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Reforming Public Housing
Greg McIntosh
Social Policy Group
16 June 1997
Major Issues Summary
Introduction
The Commonwealth-State Housing Agreement (CSHA)
Brief History
Recent Commonwealth Budgets
How Successful Has the CSHA Been?
Accessibility
Appropriateness
Affordability
Security of Tenure
Equity
Some Suggestions for Reform
The Industry Commission (Public Housing-November 1993)
The Australian Council of Social Services (ACOSS)
The National Housing Strategy
The Australian Institute of Health and Welfare
Recent Moves towards Reform
The Keating Government
The Howard Government
Conclusion
Endnotes
Appendix: Commonwealth Housing Reform Facts and
Figures
Reform of public housing in Australia has been prominent on the political
agenda recently, most particularly through deliberations of the Council
of Australian Governments (COAG). In the parliamentary context a Senate
Committee (Community Affairs Reference Committee) is also currently holding
an inquiry into Federal Government proposals for reform to the public
housing system.
This paper concentrates on the provision of public housing under the
auspices of the Commonwealth-State Housing Agreement (CSHA). The first
CSHA came into force in November 1945 and since that time it has been
the main vehicle for providing public housing to Australians. It is estimated
that there are 386 000 public dwellings in the eight States and Territories,
the combined value of which is of the order of $31 billion. Besides the
CSHA, the Commonwealth's other main program designed to help low income
earners access housing involves the payment of rent assistance to private
renters.
The bulk of the funding provided under the CSHA is in the form of capital
grants, and the States and Territories have a host of housing and housing
related schemes that come under the ambit of the CSHA including schemes
for public housing, community housing, loans for home purchase and rent
assistance. The 1996-97 Federal Budget allocated $1057 million to the
CSHA under the following programs: a base funding category ($862m), Aboriginal
Rental Housing ($91m), Community Housing ($64m) and Crisis Accommodation
($39.7m). The 1997-98 Budget saw Commonwealth funds for the CSHA reduced
to $975m for the forthcoming financial year with a further reduction to
$964m forecast for 1998-99. However, the Government has said that the
1996-97 funding levels for the Aboriginal Rental Housing Program and the
Crisis Accommodation Program will be maintained.
Five key concepts have been identified as approximate indicators of
CSHA performance: accessibility, affordability, appropriateness, security
of tenure and equity. A brief review of the evidence appears to indicate
that the CSHA is performing reasonably well in terms of these indicators
with the exception of the one which is arguably the most important, accessibility.
An analysis of statistics relating to waiting lists for public housing
and the number of recent additions to waiting lists for public housing
shows that there is a substantial shortfall in the provision of public
housing dwellings.
A number of suggestions for reform to the CSHA have come from various
quarters in recent times. For example, the Industry Commission has recommended
that there should be greater transparency and accountability mechanisms
in place for the State housing authorities; that there be a better delineation
of responsibilities between the Commonwealth and the States such that
the States become fully responsible for the purchase and construction
of public housing and the Commonwealth concentrate on the provision of
income support for all Australians; that specific and measurable performance
indicators be introduced for the CSHA; and that the State housing authorities
fully separate their functions of property and tenancy management.
The Australian Council of Social Services (ACOSS) agrees that a series
of performance based agreements should be introduced that will allow the
performance of the CSHA to be more properly assessed. ACOSS has also advocated
that the needs of tenants should be better addressed through the introduction
of local tenancy management and through the provision of nationally uniform
appeals mechanisms and tenancy legislation, and that the Commonwealth
should play the main role in terms of funding, planning and performance
monitoring whilst the States ensure that property management, tenancy
services and asset management are undertaken to agreed national standards.
Recent proposals for public housing reform have been largely driven
by the Council of Australian Governments (COAG) process. At a meeting
of State Premiers and the Commonwealth in April 1995 it was agreed that
there should be a major overhaul of the public housing system - an overhaul
that includes many of the proposals for change advocated by the various
reports and studies done in the early to mid-1990s. At the end of 1995
the Keating Government announced a radical plan to transform the delivery
of public housing in Australia. The main thrust of this plan included
the Commonwealth taking full responsibility for all rent assistance (including
rent assistance to both private and public renters) with the States and
the private sector being responsible for the supply of public housing
in their respective jurisdictions. The proposed reforms also included
a provision to allow rent assistance to be converted to a lump sum to
be used for a deposit for home purchase, greater private sector involvement,
a reduction in housing industry regulations, an 'evening out' of the subsidy
provided to private and public renters, and differential rates of rent
assistance depending on geographical location and state of the real estate
market.
The general thrust of the reforms outlined by the Keating Government
were picked up by the incoming Howard Government in March 1996. In September
1996 the Housing Ministers from the Commonwealth and the States and Territories
agreed to continue with the reforms including a commitment that all new
public housing tenants should be asked to pay no more than 25% of their
incomes in rent and that no existing public housing tenants should be
disadvantaged by the new reforms. The Ministers also agreed that neither
level of government should be disadvantaged and that the proposed reforms
should be revenue neutral.
However, since that time the details of how these reforms are to be
implemented have not been agreed upon and the whole reform process has
stalled. The States and Territories are concerned that they may be worse
off financially as a result of the reforms and are not prepared to agree
to a new system until the fine detail of the proposals is put on the table.
Given that a Senate committee is currently holding an inquiry into the
proposed reforms (with a reporting date of 30 September 1997) it is highly
likely that the proposed reforms will not be finalised and agreed to until
1998.
The key challenge for the Commonwealth is to come up with an acceptable
package that is adaptable and flexible enough to be able to take into
account any unforeseen negative consequences that may arise from the reforms
proposed. If the new package, when it is agreed to, has allowances for
future adjustments and 'fine tuning' then any shortcomings may be able
to be addressed as they arise. This is particularly important because
the housing reforms are likely to impact in different ways in different
areas of Australia and because they are likely to have a different impact
on people depending on their circumstances.
The quantity, quality and location of housing is of vital importance
to all Australians. Having a 'roof over the head' is considered to be
one of the basic necessities of life. In economic terms housing accounts
for 4-6% of Gross Domestic Product per annum and approximately 20% of
gross investment per annum.(1) In social terms, where people live (and
how they live) has an important bearing on their sense of self-worth and
how they are viewed by others.
Approximately 70% (42% owners, 28% purchasers) of Australians live in
owner occupied homes, approximately 19% live in private rental accommodation,
and 6% live in public housing. The remainder are accommodated in a diverse
number of other ways, including caravans and boarding homes, or are homeless.(2)
Australia has one of the highest rates of home ownership in the world.
For example, the equivalent figure for owner occupied houses is 68% in
England (1990), 64% in the United States (1988) and 62% (1986) in Canada.
The equivalent figures for private rental are England 8%, the United States
34.5% and Canada 32% whilst the figures for public housing are 24%, 1.5%
and 6% respectively.(3)
Assistance from governments to people in housing need in Australia comes
from two main sources - the provision of public housing and the provision
of rent assistance to low income tenants in private dwellings. It is estimated
that the total direct expenditure on housing assistance by the Commonwealth
in 1994-95 was $2 520 million, consisting of $1 067 million in payments
to the States and Territories via the Commonwealth-State Housing Agreement
(CSHA) and $1 453 million in Rent Assistance that was paid to those on
low incomes in the private rental sector.(4) As at June 1995 there were
388 601 public housing dwellings in Australia and there were 234 667 applicants
on the State and Territory waiting lists for public housing.(5) The length
of waiting lists for public housing has grown substantially over time.
For example, in 1984 there were 140 684 applicants, in 1988 there were
198 063 applicants and in 1993 the equivalent figure was 232 208.(6) Approximately
45% of Australian households which rent privately receive rent assistance
(see Appendix).
The scope, effectiveness and equity of current and past provision of
public housing has been the source of considerable debate in recent years.
This debate has been highlighted in the very recent past by the deliberations
of the Council of Australian Governments (COAG) and the release of several
major reports on public housing including that of the Industry Commission
(November 1993), the Australian Council of Social Services (June 1994)
and the Australian Institute of Health and Welfare (January 1995). As
well, the National Housing Strategy process of the early 1990s dealt with
all aspects of housing provision in Australia, including public housing.
The emphasis of this paper is on public housing, which is taken to include
housing provided under the auspices of the Commonwealth-State Housing
Agreement.
The Keating Government, before it lost office in March 1996, had foreshadowed
a major overhaul of housing assistance, which would have seen the Commonwealth
taking responsibility for rental subsidies in both the public and private
sectors, and the States and Territories being responsible for administering
and running the rest of the public housing system. The general thrust
of those proposed reforms has been picked up by the current government,
but progress has been slowed due to a lack of agreement between the Commonwealth
and the States on precisely how to implement the detail of these reforms.
This paper includes an analysis of the proposed reforms to public housing
announced by the Howard Government.
Before examining in more detail the most recent proposals for public
housing reform it is appropriate to review the operation of the CSHA to
date.
Brief History
The CSHA commenced in 1945 and is the Commonwealth Government's main
housing program. Since 1945 a series of financial assistance agreements
have been negotiated between the Commonwealth and the States with a view
to providing housing assistance to people in need. Current legislative
authority for the CSHA is contained in the Housing Assistance Act 1996,
which provides the legal framework for the latest Agreement. This Agreement,
which came into effect on 1 July 1996, is an interim agreement for up
to three years and essentially allows the CSHA to operate largely as it
has in the past whilst some fundamental reforms to its operation are negotiated
between the Commonwealth and the States and Territories.
Initiatives by the Chifley Government resulted in the first CSHA being
finalised with the six States in November 1945. The main impetus for such
an arrangement was provided by the Commonwealth Housing Commission in
a report it released in August 1944. The Commission was appointed in April
1943 to assess the state of Australia's housing stock. In its report the
Commission advised the Commonwealth to take an active role in providing
housing for those in need. Since 1945 the Commonwealth has made financial
allocations to the States for this purpose. Commonwealth-State Housing
Agreements were negotiated with the States in 1945, 1956, 1973, 1978,
1984, 1989 and 1996. The Northern Territory was included in the CSHA in
1981 and in 1989 the Australian Capital Territory became a party to the
Agreement.
Section 96 of the Constitution, which allows for the Federal Parliament
to 'grant financial assistance to any State on such terms and conditions
as the parliament thinks fit', has been the legal avenue by which the
Commonwealth has made available CSHA funds to the States and Territories
to allow for the construction of public housing and the lending of funds
for home purchase.
Recent Commonwealth Budgets
Approximately one-half of all Commonwealth funding for housing comes
under the ambit of the CSHA. The rest of the funding goes primarily to:
- rent assistance which is provided to eligible Department of Social
Security and Department of Veterans Affairs clients;
- specific programs for Aboriginals including the Community Housing
and Infrastructure Program (CHIP) and Aboriginal Hostels Ltd (AHL) which
are administered by the Aboriginal and Torres Strait Islander Commission
(ATSIC); and
- funding for organisations to provide residential care for the elderly,
including nursing homes and hostels.
The Commonwealth also funds a number of programs which help people move
into more independent living arrangements or provide for their ongoing
support needs - for example, the Supported Accommodation Assistance Program
(SAAP), the Home and Community Care Program (HACC) and the Commonwealth-State
Disability Agreement (CSDA).
Funding currently provided under the CSHA is in the form of capital
grants, mainly for the provision of public housing. The States and Territories
have a host of housing and housing related schemes that are funded via
the CSHA including schemes for public housing, community housing, loans
for home purchase and rent assistance.
1995-96
The main areas funded in the 1995-96 Budget for the CSHA were Public
Rental Housing, Pensioner Rental Housing, Aboriginal Rental Housing, Community
Housing, Mortgage and Rent Assistance and the provision of Crisis Accommodation.
A total of $1062 million was allocated to the various programs of the
CSHA in the 1995-96 Budget.(7)
The largest program within the CSHA was Untied Rental Assistance ($762.9m)
which provided finance for the construction and maintenance of public
rental housing, rental subsidies for those in need and the Home Purchase
Assistance Program as well as repayments of Commonwealth principal and
interest up to the level of State/Territory public housing operating losses.
The Pensioner Rental Housing program provided funds ($49.8m) to assist
pensioners and beneficiaries gain access to suitable accommodation.
The Aboriginal Rental Housing program provided funds ($97.1m) for the
construction, purchase or lease of rental housing for Aboriginal and Torres
Strait Islanders in need. The distribution of funds between the States
and Territories is made according to an assessment of housing need as
endorsed by the Australian Aboriginal Affairs Council. (It should be noted
that a range of other forms of housing assistance for Aboriginal and Torres
Strait Islanders is provided for via the Aboriginal and Torres Strait
Islander Commission.)
The Community Housing Program (CHP) provided $74.3 million to enable
local government, welfare and community organisations to purchase, construct,
lease or upgrade rental housing.
The Mortgage and Rent Assistance Program (MRAP) provided $30.9 million
for short-term assistance to private renters or home buyers who, because
of their low incomes, were having difficulties with their purchase repayments
or rent payments. As well as mortgage and rent relief this program also
provided for deposit assistance and housing advice and referral.
The Crisis Accommodation Program (CAP) provided capital funds of $46.9
million for short-term emergency accommodation under the Supported Accommodation
Assistance Program (SAAP). The SAAP Program provides support services
for the residents of CAP funded accommodation. Included in the types of
dwellings funded under the CAP are youth refuges, women's refuges, homeless
men's shelters and short-term housing.
For various statistics on the operation of the CSHA in 1995-96, see
the Appendix. This information was released by the Department of Social
Security in December 1996.
1996-97
As part of the portfolio reorganisation that the incoming Howard Government
instituted following the March 1996 election, the public housing function
was transferred to the Social Security portfolio. This means that funding
for the CSHA and Rent Assistance now comes under the purview of one Department.
The 1996-97 Budget provided for $1.057 billion to the States and Territories
for the provision of housing assistance via the CSHA and included some
changes to the program structure of the CSHA. The Untied Rental Assistance,
Pensioner Rental Housing and Mortgage and Rent Assistance Programs have
been rolled into a general base funding category. These base funds are
to be used for the acquisition, upgrading or redevelopment of public housing.
Some of the funds are also to be used to assist low income people to pay
their rent, to help them gain access to private rental accommodation,
to help them acquire deposit funds for home purchase and to help them
to meet mortgage payments should difficulties arise. Approximately $862
million of the total Commonwealth funding for the CSHA in 1996-97 is included
under this base funding category.
The remaining identified programs include the Aboriginal Rental Housing
Program, which has been allocated $91 million for 1996-97, the Community
Housing Program ($64m) and the Crisis Accommodation Program ($39.7m).(8)
According to the Government, the new Interim CSHA, which commenced on
July 1 1996-
...provides for a number of reforms in the delivery of housing assistance.
These include a greater emphasis on accountability and transparency through
the adoption by States of a standard accounting framework, the reporting
against nationally agreed objectives through performance indicators, and
the need for an agreed bi-lateral strategic plan.(9)
1997-98
The 1997-98 Budget allocated $975m housing under the Interim CSHA and
included a guarantee that funding for the Aboriginal Rental Housing Program
and the Crisis Accommodation Program would be funded at existing (1996-97)
levels.(10) The approximately $50m reduction in funding from that provided
for in the previous financial year will therefore presumably come from
the general base funding category although the Government maintains that
this reduction in funding is a recognition of the scope for greater efficiencies
that will eventuate once the proposed reforms are implemented.(11)
Before looking at the other reforms to the CSHA that are currently being
discussed by the Commonwealth and the States and Territories it is appropriate
to briefly review how effective the CSHA has been to date.
Five general housing assistance objectives have been identified with
housing provision under the auspices of the CSHA: accessibility, affordability,
appropriateness, security of tenure and equity.(12) From a brief review
of the evidence available, it appears that the CSHA has been reasonably
successful in meeting these objectives with respect to the majority of
the broad concepts listed. However, in arguably the most important field,
that of accessibility, the CSHA has clearly not produced enough dwelling
units to satisfy the apparent demand.
Accessibility
Accessibility refers not only to the availability of housing for those
in need but also to the ease with which household units can move to similar
or new forms of tenure. Certain groups may have difficulty obtaining housing
due to factors such as discrimination, and this is another element of
accessibility.
One of the main measures of accessibility is the length of waiting lists
for public housing. However, waiting list statistics should be used with
some caution because often there are many applicants listed who no longer
require public housing or who are no longer eligible for public housing.
Also, there are people in the community who, for whatever reason, may
not want public housing but who would normally be eligible; and there
will be a proportion of potential applicants for public housing who are
not aware that particular form of housing tenure is available to them.
It should be noted that the waiting lists are not a measure of homelessness
as the vast majority of those on the lists are either in other non-public
accommodation or even may be wait listed for other more suitable public
housing in another area.
Even if allowances are made for the shortcomings of using waiting lists
as a measure of accessibility it is still evident from the statistics
that public housing provided under the auspices of the CSHA is far from
adequate to meet the current demand. The national waiting list has grown
by more than 60% over the period from 1985 to 1995.
The number of applicants on waiting lists for public housing in Australia
has increased from 144 607 in 1985 to 200 941 in 1989 to 234 667 as at
June 1995. The total stock of rental dwellings held by State housing authorities
has also increased over time (from 273 465 in 1985 to 337 736 in 1989
and 388 601 in 1995) but not at a rate great enough to halt the increase
in the length of the waiting lists.(13)
An alternative measure of accessibility is that of how many recent applications
for public housing have been approved. If this measure is used then the
apparent unmet demand is less than the waiting list statistics would indicate
but there is still a substantial shortfall in the provision of public
housing. According to the Institute of Health and Welfare:
Over the decade from 1982-83 to 1991-92, the number of applicants added
to public housing waiting lists in a year throughout Australia tended
to increase, rising overall by 36% from 86,000 to 117,000... In the same
period the total population increased by 14%... The capacity of State
housing authorities to meet this demand has been somewhat mixed, both
over time and across States; although over the 10 years from 1982-83 the
number of dwelling units in the public sector increased by 51% ... the
number of new households accommodated increased by only 39%. This suggests
that tenants are tending to stay longer in public housing and shows that
the ability of housing authorities to accommodate new tenants depends
both on the growing stock and the rate at which existing tenants leave
public housing. Notwithstanding the fact that recent additions represent
a conservative estimate of demand, a substantial level of demand remains
unmet.(14)
More recent figures tend to confirm the above conclusion. For example,
in 1994-95 there were 103 416 applicants added to public housing waiting
lists and 51 638 applicants either cancelled or withdrew, leaving a net
addition of 51 778 applicants.(15)
The tendency of tenants to stay longer in public housing is perhaps
one area where the public housing authorities may be able to make changes
to improve accessibility. As well, the general situation at present is
that those longest on the waiting list are allocated housing ahead of
those who have been recently listed. If more emphasis was placed on needs,
as opposed to being first listed, and if more emphasis was placed on a
re-allocation of housing once a particular tenants' financial situation
improves, then a much fairer and better targeted regime may result.
Of relevance to any discussion of public housing accessibility is that
of accessibility to the private rental sector. Policy-makers need to take
into account the state of the private housing market when considering
issues related to public housing, including accessibility. An adequate
supply of affordable private rental housing will obviously take some pressure
off public rental housing authorities to expand their supply of dwellings
and policies that encourage a healthy private rental sector will have
a positive impact on, for example, public housing waiting lists. In this
context the general state of the economy and factors such as the level
of interest rates are of direct relevance to the performance of the public
housing sector. (For background, including statistics, on the private
rental market see Appendix).
Appropriateness
The concept of the appropriateness of the public housing being provided
is an important one. It relates essentially to the physical characteristics
of the housing provided, its location and whether the housing meets the
needs of the occupants. Appropriate housing can be considered to be accommodation
that is of adequate physical structure - that is, of a size and type that
suits the occupants - and that allows them to have access to the services
and employment that they need.
In a recent analysis of this concept with respect to public housing
the Australian Institute of Health and Welfare used as approximate measures
of appropriateness the rate of under-utilisation of dwellings and the
location of public housing in terms of access to services and employment.
The Institute defined an under-utilised dwelling as one in which there
were more bedrooms than were needed to adequately accommodate members
of the household. Using this measure of appropriateness it concluded that
the public housing sector was the most efficient of all types of housing:
...the public housing sector displayed the highest level of efficiency
in the allocation of dwellings of any tenure. Although in 1990 a substantial
44% of public renter households were living in under-utilised dwellings
... this incidence was lower than in the private rental market (50%) and
almost half that evident among owner-occupied dwellings (79%).(16)
In terms of the location of public housing, no definitive conclusions
were drawn due to the paucity of data, although the Institute's report
did note that tenants in Sydney tended to have a locational disadvantage
with reference to services and employment when compared to households
in the private rental market. A similar situation was found in Adelaide,
but in Melbourne the Institute believed that public housing was generally
considered to be locationally advantaged. A lack of data prevented conclusions
being drawn about locational advantage/disadvantage in the other capitals.
Affordability
The Industry Commission defined affordability as being:
...about the relative ease, once in a dwelling, in meeting housing costs
of income. The National Housing Strategy (NHS) considered housing to be
'affordable' if it did not take up too large a proportion of the household
budget. That is, after paying for housing costs, there should be enough
income for other necessities such as food, clothing and medical care.
The NHS... recommended that eligible renters should pay (after housing
assistance) no more than 25 per cent of their income on rent for adequate
and appropriate accommodation.(17)
Using the 25% benchmark as a very approximate guide to affordability
it appears that tenants in public housing are faring quite well when compared
to other forms of tenure. Recent figures from the Australian Bureau of
Statistics show that 75% of all income units which rent public housing
outlaid less than 25% of their incomes on rent - 18% higher than the average
for all income units which rent housing. By comparison, only 48% of income
units which rent from real estate agents spent less than 25% of their
income on rent.(18) These figures should be treated with caution, however,
because many renters in the private sector would not qualify for public
housing.
Security of Tenure
Security of tenure essentially refers to the degree to which occupants
of a house have the right to continued tenure in that dwelling. Once again,
on the available evidence it would appear that the providers of public
housing in Australia have a relatively good record in terms of providing
security of tenure to the occupants of such dwellings.
The analysis of the Housing and Location Choice and the Housing and Location
Preferences surveys suggests that public housing was able to provide security
of tenure to the vast majority of public tenants between 1986 and 1991.
An estimated 11% of households in public housing moved involuntarily in
that period, a proportion approximately half that of households in the
private rental market (21%).(19)
Of course, security of tenure also needs to be assessed in comparison
to other objectives, most particularly appropriateness. Perhaps security
of tenure should be viewed more as 'security of tenure within the public
housing system' so that as life circumstances change (for example, a couple
get older and their children leave home), tenants are moved to more appropriate
accommodation.
Equity
The concept of equity is a complex one, but any assessment of equity
would have to evaluate whether or not the provision of scarce public housing
resources was going to those most in need. Apart from the obvious problem
of there being no agreed method of determining 'need', very little statistical
data is available to enable firm conclusions to be made on just how equitable
the current provision of public housing in Australia is.
One measure of 'need' is to look at the proportion of those in public
housing who are in receipt of a government payment or benefit. ABS statistics
show that 78% of income units which rent from a State or Territory housing
authority have a government pension or benefit as their main source of
income. The statistics also show that 62% of income units renting State/Territory
housing authority dwellings have gross weekly incomes of less than $289.(20)
These figures do appear to indicate that the bulk of public housing
is being utilised by those who could be categorised as being in 'need'.
However, it could also be argued that there is still likely to be some
potential tenants on the waiting lists that have a greater 'need' than
those currently occupying public housing dwellings. The challenge to the
public housing authorities is to come up with the 'best' mix of balancing
equity concerns with those related to security of tenure and accessibility.
This is particularly difficult in a situation where there is a general
shortage of available and suitable accommodation.
The Industry Commission (Public Housing - November 1993)
The Commission's main task was to report and make recommendations on
how the three levels of government can deliver public housing and rent
assistance in the most efficient and effective way possible. It was of
the view that:
public housing is a cost effective way to meet government housing objectives.
But people have a variety of housing needs. In addition to public housing
the appropriate mix of assistance measures is likely to include rent assistance,
community (including co-operative) housing, and headleasing - that is,
the leasing of a property by a housing authority or community group for
on-leasing to a tenant. The need at this stage is for funding and institutional
arrangements and incentives that will allow the right mix of assistance
measures to emerge.(21)
Some of the specific recommendations and points made by the Industry
Commission included:
- that there is still a long way to go with respect to government provision
of housing for those in need;
- that the key objectives of the CSHA (accessibility, affordability,
appropriateness, security of tenure and equity) are 'ideals' that are
not linked in any measurable way to the performance of the various State
and Territory housing authorities;
- that there should be greater transparency and accountability mechanisms
in place for the housing authorities;
- that a better delineation of responsibilities between the Commonwealth
and the States should be introduced such that the States become fully
responsible for the purchase and construction of public housing. The
Commonwealth's main role should be to provide income support (essentially
via block grant rent assistance to the States) for all households in
both public and private rental. The Commonwealth should also provide
specific support to encourage housing provision in particular States
for, say, community housing initiatives;
- that all applicants for public housing should be assessed in the same
way and that each State should have a categorised waiting list so that
allocations recognise the different degrees of need;
- that public housing security of tenure should be considered in the
context of the 'local' area as opposed to a particular dwelling;
- that rents should be linked to market values and that the level of
assistance given to tenants should be dependent upon tenant incomes;
- that the various State and Territory housing authorities should fully
separate their functions of property and tenancy management;
- that the level of assistance for tenants in community housing should
be similar to assistance provided to those in public housing;
- that the housing assistance provided to Aboriginal and Torres Strait
Islanders should be at least at the same level as that provided to other
public housing tenants; and
- that the Commonwealth should come to an agreement with the States
and Territories on the funding responsibility for the housing costs
for Aboriginals and Torres Strait Islanders that exceed the capacity
of the State public housing authorities.
The Australian Council of Social Services (ACOSS)
In June 1994 ACOSS in conjunction with National Shelter (the peak body
of welfare housing organisations) held a national workshop for housing
workers and tenants. Following the workshop ACOSS released an issues paper
on public housing which contained a number of suggested reforms designed
to improve the provision of that type of housing. Some of the main comments
and suggestions for reform contained in the ACOSS paper were:
- that the Commonwealth-State Housing Agreement (CSHA) continue to be
the core vehicle for the provision of public housing :
...the CSHA should be the framework for a nationally coordinated housing
policy which enables affordable, appropriate and secure housing to be
provided to low income and special needs in nationally uniform manner.(22)
- that within the CSHA framework there be an allowance for variation
in housing design due to factors such as differing local needs and cultural
preferences.
- that recent governmental moves towards the introduction of performance
based agreements related to the objectives of the CSHA be supported
:
Objectives should be complemented by agreed performance measures which
clearly identify commonwealth and state responsibilities. To maintain
their relevance, the effectiveness of strategies to meet objectives should
also be reviewed regularly.(23)
- that the performance data used in relation to the indicators should
be 'clear, reliable and nationally comparable'.
In addition to being assessed according to factors such as stock condition,
rates of stock acquisition, and financial and other aspects of stock and
asset management, housing agency performance should be assessed according
to: ability to meet housing need; client satisfaction - energy efficiency;
appropriateness of location; design quality; accessibility to applicants;
extent to which special needs groups are met; affordability.(24)
- that in terms of stock management there are two main priorities: first,
the need to redevelop inappropriately located housing stock and stock
that is in poor condition; and second, the need to make better use of
existing stock.
The CSHA should establish national asset management and maintenance guidelines
and benchmarks to minimise any potential conflict between asset management
and quality of service objectives.(25)
- that the needs of tenants be better addressed including the introduction
of local tenancy management and the provision of nationally uniform
appeals mechanisms and tenancy legislation.
- that segmented waiting lists (as recommended by the Industry Commission)
not be introduced. At present there are wait-turn allocation policies
for public housing, which essentially means that those longest on the
waiting list are allocated accommodation ahead of those who have only
recently been listed. Segmented lists would allocate tenants to housing
according to assessed needs. ACOSS believes such a change would not
address the fundamental problem of there not being enough housing stock
to go around. It also believes that higher administration charges would
result from the introduction of segmented waiting lists.
- that the present provision of housing for Aboriginal and Torres Strait
Islander people is 'grossly inadequate'.(26) Not only are more resources
required to overcome this situation, but there is a need for greater
self-determination with possibly the Aboriginal and Torres Strait Islander
Commission playing a coordinating role. The provision of housing assistance
should be part of an integrated package rather than housing being seen
as a separate infrastructure need.
- that there be more transparency with respect to subsidies paid to
all forms of housing tenure and that the level of support for public
housing should be greater than that for other forms of tenure.
- that the cost of support services should be met by other agencies
as appropriate, not by housing agencies.
- that differential rents for public housing, as proposed by the Industry
Commission, be rejected. The Industry Commission was of the view that
higher rents should be charged for housing in more expensive locations
and for better types of housing.
- that the Industry Commission proposal to charge a premium of 2-3%
over market rents for public housing be rejected.
- that with respect to Commonwealth and State roles and responsibilities
there be a clear delineation of roles with the Commonwealth playing
the main role in terms of funding, planning and performance monitoring
whilst the States 'should be responsible for ensuring that property
management, tenancy services and asset management are undertaken to
multi-laterally agreed national standards'.(27)
The National Housing Strategy
The National Housing Strategy (NHS) was a two and a half year review
of housing needs and policies. It culminated with the publication of 'Agenda
for Action' in December 1992.
The NHS dealt with housing across the board and not just the provision
of public housing. It identified three pre-conditions for reforming the
housing sector in Australia:
...the need to formulate an integrated set of proposals to ensure more
affordable housing choices; the need to cement cooperative and coordinated
relationships between the three spheres of government, involving the industry
and community; and the need to provide adequate resources for housing
and infrastructure'.(28)
In the longer term the NHS argued that the CSHA should be more responsive
to the housing needs of particular groups; that local governments, community
groups and tenants should be more directly involved in the decision making
process; and that CSHA financing should be drawn from a wider pool. The
NHS also argued for the introduction of performance indicators against
which State housing authorities could be judged. As well, the Strategy
endorsed a 'housing affordability benchmark' and emphasised the need for
better links between housing and support services. It also advocated that
flexibility was needed in the provision of different types of housing
tenure.
The Australian Institute of Health and Welfare
The Institute's report on public housing was released in January 1995
and many of its main concerns and points have been referred to earlier
in this paper. However, it is worth noting the overall conclusion that
the Institute made on the provision of public housing:
Although assessing performance is always a subjective exercise (to some
degree), based on the measures used in this report, it is considered that
public housing is achieving better outcomes for tenants than the private
rental sector in most of the areas examined. The public sector performs
better than the private rental sector in providing affordable housing,
alleviating poverty, providing adequate dwellings (at least in terms of
dwelling amenities and a lower incidence of overcrowding), minimising
the under-utilisation of houses, and in providing security of tenure for
tenants. It does not perform as well with respect to facilitating access
to services and employment, providing housing choice and in meeting demand.(29)
The Keating Government
Recent proposals for public housing reform have been largely driven
by the Council of Australian Governments (COAG) process. At a meeting
of State Premiers and the Commonwealth held in April 1995 it was agreed
that there should be a major overhaul of the public housing system, an
overhaul that includes many of the proposals for change advocated by the
various reports and studies done in the early to mid-1990s.
The Report on Government Service Provision released by the Steering
Committee for the Review of Commonwealth/State Service Provision in December
1995 summed up the moves towards reform of public housing current at that
time:
The Commonwealth, State and Territory Governments are working to reform
the planning and delivery of housing assistance provided through the CSHA,
under the auspices of the Council of Australian Governments (COAG).
During 1995-96, re-negotiation of the CSHA is intended to be a major
strategy in assisting people - particularly those on low to moderate
incomes - to improve access to affordable housing.
Proposed reforms to the CSHA include:
- clearer roles and responsibilities for the Commonwealth, State and
Territory governments, with increased flexibility for jurisdictions
to invest in resources across a mix of housing assistance;
- measures to improve the transparency of financial arrangements;
- an outcomes focus with agreed measures of performance, including
an agreed needs methodology as a key input into planning and setting
targets;
- a clearer emphasis on commercial management of housing stock, and
diversification of supply and providers;
- potential for contestability of supply; and
- consumer choice in the type(s) of assistance.(30)
At about the same time as the Government Service Provision Report was
released, the then Prime Minister (Mr Keating) and the then Commonwealth
Housing Minister (Mr Howe) released a far-reaching set of proposed reforms
to public housing. The main thrust of these reforms included the Commonwealth
taking full responsibility for all rent assistance (including rent assistance
to both private and public renters) with the States and the private sector
being responsible for the supply of public housing in their respective
jurisdictions. This essentially would see the Commonwealth combine the
approximately $1.1 billion it spent annually on CSHA programs and the
approximately $1.4 billion it spent annually on rent assistance into one
private and public rent assistance program. The proposed reforms also
included a provision to allow rent assistance to be converted to a lump
sum to be used as a deposit for home purchase; greater private sector
involvement in the provision of public housing; a reduction in housing
industry regulations; an 'evening out' of the subsidy provided to private
and public renters; and differential rates of rental assistance depending
on geographical location and state of the real estate market.(31)
The Howard Government
The general thrust of the housing reforms proposed by the Keating Government
were picked up by the incoming Howard Government in March 1996.(32) In
September of that year the Housing Ministers from the Commonwealth and
the States and Territories agreed to continue with the reforms including
a commitment that all new public housing tenants should be asked to pay
no more than 25% of their incomes in rent and that no existing public
housing tenants should be disadvantaged by the new reforms. The Ministers
also agreed that neither level of Government should be disadvantaged and
that the proposed reforms should be revenue neutral.(33)
According to Senator Newman, the Minister for Social Security, whose
portfolio includes public housing, the main reasons why the new proposals
will lead to a better system include:
- the changes will lead to a fairer system - private and public renters
will be entitled to the same levels of financial help for renting;
- there will be less pressure on public housing waiting lists, thus
'freeing up' some public housing for people with special needs - for
example, people with disabilities;
- renters will have greater housing choices - for example, people will
be able to move to areas where there are better amenities and more chance
of a job;
- private renters will get increases in social security Rent Assistance
payments;
- the housing roles and responsibilities of the Commonwealth and State
Governments will be more clearly defined, leading to improved accountability;
and
- the States are in the best position to assess, plan and deliver local
housing needs.(34)
It is difficult to estimate the actual effects of the proposed reforms
when little detail is available, but it would appear that the biggest
advantage of the new arrangements, assuming that the total amount of housing
stock available for rental purposes either remains the same or grows after
these reforms are implemented, is that they will allow greater choice
for tenants. Public housing tenants now on lengthy waiting lists may be
able to rent in the private sector using their rent assistance payment,
and they will have the option of being more mobile (for example, moving
interstate) and following the geographical locations that offer the best
employment prospects.
As well, it is argued that an important equity consideration is addressed
by the proposed reforms. The changes will see private renters get more
support than they have in the past when compared to the level of support
given to those in the public housing sector. At present, public tenants
receive an average of approximately $4 000 per annum in assistance compared
to an average level of assistance of $1 500 per annum for private renters
via rent assistance.(35) However, this move towards greater equity does
raise a question in relation to funding of the new reforms. As was mentioned
earlier, the Commonwealth Government has promised that under the new arrangements
no new public housing tenants will pay more than 25% of their incomes
in rent and existing public housing tenants will not be worse off. Given
this promise and the fact that private rent assistance is also due to
increase substantially, it may be difficult for the Commonwealth to ensure
that reforms are revenue neutral.
The new arrangements would also see a much clearer delineation of roles
and responsibilities between the Commonwealth and the States and should
lessen many of the current problems related to overlapping responsibilities
and lack of clarity about respective roles that have been highlighted
by several reports on the operation of the CSHA.
However, critics of the reforms point to the possibility of some serious
shortcomings with the new arrangements. Of particular concern is the fact
that security of tenure, which has been a strength of public housing to
date, will not be as readily available to as many tenants, particularly
those who transfer from the public to the private sector. Disadvantaged
groups such as Aboriginal and Torres Strait Islanders, the disabled and
single parents, which have traditionally relied on the public sector for
housing, may encounter increased discrimination and not find the private
sector as 'accommodating' as the public sector alternative. There are
likely to be ways for landlords/agents to avoid such persons as customers
without running the risk of clearly violating anti-discrimination provisions.
This sort of problem, which already exists in some areas, could be exacerbated
if disadvantaged groups have to rely more on the private rental market
for accommodation than has been the case so far.
There is also the possibility, in the absence of rent control, of private
landlords pushing up rents, particularly in housing sub-markets where
there is a general shortage of available accommodation. This could become
a big problem in the event of any State or Territory sell off of their
current stock of public housing. If there is a substantial increase in
the demand for low cost rental housing due to the large cash injection
provided by the new rental assistance arrangement, then the temptation
for landlords to increase rent will obviously be there.(36) Apart from
the imposition of very politically unpopular rent controls there would
appear to be very little that the various governments can do to make sure
this will not happen.
An important point to note is that it appears to be highly likely that
the new arrangements, if implemented, will have a differing impact not
only on families experiencing differing economic and social circumstances
but also in terms of geographical location. This means that the new system
will need to be adaptable and flexible so that adjustments can be made
if particular areas or families are in some way disadvantaged when the
changes are implemented.
Notwithstanding earlier apparent agreement on the general thrust of
the proposed changes, progress on the actual implementation of the reforms
has been stalled - not least because the States and Territories now feel
that they and their public housing tenants will not necessarily benefit
from the changes as outlined to date. For example, the following resolution
was agreed to by the State and Territory Housing Ministers at a meeting
in Brisbane on 20 January this year:
State and Territory Housing Ministers meeting in Brisbane today reaffirmed
their commitment to public housing for those in need and condemned any
proposed cuts in public housing by the Federal Government. Ministers also
condemned the Commonwealth's decision to fund State capital programs only
until 31 December 1997, noting the immediate impact on the provision of
public housing to the needy and the residential construction sector. Ministers
reaffirmed their fundamental commitment to adequately house more low income,
disadvantaged people in a more effective manner. The Ministers demanded
that the Federal Government immediately guarantee funding at existing
levels for the next two years while a housing reform process is being
concluded. Ministers expressed concern that the federal reform agenda
had stalled and they called on the Federal Government to recommence meaningful
discussions with the States and Territories to progress national housing
reform. Ministers had grave reservations about the proposed Commonwealth
model for reform which totally replaces State capital funding with income
assistance. As a demonstration of the States' and Territories' commitment
to reform, Ministers today directed their officials to undertake a complete
examination of pricing, eligibility and tenure policies as a matter of
urgency. Ministers are confident that by pursuing theses recommendations
services can be improved for those in need and also meet the objectives
of national housing reform.(37)
The sentiment expressed in this Housing Ministers' resolution, combined
with the fact that the Senate Community Affairs References Committee is
currently holding an inquiry into the proposed reforms (with a reporting
date of 30 September 1997), suggests that the stalemate over the changes
may continue for some time, notwithstanding the fact the Commonwealth
has now (in the context of the 1997-98 Budget) promised funding for the
CSHA at least until the current interim arrangements expire in June 1999.
It is not only the Housing Ministers' from the various States and Territories
that have expressed reservations about the proposed reforms to the public
housing sector. Other groups and bodies have also expressed concerns about
the Commonwealth's intentions. For example, National Shelter (the peak
body representing consumers of public and community housing) oppose the
proposed changes arguing that it would take a 'miracle' for the Government's
plan to succeed. Monica Wolf, the executive director of National Shelter,
estimates that the Government would need to put in an additional $2b to
$2.5b into the public housing system if it is to keep its pledge upon
coming to office of ensuring a continued supply of public housing, of
ensuring that no public tenant would pay no more than 25% of their income
in rent and implementing measures to reduce the poverty problem in the
private rental market.(38)
Others have also expressed concern about the plan to shift money from
public housing to rental subsidies in an attempt to help low income earners
in the private rental sector. According to John Daziel, a spokesman for
the Salvation Army, the proposal will discriminate against people who
are jobless...'It will lead to landlords giving preference to renters
who have jobs (and)...low income renters will not have the skills or powers
to insist on their housing rights.' (39) For Don Siemon, the social policy
coordinator for the Brotherhood of St Laurence, the choices that governments
face were clear:
Are we prepared to develop a system which actively alleviates poverty
and is a community asset for generations to come, or will we leave people
with only a pension or unemployment allowance to their own devices in
the chance that they can turn up a decent home at a rent they can afford
through the market.(40)
The key challenge for the Commonwealth is to come up with an acceptable
package that is adaptable and flexible enough to be able to take into
account any unforeseen negative consequences that may arise from the reforms
proposed. Some of the concerns raised about the proposed reforms, if they
do eventuate, could see some people far worse off than they are now. If
the new package, when it is agreed to, has allowances for future adjustments
and 'fine tuning' then any shortcomings may be able to be addressed as
they arise. This is particularly important given the arguments that the
housing reforms are likely to affect different areas of Australia in different
ways and that they are likely to have a different impact on people depending
on their circumstances.
- National Housing Strategy, Agenda for Action, December 1992:
4.
- Department of Social Security, Housing Assistance Act 1989 Annual
Report 1994-95, Canberra, AGPS, 1996: 1.
- As quoted in Industry Commission Report No. 34, Public Housing
Volume 1, November 1993 : 24
- Department of Social Security op.cit.: 7
- ibid: 18-19.
- ibid: 47
- Figures provided by the Department of Social Security (Housing Division).
- Figures provided by the Department of Social Security (Housing Division).
- Department of Social Security, Portfolio Budget Statements 1996-97:
179.
- 1997-98 Budget Paper No.2 : 132
- ibid :132
- Recital D of the Housing Assistance Act 1989.
- Department of Social Security, Housing Assistance Act 1989 Annual
Report 1994-95, op. cit.: 45-47.
- Australian Institute of Health and Welfare, Public Housing in Australia,
Canberra, AGPS, 1994: 129-30.
- Department of Social Security, Housing Assistance Act 1989 Annual
Report 1994-95, op. cit.: 58.
- Australian Institute of Health and Welfare, op. cit.: 115.
- Industry Commission, Public Housing, Canberra, AGPS,
1993: 10.
- ABS Cat. No. 4138.0, Renters in Australia, April 1994: 33.
- Australian Institute of Health and Welfare, op. cit.: 6.
- ABS Catalogue No. 4132.0, op. cit.: 27.
- Industry Commission, op. cit.: xv.
- Australian Council of Social Service, Issues and Options for Public
Housing Reform (ACOSS Paper No. 67), Surry Hills, ACOSS, 1994: vi.
- ibid: vi.
- ibid: vii.
- loc. cit.
- ibid: viii.
- ibid: x.
- National Housing Strategy, Agenda for Action, December 1992:
ix
- Australian Institute of Health and Welfare, op. cit.: 7
- Steering Committee for the Review of Commonwealth-State Service Provision,
Report on Government Service Provision, December 1995: 127-8.
- Australian Financial Review, 11-12 December 1996.
- For example, see Senator Jocelyn Newman, Information - Housing
Reform, Media release 23 September 1996
- Senator Jocelyn Newman, Housing Ministers' Conference, Media
release, 20 September 1996.
- Senator Jocelyn Newman, Housing Reform Kit, 24 September 1996.
- ibid.
- For example, see Stan Sharkey and Chris Sheil, 'Housing Reform an
Illusion', Australian Financial Review, 25 November 1996
- Obtained through the Info Xchange on the Internet at http://infoxchange.net.au.
- Canberra Times, 17 August 1996
- Age, 1 August 1996
- ibid, 1 August 1996
The information in this Appendix is taken from the Housing Reform
Kit released by the Department of Social Security on 20 September
1996.
Annual Commonwealth State Housing Agreement Expenditure on Housing Assistance
1995-96
Table 1: CSHA Expenditure by State/Territory 1995-96
$m (rounded) NSW Vic Qld WA SA Tas ACT NT Total
Commonwealth 343.5 243 200.8 108.3 86.5 29.6 21.2 34.8 1 068
contribution
State 142.3 105 75.7 40 34.4 12.9 9.6 7 427
contribution
Total 485.8 347.9 276.4 148.4 120.8 42.5 30.8 41.8 1 495
Private renters
- Total annual Commonwealth payments on Rent Assistance are $1.6 billion.
- About 20 per cent of Australian households (nearly 1.47 million) rent
privately. Of these, around 45 per cent receive Rent Assistance payments
as individuals and families.
- Rent Assistance is paid to recipients of DSS pensions, allowances
and family payment for low income working families who rent in the private
rental market. Assistance is only paid where private rents exceed minimum
thresholds (which currently range from $37.30 per week for singles and
$49.20 for families with children).
- There is no variation in the current Rent Assistance payments to provide
for those living in higher housing cost areas e.g. Sydney.
- Some 43 per cent of individuals and families receiving Rent Assistance
pay more than 30 per cent of their income in rent.
- Each year an additional 140 000 private dwellings come onto the private
housing market.
- Average annual Rent Assistance is $1 500 per recipient.
- Vacancy rates vary by location and move in a cyclical pattern. Vacancy
rates by major city are outlined in Table 2.
Table 2: Private Rental Vacancy Rates by Capital City
City Average vacancy rate City Average vacancy rate
Sydney 1.4% Perth 4.3%
Melbourne 2.1% Hobart 5.6%
Brisbane 5.1% Canberra 4.7%
Adelaide 4.3% Darwin 4.3%
Source: REIA Market Facts April 1996
- The Real Estate Institute of Australia considers that a rental market
is in equilibrium with a vacancy rate of around 3%. Vacancy rates in
Sydney are improving and in Melbourne have bottomed out.
Public Housing
- In 1995-96 an estimated 386 000 public rental households.
- In 1995-96, an estimated 337 000 households received public housing
rebated rents ('subsidies')-rents are generally set at around 20 to
25 per cent of household gross income. Less than 15 per cent of public
tenants pay full market rent.
- The national public housing stock is worth $34 billion and is managed
by State/Territory Housing Authorities.
- Average annual public housing subsidy per household is $4 000.
- In the 1994-95 financial year only some 5 000 public housing dwellings
were added to public housing stock for the $1.5 billion expenditure
in the Program compared with 14 000 acquisitions in 1989.
- Waiting times for public housing vary from State to State. The highest
is NSW where some applicants have been waiting 10 years. Many of these
waiting lists allocate housing on the basis of length of wait, rather
than relative need. Once families gain access to public housing they
are able to remain irrespective of their income.
- In 1994-95, 235 000 people were on public housing waiting lists.
Table 3: Net Changes to Waiting Lists for Public Rental Housing 1994-95
NSW Vic Qld WA SA Tas ACT NT Aust.
Waiting list 87 171 49 259 27 699 14 348 40 205 3 834 7 072 5 784 235 372
at 1/7/94
Applicants 29 130 18 331 14 799 13 157 12 153 5 300 5 342 2 827 103 416
added
Applicants 17 104 6 481 3 910 6 815 6 822 3 400 2 604 2 196 49 332
cancelled or
withdrawn
Dwellings 10 998 9 421 10 065 7 353 8 072 2 772 2 479 1 323 52 483
allocated to
those on
waiting list
Waiting list 88 199 51 688 28 523 13 337 37 464 2 962 7 331 5 092 234 596
at 30/6/95
Allocations of 1 745 2 400 970 961 1 173 447 799 204 8 699
Emergency/
Priority
Accommodation
(included in
above)
Proportion of 15.9 25.5 9.6 13.1 14.5 16.1 32.2 15.4 16.6
all allocations
made on a
priority basis
(%)
Source: Housing Assistance Act 1989 Annual Report 1994-95
Comparison of Subsidies for Public Housing and Private Rental Assistance
- The current system substantially advantages public housing tenants.
While private renters receive an annual subsidy of around $1 500 a year
public households receive an average annual subsidy of $4 000.
- Under the current arrangements the gap between these two subsidy levels
grows annually as redevelopment and upgrading of public housing stock
increases the subsidy differential.
Table 4: Private and Public Renters Subsidy Differentials
Median Rent* Private Renter Public Renter
(Rent Assistance) (Rent Rebate)
Sydney $180 pw $43.00 pw $112.00 pw
Melbourne $150 pw $43.00 pw $82.00 pw
Perth $130 pw $43.00 pw $59.00 pw
*Median rents as reflected in the ABS rental tenants survey 1994. (Unemployed
couple with 2 dependent children renting a three bedroom median priced dwelling)
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