The Menzies Government and housing policy
contemporary policymakers can draw inspiration from the menzies government’s housing policies, which had a palpable effect on Australian home ownership, argues David Furse-Roberts as he addresses the 2024 annual conference of the robert menzies institute.
At one of Menzies’ public rallies, a heckler yelled out to him, shouting ‘What ya gonna do about ‘ousing Bob’. Menzies shot back remarking, put an ‘h’ in front of it!
In his landmark Forgotten People speech of May 1942, Robert Menzies spoke of the importance of ‘homes material, homes human, and homes spiritual’. He went on to affirm that ‘the home is the foundation of sanity and sobriety; it is the indispensable condition of continuity; its health determines the health of society as a whole’.
From the outset, it is important to appreciate that Menzies’ vision for greater home ownership had a historical context. The Australian historian, John Murphy recognised that the lived experience of Australians through the travails of depression and then War had given them a real yearning for stability and continuity. Accordingly, home ownership was regarded by many as a solid foundation on which to lay down roots and raise a family.
The onset of the Cold War was another factor which drove the appetite for homeownership. With the opposition of communism to private property and even the jibes of Labor’s Minister for Postwar reconstruction, John Dedman, deriding aspiring homeowners as ‘little capitalists’, property ownership was regarded as the great bulwark against any advances of socialism.
Reading the public mood accurately before his return to the Prime Ministership in December 1949, Menzies made home ownership a core part of his post-war vision for the country.
To give policy substance to his vision for the home, his government introduced some key initiatives during his lengthy second term in office to bring homeownership within the reach of more Australians. Responding to the housing shortages evident during the Depression and Second World War, the Menzies Government boosted housing supply and devised policies to increase the outright ownership of homes for Australian families.
The results of the Menzies Government’s housing strategy were already evident after two terms. In his 1954 election speech, Menzies observed that in the last three years of the Chifley Labor Government, 140 000 houses were built in Australia, whereas in the past three years of his government, 227 000 new dwellings were constructed.
Menzies appreciated that the key to boosting housing supply was the reduction of building costs. He remarked that ‘by sound industrial policies, adequate supply of materials, and the steady continuity of work, the costs of building have been reduced’. In his 1949 bid to return to office, he had vowed to ‘review the incidences of such imposts as sales tax on home fittings and furniture. The lower costs of building would of course translate into more affordable houses for Australian families.
To encourage home ownership, Menzies proposed the following practical measures in the lead up to the 1954 election.
First, the Government would partner with the Commonwealth Bank and other financial institutions for continued support to Building Societies, Cooperative Societies and other creditors lending money to home buyers.
Second, the Government would increase the advance available for the purchase of existing homes from 2,000 pounds to 2,750 pounds under the War Service Homes Act.
Third, it would authorise the States to sell Housing Agreement houses to ex-servicemen tenants of twelve-months standing with a maximum advance to the purchaser of 2,750 pounds.
Finally, for tenants who were non ex-service personnel, the States would be authorised to sell Housing Agreement houses with a minimum deposit of 10%.
To give effect to these measures, the Menzies Government passed legislation in April 1955 enabling the States to sell their public housing stock to prospective private purchasers on credit terms, rather than keeping this in government hands.
Within four years, more than 75% of the houses being built each year under the Commonwealth-State Housing Agreement were sold to family purchasers. In 1956, the CSHA was renegotiated so that 20%, and later 30%, was passed on to financial institutions for lending to people to either purchase or build housing.
The Government’s motive behind this policy was clearly aspirational in helping Australians to realise their dream of owning a home. As Senator William Spooner, the Minister for National Development, explained:
“We take the view that people who have worked and saved to get enough money to put a deposit on their own homes are at least as entitled to receive some aid from the community’s funds as is the person who seeks to solve his housing problem by going on a State Housing Commission waiting list.”
Consistent with Liberal philosophy, the Agreement was not so much about giving people a handout from the Government, but rather a hand up to help people attain their goal of home ownership. As opposed to simply being given a welfare check to spend towards a home, people would be given the necessary assistance on a loans-basis.
New Housing Portfolio
To sharpen the Government’s focus on housing policy, Menzies agreed to establish a new ministry for housing in December 1963. As early as 1954, Senator Spooner had proposed to Menzies the establishment of ‘Housing’ as a separate portfolio ‘so that we [the Government] have a proper perspective and a co-ordinated policy’ on housing.
The first Minister appointed to the new housing portfolio in December 1963 was Leslie Bury, the Member for Wentworth in Sydney’s eastern suburbs. Born in London in 1913, Bury read economics at Queens College, Cambridge University, before emigrating to Australia in 1935 to take up a position with the Bank of NSW. Following successful careers in the Departments of External Affairs and Treasury, Bury won the seat of Wentworth in the December 1956 by-election. An ardent supporter of free-trade, Bury was critical of Keynesianism and excessive state intervention. In 1961, Menzies appointed Bury to his first portfolios as Minister for Air and Minister for Assisting the Treasurer. Despite being sacked from these posts in 1962 for his outspoken views on Britain’s integration into the European common market, he returned to the ministry in 1963 as the inaugural Minister for Housing.
Homes Savings Grant 1964
As Housing Minister, Bury’s most noteworthy achievement was the introduction of the ‘Homes Savings Grant’ for first home buyers in 1964. The scheme offered cash grants for married or engaged couples under the age of 36 to buy a home. To be eligible for the grant, the house or unit purchased needed to be the first home owned by either or both of the married couple upon or after marriage. Eligibility for the grant also had a cap on properties valued at more than 7000 pounds, reflecting the view of the Government that those acquiring more expensive homes needed less help from the taxpayer. It applied equally to properties in urban and rural areas.
Introducing the Home Savings Grant Bill to Parliament, Minister Bury explained how the policy objective of home-ownership was eminently conducive to the Government’s quest to foster family life:
Housing is vital to the welfare and happiness of individuals and thus to our future development as a nation. Without proper housing, the process of marriage and family formation which are the very essence of Australia’s future must be seriously impaired. The Government seeks, moreover, to foster a healthy property-owning democracy of sturdy independent individuals and regards home ownership as a basic ingredient. It is a lynchpin of family life.
As well as facilitating marriage and family formation, the legislation was designed to encourage individual thrift with the incentive for young marrieds to save a portion of their personal income towards the acquisition of a property. Accordingly, the scheme required couples to have ‘accumulated acceptable savings in Australia for at least three years’ to be eligible for a Commonwealth grant of £1 for every £3 of savings for a home. The grant was aimed at encouraging personal saving by young people before they entered into a commitment to acquire their own home.
Housing Loans Insurance Corporation
Finally, the Menzies Government established the Housing Loans Insurance Corporation (HLIC) in 1965 to provide a government-supported housing loan insurance scheme to help homeowners. As Menzies himself had noted, ‘many people found that, to fill the gap between available housing loans and the buying requirement of the purchaser, it was necessary for the purchaser to borrow money, frequently on oppressive terms’.
To help remedy this, the Menzies Government’s HLIC would insure approved lenders against loss arising from the making of loans for housing. With the government guarantee involved in this scheme, people would be able to borrow, as a single loan at a reasonable rate of interest, nearly all of the money they needed. Menzies said that the loans, being the subject of the guarantee, would extend to something like three times the borrower’s established income, with a reasonable total ceiling. The Government would, up to a high percentage of valuation, ranging up to 95% in appropriate cases, insure the repayment of such loans by approved lenders at approved rates of interest, which, under guarantee, would be reasonable.
Appraisal of the Menzies Government’s housing policies
Menzies and his government sought to encourage greater homeownership as it provided a stable, secure dwelling-place for family life to flourish. Families having autonomy over their property would be spared from the typically transient nature of leases and the destabilising effects these shorter-term living arrangements can have on family life.
In addition, home ownership provided an essential anchor for people in their communities. Owning one’s own dwelling helped give citizens a tangible and permanent stake in the community to which they belonged. In Menzies’ own words, homeownership would give us ‘one little piece of earth with a house and a garden which is ours; to which we can withdraw, in which we can be among our friends, into which no stranger may come against our will.’
It helped reinforce the conservative instincts for security, stability, continuity, and loyalty to people and place. Furthermore, the ownership of one’s home provided the best security against future pauperism and welfare dependency. It would give older Australians the financial security of not having to pay rent in retirement.
The housing initiatives of Menzies’ second term in office had a palpable effect on Australian home ownership.
As the Australian economist Mikalya Novak observed, ‘the considerable increase in homeownership throughout the country was an unquestionable hallmark of Australian experience during the mid-twentieth century.’ The 1950s and 60s were undoubtedly the golden age of the Australian dream. The images of a young family posing proudly in front of their dream home with the FJ or EJ Holden parked in the driveway were iconic of the Menzies era, and for good reason.
According to ABS data, about 53% of all occupied private dwellings were owned by households (with or without a mortgage) in 1947, when the Chifley Labor Government was still in office. This figure then rose to 63% in 1954, to 70% in 1961, and about 73% in 1966. In the same time span, meanwhile, the share of renters of private properties fell from about 44% in 1947 to just 27% by 1966. Between 1947 and 1971, the total stock of dwellings in Australia increased from about 1.92 million to 4.01 million.
With housing affordability and homeownership once again ‘live issues’ for today, we can draw inspiration from Menzies’ enduring vision for a flourishing, property-owning democracy of strong families and be similarly proactive in making homeownership more attainable for our own generation and those that follow.
David Furse-Roberts is a Research Fellow at the Menzies Research Centre. This is a transcript of a paper he delivered at the 2024 conference of the Robert Menzies Institute in November.