City of Melbourne urges state government to reconsider its ‘prescient’ 2019 housing pitch

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The City of Melbourne has renewed its call for the Andrews government to tackle the state’s housing crisis by mandating all large apartment projects to include a proportion of affordable homes.

It comes nearly four years after the council first urged the government to introduce mandatory “inclusionary zoning”, a system that requires a proportion of social or affordable housing be delivered as a condition of approval for larger housing projects. It is already used in the US, Europe, South Australia, the ACT and parts of NSW.

Melbourne Deputy Lord Mayor Nicholas Reece says mandatory inclusionary zoning will help address the city’s housing crisis.Credit: Luis Ascui

The push was part of the council’s 2030 Affordable Housing Strategy, which found that Melbourne was in the midst of an affordability crisis as a result of a rapidly growing population, rents increasing faster than wages, and insufficient investment in social and affordable housing for decades.

It was backed by research from consultants SGS Economics and Planning, which found that for every $1 invested in affordable housing, the community benefited by $3 through retention of workers in their jobs, educational benefits, health cost savings, reduced family violence and reduced crime.

The government is currently finalising a much-spruiked housing and planning package and has said it is focused on boosting housing supply by streamlining the planning system and sidelining councils.

But councils and social housing advocates, who are calling for mandatory inclusionary zoning, say merely fast-tracking planning will have little impact on affordability and social housing stock.

City of Melbourne Deputy Lord Mayor Nicholas Reece, who is also a former Victorian Labor secretary, said it was unfortunate the government had not accepted the council’s 2019 call for inclusionary zoning and that the housing crisis had only worsened since then.

“It was good policy in 2019, and it’s even better policy in 2023,” Reece said. “With the benefit of hindsight, you may even say our call in 2019 was prescient.”

The council uses a version of inclusionary zoning when approving development on its own surplus sites, resulting in the delivery of hundreds of affordable housing units across the municipality.

But the wider introduction of mandatory inclusionary zoning needs to be instated by the state government.

The council’s 2019 submission stops short of specifying a level of affordable housing that should be included in new developments statewide. But it suggested a 10 per cent requirement was “economically warranted” within the City of Melbourne area.

“Other cities in Australia and overseas have proven that inclusionary zoning is a powerful policy tool to drive affordable housing development at scale,” Reece said. “It should be something the Victorian government considers as part of the upcoming housing statement.”

The Age revealed on Monday that six years after announcing an inclusionary housing pilot on six surplus government sites – five in Melbourne and one in Wodonga – not a single home had been built.

Social housing advocates are concerned that, despite years of talking about inclusionary zoning, the government will baulk at its implementation in the upcoming housing package.

On Monday, Deputy Premier and Infrastructure Minister Jacinta Allan struggled to respond to questions about the inclusionary zoning pilot. She said the pilot showed “there needed work to be done to understand what were some of the barriers to being able to invest in social and affordable housing here in Victoria”.

She said that beyond the pilot, the government had achieved much in social housing.

“While that pilot has been under way, we’ve also – in just the last three years alone through the big housing build – completed or have under way … 7600 new social, affordable homes,” Allan said.

Asked how the government could be trusted to tackle the housing crisis in its housing package, given the years-long delay in the inclusionary housing pilot, Allan said: “We are making a big investment as a government in social and affordable housing, but we know we need to do more. That is why there is the work that’s going on in the housing statement.”

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