Consider the 25-year-old psychologist in Wagga Wagga who spent three months sleeping in a friend’s garage – not because housing wasn’t available, but because none of it was affordable on her salary. Her colleague drove 173km each way to work, sometimes sleeping in her car when exhausted.

These stories from the recent NSW Parliamentary inquiry into essential worker housing represent a critical but under-appreciated element of our productivity challenge: We are pricing teachers, nurses, cleaners and mental health workers out of the communities they serve.

According to the latest rental affordability index, a single person on JobSeeker payments in Sydney would need to spend 137 per cent of their income on rent – an obvious impossibility. But even a qualified teacher earning $85,000 a year falls outside affordable housing eligibility criteria in most areas, despite being unable to afford market rents near major employment centres.

Some argue this reflects natural price signals encouraging efficient allocation of resources. Let the market work, they say. Workers will move to cheaper areas, or wages will rise to attract talent where it’s needed.

This approach faces significant challenges. Unlike manufacturing widgets, you cannot deliver emergency healthcare, clean a building, or respond to crime remotely from Dubbo. Essential services demand physical presence.

International evidence demonstrates that substantial social housing can work alongside markets. Singapore houses 77 per cent of its population in public housing. The Netherlands, with 29 per cent social housing, has created mixed-income communities without stigmatisation while maintaining more stable rental markets than Australia.

Australia’s approach has delivered poor outcomes. We’ve allowed social housing to shrink to just 3.8 per cent of total stock while other developed nations maintain 20-30 per cent. The result: more than 200,000 households on waiting lists competing desperately in private rental markets they cannot afford, driving up rents system-wide.

Consider the productivity costs. The NSW inquiry heard of a CEO of an aged care provider who now spends her time furnishing rental properties for staff instead of focusing on caring for vulnerable older people.

Large employers are incurring $400,000 annually in extra staffing expenses solely to manage housing for essential workers.

Treasury’s Housing Australia Future Fund represents sophisticated policy design that must be expanded. The $10bn investment generates $500m annually through returns, not borrowing. Combined with the $2bn social housing accelerator, this creates investment certainty while allowing mixed-tenure developments.

Australia can choose to treat housing as a commodity, leaving increasing numbers without secure homes, or embrace housing as essential, productivity-boosting infrastructure. Other developed nations prove this isn’t ideological – it’s practical policy that aligns private interests with public benefit.

Alex Raphael is CEO of Australian Community Housing