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State and territory housing debts


Recent media reports  indicated that Senator Jacquie Lambie intended to support the Government’s (now passed) tax cuts if the Government provided further assistance to help tackle homelessness in Tasmania.

In making her case, Senator Lambie referred to Tasmania’s outstanding housing debt to the Australian Government. Senator Lambie argued that the repayments and interest on this debt are detracting from the state’s ability to build further social housing and reduce housing waiting lists.

Senator Lambie’s call for Australian Government assistance follows reports last month that Tasmanian’s Housing Minister, Roger Jaensch intended to approach the Government with proposals on waiving the debt and other ways to address homelessness. It has been reported that in 2007 Tasmanian Premier Paul Lennon made a similar proposal to Prime Minister John Howard and opposition leader, Kevin Rudd.

It would appear that the ACT Government has also recently sought to renegotiate the terms of its housing debt with the Government, in order to reduce its financing costs (separate to the $1 billion loan to cover the ‘Mr Fluffy’ crisis).

Origins of the debts

Prior to the introduction of the National Affordable Housing Agreement (NAHA) in 2008, and, more recently, the National Housing and Homelessness Agreement (NHHA), the Commonwealth-State Housing Agreement (CSHA) was the main means through which the Australian Government, along with the state and territory governments, provided funding for public housing.

 

Under the CSHA the Commonwealth made advances to the states from 1945 to the mid- to late-1980s to provide financial assistance for building new public housing and low interest loans to home builders, as well as a range of other housing-related purposes. The loans were provided at a fixed interest rate discounted from the long-term prevailing market rate and the repayments structured so as to allow the loans to be fully repaid over a term of 53 years.

 

In addition to CSHA loans, the Commonwealth made housing-related loans to the states and territories under States (Works and Housing) Assistance Acts. In the case of the Northern Territory and Australian Capital Territory, loans were also made relating to assets transferred from the Commonwealth to these jurisdictions at the time of their self-government (in 1978 and 1989, respectively).

 

State and territory housing-related debts

Budget paper number three includes details of the debts owed by state and territory governments to the Commonwealth, including housing-related debts.  

As the table below shows, as at 30 June 2018 the states and territories owed over $2 billion to the Commonwealth in relation to housing loans. This figure includes CSHA loans, housing for service personnel loans, other housing loans, and Loan Council housing nominations.

Tasmania’s housing-related debt to the Commonwealth stood at just under $149 million.

Outstanding state and territory housing-related debts as at 30 June 2018

$’000

NSW

VIC

QLD

WA

SA

TAS

ACT

NT

Total

Commonwealth-State Housing Agreement loans

446,487

-

130,143

122,296

33,945

62,969

-

20,823

816,663

Housing for service personnel

36,779

-

20,247

3,411

1,713

-

-

-

62,149

Other housing

-

-

-

-

-

-

123,161

40,408

163,569

Loan Council – housing nominations

322,595

-

115,951

197,916

140,631

85,635

-

113,347

976,075

Total

805,861

-

266,341

323,623

176,289

148,604

123,161

174,578

2,018,457

Source: Australian Government, Federal Financial Relations, Budget paper no. 3: 2019–20 (Appendix D: debt transactions).

The first of the following tables shows interest payments and repayments from Tasmania to the Australian Government in respect of CSHA loans and Loan Council housing nominations over the forward estimates period.

The second table shows the amount of funding provided by the Australian Government to Tasmania under the NHHA to support the provision of affordable housing and homelessness services. As can be seen, for every dollar the Tasmanian Government receives in NHHA funding it pays back around half in housing-related debt.

Summary of Tasmanian housing-related debt repayments and interest, 2018–19 to 2022–23

$’000

2018–19

2019–20

2020–21

2021–22

2022–23

Repayment

7,916

8,017

8,122

8,259

8,373

Interest

8,746

8,360

7,967

7,565

7,153

Total

16,662

16,377

16,089

15,824

15,526

Source: Australian Government, Federal Financial Relations, Budget paper no. 3: 2019–20 (Appendix D: debt transactions).

National Housing and Homelessness Agreement funding for Tasmania, 2018–19 to 2022–23

$’000

2018–19

2019–20

2020–21

2021–22

2022–23

NHHA funding

33.2

33.7

34.3

32.8

33.1

Source: Australian Government, Federal Financial Relations, Budget paper no. 3: 2019–20, p. 41.

Waiving of housing-related debts

The waiving of state and territory housing-related debt—such as Senator Lambie reportedly requested—is not without precedent. South Australia has had some of its housing-related loan debt forgiven in the past.

 

In the 2013 Economic Statement there is a line entry for South Australian Government housing stimulus assistance. Associated with that measure were:

  • a payment in 2012–13 of $283.9m for ‘South Australian Government housing stimulus assistance’ and

  • a revenue loss of $62.7m projected over 2013–14 to 2016–17.

The payment of $283.9 million is referred to as ‘the forgiveness of South Australian Government housing debt’ in the 2012–13 Final Budget Outcome. The South Australian 2013–14 Budget Statement refers to Commonwealth Government ‘relief on $320 million of South Australia’s public housing payments as part of a package to assist the unique circumstances facing housing construction in South Australia’.

The difference between the $283.9 million and the $320 million may be a result of how the figure is recorded. That is, the Commonwealth may have recorded the present value (discounting future receipts from South Australia).  

While the amount of debt forgiven is likely to have represented a significant benefit for South Australia, as can be seen from the first of the above tables, South Australia still has a housing-related debt to the Commonwealth of around $176 million (and there does not appear to be any published analysis of the effects of the reduced debt on overall housing investment).

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