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20 June 2023, 20:03
Victorian Legislative Council, Melbourne

I rise on behalf of Legalise Cannabis Victoria (LCV) to speak to the Victorian Future Fund Bill 2023. The bill’s purposes have been thoroughly canvassed in this house already, so I will not restate those now. But we do acknowledge and appreciate the need for the fiscal impact of the COVID-19 pandemic to be carefully managed to ensure our current debt does not excessively burden future generations. It has been said by the government that the establishment of this fund in legislation is an important step to providing certainty regarding its governance and purpose. Yet nothing in this proposed legislation gives a general indication of where the fund will make its investments, nor is there a clear goal for investment returns.

The minister’s second-reading speech acknowledges that this fund is aligned with the practice of equivalent funds in New South Wales and Queensland. In New South Wales their Generations Fund, set up in 2018 with $10 billion of capital to be used to help to repay state debt, was found to be investing in so-called emerging markets, resulting in hundreds of millions of taxpayers dollars being invested in tax havens and authoritarian countries. We would hope that the Victorian equivalent does not suffer this same fate and end up actively financing activities that worsen the challenges we face as a society. With this in mind, we strongly urge the government to ensure that this fund is operated with the transparency and consistency that $10 billion of public funds deserves. In particular we press the importance that this fund be an ethical investor.

There is another principal point that I wish to press. It relates to the sale of government land, which will account for a significant portion of the capital directed into the fund. To this end, LCV is very interested in seeing the state develop a formal process around the sale of Crown land to ensure that its use for public, social or affordable housing can be maximised, and we have put a potential solution to the government. It is well known to all of us that Victoria is facing a crisis in the lack of social and affordable housing. Melbourne’s population will increase by 1 million people every decade between 2020 and 2050. Plan Melbourne projects that we need to build 460,000 new homes every decade by 2050 to cater for Melbourne’s expected population growth. To put that in some perspective, that is the equivalent of all the homes in the City of Greater Geelong multiplied by four being built every 10 years. This will intensify the housing affordability crisis we are already experiencing, particularly amongst low- and moderate-income households.

The housing market is unable to deliver the number of affordable homes we will require in the next 10 years. Most of the homes currently being built are not affordable to the 64 per cent of households who are the targets of Victoria’s own affordable housing policies. In the period 2016 to 2036 Victoria will require an additional 166,000 social housing dwellings to accommodate those low-income households in the bottom income quartile alone who will otherwise be experiencing housing stress. This implies that we need to build at least 8000 new social housing dwellings a year. Victoria is currently developing but a tiny fraction of this target.

The ready availability of land is crucial to rapidly expanding the supply of social housing. Institutional investors have repeatedly emphasised the importance of having a ready pipeline of assembled projects. Land is the Achilles heel in achieving this outcome. For both housing associations and Homes Victoria the biggest problem is being able to access land in suitable locations at an affordable price. The availability of land to Homes Victoria and community housing providers also provides leverage with developers in concluding agreements to build social and affordable housing projects. With the government in the process of expediting extensive sales of state-owned land, we must be careful not to miss this essentially one-off opportunity to maximise the use of that land. We cannot sell it twice. If this land is assessed by the valuer-general at best and highest use, it generally means that it cannot be afforded by either housing associations or Homes Victoria and will end up with a private developer, with revenue from these land sales going to the Victorian Future Fund. But if we ensure that prior to being released to the market, it is assessed for its suitability for public, social or affordable housing, then there may be an opportunity for both financial and social gain. We would suggest that this assessment be overseen by Homes Victoria, with final approval by the Homes Victoria advisory board. Where a site is identified as being suitable for public, social or affordable housing, in the first instance expressions of interest would be sought from relevant not-for-profit entities such as housing associations, either directly or in partnership with a developer or Homes Victoria itself, to develop the land in question.

For the purposes of valuing the land to be offered, the valuer-general could base their valuation on best and highest use for not-for-profit purposes – essentially a modest discount for a very clear purpose and a significant social dividend. Homes Victoria could assess applications to develop the land for social and affordable housing according to its design criteria and on a value-for-money basis. Where a suitably funded proposal is approved for the development of the site in question, the land could be sold to the relevant party, who would be responsible for the development, including payments to the government of the assessed value of the land. Funding sources could include the housing affordability future fund or the newly announced social housing accelerator. The proceeds from the sale could then be disbursed to the Victorian Future Fund. The outcomes therefore would be the proceeds of the sale to the future fund plus a timely remedy to the social and affordable housing crisis wrapped in one.

We do thank the Treasurer for making the time to hear us on this issue and his undertaking in good faith to pursue this issue further. Victoria will not have this opportunity twice. The $10 billion intended for this fund could be spent or invested in many ways to the benefit of Victorians. We urge the government to do this right. Accordingly, we will be supporting the proposal for the fund.


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