News

Easing COVID restrictions not enough to stop outer suburbs mortgage time bomb

MEDIA RELEASE - Friday May 8, 2020

Australia’s outer urban growth areas need immediate and long-term economic stimulus to prevent a ticking time bomb of mortgage defaults with up to half a million households at risk. Sixteen of the top 20 areas for mortgage stress are in growth areas, along with forecasts of up to half a million residents unemployed. Five million people – a fifth of the population - live in Australia’s outer suburbs. They already experience financial stress, high transport costs, long commutes and limited access to the services and facilities that others take for granted.

The National Growth Areas Alliance (NGAA) is today calling on the Federal Government and National Cabinet to urgently prioritise infrastructure projects and other stimulus measures in growth areas, regardless of when restrictions are eased.

“Piling massive unemployment and economic loss onto already disadvantaged communities would be a disaster,” said NGAA Chair, Cr Matt Deeth (Mayor of Wollondilly Council, NSW).

“We must prioritise growth areas in economic stimulus allocations or risk further entrenching significant disadvantage, through mass mortgage defaults, higher unemployment, reduced access to affordable housing and worsening infrastructure deficits.”

“The COVID-19 economic shock will have a disproportionate effect on growth areas because of our reliance on the hardest hit employment sectors, and the prominence of already-vulnerable communities,” said Cr Deeth.

High Risk Factors facing one fifth of Australia’s population living in outer urban areas

• Half of all households in growth areas are under mortgage stress, with more than 300,000 lower income families at particular risk
• Estimates of up to 16% unemployment would leave 424,000 people in growth areas jobless
• Over 30% of all employees in growth areas work in the retail, construction and manufacturing sectors
• 334,000 of Australia’s most vulnerable small businesses (with less than 20 employees) are in growth areas
• GDP is forecast to decline in most growth area councils at a higher rate than the national average

Fast-tracking major infrastructure projects and directing existing funding streams such as the Urban Congestion Fund to growth areas will create local jobs, help address the existing infrastructure deficit in growth areas and stimulate residential housing development.

“Councils in growth areas also need financial assistance from Federal and State Governments to continue responding to the drastically increased need for help from newly vulnerable communities and small businesses,” said Cr Deeth.

“Supporting a strong residential construction sector with planning, land tax changes and by addressing the shortage of social and affordable housing is also important. Population growth won’t stop just because overseas migration is on hold. Growth areas have high birth rates and will continue to attract new residents.”

The NGAA represents Councils from outer urban growth areas around Australia’s major cities, home to more than 5 million people.   www.ngaa.org.au

NGAA Economic Recovery Proposal: Boosting Australia’s Economy through Growth Area Productivity