The New South Wales (NSW) government’s recent decision not to use three of the former WestConnex tunneling sites in inner-city Sydney for social housing. This decision has sparked debate regarding the fate of these irreplaceable assets. The sites in question are strategically located along the bustling Parramatta Road in Haberfield and Ashfield, near an M4 ventilation stack. The government’s selected decommissioned tunnelling hub at Wattle St, Haberfield is already targeted for residential development. This is all happening despite an escalating social housing crisis. In addition, the state has committed to a challenging 7,800 new homes within the inner west as part of the state plan over the next five years. The Inner West Council intends for 1,000 of these houses to be used as public housing.
The NSW government is getting on with the business of fulfilling its election pledge to construct 30,000 additional homes. Of these, 8,400 will be dedicated to social housing. At present, over 64,000 people are on the waiting list for social housing in NSW alone. This lack of affordable homes for rent reflects the growing pressure for all affordable housing. The government has announced a really promising new pipeline of 500 homes. This joint venture project features 200 build-to-rent units, exclusively for essential workers. Their Citywide Transit Plan, adopted in 2017, requires that new development surrounding train stations include at least 2 percent affordable housing.
The Challenge of Affordable Housing
The City of Sydney has used levies on a much smaller scale for many years to fund affordable housing projects. The NSW government has been reluctant to go all-in on state-wide levies. The imposition of a development levy of up to 10 percent on new housing developments has strong support from Professor Hal Pawson. We hope this special approach can truly fund and broaden affordable housing in Sydney’s inner city, he said. This proposal takes its cue from Greater London, where such upzonings require that 50 percent of housing be affordable.
This decision not to use the WestConnex sites for social housing was met with outrage and confusion from stakeholders. Sydney’s housing affordability crisis requires both immediate and long-term action. A new University of Sydney study has a stark warning — every property in Greater Sydney will remain unaffordable for people on a median income until at least 2031. This complex projection brings to light a necessary and pressing challenge. Climbing demand for affordable housing We cannot achieve increased production of affordable housing without bold strategies and innovative solutions.
Government's Revised Housing Plan
So, the NSW government is moving – at least in part – to address the affordability crisis. To their credit, they recently released a much better housing plan that addresses many of the big flaws. Of that plan, the blueprint calls for 500 new homes — with the intention of housing essential workers within reach via 200 build-to-rent homes. Moreover, it proposes a new mandate that all developments within a half mile of train stations include 2 percent affordable housing.
This effort is one piece of a larger industry-wide effort. It is intended to align housing supply and demand while addressing affordability issues in high-opportunity areas. That’s why the federal government should prioritize funding for essential workers in order to build inclusive, opportunity-rich communities. They’re threading affordable units into existing transit corridors to keep people connected to jobs and services across the region.
While this is an important effort, critics contend that without deeper, long-term measures taken these units will cease to be affordable. The possible imposition of new development levies can create contentious debates. Supporters point out that these levies are a wonderful way to fund the production and preservation of affordable housing.
The Role of Levies in Addressing Affordability
Levies have proven to be successful in funding affordable housing in both urban and rural areas. In many ways they are a panacea, and the answer to Sydney’s affordability woes. The City of Sydney’s experience with smaller-scale, more localized levies shows their strength as a funding mechanism. In response, the NSW government has been gun-shy in applying levies on a wider basis. Such hesitation begs the question of whether it’s truly committed to addressing the affordability crisis.
Professor Hal Pawson's advocacy for a levy of up to 10 percent on new housing developments highlights its potential impact. Such a levy could generate significant revenue that can be reinvested into creating affordable housing options across Sydney's inner city. Comparing with Greater London’s approach just underscores the benefits of moving to stronger, similar measures.
The government’s updated National Plan is still a work in progress. Stakeholders continue to call for wider, deeper strategies that address short-term relief and crisis response while advancing long-term sustainability. As Sydney faces soaring land costs and a rising need for affordable housing, funding mechanisms that work are more important than ever.
