Gough Whitlam's 1958 hot take on housing

How we discussed housing supply and affordability six decades ago compared to today

Cameron Murray

Nov 12, 2023

Below are quotes from a summary of comments made by Labor MP Gough Whitlam on the 2nd of May 1958. He was then in the opposition party during the Liberal Menzies government. You can read the source document here.

First, Whitlam explains that the role of the Commonwealth government is to decide on the financial settings for housing finance, while the States decide how to build and regulate homes. This has strong parallels to today, where the central bank and federal financial regulation determine the price and access to mortgages.

Mr. E. G. Whitlam, M.P., discussed the cost of housing with Canley Heights and Smithfield Branches of the Australian Labor Party, which meet on the first Sunday night in the month. He said the cost of housing is a problem which requires co-operation between Federal and State Parliaments. To put it briefly, the Commonwealth Parliament decides the availability and the cost of housing finance and the State parliaments can in many ways control the cost of land and housing.
Under the Constitution the Commonwealth has the power to legislate with respect to banking and insurance companies, which are virtually the sole sources of funds for the construction and purchase of private dwellings. The Commonwealth also has the responsibility of finding loan funds with are used for the construction of houses by public authorities, such as the War Service Homes Division and the Housing Commissions. In other words, the Commonwealth as the responsibility for deciding how much money will be spent on building homes and transferring houses, how long the money will be lent for and what interest rate will be charged upon it. The Commonwealth, however, cannot resume or subdivide land except for men who are or have been in the Services, for Commonwealth Servants and for migrants.

Whitlam then suggests that the States, via their choice to actively subdivide land for housing (or not) have “undoubted power” to “fix rents” and “fixe the price of land.” The way States are regulating residential tenancies, or choosing not to, was also a sensitive political topic then, just like today.

The state governments have undoubted power to fix rents and to fix the price of land. They decide how land shall be used and subdivided. They can themselves acquire, resume and sub-divide land or set up local government bodies to do so.
The principal change brought about by the recent amendment of the State Landlord and Tenant Act was to remove from rent control any premise which a tenant and his family choose to vacate or from which a court evicts a tenant whom the Court decides to be at fault and undeserving of sympathy. In either case there is bound to be a rise in the rent for which the premises are relet. It is quite wrong, however, to suggest that a tenant can now be evicted on any ground on which he could not have been evicted for very many years past.

Then, Whitlam explains how the Commonwealth government has been able to provide cheap homes to people, as long as they were military veterans. This happened via the sale of War Service Homes on land that was “one third of the cost” of “similar land in the same suburbs”. This is a straightforward demonstration of how to get people cheap homeownership.

The great problem in the cost of accommodation, however, is in the outer suburbs such as ours. People who are fortunate enough to secure a Housing Commission house and then buy that house from the Commission or to purchase a group home through the War Service Homes Division know that the cost of their land is only one-third of the cost for similar land in the same suburbs. A person purchasing a house from the War Service Homes Division of the Housing Commission saves £500 on the cost of the land alone. This very clearly indicates the advantage which can be gained from government acquiring and subdividing land instead of allowing private persons to exploit such subdivisions. This is, however, a field in which the State government and municipal councils can and should do a great deal although they have hitherto done nothing and in which the Commonwealth government can do little for some classes of persons and has done something for them but not enough.
Mt. Whitlam said that the only way to stabilise the cost of existing housing and still more the cost of future housing was to secure co-operation between State and Federal parliaments.

To me, the big difference between Whitlam’s 1958 hot take and the hot takes of today’s political analysis of housing is the willingness to talk about subsidised homeownership and active state involvement in the production of new homes. No talk of zoning, deregulating land markets, or any such thing. Just simple plain talk about providing residents another option to the market.

A decade later, Whitlam made a speech about “Migrants and some of their problems” (see this document). In it, he noted the troubles that cities had in keeping up with slum clearance and infrastructure investment during periods of rapid immigration, and how little responsibility the federal government takes.

No national government in any comparable country in either unitary or federal systems accepts so little responsibility for planning and financing urban development as the Australian national government.
No other government in the world claims, as the present national government does, that the problems of cities are the sole responsibility of State and local government.

This speech is relevant again today, where huge flows of immigration to the cities are stretching infrastructure beyond our ability to keep pace. The federal government then, like now, enjoys the pleasure of taxing the incomes of migrants without having to face the costs of the infrastructure that States and local governments must provide.

In Australia, not much has changed when it comes to the issues in housing and urban development. But the way we debate it politically has.

Lastly, I should mention that I came across these documents courtesy of Jago Dodson on X/Twitter, who I recommend following for more interesting history and analysis of housing and urban development.

Advertisement – Fat Tail Investment Research

Fresh Economic Thinking is reader-supported (thank you). I will also post advertisements from time to time.

Fat Tail Investment Research is an Aussie outfit that publishes research on a range of investment options. The people there have been readers of my work for many years.

Sign up for free using this link for their investment insights about stocks that historically pay a consistent income AND could deliver capital growth.

Thank you for reading Fresh Economic Thinking. Please subscribe and share this article.

Paid subscriptions are available, but for now, only get you good vibes. In 2024, better things are coming. My new book, The Great Housing Hijack, will be released and with your help, Fresh Economic Thinking will evolve into Australia's newest think tank.