Commonwealth Rent Assistance
Government rent assistance is intended to ensure that adults with
limited means can afford to live in rental housing that meets adequate
It recognises that many renters in the private rental market struggle to pay
high rents out of low to very low incomes. In this chapter, the committee looks
at Commonwealth Rent Assistance (CRA) and its effectiveness in helping with
housing costs and reducing rental stress.
Eligibility for Commonwealth Rent Assistance (CRA)
Commonwealth rent assistance payments are provided to eligible income
support recipients. It involves a base payment to certain households, to help
them meet basic living standards.
To receive CRA, a person must qualify for a social security income support
payment or Family Tax Benefit A and must pay a minimum amount of rent, called the
rent threshold. CRA is then paid at the rate of 75 cents for each dollar above
the rent threshold up to a maximum rate.
The CRA is indexed to CPI. Also, CRA is paid to eligible tenants in community
housing but not tenants in public housing.
CRA is the main form of housing assistance in Australia, with over
40 per cent of households in the private rental market receiving these
payments. In 2012–13, around 1,268,000 individuals and families received
CRA at a cost of $3.6 billion. According to the Department of Social Services, in
2014–15, the number of CRA recipients had risen to 1.3 million renters around
Australia at a cost of approximately $4.4 billion.
Reliance on CRA
The AIHW noted that CRA had a major effect on households' rental
affordability, with a 27 percentage point reduction in the number of low-income
recipients in housing stress after receiving CRA.
The Productivity Commission's figures show that at 6 June 2014 of the
1,315,385 income units receiving CRA nationally:
the median CRA payment was $124 per fortnight; and
76.3 per cent of all CRA recipients were paying enough rent to be
eligible to receive the maximum rate of CRA.
In June 2014, 67.4 per cent of CRA recipients would have paid more than
30 per cent of their gross income on rent if CRA were not provided.
However, with CRA provided, 40.3 per cent of CRA recipients still spent more
than 30 per cent of their income on rent.
Giving some meaning to these figures, Australian Council of Social Service (ACOSS)
Those who are in private rental will always need some subsidy
to help them meet that cost. Unless you are in fully subsidised housing, in the
public and community housing system, in terms of making rent affordable for
those households I think some kind of demand-side subsidy is necessary.
Similarly, Ms Sue King, Anglicare, indicated that people were becoming
'incredibly reliant on CRA' in order just to survive in the private rental market.
A number of reviews that have looked more broadly at housing and welfare
issues have included CRA in their consideration.
Pension review report
The 2009 pension review report acknowledged the important role that CRA
had in alleviating rental stress and recognised, in particular, the pressure
faced by some pensioners paying high rents. It noted that price increases in
the rental market had outstripped the rate of assistance. Further, the payment
had become less effectively targeted because of the way CRA had been indexed.
The review found that the magnitude of these effects was significant and:
If Rent Assistance had been indexed by the changes in actual
rents paid by Rent Assistance recipients between 2001 and 2008, rather than by
the CPI, it would be some $8.00 a week higher than it currently is. Noting that
the last major adjustments to Rent Assistance occurred in the context of the
GST changes in 2000, this suggests that the gap over this longer period is more
likely to be around $9.00 to $10.00 a week.
The pension review report concluded that there was scope to improve the
targeting of this payment so it would better meet the needs of those who face
the highest housing costs.
It also suggested that an immediate response to improve the circumstances of
pensioners who rent privately could be achieved through an increase in rent assistance.
That same year, the Henry Review also mounted a case for increasing the
amount of CRA. It found:
As at 5 June 2009 there were 418,000 individuals and families
paying more than 30 per cent of their income in rent even after receiving Rent
Assistance; 129,000 of these were paying more than 50 per cent of their income.
Many of these people, especially age pensioners and disability support
pensioners (who make up around one-quarter of Rent Assistance recipients) are
likely to have limited capacity to increase their incomes. The number of Rent
Assistance households paying more than 30 per cent of their income in rent is
at its highest level since 2000.
The Henry Review proposed that rent assistance should be increased so
that assistance would be sufficient to support access to an adequate level of
housing and should be more appropriately indexed in line with market rents to
reflect that growth. The review also suggested that CRA be extended to public
housing tenants, with recipients paying rents that reflected market rates,
subject to gradual transitional arrangements.
The review went further, advocating:
A new source of funding should be made available in respect
of the tenants who have high housing needs, such as those with high costs due
to disability or people likely to face discrimination in the private market.
The payment would be based on the needs of recipients and, where practical,
directed by them to providers of their choice.
National Commission of Audit
The 2014 National Commission of Audit considered the Henry Review's
suggestion about extending rent assistance to public housing tenants. It argued
that under such an arrangement, the Commonwealth would need to increase
aggregate rent assistance funding. The Commission suggested that this
additional funding could be sourced from redirecting funds currently
contributing to NAHA and NRAS, which amounted to $1.5 billion a year. It was of
the view that there was much merit in considering this option further, arguing
that two benefits would arise from this approach:
First, the market would determine rents for public and
private housing. Second, abolishing housing agreements with the States would remove
duplication of effort, improve accountability and alleviate the reporting
burden for State governments.
The Commission concluded that 'Commonwealth funding currently directed
to the housing agreements should be redirected to fund the extension of rent
assistance to public housing tenants'.
Welfare system review
The Commonwealth Government recognised the importance of CRA achieving
its policy outcomes. To ensure this occurred, CRA was included, like many other
government payments, in the recent review of government welfare. Accordingly, the
welfare reform review looked at rent assistance available to tenants in public
housing and to tenants in community or private rental accommodation.
The committee has discussed the rental arrangements for public housing and
noted that tenants in public housing are not entitled to CRA.
The welfare reform interim report recognised, as did the earlier
reviews, that rent assistance had gradually become 'less effective in reducing
rental stress for people in the private market'.
It indicated that while rent assistance had increased by 40 per cent
between 2001 and 2013, median rents had increased by between 65 per cent
and 100 per cent.
As a consequence, according to the welfare reform interim report, income
support and family recipients have had to cover more of the costs of rent from
their income support and family assistance payments, which reduced the income
available for other costs of living.
In its view, there was a need 'to redesign Rent Assistance to assist people in
private rental who have the highest needs'.
The interim report suggested:
Rent Assistance should be reviewed to determine appropriate
levels of assistance and the best mechanism for adjusting assistance levels
over time. Initial steps in this direction may be possible at little cost to
The review noted further that rent assistance for parents should
recognise their role in supporting young people beyond school to independence.
Effectiveness of CRA
The role and effectiveness of CRA was also a major topic raised in
evidence before the committee.
Evidence received by the committee was generally consistent with the
findings of the earlier reviews. It recognised the valuable assistance that CRA
provided to low-income renters and the continuing and growing gap between the
amount of assistance provided and rising rents. For example, Ms Findlater Smith,
National Council of Women of Australia, argued that CRA was far too low. She
At $80 a fortnight it is a little bit of help but it goes
nowhere near far enough. If you are getting $590 a fortnight plus $80 and your
rent is $300 a week, what are you living on? That is taking away heating and
all of the other running expenses you have. The trouble is that that gap is
being picked up by emergency relief. So millions and millions of dollars are
going to Anglicare, St Vinnies and the YWCA for emergency relief to pick up the
mess for people who cannot afford to live. 
Mr Flynn, Mission Australia, supported the longstanding call for an
increase to the CRA. He argued that lifting CRA would 'probably be the fastest
thing that you could do' to bring immediate short-term relief for households in
extreme financial stress.
COTA was of the view that CRA often meant 'the difference between having and
not having a home'. It observed, however, that the CRA had not kept up with the
increases in private rents, particularly in metropolitan areas, and did not
reflect the geographical difference in rents that people faced. It stated:
Whilst we see long term solutions for increasing the supply
of affordable housing as critical, an increase in the CRA for the lowest income
groups is an important measure as it would start to reduce the gap between the
level of subsidy received by people in public housing and people in private
rental who may have similar incomes and needs.
COTA was one of many organisations calling on the government to increase
the CRA. It suggested an increase to the maximum rate of the CRA by 30 per
Ms Phillips, Australian Council of Social Service, urged the government to
increase financial support to low-income renters. She told the committee that
CRA was 'not delivering enough support to ensure that low-income earners were
not living in financial stress'.
The Council also suggested a 30 per cent increase to CRA which equated to a
$20-a-week rise at a cost of $880 million for 2014–15, going up to $920 million
Likewise, the Tenants Union of Victoria highlighted the need for an
immediate increase in rent assistance. In addition, it suggested a longer term
view be taken about what role rent assistance played in the market and how it could
be reshaped and reformed to provide a better housing affordability outcome.
It recommended increasing CRA by at least $25 per week and subjecting the payment
to a 'fundamental review'.
According to the National Union of Students, Australians for Affordable Housing
had undertaken some modelling, which suggested that while a $25 increase
in CRA was not the solution to the affordability problem, it was a realistic
option considering budgetary concerns and the current financial climate around
housing and housing affordability.
Indeed, Australians for Affordable Housing indicated that a $25 per week
increase in CRA would provide relief to nearly 100,000 renters.
The National Union of Students (NUS) suggested increasing CRA by
$25 per fortnight, which would 'see a substantial proportion of
students lifted out of housing stress and go towards alleviating the burden
that rent places on many student budgets'.
NUS argued that a student's rental assistance should not be automatically cut
when that student is in a shared accommodation arrangement.
Indexation of CRA
Mrs Ullman, National Seniors Australia, suggested that the value of
CRA should be linked to movements in national rents, rather than CPI, which had
not kept up with increases in rent.
In support of this view, Ms Phillips, ACOSS, argued that indexing CRA to CPI
was an inappropriate and inadequate response and a review was required.
Mission Australia, was similarly definite in its view that, to be responsive,
CRA had to move at a rate different from other income support payments in order
to reflect the realities in the rental market.
Equality Rights Alliance urged an increase in the indexation of CRA.
Similarly, Mr Schrapel, Uniting Communities, was of the view that CRA needed to
be indexed properly to housing costs rather than just to CPI and better
targeted to areas where rental costs were very high. In his opinion, a supplement
to rent assistance for people in those circumstances would allow them some
CRA's responsiveness to different circumstances
Mr Schrapel thought there was potential to broaden the base for people
on low incomes, not just for those relying on social security benefits.
In the same context, Mr Walker, Department of Housing and Public Works,
Queensland, noted that social housing tenants and residents of some retirement
villages could not access CRA. In his view, CRA, as structured, was not
sufficiently responsive to variations in household income and movements in
market rents in particular, which meant that some households received
assistance exceeding the need to make rent payments while others remained in
rental stress even after receiving CRA payments.
Dr Kazakevitch, Associate Professor Frost and Mr Borrowman supported the proposal
to extend the rental assistance programs to reduce the incidence of rental
stress and the effect of moving house.
Proposal for public housing eligibility
Mr Langford referred to the Commission of Audit's reasoning that, if the
CRA were made available to those in public housing, there would be some
preconditions on that. For example, the Commission of Audit foreshadowed the possible
removal of some of NRAS funding.
Professor Winter also referred to one of the policy ideas canvassed by the
Commission of Audit and the welfare reform review regarding making CRA
available to public tenants with the Commonwealth moving out of the capital
subsidy space. The Commonwealth would then assume the role of simply providing
CRA. Professor Winter argued, however, that if the government wanted to grow
the housing association sector then that decision would be counter to that
objective. He stated further:
That financial discrepancy of public tenants not having
access to Commonwealth rent assistance at this point in time is one of the
reasons why state governments are looking to do stock transfers to the
not-for-profit sector. If you do want to grow the housing association sector
and you want to see stock transfer from the public housing sector to the
housing association sector, I would keep the distinction between who gets CRA
and who does not.
Professor Winter contended that if the housing associations were deemed to
have a role in providing both affordable rental and shared equity home ownership
then they needed support to grow. He observed:
One of the things that underpins their growth at the moment
is that public housing agencies are transferring their assets slowly across to
the housing association sector. One of the reasons they do that is there is not
enough money coming into the public housing agencies. There are not enough
subsidy streams coming in.
According to Professor Winter, if CRA were available to the public
sector, the subsidy streams coming into the public housing agencies would be
increased, which would slow down the stock transfer process.
Mr David Cant, Brisbane Housing Company, recognised the value of the CRA
as a safety net. He also underlined the need to have measures to promote supply,
noting that rent assistance on its own created more money chasing limited
housing supply, which could drive up rents. In addition, he argued that rent
assistance did not provide an incentive to an irresponsible landlord to improve
standards, so it could be 'a subsidy to slum landlords'.
Ms Coleman suggested that simply putting some hundreds of millions of
dollars into increasing rental assistance would just contribute to an upward
pressure on prices, as had happened under the First Home Owners Scheme.
According to Ms Coleman, when rent assistance is pushed up, state housing
authorities automatically put the rent up by the amount of the increase so that
they just absorb the net difference.
In her view, CRA would not necessarily lead to an increase in supply. She
argued that consideration should be given to innovative approaches to using the
economic levers the Commonwealth has 'to enhance the supply of housing rather
than putting money into measures that would see more money chasing the limited
amount of stock that is there at the moment'.
Mrs Julie Anne Morris, National Council of Women of Australia, supported
this contention that landlords absorb increased rent assistance, suggesting
that they had no incentive to keep rents down while the Commonwealth would top
it up and keep it rising.
While Mr Yates acknowledged the suggestions that CRA drove up rents because it puts
more money into the system, he noted that it was clear that the most vulnerable
group of pensioners in housing were those in the private rental market, who benefited
directly from CRA. He also submitted that in the community housing space, CRA helped
to increase supply because it made community houses more viable. Nonetheless,
he drew attention to the fact that CRA had 'not in a large quantum increased
for quite some time...'
Mr Pisarski noted proposals to raise the CRA because of its inadequacy
in meeting the needs of low income earners in the rental market. He also
recognised the potential for CRA to drive up rents, noting that if CRA were
increased without a corresponding supply-side strategy, then that would exert
inflationary pressure overall.
He explained further:
If we are only putting Commonwealth rent assistance on the
table, without doing something on the supply side of that affordable housing
equation, then we are arguably creating an inflationary impact. There is not a
lot of documented evidence around that, but there is anecdotal stuff around it,
and it makes a lot of sense. 
Ms Phillips argued, however, that CRA recipients do not comprise a
significant proportion of the overall rental market that would exert a
significant inflationary effect across the market.
Even so, she agreed that there may be some sub markets with a higher concentration
of CRA recipients where there may be some effect. Although she conceded that a
rise in CRA was an 'imperfect proposal', she argued that in the absence of
supply flowing into the system at the required rate, the proposal to increase
CRA was the best measure to alleviate very difficult circumstances.
Others also regarded CRA as an imperfect solution—a band aid—but in light of an
intractable supply problem they accepted that it was vital in assisting people
to meet the basic cost of living.
According to Mr Schrapel the suggestion that CRA ratchets up prices and the extent
to which it did so derived more from anecdotal evidence rather than any hard
and fast data. He also considered the supply side of affordable housing and informed
the committee that:
Our gut feeling is that if you just increase CRA as the only
lever that you are using to try to support low-income households that are in
housing distress then in the short term that is likely to inflate some of the
rents and allow some landlords to put prices up. So there would need to be some
controls over that.
Consistent with many other witnesses, he indicated that there needed to
be a corresponding focus on supply.
In other words, if supply remained constant, while the amount that people could
pay in rent increased, then rents would go up.
Mr Schrapel did wonder, however, how much of that reduction of 20,000+ public
housing properties could have been saved in South Australia if public housing
tenants had qualified for rent assistance in the same way that private renters were
He noted that effectively CRA goes into the pockets of those who rent in the
In his view, there was a need to re-look at the Commonwealth rental assistance
program and how it was targeted. He conceded there was a problem in simply
increasing CRA, in terms of it becoming a price stimulant and inflating
rentals. Nonetheless, he acknowledged, that when people were paying such high
rents and not having disposable income to meet their other needs something
needed to be done to recalibrate CRA.
In respect of the proposal to make CRA available to the public housing
sector, Mr Searle, Department of Housing, WA, reminded the committee that CRA
was income support and that it did nothing for supply. He explained that the
dollars Western Australia received from the Commonwealth were about capital
supply—$150 million through NAHA. He explained that, if CRA were to be applied
to public housing tenancies, Western Australia would gain between $80 to $90
million but lose $150 million if the Commonwealth withdrew financial assistance
to the state through the NAHA—a cut of $60 to $70 million. The loss would vary
from state to state.
Other forms of rental assistance
There are other forms of rental assistance. For example, the Western
Australian Government offers no interest bond loans to help people access the
private rental market.
Dr Wendy Stone noted that government cash payments were a means of providing households
with rent assistance. In her view, these payments, while necessary, were not
sufficient to enable tenants to manage the structural conditions in which they were
living and the problems they created. From Dr Stone's perspective, in addition
to private rental assistance in the form of, for example, bond assistance, there
was the need to acknowledge critical reforms in other areas. She argued:
...if we only address household needs in the form of rent
assistance and private rent assistance without structural reform in tax and
other systems 'we just keep slapping on bandaids to a problem and we are not
addressing the root cause'.
Income stream for community housing providers
Dr Burgmann explained that in the private rental market, the tenant
retains the CRA but in community housing the full amount of CRA that a tenant
is entitled to is transferred to the community housing provider. The provider could
then use this money for additional housing or for services.
Thus, the CRA not only assists low income-earning renters by easing the burden
of paying high rents but is also an important source of revenue for community
housing providers. Ms Croce informed the committee that CRA comprises about
one-third of most providers' rental income and is often used for repairs and
maintenance and for improving services for tenants. She indicated that CRA
assists larger providers to grow their portfolios by using it to leverage for
private financing so they can build more dwellings.
Mr Flynn also explained that access to CRA was key to the rental
viability of community housing providers and enabled them to contribute to the
supply side response by ensuring a sustainable community housing sector. He indicated
that an increase in CRA would have a positive effect on the ability of
community housing providers to attract finance to build more properties: that CRA
was an important part of the viability of community housing providers.
The committee has referred to the importance of policy certainty in the
housing and homelessness sector, which also applies to rental assistance. Ms
Croce spoke of the sector's need to be confident that CRA was going to continue
to be available to community housing providers.
Unequivocally, evidence confirmed the fact that low-income earners need
rental assistance to access affordable and appropriate housing and that they were
becoming increasingly reliant on this assistance. Moreover, a number of
comprehensive reviews have recognised that for some period of time the rate of
CRA has continued to slip behind the rate of rent increase. Indeed, as far back
as 2009, the call for an increase in CRA was clear and definite. Evidence
presented to this inquiry highlighted this growing gap.
Evidence also supported the grounds for a change in the way the CRA is
indexed and favoured tying increases in CRA to the CPI for rents. In addition,
a number of witnesses drew attention to the fact that CRA could be better
targeted to take account of the rental burden borne by people living in areas
or regions experiencing very high rents or low-income earners in rental stress
but ineligible for assistance.
The committee was not convinced, however, of the merit of the proposal
by the Commission of Audit to redirect funding from NAHA and NRAS to enable a
broadening of the eligibility for CRA to public housing tenants. In this
regard, the committee notes the concerns of the Western Australian government
that a shift in funding to CRA and away from NAHA and NRAS could result in a
loss of $60 to $70 million in Commonwealth funding to that state. Clearly any
shift of funding needs to ensure that the overall funds allocated to the states
for affordable housing increases rather than decreases and that the effort is
directed toward increasing the supply of affordable rental properties.
The committee also notes the concern that a rise in CRA could have an
inflationary effect on rents if the supply of affordable rental properties
remained constant. This situation of an inadequate supply of affordable housing
is an area that requires immediate and definite government intervention,
otherwise assistance such as CRA will serve simply as a band aid, albeit much
needed, to a much deeper and serious shortfall in the rental market.
The committee recommends that the Australian Government:
review the eligibility criteria for CRA to ensure that it is
targeted at those most in need;
review the method of indexing CRA with a view to retaining its
review the adequacy of CRA.
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