If we are to get blood to the muscle of the economy, workers need access to housing they can afford in proximity to where the jobs are located.

If we are to get oxygen to the brain of our society, students need access to housing they can afford in proximity to places to learn.

And if we are to keep the heart of our community pumping, people need to be able to put down and maintain roots in places where the cost of housing doesn’t force them to sever ties and move every six months. 

There have been so many inquiries and reports that conclude we are not providing enough affordable housing, that it is time to print those reports and start building houses out of them.

But with housing on the national agenda, the passage of the Housing Australia Future Fund, and proposals for new planning tools to create affordable housing in NSW, perhaps we can be optimistic.  

Just when we thought the housing crisis couldn’t get any worse, there is more evidence that Sydney is the biggest killer of not only the great Aussie dream of home ownership, but also a much more fundamental one – the universal right to adequate housing. 

More and more people are renting for life – if they can find a home. Sydney’s growth by sprawl, long the enemy of community building and the environment, is also costing potential homeowners the earth at a time when people are stretched to the limit. 

Planning Secretary Kiersten Fishburn wants to “scrape the barnacles off” the system to make approvals faster, delivering more supply. And the Premier wants an express lane and 30 per cent uplift incentive to developers who factor in 15 per cent of affordable housing for new projects. 

So, we have a diagnosis of the problem, but is the prescription right? 

What we need is a form of housing superannuation for cities – getting the policy settings in place now will make sure Sydney, and all our major cities for that matter, have the housing they need for who need it well into the future. 

To deliver the scale of affordable housing needed to make our economy and community work it must be encoded into the DNA of our cities.    

The superannuation guarantee has delivered unquestioned economic and social benefits to Australians, but its maturity has been gradual, giving the market time to adjust.

It is now part of the DNA of our financial and retirement systems. It’s come a long way since its introduction, at a 3 per cent contribution rate, in 1992. That contribution rate continues to grow – to 12 per cent in 2025.  

Apply the same superannuation model to cities

So, how do we deliver a superannuation for cities? The answer lies in encoding it in the cities’ DNA through planning and then allowing partnerships that bring together capital and capability to deliver affordable housing. 

Who has the capability to form these partnerships? We have the community housing sector. 

Social and affordable housing and the long-term market enable greater housing diversity.

These are segments where traditional housing markets fail to deliver for lower-income households. Community housing providers partner with developers, builders and institutional investors to create an affordable housing asset class to increase the supply of homes suitable for lower-income households. 

Community housing providers are also regulated, providing assurance to the public and partners that outcomes and quality are maintained over time.  

The Minns policy proposal for density bonuses in return for affordable housing is to be supported.

A hypothetical case study on how the Minns proposal might fare

In an exercise to put it through its paces, we invited two significant and sophisticated developers we have worked with successfully to look at what the policy would mean in practice.  

Both want to contribute to the supply of good-quality affordable housing. Both believe in the success of diverse and inclusive places, and they’ve got runs on the board.

Like many in the development sector, they are proud of their contribution to the urban fabric of Sydney and will build on partnerships where the policy environment enables them to be fairly compensated for the risks they take.  

We engaged urban growth and change consultancy Astrolabe Group to lead the policy modelling. 

Director Michael Comninos said the scheme’s intent is to provide a planning bonus to developers to subsidise the provision of affordable housing. Our modelling shows that this approach won’t work everywhere for everyone.  

”More work is required to explore how to reduce input costs and increase funding support for CHPs,” Comninos said. “The passage of the Housing Australia Future Fund is critical to improving the performance of the scheme, but it can’t be the sole solution. 

“Without interventions to support a community housing provider’s ability to pay for homes, the scheme won’t be used at scale.

“Either policy settings need to be amended, or the level of affordable housing would have to drop to promote adoption of the scheme by market build-to-sell developers.

“It’s also likely that affordable housing in these schemes will be valued based on a return to market use after the minimum 15 years. In the short term, a lower affordable threshold will lead to more projects being delivered, providing more affordable housing in more places.” 

The developers who contributed to our modelling would readily partner with a community housing provider to deliver the scheme – they’ve worked with us before. But each also expressed the view that it would not make economic sense for them to take up the Minns express approval in its current form on most projects.  

So, here’s what to do – use mandatory inclusionary zoning

For this reason, we propose a longer-term shift with the introduction of mandatory inclusionary zoning on big developments – a superannuation for cities, if you will.  

Developments would be required to include a proportion of affordable housing. Astrolabe’s modelling suggests this could start around 5 per cent and increase gradually over time, allowing the market to adjust. 

It would come into effect three years from now to encode affordable housing into the DNA of our growing city. 

We must address the housing crisis now, but great legacies are created with forward planning and are introduced gradually.  

The Committee for Sydney, in its recently released report Chronically Unaffordable Housing 2023, joins a growing chorus of calls for inclusionary zoning. It is time.  

Just as the superannuation guarantee was introduced gradually, the market’s ability to absorb and deliver mandatory inclusionary zoning will need to factor in construction costs, land prices, government fees and charges, federal government policies, growth in real wages and interest rates.

Landowners and developers should not be lumped with unexpected costs of inclusionary zoning in a way that makes projects unfeasible.  

But if we set the target early and have incremental change, the market is more likely to be able to absorb the policy obligations and deliver great projects. 

The Minns government’s 30/15 policy is a good down payment on affordable housing if the settings are right, but a superannuation for cities scheme – with affordable housing in the DNA – needs inclusionary zoning. 

This will also satisfy the Premier’s aspiration to accelerate and approve developments at scale, addressing the supply side of the equation. It also gives the market and developers more than enough time to adjust and train their energies on the most important social and economic issues facing the nation.