How heritage protection is cutting down new development

There is growing appreciation that the traditional approach of subsidising demand doesn't work. The lucky recipients bid up prices, making housing more expensive for everyone else. Unless supply increases, demand-side measures just reshuffle a fixed housing stock - at substantial cost to the taxpayer.

Unfortunately, these lessons are yet to be learnt by the Queensland government, which last week doubled grants to First Home Buyers; or the Commonwealth, which just increased subsidies to risky borrowers (undoing the efforts of APRA to prevent that very borrowing).

Housing supply advocates are starting behind in many areas. The anti-development crowd have had decades to erect barricades, and each requires concerted effort to tear them down.

One such barrier is heritage protection.

Heritage protection sounds like a good idea in theory. Many people admire and want to preserve the old and attractive features of our cities and towns. But it has been allowed to run amok.

It is important to understand that heritage protection is not just extended to historically significant things but also to items of alleged scientific, cultural, social, archaeological, architectural, natural or aesthetic curiosity.

This has meant that heritage has extended to items whose significance or appeal is very narrow. Indeed, many of the buildings being listed have no appeal to the broader public. Some are widely regarded as eyesores.

When the McKinnon Foundation polled Australians about their concerns with increased housing density, only 10 per cent of respondents mentioned heritage in their top five. "Losing built heritage" came in 17th out of 18 possible concerns.

Yet heritage protection has exploded across many suburbs. The City of Sydney now has more than 50 per cent of its land under Heritage Conservation Areas or heritage items, while Sydney's inner west council has more than 40 per cent.

Vast swathes of territory have been turned into little more than living museums, including most of Haberfield, Balmain, Glebe, Hunters Hill, Woolwich, and much of the north shore on the east side of the Pacific Highway.

Unsurprisingly, admission to these museums is now often $3-4 million or more.

The problem is that heritage protection - which should serve as a shield to protect a rather limited sweep of items of genuine historical significance - has become a sword wielded to cut down new development.

And in the hands of those who wish to see nothing change in 'their' suburb, it has held development hostage to an increasingly absurd and irrational list of demands.

For example, in April the City of Melbourne listed a 1970s seven-storey concrete carpark. In June, Sydney's Inner West Council proposed listing 15 electricity substations. Last week, the NSW Heritage Council opposed the construction of high-rise buildings at Central Station in Sydney, suggesting that low density would be more appropriate for that location.

With our housing affordability crisis escalating, we cannot allow a tiny minority to encase the country in a stasis cube.

Heritage protection has been able to expand largely unnoticed because its costs are hidden. But it is not costless.

Not only does heritage often directly prevent the building of new, denser, housing (which is an obvious cost), it imposes unwieldy restrictions on the use of existing housing. Those who own heritage-listed properties are frustrated seemingly at every turn when seeking to make their properties more liveable.

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One way to assess the true cost of heritage protection is to compare the value of a property under its restricted heritage use with the potential value of that property if it was unencumbered. For an inner-city block of land that otherwise might support a medium-rise apartment building, that cost will be many millions of dollars.

Then imagine multiplying that across the number of properties in all the suburbs identified above. That is the true cost of the heritage regime.

This suggests one simple way to get people to understand the scale of the problem would be to task the Productivity Commission with an estimate of the current cost of heritage protection in Australia; together with recommendations on how to lower this cost.

Going forward, councils and heritage bodies should be required to include an estimate of the true cost of all new heritage listings, together with a justification for who should bear that cost.

This would also make clear the unbelievably disproportionate emphasis placed on protecting historical architecture compared to the rest of our history. NSW spends about $360 million a year on operating costs for artistic and cultural institutions, like the Art Gallery of NSW and the Australian Museum.

That may not even cover the cost of heritage protection in a single Sydney suburb.

We should fundamentally change the nature of heritage protection, whilst ensuring that truly important historical buildings are preserved but also valued.

Instead of endless regulation, governments (federal, state and local) could be required to purchase historically significant buildings they wish to preserve and make them open to the public to admire and visit.

This will make clear if the buildings or items really are significant to the general public, both because the cost to taxpayers will be transparent and people will actually come to see them - or not, in many cases.

For example, it is hard to imagine that many people would choose to visit a concrete car park where you couldn't park your car.

But perhaps more importantly, it will make clear whether the public truly values heritage to the level that is implied by the current protections, or if heritage protection is just another NIMBY racket.