And that doesn't cut it,” he said.

“And so, the purpose of the exercise here as a political and advocacy exercise has been so very, very valuable. And of course, the really hard bit now begins.”

Caption: Lord Mayor Sally Capp (front, second from right) among the 40 “people’s panel” members (picture: City of Melbourne).