Current Issues
The Commonwealth-State Housing Agreement
E-Brief: Online Only issued 29 November 2001
Greg McIntosh,
Analysis and Policy
Janet Phillips,
Information/E-links
Social Policy Group
Governments in Australia provide a range of support and
assistance for housing. The two main programs dedicated to specific
housing assistance are the
Commonwealth-State Housing Agreement (CSHA) and
Rent Assistance (RA).
The CSHA is a joint Commonwealth-State arrangement which aims to
assist both renters and purchasers obtain appropriate
accommodation. It is mainly concerned with the provision of public
housing, but also provides funding for other types of tenure as
well. The main identified funding priorities of the CSHA are public
housing, community housing, crisis accommodation, Aboriginal rental
housing, private rental support and home ownership support. On
average, the Commonwealth provides approximately two-thirds of
total funding for the CSHA with the remainder being provided by the
States and Territories. According to data published by the
Commonwealth Department of Family and Community Services (see Table
below for full details) the Commonwealth provided $957.6m for the
CSHA in 1999–2000.
Rent Assistance is fully funded by the Commonwealth and provides
rental assistance to low income households and individuals in the
private rental market. Assistance is in the form of a non-taxable
income supplement paid to people who receive income support
payments or more than minimum family payment in recognition of
housing costs in the private market. From the mid 1990s total
outlays on RA have exceeded those provided on the CSHA, for
example, in 1999–2000 an excess of $1.5 billion was spent on
the provision of RA.
As well as the CSHA and the provision of Rent Assistance to
private renters, the Commonwealth also provides a range of other
housing assistance. The main forms of this other assistance
include:
For an overview of the housing system as a whole, including the
private market and details on social housing in general see the
Australasian Housing
Information Network portal.
Additional background and data can also be found in Chapter 16:
Housing of the Productivity Commission's Report on
Government Services 2001.
Initiatives by the Chifley Labor 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. It reported that there was an
estimated housing shortage of 300 000 dwellings. The
Commission advised the Commonwealth to take an active role in
providing housing to overcome this shortage. 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, 1981, 1984, 1989, 1996 and
1999. 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.
The first CSHA allocated funds for the construction of new
dwellings only and 50 per cent of such housing had to go to
ex-defence force personnel. The housing was to be for rental
only—the Commonwealth provided loan funding and the States
were to be responsible for service delivery. Much of the housing
constructed via the first CSHA was on large estates on the
outskirts of the major cities in Australia and was partly
responsible for the urban sprawl that characterised the post war
years.
Over the period 1956 to 1973 the main aim of the CSHA was to
encourage home ownership via the provision of low interest loans to
home builders and the sale of houses on highly concessional terms.
Public rental housing was still important, particularly for low
income households who could not afford to buy a home. Throughout
this period the States had considerable leeway under the CSHA
(including the level of rents, type of rebates, eligibility
criteria and even the level of funding) and this resulted in
substantial policy and funding differences between the various
jurisdictions.
In the 1973 Agreement the emphasis moved towards targeting
housing assistance to low income earners and new eligibility
requirements were introduced for both rental and home ownership. As
well, it was specified that only 30 per cent of new CSHA housing
could be sold to home purchasers.
The 1978 Agreement further limited housing assistance to those
in most need—grants were given for pensioner assistance and
others in need. This Agreement also saw an expansion in the types
of housing provided under the CSHA including the leasing of
dwellings, joint ventures, community housing and interest subsidies
for those buying a home. In the context of the 1978–79 Budget
the Commonwealth included a requirement that the States match
Commonwealth CSHA advances.
Whilst broadly similar to the 1978 CSHA, the 1981 Agreement
included formal State matching requirements in terms of funding and
an increasing proportion of Commonwealth funding was earmarked for
specific groups. However, with respect to untied funds the States
were free to allocate money to rental or home purchase assistance
without restriction.
The main aim of the 1984 Agreement was to increase the level of
public rental housing. Various 'ear marked' grants were replaced
with a number of specific programs aimed at particular groups and
segments of the housing market: rental housing for Aborigines,
rental housing for pensioners, crisis accommodation, local
government and community housing and mortgage and rent assistance.
Home purchase loan repayments were to be set at market levels and
rent levels for public housing were to be set on a formula outlined
in the Agreement.
This Agreement also emphasised the need for additions to be made
to the level of public housing stock, or at least to halt the
decline in the level of stock available. Commonwealth assistance
was to be made in the form of grants, not loans as in the past, and
the States were required to match at least half of the
Commonwealth's untied grants with funding of their own. Joint
Commonwealth-State assistance plans were introduced and an
increasing emphasis was placed on user rights for those in rental
housing.
(From the mid to late 1980s the Commonwealth began to place a
greater emphasis on private rent assistance via the Commonwealth
Rent Assistance (RA) scheme. Expenditure on RA increased from
approximately one quarter of CSHA expenditure in 1984–85 to
approximately one and a half times the expenditure on CSHA by
1994–95).
One of the key features of this Agreement was an emphasis on
housing outcomes for individuals as opposed to building up the
stock of public housing. Another emphasis was on improving
accountability for the housing assistance provided including the
setting of targets and the measurement of outcomes.
The
current CSHA is due to expire in mid 2003 and already there are
moves underway to begin negotiations for a new 2003 Agreement. The
1999 Agreement focuses on helping families and individuals who
cannot be adequately housed in the private market. It builds on the
1996 Agreement in terms of strengthening accountability and
reporting mechanisms and also how outcomes are measured. A key
feature of this Agreement is that housing assistance should be
based on need as opposed to the earlier notion of security of
tenure. As well, bi-lateral agreements between each jurisdiction
and the Commonwealth have become the norm.
The following Table from the Commonwealth Department of Family
and Community Services shows Commonwealth spending on the CSHA over
the period 1994–95 to 2000–01. Figures are given for
the main sub-sections and programs of the CSHA and State/Territory
breakdowns are shown. It should noted that three Commonwealth-State
Housing Agreements (the 1989, 1996 and 1999 Agreements) are
covered, at least partly, in the data shown on the Table.
Commonwealth Funding for the CSHA: 1994–95 to
2000–01
The 1989 CSHA
1994–95
|
Untied Grants
|
Pensioner Rental Housing
Program
|
Aboriginal Rental Housing
Program
|
Mortgage and Rent Assistance
Program
|
Crisis Accomm Program
|
Community Housing Program
|
Total
|
($'000)
|
NSW |
267 845
|
18 960
|
20 597
|
10 495
|
18 261
|
21 253
|
357 411
|
VIC |
199 978
|
11 432
|
3 638
|
7 785
|
9 987
|
19 335
|
252 155
|
QLD |
133 783
|
9 518
|
30 313
|
5 498
|
8 946
|
12 085
|
200 143
|
WA |
70 301
|
4 093
|
15 862
|
5 192
|
467
|
5 353
|
101 268
|
SA |
53 592
|
3 852
|
9 224
|
2555
|
3 236
|
4 751
|
77 210
|
TAS |
19 244
|
912
|
-
|
822
|
-
|
1 857
|
22 835
|
ACT |
18 218
|
523
|
-
|
522
|
890
|
1 749
|
21 902
|
NT |
13 518
|
523
|
19 247
|
297
|
398
|
358
|
34 341
|
TOTAL |
776 479
|
49 813
|
98 881
|
33 166
|
42 185
|
66 741
|
1 067 265
|
|
|
|
|
|
|
|
|
1995–96 |
|
|
|
|
|
|
|
NSW |
257 356
|
18 520
|
17 777
|
10 481
|
14 803
|
24 257
|
343 194
|
VIC |
185 812
|
10 882
|
3 638
|
7 734
|
9 921
|
18 843
|
236 830
|
QLD |
137 217
|
9 791
|
30 405
|
5 574
|
7 150
|
13 540
|
203 677
|
WA |
70 714
|
4 153
|
15 862
|
2 956
|
7 096
|
7 119
|
107 900
|
SA |
50 508
|
3 945
|
8 342
|
2 537
|
4 554
|
6 158
|
76 044
|
TAS |
29 617
|
1 429
|
1 392
|
815
|
2 164
|
2 258
|
37 675
|
ACT |
18 182
|
523
|
-
|
520
|
753
|
1 161
|
21 139
|
NT |
13 510
|
523
|
19 669
|
297
|
476
|
1 016
|
35 491
|
TOTAL |
762 916
|
49 766
|
97 085
|
30 914
|
46 917
|
74 352
|
1 061 950
|
The 1996 CSHA
1996–97
|
Base Funding (1)
(Net of SFCs)
|
Aboriginal Rental Housing
Program
|
Crisis Accom Program
|
Community Housing Program
|
Total
|
State Fiscal Contribution
(Actual)
|
($'000)
|
NSW |
290 663
|
17 777
|
13 432
|
21 675
|
343 547
|
0
|
VIC |
213 536
|
3 638
|
9 868
|
15 924
|
242 966
|
0
|
QLD (2) |
43 249
|
25 227
|
7 238
|
11 679
|
87 393
|
113 368
|
WA |
82 498
|
15 862
|
3 812
|
6 152
|
108 324
|
0
|
SA |
51 696
|
8 342
|
3 221
|
5 197
|
68 456
|
18 000
|
TAS |
26 235
|
696
|
1 033
|
1 667
|
29 631
|
0
|
ACT |
9 137
|
0
|
665
|
1 074
|
10 876
|
10 366
|
NT |
14 370
|
19 458
|
386
|
622
|
34 836
|
0
|
TOTAL |
731 384
|
91 000
|
39 655
|
63 990
|
926 029
|
141 734
|
|
|
|
|
|
|
|
1997–98 |
|
|
|
|
|
|
NSW |
259 265
|
17 777
|
13 433
|
21 676
|
312 151
|
0
|
VIC |
190 333
|
3 638
|
9 861
|
15 913
|
219 745
|
0
|
QLD (3) |
22 321
|
25 227
|
7 263
|
11 720
|
66 531
|
117 857
|
WA |
74 058
|
15 862
|
3 837
|
6 192
|
99 949
|
0
|
SA |
41 351
|
8 342
|
3 178
|
5 129
|
58 000
|
20 000
|
TAS |
23 628
|
696
|
1 021
|
1 647
|
26 992
|
0
|
ACT |
12 615
|
0
|
664
|
1 071
|
14 350
|
5 308
|
NT |
7 167
|
19 458
|
398
|
642
|
27 665
|
6 500
|
TOTAL |
630 738
|
91 000
|
39 655
|
63 990
|
825 383
|
149 665
|
|
|
|
|
|
|
|
1998–99 |
|
|
|
|
|
|
NSW |
256 461
|
17 777
|
13 425
|
21 663
|
309 326
|
0
|
VIC |
188 181
|
3 638
|
9 850
|
15 896
|
217 565
|
0
|
QLD (4) |
84 094
|
25 227
|
7 303
|
11 784
|
128 408
|
55 412
|
WA |
73 653
|
15 862
|
3 855
|
6 221
|
99 591
|
0
|
SA |
55 306
|
8 342
|
3 157
|
5 094
|
71 899
|
5 000
|
TAS |
23 171
|
696
|
1 004
|
1 621
|
26 492
|
0
|
ACT |
12 295
|
0
|
658
|
1 061
|
14 014
|
5 400
|
NT |
10 621
|
19 458
|
403
|
650
|
31 132
|
3 043
|
TOTAL |
703 782
|
91 000
|
39 655
|
63 990
|
898 427
|
68 855
|
Notes:
(1) Commonwealth allocations were reduced for 1996–97 to
1998–99 as some States chose to use CSHA funds to offset
their State Fiscal Contribution (SFC) liabilities to the
Commonwealth Government's debt reduction program, which was agreed
at the 1996 Premiers' Conference.
(2) QLD 1996–97 SFC payment is comprised of reductions to
several portfolios but payment was made from CSHA grants for
administrative simplicity. Queensland agreed to transfer
approximately $84m from other State sources for CSHA
purposes.
(3) QLD 1997–98 SFC payment is comprised of reductions to
several portfolios but payment was made from SHA grants for
administrative simplicity. Queensland agreed to transfer
approximately $89m from other State sources for CSHA
purposes.
(4) QLD 1998–99 SFC payment is comprised of reductions to
several portfolios. QLD agreed to transfer approximately $40m from
other State sources for CSHA purposes.
The 1999 CSHA
1999–2000 |
Base Funding
|
GST Compensation
|
Aboriginal Rental Housing
Program
|
Crisis Accom Program
|
Community Housing Program
|
Total Commonwealth
|
($'000)
|
NSW |
253 020
|
-
|
17 777
|
13 417
|
21 651
|
305 865
|
VIC |
185 864
|
-
|
3 638
|
9 856
|
15 905
|
215 263
|
QLD |
138 124
|
-
|
25 227
|
7 325
|
11 819
|
182 495
|
WA |
73 232
|
-
|
15 862
|
3 884
|
6 267
|
99 245
|
SA |
59 068
|
-
|
8 342
|
3 132
|
5 054
|
75 596
|
TAS |
22 705
|
-
|
696
|
990
|
1 598
|
25 989
|
ACT |
17 394
|
-
|
0
|
649
|
1 047
|
19 090
|
NT |
13 557
|
-
|
19 458
|
402
|
649
|
34 066
|
TOTAL |
762 964
|
-
|
91 000
|
39 655
|
63 990
|
957 609
|
|
|
|
|
|
|
|
2000–01 |
|
|
|
|
|
|
NSW |
249 635
|
23 000
|
17 777
|
13 410
|
21 640
|
325 462
|
VIC |
183 463
|
15 000
|
3 638
|
9 856
|
15 904
|
227 861
|
QLD |
136 954
|
19 850
|
25 227
|
7 357
|
11 872
|
201 260
|
WA |
72 505
|
8 533
|
15 862
|
3 895
|
6 285
|
107 080
|
SA |
57 878
|
9 517
|
8 342
|
3 109
|
5 017
|
83 863
|
TAS |
22 260
|
2 617
|
696
|
977
|
1 576
|
28 126
|
ACT |
17 208
|
5 900
|
0
|
647
|
1 044
|
24 799
|
NT |
13 485
|
5 250
|
19 458
|
404
|
652
|
39 249
|
TOTAL |
753 388
|
89 667
|
91 000
|
39 655
|
63 990
|
1 037 700
|
NB: The 2000–2001 table shows projected expenditure as at
28 February 2001.
Source: Answer to Senate Estimates Question on Notice No. 46(a)
asked by Senator Evans on 20 February 2001. Senate Community
Affairs Legislation Committee, Additional Information Received,
Family and Community Services Portfolio, Volume 1, May
2001, pp. 117–119.
Commonwealth funding for the CSHA has been reduced in real terms
over the period covered in the Table. During the course of the 1996
CSHA some State/Territory jurisdictions (Queensland, South
Australia and the two Territories) did not take up their full
Commonwealth CSHA allocations so as to offset their State Fiscal
Contributions—see Notes for more details.If future
projections of Commonwealth funding are accurate this reduction in
support is likely to continue into the future. For example,
projected Commonwealth outlays for the CSHA are $1028m in
2001–02, $1019m in 2002–03, $920m in 2003–04 and
$911m in 2004–05. (Answer to Senate Estimates Question on
Notice No 46 (b): Senate Community Affairs Legislation Committee,
Additional Information Received, Family and Community Services
Portfolio, Volume 1, May 2001, p. 120.)
As mentioned earlier however, it should be noted that as funding
for the CSHA has been declining, Commonwealth funding for Rent
Assistance has been increasing, for example, outlays on Rent
Assistance have risen from $1.45 billion in 1994–95 to $1.7
billion in 2000–01 (Department of Family and Community
Services, Annual Report 2000–01, p. 111). This is in
line with the recent trend towards relying more on the private
rental market to provide housing for those in need.
The increased expenditure on RA over the past 10 to 15 years has
been driven by both increases in the amount of individual RA
provided and expanded access in terms of those eligible for RA. The
major changes to RA affecting access to the assistance have
been:
- July 1987 – the separate income test for RA was abolished
and RA was paid as a component of the income test rate of income
support payable. This considerably expanded access to RA to
part-rate income support recipients.
- December 1987 – For the first time RA was paid to
families with children paid as a part of the Family Allowance
Supplement. Previously RA was only payable attached to an income
support pension/allowance. This considerably expanded access to
RA.
- June 1989 - $5 a week was added to the RA for families with
children. Rent threshold above which RA was payable was raised to
$20 per week.
- June 1990 – higher RA rate paid to families with 3 or
more children.
- March 1991 – Twice yearly CPI indexation of the RA rate
was introduced.
- March 1993 – Universal RA rent threshold varied for
families with greater numbers of children and the withdrawal rate
up to the maximum rate eased to 17 cents in the dollar.
- March 1994 – abolition of RA waiting periods for
allowance recipients.
- March 1996 – maximum RA rate was increased by $5 per
fortnight for families with children.
- July 2000 – the maximum rate of RA was increased by 4 per
cent as part of the compensation for the GST.
A key concern in relation to housing in Australia at present is
the lack of affordable and appropriate housing, particularly for
those families and individuals 'caught in the middle', i.e. those
who find it difficult to access public housing but who cannot
afford to buy or rent privately. Recent changes to public housing
including declining CSHA outlays and changing tenure and
eligibility requirements has meant that only those on very low
incomes are being housed in the public sector. Notwithstanding
increasing outlays on RA, the private rental market is increasingly
out of reach for many families and individuals whose slightly
higher incomes also make it difficult for them to access the public
housing sector. Housing researcher, Owen Donald (Australian Housing
and Urban Research Institute, Research and Policy
Bulletin, Issue 3, August 2001) sums up the situation
thus:
- Many low income people are paying in excess of 30 per cent of
their gross income for housing. This is commonly regarded as the
limit of housing affordability for people on low incomes. Above
this level they will need to make choices about cutting back on
essential expenses.
- Present policy settings are unable to generate a sufficient
supply of affordable housing in vibrant labour markets. This is a
crucial issue for achieving welfare reform and combating economic
and social exclusion. It needs to be resolved to avoid
concentrating low-income people in economically depressed regions
with few job prospects.
- The maximum rate of Commonwealth Rent Assistance is well below
the level required to make private rents affordable for low-income
people in most capital cities and some other locations.
- Most states' public housing systems are under stress, with
significant financial pressures associated with: falling rental
income; the maintenance and refurbishment of ageing stock; and the
need for major adjustments to take account of demographic and
social changes.
- A major challenge is to deliver more seamlessly a range of
housing, health and welfare services to address the individual
circumstances of people with complex and inter-related needs (such
as for the frail aged or homeless people with substance abuse
problems).
- There is a profound shortage of affordable and adequate housing
for Indigenous Australians. Many communities in remote areas lack
access to basic facilities for essential good health.
Australasian
Housing Information Network
Australian Housing and Urban
Research Institute (AHURI)
Commonwealth Department of Family and Community Services -
Housing Support
Human Rights and Equal Opportunity Commission - housing
page
Productivity Commission, Report on Government Services
2001, Chapter 16:
Housing
Australian Institute of Health and Welfare, Australia's
Welfare 1999: services and assistance, Chapter
5: Assistance for Housing
National
Housing Conference, 24–26 October 2001
NSW: Department of
Housing
Vic.:
Office of Housing
QLD: Department
of Housing
WA: Department of Housing
and Works
SA: Housing
Trust; Community Housing
Authority
Tas.: Housing
Tasmania
NT: Territory
Housing
ACT: ACT Housing;
Housing Policy and
Planning
Australasian Housing
Institute
Australian Council of Social
Service (ACOSS)
Australian Housing
Information Network
Community Housing Federation
of Australia
National Community Housing
Forum
National Youth Coalition
for Housing
Shelter State/Territory organisations: NSW, Vic., QLD, WA, SA, Tas.
Habitat
International Coalition
Housing New Zealand
International Union of
Tenants
New Zealand Ministry of
Housing
UK Housing
Corporation
UK Shelter
United Nations Human Settlements
Programme (UN-HABITAT)
US Department of Housing
US Census
Bureau – housing information
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