Home ownership: A great Aboriginal dream
Home ownership is the great Australian dream. A place to call your own and where your heart is.
My parents are both proudly Aboriginal. As a young bloke, I remember their pride when they bought their first home, a little house on the edge of town.
Growing up I watched them struggle to pay the mortgage, through good and bad times. Extensions, cars, funerals and even my university education were all paid for via refinancing the family home. I’m sure it’s a story that would be familiar to many Australians.
It wasn’t until I got older that I realised mum and dad were in the minority. You see, only 28 per cent of Indigenous Australians own their home, compared to 71 per cent of the wider population.
This should come as no surprise when you join the dots that underpin Indigenous disadvantage.
Indigenous Australians have never enjoyed the same education and health outcomes as non-Indigenous Australians. Throw in high levels of unemployment, and you don’t have to be David Unaipon (of $50 note fame) to realize that hand to mouth survival, and not house hunting, tops the to-do list.
Why should we care? Well, it’s important given the growing calls from indigenous leaders and Government for more ‘intergenerational wealth creation opportunities’ to help break the cycle of entrenched disadvantage in indigenous Australia.
The basic premise is that you accumulate wealth over your lifetime, and when you die, this wealth transfers to your kids and increases their asset base. Each generation ends up a little wealthier than the previous one, and life becomes a little easier – well, that’s the idea anyway.
For most of us the primary vehicle to transfer this wealth is the family home. So if only one in three indigenous Australians own their home, it’s going to be a little hard to give the next generation a leg up. Rather than climb the ladder of opportunity, indigenous Australians are left stranded on the bottom rung.
There is no moving forward, it is just another lap around the cycle of entrenched disadvantage.
The Federal Government acknowledges there is a problem.
When Kevin Rudd was at the helm he formed a National Policy Commission on Indigenous Housing. The Minister for Indigenous Affairs, Jenny Macklin, has charged her lead agency for indigenous economic development, the much-maligned Indigenous Business Australia (IBA), with providing cheap home loans to indigenous first home buyers.
It’s nothing new. Since 1975 the program (under other names) has lent more than $1.39 billion and helped more than 13,740 families own their own home.
With a starting interest rate of 4 per cent, and a cap at 1 per cent below market interest rates, it’s a good deal for indigenous Australians.
Actually it is so good the queue is now out the door and around the block. At last count, there were 1,323 Indigenous Australians waiting patiently in line, some for up to five years, for an IBA home loan.
While it’s a noble thing for the Government to invest in, it’s potentially a very expensive and an unsustainable model. Just to service the people in the existing queue, IBA is going to need to raise another $500M. This is big money in anyone’s language.
But here’s the thing; indigenous home ownership is an impossible nut to crack if you tackle it as only a lending issue.
The cold hard reality is that home ownership is the culmination of a good education, good health, a steady job and the willingness to sacrifice to save a deposit and service the mortgage.
It is not that the calls for intergenerational wealth creation and home ownership are wrong. It’s just that they downplay, or completely ignore the complexity of the building blocks that are required to make it happen. It’s like starting at the finish line, or decorating the pot of gold at the end of the rainbow, and claiming success.
Now don’t get me wrong, home ownership is a good thing. And the more Indigenous Australians who own their own castle, the better.
The queue outside IBA proves that plenty want a mortgage. And I’m sure many more get a normal home loan through their bank.
However, home ownership and the resulting intergenerational wealth creation opportunities won’t happen on the scale required to make a real difference if we don’t get the basics right.
We simply must have better educated, healthier and more employed indigenous Australians.
Fix these and you’ll have intergenerational wealth creation opportunities, and you’ll go a long way to breaking the cycle of Indigenous disadvantage.
Otherwise, we might as well hold hands with the concerned onlookers and well wishers and sing the Rainbow Connection in our best Kermit voice for all the difference a couple of government home loans will make to the real underlying problems that continue to haunt Indigenous Australia.
I suspect the big wigs in Canberra know this is the case – but you can never be sure.
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