Housing, communities and environment

Budget Review 2019–20 Index

Matthew Thomas and Bill McCormick

Australian Government expenditure on housing and communities in 2018–19 is estimated to be $5.3 billion, representing 1.1 per cent of total Australian Government expenditure.

This administrative category consists of housing, urban and regional development, and environment protection. Table 1 presents a breakdown of funding allocations against these sub-functions.

The environment protection sub-function initiatives include: the protection and conservation of the environment; water and waste management; pollution abatement and environmental research. This includes funding sources such as the Emission Reduction Fund (mentioned in the Fuel and Energy brief) and the Reef Trust.

Table 1: total housing and communities expenditure (millions)

2018–19
(est.)
2019–20
(est.)
2020–21
(est.)
2021–22
(proj.)
2022–23
(proj.)
Housing  3 051  3 141  3 107  3 057  3 096
Urban and regional development  1 288  1 773  1 152  1 399   570
Environment protection   939 992  1 005  1 068  1 101
Total  5 278  5 906  5 264  5 524  4 767

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2019–20, 2019, p. 5–27.

Note: Figures may not add due to rounding.

Key trends

Table 2: real growth rates—housing and communities expenditure, percentages per annum*

2019–20 2020–21 2021–22 2022–23 2019–20 to 2022–23
Housing  0.7 –3.4 –3.9 –1.0 –8.2
Urban and regional development  34.6 –36.6  18.6 –60.2 –70.0
Environment protection  3.3 –1.1  3.8  0.7  3.4
Total  9.4 –13.0  2.5 –15.7 –24.8

Note:

*Estimates of real fiscal growth rates are based on 2017–18 dollars with the consumer price index as the deflator, and have been calculated by the Parliamentary Library. Estimates may vary compared to 2018–19 Budget due to rounding.

Housing

As can be seen from Table 2, expenses for the housing sub-function are estimated to decrease by 8.2 per cent in real terms over the forward estimates. This reduction is largely attributed to decreasing payments under the National Rental Affordability Scheme (NRAS), which was closed to new applicants as a part of the 2014–15 Budget; and ‘a forecast reduction in the construction and acquisition of Defence Housing Australia (DHA) properties in 2020–21’.[1]

Around half of housing sub-function funding is made up of the Australian Government’s contribution to the National Housing and Homelessness Agreement (NHHA). Funding is provided under the NHHA largely for the delivery of social housing and homelessness services.[2] NHHA funding for social housing has been maintained at the same levels as those provided under the previous National Affordable Housing Specific Purpose Payment. Housing experts have argued for some time that Australian Government funding for social housing is insufficient and has failed to keep up with housing and service delivery costs.

It should be noted that funding for housing support is also provided in the form of Commonwealth Rent Assistance (CRA), under the Social security and welfare function. This funding remained relatively constant at around $4.4 billion for each of the three years to 2017–18, with the estimated figure for 2019–20 being $4.6 billion. Successive Australian Governments have for some time placed a greater emphasis on rental subsidies to support eligible renters in the private rental market than on providing support for social housing. 

Further funding for housing support has been provided in recent years through financing of the National Housing Finance and Investment Corporation (NHFIC) and the National Housing Infrastructure Facility (NHIF). As a part of the 2017–18 Budget the Government allocated $63.1 million over the forward estimates towards the establishment of the NHFIC and $118.0 million over three years from 2018–19 towards the NHIF. The NHFIC operates the NHIF and an Affordable Housing Bond Aggregator (AHBA), both of which are intended to encourage private investment in affordable housing.[3]

While a number of housing experts welcomed the introduction of the AHBA, they have pointed out that without government support to close the financing gap between the costs of delivering new community housing and the income received by community housing providers (from concessional rents and CRA), the AHBA is unlikely to result in substantial growth in affordable housing.

It has been reported that community housing organisations have been ‘left confused’ about the absence of funding for community and affordable housing in the Budget. National Shelter spokesperson, Adrian Pisarski is said to have stated: ‘we would have thought that with $100 billion worth of expenditure [on infrastructure] going forward, there could have been something in there for affordable housing, there wasn’t. ... Affordable and social housing is essential infrastructure, so there should have been some direct line linking that spending with affordable housing’.

Environment protection

The environment protection sub-function funding will increase by 3.5 per cent in real terms from
2019–20 to 2022–23 due in part to the new measure Practical Environment Restoration and the Emission Reduction Fund. The latter now forms part of what is termed the Climate Solutions Fund. It will receive $2 billion over 15 years from 2019–20 to ‘boost agricultural productivity, support jobs for Indigenous communities and improve biodiversity and water quality, and reduce greenhouse gas emissions’.

Significant policy announcements

Table 3: Allocation for the Practical Environment Restoration package (millions)

Budget measure 2018–19  2019–20  2020–21  2021–22  2022–23
Practical Environment Restoration 54.8 29.6 28.0 25.0

The $137.4 million package for Practical Environment Restoration will be funded over a four year period and go towards one existing and two new programs:

  • $100.0 million to establish an Environment Restoration Fund to provide grants for on-ground restoration and protection projects focusing on threatened and migratory species and their habitats; coasts and waterways; recycling and waste reduction; and other priority and emerging environmental issues
  • $28.3 million to establish the Communities Environment Program, providing $150,000 to each federal electorate in 2019–20 for up to 20 community led environment projects with grants ranging from $2,500 to $20,000 and
  • an additional $9.2 million to the Wet Tropics Management Authority’s Yellow Crazy Ant Eradication Program to control yellow crazy ants in, and adjacent to, the Wet Tropics World Heritage Area. (Note that separate programs relate to red fire ants and Argentine ants. See separate Agriculture and Water brief).

[1].          The National Rental Affordability Scheme (NRAS) was introduced by the Rudd–Gillard Government in the context of the 2008–09 Budget as a part of its broader package to address housing supply pressures and as part of the stimulus package in response to the global financial crisis (GFC). Under the scheme, the Australian Government provides an annual incentive to investors for up to ten years as a refundable tax offset or payment. This is augmented by a state or territory annual contribution, which may take the form of cash grants, concessions on stamp duty or the provision of discounted land over the same period. Properties developed under the NRAS are made available to low- to middle-income earners at 20 per cent below market price for each of the ten years for which an NRAS incentive is received. NRAS incentives are due to fully expire by the end of the 2026 calendar year.

[2].          Social housing consists of public housing, community housing, state-owned and managed Indigenous housing (SOMIH) and Indigenous community housing.

[3].          The National Housing Finance and Investment Corporation will use the National Housing Infrastructure Facility to provide grants and concessional loans to support the creation of housing-related infrastructure and the Affordable Housing Bond Aggregator to provide finance to registered community housing providers by aggregating their lending requirements and issuing bonds to institutional investors.

 

All online articles accessed April 2019

For copyright reasons some linked items are only available to members of Parliament.


© Commonwealth of Australia

Creative commons logo

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

This work has been prepared to support the work of the Australian Parliament using information available at the time of production. The views expressed do not reflect an official position of the Parliamentary Library, nor do they constitute professional legal opinion.

Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Enquiry Point for referral.  

Top