ADDITIONAL COMMENTS BY SENATOR LUDLAM
The National Rental Affordability Scheme (NRAS) is a welcome
contribution to addressing the housing affordability crisis in Australia. It
has potential to significantly increase the supply of rental stock, reduce the
proportion of income that low to moderate income households are forced to spend
on rent, and exert a deflationary influence on the rental market to the benefit
of other renters who are not direct beneficiaries of the Scheme. As many
submissions have pointed out, the NRAS alone will not resolve housing
affordability and homelessness throughout Australia. But it will play a part
alongside other initiatives that the community housing sector hopes to see
included in the National Affordable Housing Agreement.
endorse the Committee’s report, there are a few areas that I consider warrant
NRAS and housing sustainability
The NRAS as currently conceived does not afford a high priority to
sustainable housing design in NRAS dwellings. Subclause (2)(f) of Schedule 1
of the draft National Rental Affordability Scheme Regulations 2008
identifies ‘proposals which maximize affordable housing outcomes for tenants
including building and design features that reduce the overall costs for
tenants’ as ‘priority areas of interest’ that applicants are required to
‘address’ in their proposals. Sustainable design features, such as features
that promote water and energy efficiency, meet this description, but applicants
are only required to make comment on the priority areas. They are not required
to deliver on them in the same way as the criteria listed at subclause 1(c) of
Some submissions to the inquiry commented on the scope for sustainable
design to feature in the NRAS, although in their submissions and their
statements contributors were quick to make such considerations secondary to the
primary goals of attracting investors to the scheme and ensuring that the
scheme commences without delay. However, there is no need to choose between
these important objectives. Many sustainable design features can be included
in a dwelling without adding significantly to construction costs. Improvements
in energy efficiency can be achieved at little cost through the orientation of
a dwelling, the placement of windows, using insulation and energy efficient
light fittings, locating the bathroom, kitchen and laundry close to the hot
water system, and so on. Similarly, greater water efficiency can be achieved
by installing water efficient tap and shower fittings, a rainwater tank,
plumbing that enables grey water to be used on gardens. Other economical and
effective examples could be listed. It should also be recognised that, as
noted in the majority committee report, the NRAS provides benefits to landlords
in excess of the rent forgone by renting dwellings out at 20% below market
rates. If improving the sustainability credentials of NRAS dwellings involved
some minor additional expenditure, that would be perfectly reasonable in light
of the public money participants in the Scheme will receive.
Giving sustainable housing design greater prominence within NRAS would
serve two important purposes: it would contribute to ongoing housing
affordability by reducing utilities expenses; and it would reduce the
environmental impact of dwellings, which is particularly important in light of
the urgent need to address climate change and water scarcity. In our present
predicament, we should be seeking to promote greater environmental
sustainability in all areas of public policy.
For these reasons, the NRAS ought to be amended to specifically require
applicants to deliver sustainability outcomes. This should apply to future
application rounds, to ensure that current proposals that have been developed
on the basis of the current criteria are not delayed or abandoned.
There is a strong affordability argument for low-income housing to be
constructed according to the highest standards of energy and water efficiency
and close to public transport links so that ongoing living costs are kept as
low as possible. With energy, petrol and water prices due to rise around the
country, well-located energy and water efficient housing will prevent energy
poverty and assist people on low incomes to manage the transition to a
The risk to the charitable tax status of non-profit participants in NRAS
The possible risk participation in the NRAS may pose to the favourable
tax treatment many non-profit organisations enjoy was highlighted in virtually
all of the submissions to the inquiry. Contributors have made it clear that
many affected organisations will not participate if it will jeopardise their
charitable tax status. With over half of the round one proposals coming from
the non-profit sector, their withdrawal would clearly be highly disruptive.
The provision of affordable housing under the Scheme would not only be reduced
quantitatively, but also qualitatively. The non-profit sector had a
significant hand in designing the Scheme from the outset and it has a history of
innovative affordable housing provision. It also has a philosophical
commitment to redressing poverty and disadvantage that can only benefit the low
income households the Scheme is designed to assist.
The Government clearly recognises the advantage of securing the
non-profit sector’s participation in the Scheme. The provision for non-profit
organisations to receive incentives by way of payment rather than tax credits
demonstrates that their participation was always intended. To ensure that the
Scheme operates as planned, the Government needs to act to conclusively
eliminate the threat to non-profit organisations’ favourable tax treatment.
The Government's guarantee toward the end of the inquiry that non-profit
organisations' charitable tax status will be protected for the initial two
years of the Scheme's operation is a welcome reprieve, but certainty in the
longer term is required to prevent disruption to the Scheme once this period
Role for an independent expert advisory group
Numerous contributors to the inquiry spoke of the importance of refining
and enhancing NRAS in various ways in light of evidence of the Scheme's
performance. This is obviously an important element of effective,
evidence-based policy. The National Affordable Housing Summit offered the
The group believes it is absolutely essential that an expert and
independent group of advisers be asked to assist in detailed formulation of the
Third Call and related aspects of the scheme. The group could include a person
with high-level experience in business and finance, another with substantial
experience in provision of low-rent housing and a third person with expertise
in schemes of this kind.
This is a very sensible suggestion that would ensure that the Government
had access to appropriate expertise to help it finetune the Scheme to achieve
the best possible outcome for people in rental stress.
Continued consideration of proposals for smaller NRAS developments
Another common theme in submissions to the Committee concerned the
desirability of continued inclusion of smaller (i.e. fewer than 100 dwellings)
NRAS developments in the Scheme. I note that the Bills and the draft
Regulations do not foreclose this possibility.
Smaller developments can play an important role in providing affordable
housing in high density areas where larger developments may not be feasible,
and in rural areas where there may not be a need for larger developments. It
would be to the detriment of the Scheme if proposals for such developments were
not afforded the same consideration as proposals for larger developments.
A housing sustainability criterion be included in subclause 1(c) of
Schedule 1 of the National Rental Affordability Scheme Regulations 2008.
The Government acts to ensure the non-profit sector will not jeopardise
their favourable tax treatment by providing affordable housing under the NRAS
for the duration of Scheme.
The Government appoints a small group of independent experts to advise
it on the future development of the NRAS.
Proposals for smaller developments continue to be considered for
inclusion in the Scheme on an equal footing with larger developments.
Senator Scott Ludlam
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