Chapter 10 - Measures to increase affordable rental housing
Through choice or necessity, around one third of Australians will
rent their home rather than buy it. It is, therefore, important to ensure
access to appropriate and affordable rental accommodation. The committee heard
evidence that affordable rental housing is not only necessary to assist lower
income earners or welfare recipients who struggle to meet market rents, but
also to assist some communities to attract and retain essential workers in high
housing cost areas. For example, Ms McCool from the Gold Coast City Council
advised the committee that
Some of our workers, mainly in the hospitality and construction
industries—or the service industries generally, not just hospitality but child
care, schoolteachers and police officers—would find it incredibly hard to rent
accommodation let alone enter the property ownership market on the Gold Coast currently.
There is currently a range of government programmes aimed at
supporting people to obtain affordable rental accommodation. These include:
- private rental housing assistance, through Commonwealth Rent
Assistance and programmes provided by state and territory governments aimed at
assisting low income households; and
- the provision of public and community housing, including both
medium- to long-term housing and emergency or crisis accommodation.
These programmes, which are discussed in some detail below,
primarily provide assistance to low income families and welfare recipients.
There do not appear to be many programmes which seek to target workers in
'essential services', who are finding it increasingly difficult to access
affordable housing in some areas of Australia. By increasing the supply of
affordable rental housing, the National Rental Affordability Scheme may, if
successful, provide some assistance in this regard, however it does extend over
long time frames.
Commonwealth State Housing Agreement
Many of the programs aimed at supporting people to access
affordable rental accommodation are delivered under the auspices of the
Commonwealth State Housing Agreement (CSHA). The first CSHA was agreed in 1945.
The current agreement is for the period 1 July 2003 to 30 June 2008, and is to be replaced by a National Affordable Housing Agreement, which is currently
Total funding for the CSHA in 2005-06 was $1.3 billion, which was
comprised of $944 million in Commonwealth funding and $364 million in state
matching grants. Commonwealth grants comprised:
- base funding ($744 million), which is general purpose funding
that can be used for any housing assistance purpose. The vast majority is used
for public housing; and
- identified programme funding, which can only be used for the
specific purpose for which it was provided. The identified programmes are the:
- Aboriginal Rental Housing Program ($93 million);
- Community Housing Program ($66 million); and
- Crisis Accommodation Program ($41 million), which provides
capital funding for services funded under the Supported Accommodation Assistance
The states and territories are required to contribute to the
agreement in the order of 48.95 per cent of the base funding that they receive
from the Commonwealth.
According to the Independent Audit of Government Contributions to Housing
Assistance, for the period 1996–97 to 2004–05, funding provided by the
states has generally been in excess of that required to meet their matching
obligations under the CSHA.
No breakdown of how state and territory funds were allocated was
available, however, some data may be provided against specific programmes
Private Rental Housing Assistance
Commonwealth Rent Assistance
Commonwealth Rent Assistance (CRA) is a non-taxable income
supplement paid through Centrelink. The payment is added on to the pension,
allowance, or benefit of eligible income support recipients who rent in the
private rental market. Pensioners, allowees and those receiving more than the
base rate of Family Tax Benefit A may be eligible for rent assistance. According
to the Australian Council of Social Service:
Commonwealth Rental Assistance (CRA) is the most significant
form of direct rental assistance provided by Government to tenants in the [private]
Rental Assistance is paid at the rate of 75 cents for every
dollar of rent paid above the specified minimum rent threshold, up to a maximum
amount. The minimum rent threshold and maximum rate of rent assistance varies
according to the family situation of the recipient and the number of dependent
In 2006–07, the CRA programme provided $2.2 billion of assistance, a real
increase of 12 per cent over the last ten years.
In June 2006, 23 per cent of Centrelink clients were receiving rent assistance.
As outlined in Table 10.1, CRA is effective in reducing the
proportion of income that recipients are spending on rent. However, 23 per cent
of CRA recipients may still be classified as being in housing stress (that is, paying
more than 30 per cent of their income on housing) and a further 8 per cent
remain in housing crisis (paying more than 50 per cent of their income on
housing) even after receipt of the benefit.
Table 10.1: Recipients (income
units) of Commonwealth Rent Assistance, proportion of income spent on rent with
and without CRA, by state/territory, June 2006 (per cent)*
30% to 50%
from: AIHW (2007a, p. 224).
A number of witnesses and submissions expressed concern about the
effectiveness of the CRA in meeting the needs of low income families:
...we are concerned that Commonwealth rent assistance was taken
out of the Commonwealth-state housing budget, was folded into another
vehicle—the Social Security Act—and has really failed to deliver affordability
for people in receipt of rental assistance. I think the breakdown of figures
shows that it makes rentals affordable for about a third of people; another
third, because of the exemptions of some parts of their income, are arguably
not really in rental stress in the first place; and for another third it is
completely inadequate. So I guess when we look at the $2 billion-odd that goes
into rent assistance, yes, our concern is that it is a very blunt and
inadequate instrument for at least a third of the recipients.
It was argued that the CRA might better meet the needs of low
income recipients if the maximum rate of rent assistance, which is the same
nationally, varied by region, so as to better reflect market rents in different
cities and regions:
...the funding levels available under
Commonwealth rental assistance should take into account regional differences in
the private rental market. I know that sounds like it might be an impossible
thing to do, but there are particular cities, particular places, where it is
not going to touch the surface in terms of keeping people in their
accommodation or buying them any accommodation.
The eligibility requirements for CRA have also been criticised as
they exclude some low income groups who may be experiencing housing stress,
such as low income working households without children (and therefore not in
receipt of family tax benefit), Austudy recipients, migrants subject to benefit
waiting periods, and people reliant on long term insurance benefits.
As such, there have been calls for the CRA to be re-cast as a housing
affordability support for a diverse range of low income households, including
...if one looks at [rent assistance] in a holistic sense as an
affordability support, it is arguable that it should be available to home
purchasers in temporary financial stress. It could, for instance, take into
account mortgage interest payment as a quasi rental payment. Where mortgagers
suffer financial setbacks, such as job loss or difficulties arising from
marital breakdown, assistance could be available in a quantum similar to what
would be received in the private rental market.
There was also some question about whether rent assistance was
the most effective use of Commonwealth funds in terms of its impact on
affordable housing, and whether it may in fact have an inflationary effect on
rents. Dr Crabtree from the University of Western Sydney noted that:
From my discussions with the community housing sector and the
cooperative housing sector, I think there is a potential for better use of
those [rent assistance] funds. It does tend to just feed through into private
landlords’ pockets and does not actually do anything about addressing the
supply of affordable housing. From my work with the sector in Australia, I
would say that there are better ways, or maybe it is worth looking at better
ways, of using that money.
Given the concerns that the CRA is a 'blunt tool' for addressing
housing affordability, a number of witnesses and submissions called for a
review of the programme.
For example the Australian Council of Social Service indicated that:
What we would like to see is a review into Commonwealth Rent
Assistance: (a) how it meets the needs of those people who need it and (b) how
it interacts with current policies and policies that are going to come on
stream over the next year.
10.15 The committee recommends that the Australian Government
commission an independent evaluation of the Commonwealth Rent Assistance programme,
to ascertain its effectiveness and cost effectiveness in improving housing
affordability for low to medium income households and to make recommendations
regarding future directions for the programme, including eligibility criteria.
10.16 The review should be undertaken in the context of a more
comprehensive review of all government initiatives, both supply side and demand
side, aimed at improving housing affordability.
10.17 The committee recommends that the Australian, state and
territory governments increase the quantum of support available under
Commonwealth Rental Assistance for older Australians living in private rental
Private Rent Assistance
Under the Commonwealth State Housing Agreement, each state and
territory runs programmes aimed at assisting eligible low income households to
establish and maintain private rental tenancies. While the nature of these
programmes and the eligibility requirements vary by jurisdiction, they commonly
provide one-off forms of assistance such as bond loans, assistance with rental
payments and relocation expenses.
In 2005–06 the states and territories provided $78 million worth
of private rent assistance to 134 000 households. Of those households 75 per
cent received bond loans, 37 per cent received rental grants and subsidies, 2
per cent received payments to assist with relocation expenses and 8 per cent
received other one-off grants.
Under the CSHA, social housing refers to both public housing,
which is delivered by state and territory housing authorities, and community
housing, which is generally provided by the not-for-profit sector.
Government owned and managed housing is provided under the
Commonwealth State Housing Agreement in the form of both mainstream public
housing and Indigenous housing. Public housing was first provided under the
CSHA in 1945 and, according to Professor Troy:
was originally designed to provide rental housing of high
standard to any who sought it. It was a public housing program. The ambition
was to provide as much as half the housing.
As well as providing affordable homes of reasonable quality to
low- to medium-income households, public housing also contributed to home
ownership, as many people who rented public housing eventually purchased their
home from state housing authorities or went on to purchase privately:
the old-style postwar public housing...was targeted at low-to
moderate-income working families, who were using that as, if you like, a normal
part of the rental housing market and very often as a pathway towards
In the mid 1990s, the nature of public housing in Australia
changed. In the early 1990s the client base of most public housing authorities
was 'dominated by couples with children, and almost a third of households were
in full-time employment and paying market rents.'
However, the 1996 CSHA gave priority to targeting public housing to those most
in need, that is, those experiencing the lowest incomes or in dire need of
housing assistance. The 1996 agreement also eliminated the separation between
capital and recurrent purposes for which grants could be applied.
Mr Adam Farrar, from the NSW Federation of Housing Associations,
advised that these changes led to quite dramatic shifts in the nature of public
... across the country we have turned public housing from being a
low-cost, affordable rental market into being the response that we failed to
put in place after we started deinstitutionalisation [of, for example, people
with mental health problems] 15 to 20 odd years ago. It has been recently recognised,
for example, that we did not put in place the kind of mental health solutions
that followed the closure of mental health facilities. It has also been
recognised, but less explicitly, that the accommodation options did not follow...
As a result—partly, for the past 10 or 15 years, simply as a
result of demand—public housing has shifted to being that response. Its client
group has become people who otherwise in the past would have been either in
aged care, in government youth facilities or in mental health facilities.
Increasingly we are seeing that move from an implicit change due to demand to
quite an explicit policy. New South Wales has made it quite explicit that that
is its target group now. It does not house low to moderate-income
households and, instead, it is there to meet that demand...
Other witnesses, such as Professor Disney, noted that this over-targeting
of public housing to the most severely disadvantaged had threatened the
viability of the public housing system as:
It means not only that they [state housing
authorities] cannot charge enough rent to meet their costs but also that they
have higher support costs for the people who are living there. Of course, in
many ways, really, things that were being met out of the health and welfare
budget are now being met out of the public housing budget as the
consequence of de-institutionalisation. Housing is now picking up the tab...
This point was explained in more detail by Mr Farrar, who noted
the vicious circle that has been created for the public housing system:
In Australia we have a unique way of funding housing
affordability for people who live in social housing. In other countries, they
charge the cost of providing that housing—as you would in any other kind of
market—and then there is either a CSO subsidy or an explicit subsidy to the
tenants which meets the gap. In Australia, we chose to do it by charging a rent
which we deemed to be affordable—which was a proportion of income. So in a
sense the system had to subsidise it internally. It has a perverse consequence:
as you target more tightly to lower-income households your income falls. As a
result, state housing authorities across the country are to all intents and
purposes bankrupt. For a number of years they have been cannibalising their own
supply simply to maintain their operations. This is due to the fact that we
have targeted more tightly. We have targeted more tightly because we created a
population whom we have stopped housing in institutions. So demand increased
and, at the same time, we reduced funding for new supply and our formula
reduced the income streams. It was a dire position.
The overall impact of the changes to public housing in Australia
over the last ten years has been a steady decline in public housing stock, an increase
in waiting lists and a diminished reputation for public housing in the
Public housing stock
Many witnesses lamented the decline in public housing stock in Australia.
For example, ACOSS indicated that:
what has been extraordinary is that over the last 10 years,
given the increased numbers of people who are living in poverty and given the
fact that our population has increased, the number of houses available in
public and community housing...has declined.
Mr Davies, from the Northern Rivers Social Development Council
Public housing now forms a very small part
of the overall housing market—under five per cent of all housing and 15 per
cent of all rental housing stock across the state, and I think it is a similar
The decline in public housing stock is born out by the
statistics. Between 1996 and 2006, the number of public housing dwellings
nationally declined from 372 134 to 341 378, a reduction of around 8 per cent.
During this same period, Australia's population increased by around 13 per
cent, making the decline in public housing even more significant.
Not surprisingly, funding for public housing has also declined in
real terms. According to the Productivity Commission, in 2006–07 the
Australian, state and territory governments provided $1.3 billion for housing
assistance under the CSHA, the bulk of which was for public and community
housing. Real expenditure on CSHA assistance declined by 16.7 per cent between
1997–98 and 2006–07 (refer to chart 10.1). Public housing is the largest form
of assistance provided under the CSHA.
Real government expenditure on CSHA assistance and CRA
Source: Productivity Commission of Australia (2008, pp. 16.5-16.6).
Some witnesses indicated that public housing stock has declined
so severely that even those in priority need can no long access it in a timely
One would assume that a person in a women’s refuge would move
into secure public housing. But that is no longer the case; it is not
According to the AIHW, of the 24 282 households newly allocated
to either public housing or state owned Indigenous housing in 2006–07, half
were classified as in greatest need. Of those, 50 per cent were housed within 3
months of joining the waiting list, a further 21 per cent were housed within
3–6 months, and 4 per cent waited 2 years or more.
As detailed in Table 10.2, public housing across Australia is
virtually fully utilised, with occupancy rates of 98 per cent in 2007. At 30 June 2007, a total of 176 321 households were on waiting lists for public rental
housing, of which 11 700 households were classified as being in 'greatest need'.
Table 10.2 Public
housing - occupancy rates (per cent)a
Source: reproduced from Productivity Commission (2008, p.
Attitudes to public housing
The committee heard that, due to the changes that have occurred
to public housing over recent years, it is now viewed very negatively by the
community and public housing tenants are often stigmatised:
The stigma in this area around public housing is extremely high.
I know that people—even my own family—who buy a house and find out that it is
public housing next door can often act inappropriately to those people when
they could be quite decent people.
This creates difficulties for the expansion of public housing,
even if funding is available, as many communities are resistant to the
inclusion of public housing in their area, due to the social problems that may
be associated with it. For example, in the Northern Territory, Ms Vine Bromley
from NT Shelter Inc stated that:
The only public element of the new housing that is going into
any of the new suburbs that are opening up in the Territory right now is for
seniors, because they are nicer public housing tenants and more acceptable to
the community that they will be living in.
Notwithstanding the difficulties, there was general consensus
among community organisations that 'we really need to get back to a broader
social mix in public housing and to spreading it around in a more diversified
Professor Disney argued that this would best be done through the
National Affordable Housing Agreement, which is to replace the CSHA, and that
additional investment would be required:
...at the very least, [we should] restore the funding that has
been cut over the last 15 years or so. About $300 million really needs to be
put back in again over the next few years. But we have to get the product right
that it is being put back into.
While community organisations agree that there needs to be an additional
investment in public/community housing, there was less consensus on the
Just in percentage terms, there are various people who are
saying that we need to return to six per cent of housing stock available that
is public and community housing. There are groups who say that we need to go
much further and have another target of eight per cent and then another target
of 10 per cent to ensure that we are not just going back to historical levels but
ensuring that we have more stock than we did historically. We have done some
modelling on what it would cost in the first year... you are looking at an
investment in the first year in a budget cycle of about $500 million as the
starting point to get us to a target of at least six per cent.
In addition to public housing, the CSHA also provides mainstream
community housing. According to National Shelter 'community housing is, by and
large, housing the same client group—with some greater degree of flexibility—as
public housing properties'.
However, community housing differs from public housing in that the tenancy and
dwelling management is run by a community-based service provider, rather than
by state and territory governments. In addition, 'community housing tenants can
attract rent assistance payments from the Commonwealth whereas public housing
tenants do not.'
Unlike public housing, community housing providers may also offer
tenants an opportunity to participate in the decision making and management of
Community housing providers also offer a range of support services, including
personal support, advice and referral, training and employment support and
financial and material assistance.
Many community housing associations allow or even encourage
tenants to modify and renovate their houses through a model they call
"sweat equity". This not only maintains or improves the value of the
house and reduces ongoing maintenance costs, but also increases the tenant's
sense of ownership and control over their environment. The Managing Director of
Common Equity Housing commented:
The effect of this is that the tenants take great pride in their
homes. I talk about the front fence syndrome. We do not just let people paint
their front fence; we are actually out there physically encouraging them to do
it. Anecdotally that means we pay for the paint and the person paints their
fence, but it makes them proud of their house and it has a great effect in the
neighbourhood. As I say to people, ‘When you’re out there painting your front
fence, the neighbours talk to you. The neighbours assume you own the house and
you’re not seen as a welfare housing case.’ That is pretty much how our program
runs. Our houses are all interspersed in the community, and people do not view
themselves as tenants. They view themselves as very proud of being a part of
their cooperative, and that is a mentality that I think is really important in
good effective social housing.
Through offering long-term leases and security of tenure,
providing support and referral services, and also by encouraging "sweat
equity" community housing is able to provide many of the social benefits
of home ownership on health and well being discussed in chapter 2.
Some Community Housing Associations also support the transition
from rental to home ownership, allowing tenants who have developed their
earning capacity to purchase their property from them and using the capital to
develop another unit of affordable housing elsewhere. This could either take
the form of an outright purchase, a limited equity deed, or a share in the
association comparable to the housing cooperative model discussed in chapter
At 30 June 2007 there were approximately 33 557 households living
in community housing in Australia. Ninety-four per cent of community housing
households were low income households and 5 per cent were identified as
Indigenous households. Two-thirds of CSHA community housing was located in
major cities, with 20 per cent in inner regional areas and 10 per cent in outer
regional areas. The remaining 3 per cent were located in remote and very remote
As with public housing, occupancy rates in community housing are very high,
running at 96.7 per cent in 2006–07.
National Shelter emphasised that community housing providers are
under similar financial pressures to those experienced by the public housing
That level of income really does not give public or community
housing agencies the ability to grow their systems. They can maintain at a
static level what they currently do, but they cannot grow their systems.
The Committee heard that a number of community housing providers
are working together to try and access funds to expand the community housing
sector. Mr Murnane, from Argyle Community Housing, advised that five large
housing organisations in NSW have formed a development company called Blue
Chip, with a view to tendering for government funds to expand the sector:
The New South Wales government have the Affordable Housing Innovations
Fund. They have $8 million, and we are lodging a tender under that program
tomorrow... Blue Chip are proposing to acquire government funding, make some
contributions ourselves and borrow some money on the private sector. In fact,
we have been able to demonstrate—and we have a number of small projects
currently underway—that, anywhere in the metropolitan area, we can provide a
house for $160,000 cost to government. So, for the $8 million that is currently
available under the Affordable Housing Innovations Fund, we anticipate that we
would be able to produce 50 units of housing.
Similarly, Mr Murnane told the committee that fifteen national
housing providers have got together and formed PowerHousing Australia, which
will be able to act on behalf of members at a national level:
PowerHousing has been set up so that organisations like the Commonwealth
government, Delfin Lend Lease, Stockland and some of the big developers can go
to one organisation, deal with it and then we would share that out amongst the
members wherever the need is.
In addition, because of the additional flexibility available to
community housing organisations, state and territory governments are
encouraging growth in the sector and a number have, or are considering,
transferring some public housing stock to community providers.
For example, Mr Murnane from Argyle Community Housing Ltd, advised the
We recently took over managing the entire housing property stock
of New South Wales Department of Housing in the Wingecarribee Shire, so we
manage 390 housing properties of the department in that area. As a result of
that transfer, overnight we became the council’s largest residential ratepayer
and we have been able to negotiate, with local developers and the council, being
given some land. We did a presentation to the Wingecarribee council about the
cost of affordable housing in the shire. They set up a housing strategy group and
donated some land, and the developer donated some land and sold us other land
cheaply. So at the moment we have eight houses under construction in the
There was some question about whether the transfer of public
housing stock to community housing was acceptable to the Australian Government
as, because community housing tenants would be eligible for rent assistance, it
could be perceived as 'double dipping':
It is something we are actually having a look at at the moment...
on the one hand we would be concerned if there were massive cost shifting from
state governments by transferring their stock into community housing, which
would then generate a rent assistance payment. The reason, I suppose, given for
not paying rent assistance in public housing is that the Commonwealth has
already made a substantial contribution to the cost of that housing, so to
subsidise again through rent assistance would be a bit of a double dip.
However, having said that, the other side of the argument is pretty convincing
also—that is, that community housing, and particularly the tenancy support that
they can give people, is certainly a quality product. In many cases they do a
fantastic job, so as a model for sustainable housing for low-income people it
is very attractive. So we are weighing that at the moment.
The Department of Family, Housing, Community Services and
Indigenous Affairs also questioned how the community housing sector might best
develop in Australia:
Whether or not the community housing sector has the capacity to
manage significantly larger numbers of housing stock, I do not know. There is
also, for me, a bit of an issue about whether or not it is necessary for
community housing organisations to own the houses, to have long head leases on
the houses or whether or not they can in fact provide that tenancy support
effectively to people in private rental also, which could be another option.
National Shelter warned that, without additional investment and
support, it would be difficult for the community housing sector to develop to
meet growing needs:
We do not have a Housing Benefit like the UK. We do not have the
levels of capital resourcing like they do in the UK. We do not have the
legislative requirement for local authorities to house people like they do in
the UK. Without those sorts of measures sitting around a community housing
system, it can be stagnant. It will grow through things like the National
Rental Affordability Scheme, but it will not be able to do the full job or be
able to cope with the kinds of stock transfers away from public housing to
community housing that we have seen in other countries.
10.52 In order to meet the immediate need for social housing of
highly disadvantaged households, the committee recommends that significant new
funding be invested, by both the Australian Government and state and territory Governments,
under the new National Affordable Housing Agreement, with the aim of increasing
the pool of social housing to at least 6 per cent of housing stock.
The committee recognises the strengths that the Community
Housing Sector brings to the delivery of social housing in Australia.
In order to ensure that these strengths are fully employed, the committee
recommends that the Australian, state and territory governments work more
closely with Community Housing Associations to support them in meeting their
social housing commitments and to explore options for attracting more
investment, including private sector investment, into not-for-profit models of
10.54 With a view to building more sustainable social housing in
the longer term the committee recommends that the pool of social housing stock be
increased to at least 10 per cent of housing stock by 2020, facilitating the
entry into social housing of a more diversified mix of low to medium income earners.
The purchase of this additional social housing stock could be
funded by way of low interest loans to state and territory housing authorities
and/or community housing providers from the Commonwealth infrastructure fund.
10.56 As an additional measure to improve the sustainability of
social housing, the committee recommends that the formula used to calculate the
level of rent paid in social housing be reviewed, with a view to enhancing the sustainability
of social housing stock (and, if possible, providing for growth), while
10.57 The review should include an examination of the
interaction between social housing and Commonwealth Rent Assistance payments,
and how these two programmes might be best utilised to maximise socially and economically
sustainable outcomes in terms of access to affordable housing.
Emergency assistance programmes
In addition to rental assistance programmes and public and
community housing, governments also provide a number of programmes designed to
prevent and address homelessness.
Supported Accommodation Assistance
The Supported Accommodation Assistance Program (SAAP) is a joint
Australian and State and Territory government programme that provides
transitional supported accommodation and support services to people who are
homeless or at risk of becoming homeless.
According to the Productivity Commission, recurrent funding of
SAAP services was $356 million in 2006–07. Nationally, real recurrent SAAP
funding per person has decreased from $18 in 2002–03 to $17 in 2006.
SAAP agencies provide a range of services to homeless people and
those at risk of becoming homeless including the provision of crisis housing
and short term supported accommodation; medium to long term supported accommodation;
outreach support; day support and telephone information and referral.
Major Eldridge from the Salvation Army indicated that SAAP
programmes have 'backed up' and that:
Good services are finding themselves unable to provide beds at
the crisis point and unable to secure beds at the exit points. So we need to
really look at how we might support that program and deal with the current
This was reflected in the data from the SAAP 'Demand for
Accommodation Collection', which showed that nationally in 2005–06, 54 per cent
of adults and unaccompanied children requesting immediate new SAAP
accommodation on a given day were turned away.
Major Eldridge called for the expansion of the SAAP as a 'national response to
the needs of households at risk and people experiencing homelessness.'
The 2008–09 federal budget included a measure 'A Place to Call
Home' aimed at reducing the number of people turned away from SAAP services.
Under the initiative $150 million over five years will be provided to states
and territories to create 600 new homes for homeless individuals and families. According
to the Budget Fact Sheet:
Instead of going to a refuge, homeless families and individuals
will move directly into this housing and receive tenancy and other support for
the first 12 months. They will not have to leave the housing at the end of the
support period. The housing will be transferred to the general public housing
pool and their tenancy extended in accordance with normal tenancy arrangements
for public housing.
Indigenous people will be provided with homes and support
services at least in proportion to their share of the homeless population.
The committee recommends that the Australian Government consider
whether the level of increased support to the Supported Accommodation
Assistance Program being offered under the 'A Place to Call Home' initiative is
sufficient to address the level of unmet need, and increase support to
emergency assistance programmes provided by charitable organisations to assist
the growing numbers experiencing financial crisis.
Household Organisation Management
Expenses (HOME) Advice Program
The Household Organisation Management Expenses (HOME) Advice
Program is a pilot early intervention programme aimed at assisting families who
are experiencing difficulties in maintaining tenancies or home ownership due to
personal or financial circumstances.
FaHCSIA delivers the programme through a partnership with Centrelink and
community agencies in eight locations throughout Australia, one in each state
and territory. The South Australian location specifically targets Indigenous
Between 1 July 2004 and 30 June 2007 the HOME Advice Program
assisted 1 636 families, including 2 303 adults and 3 438 children.
About 60 per cent were single parent families and a further 29 per cent were
couples with children. Most families (82 per cent) were in some form of rental
accommodation. As outlined in Table 10.3, below, families tended to present to
the Home Advice Program with a range of complex problems.
Table 10.3: Most common factors contributing to case
Per cent (%)**
Sought emergency financial assistance in the past 6
Few social support networks
Debt impairing family / social functioning
History of family violence
Poor budgeting skills
Limited employment opportunities
Mental illness indicated
No reasonable transportation to attend work
AVO/restraining/intervention order in place
** Cases reporting the issue affecting the management
of the case as a proportion of all cases in 2005-07
With the aim of preventing families from becoming homeless, the
HOME Advice Program provides a diverse range of support. Key aspects of the
- early identification of families at risk and early intervention
to prevent homelessness by securing the families' housing situation and
resolving the most immediate financial crisis issues;
- an holistic approach that involves working with the entire
family, including children, and being Indigenous inclusive;
- a family centred approach that involves working with the family
on the full range of issues with which they are faced, with a view to building
resilience and achieving sustainable outcomes;
- provision of flexible brokerage services, to provide for timely
financial support, and to allow the purchase of additional support services to
meet the families needs. This may include assistance to meet rent or mortgage
arrears through an initial payment aimed at averting the threat of eviction,
followed by the development of a budget incorporating regular arrears
- a partnership approach between the community agency providing the
HOME Advice Program, Centrelink, and other services. This includes the
provision of a dedicated Centrelink Home Advice social worker to provide case
management and rapid response to address complex income support issues.
An evaluation of the HOME Advice Program looked at housing
outcomes for families who had passed through the programme in 2005. It found
that: 86 per cent of families had remained in adequate housing (79 per cent) or
improved their housing situation (7 per cent); 6 per cent had remained in
inadequate housing; and 6 per cent were in a worse housing situation. The
outcome for 5 per cent of families was unknown.
The evaluation also followed up clients six to twelve months
after participating in the programme to assess the sustainability of outcomes.
This follow-up found that around half of the families had not experienced
homelessness since leaving the program, a quarter had become homeless at some
point and the remainder could not be followed up. If clients seen by the Northern
Territory and South Australian HOME Advice services (who had a high
proportion of Indigenous clients) were removed from the statistics, the
proportion of past participants in the program who had never experienced
homelessness increased to almost three-quarters. There was a clear difference
between Indigenous and non-Indigenous clients in terms of outcomes, with
Indigenous families much more likely to experience a period of homelessness
following their participation in the programme.
In addition to helping prevent families from becoming homeless,
the evaluation found that the HOME Advice Program assisted many families to
resolve financial problems, particularly problems with Centrelink entitlements
or debt, and to meet their goals in relation to employment. Participation in
the programme also improved family resilience and community connectedness. The
evaluation found that the two variables that contributed most to successful
- the availability of brokerage, allowing families to be supported
early in a crisis; and
- the intensity of support provided to families, with arbitrary
restrictions on the amount of support that could be made available viewed as
being counter productive.
A number of witnesses were aware of the Home Advice Program and
suggested that it should be expanded nation wide:
We have had a good look at—we are not participants in—the trial
of the HOME Advice Program. It is a pilot program... It certainly did seem to be
a very useful program—talking to some of the providers who have delivered it—in
terms of preventing people from falling out of rental housing. They do have
some brokerage money. They also have an opportunity to maintain people in their
current accommodation and prevent at risk families from becoming homeless. We
would like to see that program extended across the country.
One witness also saw potential for the programme in preventing
families from falling out of home ownership:
We would suggest that an expanded version
of that program [HOME Advice] could have a very productive role, and it would
actually be a better way of maintaining homeownership, getting people into
homeownership and keeping them in homeownership than what currently exists... I
imagine there are a number of different ways in which it could be followed. It
could be a referral program; it could be something that banks refer people to;
it could be something that Relationships Australia takes responsibility for...
In 2005–06 the Home Advice Program was estimated to have cost
$1 323 and $3 436 per client, with an average cost per client of $2 030.
If Centrelink contributions were included, the average cost per client was $3 079.
This compared favourably to an average cost per client under the Supported
Accommodation Assistance Program, which provides assistance to homeless
persons, of $3 130.
Thus, by helping to prevent families from becoming homeless, the programme was
providing savings to the Australian Government, while also achieving positive
social outcomes for the families concerned and the broader community.
10.75 The committee recommends that the HOME Advice scheme be
expanded nationally to provide early intervention services for families at risk
of homelessness. The scheme should be evaluated after five years, including a
comprehensive economic evaluation, to ensure that the expanded programme
continues to provide economic and social benefits to the community.
The committee recommends that consideration is given to
expanding referral pathways to the HOME Advice scheme to include financial
institutions, so as to better capture low income mortgagees who may be at risk
of becoming homeless (see paragraphs 9.48–9.55).
National Rental Affordability Scheme
The National Rental Affordability Scheme (NRAS) was announced by
the Government on 3 March 2008 as a supply-side response to dealing with the
shortage of affordable rental property in Australia. The scheme aims to:
- increase the supply of affordable rental dwellings by 50 000
- reduce rental costs for low and moderate income households; and
- encourage large scale investment in and innovative delivery of
The committee recommends that the Australian government encourage
applications under the National Rental Affordability Scheme that would target
the development of new affordable rental properties in areas of greatest need
and/or for communities needing affordable housing for essential services
Under the scheme, a National Rental Incentive will be available
to providers of new dwellings, on the condition that they are rented to low and
moderate income households at 20 per cent below market rate. The incentive will
be available for a period of ten years, provided that the property continues to
be rented to a household that meets the eligibility criteria.
The annual National Rental Incentive will comprise:
- a Commonwealth Government tax offset or grant of a specified
value ($6 000 initially and indexed annually thereafter according to the
rental component of the Consumer Price Index). The Commonwealth contribution
will be provided as a refundable tax offset, except to non-profit organisations
endorsed as a charity, who may receive the contribution in the form of a grant;
- a State or Territory contribution in the form of direct financial
support of a specified value ($2 000 per annum) or some other support of
For the purpose of the National Rental Incentive, dwellings will
be regarded as new if they are increasing the supply of lower-cost rental
housing. This may include newly constructed dwellings that have never been
occupied on a residential basis or are being substantially rehabilitated, such
as a motel being converted into residential housing. Refurbishments of existing
dwellings will not be eligible unless refurbishment leads to a net increase in
the number of dwellings.
In terms of the eligibility criteria for tenants to ensure
continued eligibility for the National Rental Incentive scheme, the discussion
paper indicates that this will be modelled on eligibility for Commonwealth Rent
Assistance or the low income Health Care Card. Table 10.4 provides an
indication of the income limits for CRA and low income Health Care Card on
which tenant eligibility could be based.
Table 10.4: Income
Income limits for continuing eligibility for the CRA
Single age pensioner
Couple, no children, both age pensioners
Working family (FTB recipient) two children under 12
Working family (FTB recipient) three children under
Income limits for continuing eligibility for the low
income HCC are:
Couple, no children
Couple, 2 children
Views on the Scheme
The community sector was generally positive about the National
Rental Affordability Scheme. The Australian Council of Social Service indicated
We think that it is a big breakthrough, because it provides for
the first time a real incentive for people to invest in low-income housing.
It was noted, however, that the scheme had only just been
announced and that no details were available about how it would work
(unfortunately the discussion paper was not released until after the committee
had completed taking evidence). As such, witnesses were only able to talk theoretically
about the potential effectiveness of the scheme.
A number of witness from the community housing sector indicated
that they believed the scheme would allow them to expand their operations. For
example, Mr Murnane from Argyle Community Housing Ltd stated that:
...we are quite excited about this proposal—there would be I think
in rough terms about $600 million available. The thing that made it exciting
for us was that there was about an $8,000 subsidy to go with it. There was a
$6,000 subsidy over a 10-year period from the Commonwealth and $2,000 per unit
from the state. When we looked at those figures, we could provide housing under
that proposal. We have only had a very preliminary look at it, because we have
been caught up with other things, but we could provide housing under that
scheme, particularly, if those figures were indexed over a 10-year period. We
have negotiated arrangements with financial institutions that are more than
happy to fund us to be able to develop housing based on the figures outlined in
the NRA Scheme. We think that is a positive move.
Others, while supportive of the scheme, questioned whether it
would deliver all that it had promised and stressed the need for the scheme to
be flexible and responsive to the lessons learnt during implementation:
I think that we need to test the National Rental Affordability
Scheme in the marketplace first. I do not think there is any help in just doing
some modelling. After all, this is about real investments with real investors,
so we need to test it in the real marketplace. I would like to see a guarantee
that the scheme can be fine-tuned in response to that.
Ms Kakas, from the Property Council of Australia, indicated that
she believed that:
...we have the opportunity, if the National Rental Affordability
Scheme is properly designed, to bring some maturity and some changes into the
marketplace to bring superannuation, developers, trusts and new ways of
bringing products to market and to keep investors in place.
In respect of whether members of the Property Council would
participate in the scheme, Ms Kakas advised that:
I think not having the detail certainly adds a level of
constraint and speculation which keeps our development people as a whole
putting their toe over the sidelines, saying, 'We’d like to participate and we
think this has real potential but we really need to see how it is going to work
on the ground and whether or not there is some feasibility and flexibility
there to allow for innovation to occur.'
The question of whether institutional investors, such as
superannuation funds, would actually participate in the scheme was also raised
by a number of witnesses. For example, Mr Sutton from the Construction,
Forestry, Mining, Energy Union told the committee that:
...[the] rental package proposal, is hoping that institutional
players like super funds will come and fill that space. I am not yet convinced,
because we have not seen all the detail or the mechanics of how that is going
to work, that it will marry the two things together. I am certainly hoping we
can. I myself am a superannuation trustee, and of course you have a fiduciary
duty when you sit at the super fund.
Mr Farrar from the NSW Federation of Housing Associations
suggested that, as an incentive to attract institutional investors to the
scheme, the government look at underwriting their investment in the short term:
It would be prudent at a time like this for government to
provide, even if it is only for a temporary period, some underwriting of that
risk so that the market can come into the marketplace with an unknown product
and some confidence that they are not going to lose their shirts on it. I think
they will very quickly learn that it is not a high-risk but a low-risk
The National Rental Affordability Scheme aims to help create an
additional 50 000 affordable rental dwellings across Australia by 2012 and, if
successful, will offer a further 50 000 incentives from 2012. Some questions
were raised as to whether this was achievable in light of the skills shortages
faced by the construction industry and other limiting factors, such as land
In response to these concerns FaHCSIA indicated that
...by the time we get to year 5, we would be thinking that is
around about another 20 to 30 additional dwellings at that point—that is 20,000
to 30,000 on top of the hopefully 200,000 dwellings a year that will be being
built at that point. We are talking about 2011-12, so in that sense it is not
that much of an increase for the industry as a whole.
Ms Winzar also advised the Committee that, while FaHCSIA had not
had explicit discussions with the Housing Industry Association and other
stakeholders about whether the industry could deliver an additional 50 000
dwellings, 'the industry associations are well aware of what the government is
trying to do.'
In addition to the concerns raised about whether the National
Rental Affordability Scheme will be successful in attracting institutional
investors and delivering the full quantum of dwellings, some questions were
also raised about whether the scheme will deliver additional affordable housing
in the right areas.
Mr Farrar from the NSW Federation of Housing Associations
indicated that he understood that the NSW government had undertaken some
which suggests that because the market is variable then the
incentive is going to work better in places where the need is least and work
less effectively in places where it is highest.
This issue was to some extent acknowledged by the Department of
Families, Housing, Community Services and Indigenous Affairs who noted that:
...it may well be that, for an institutional investor, the entry
price of such a measure as the National Rental Affordability Scheme is not
attractive in Sydney, notwithstanding the prospect of longer term capital
growth, and that they would prefer to see an investment in Wollongong, Newcastle
or Dubbo or in one of the regional centres.
The Department went on to indicate that they are not overly
concerned about targeting, at least in the initial rollout of the programme, as
'with rental vacancy levels below three per cent in all capital cities, in a
sense it does not matter where they are targeted—because there are rental
shortages right across Australia.'
The Department acknowledged, however, that this was an issue that they may need
to address over time:
We will monitor the developments as they go along. After about
year 2, I think we will have a pretty clear sense about whether or not we need
to do something different in some particular areas which still have significant
levels of rental stress.
The Department also emphasised that state governments could offer
additional incentives to attract investors into their state, or into particular
This is something being considered at some levels, with the Gold Coast City
Council indicating that the Council 'is considering incentives to the private
sector in light of the Australian government’s National Rental Affordability
Linked to the issue of whether the National Housing Affordability
Scheme will be adequately targeted geographically, is whether it will address
the problems being experienced by some communities in ensuring that affordable
housing is available for essential workers. As noted above, a number of
witnesses to the inquiry stressed that affordable rental housing was required
not only to assist lower income earners or welfare recipients who struggle to
meet market rents, but also to assist some communities to attract and retain
essential workers in high housing cost areas.
The income levels being proposed as part of the tenant
eligibility criteria, as outlined in Table 10.4, would appear to exclude many
workers who might be classified as 'essential'. For example, the base salary
(before shift penalties) for a first year nurse in NSW is around $48 000 per
annum, and for a probationary constable it is around $47 000 per annum. Both of
these professional groups would be excluded from eligibility for affordable
housing under the criteria proposed in the discussion paper.
10.101 The committee recommends that the Australian Government considers
how community housing providers and housing cooperatives might be assisted to
access funding under the National Rental Affordability Scheme.
10.102 The committee recommends that the Department of Families,
Housing, Community Services and Indigenous Affairs conduct a mid-implementation
review of the National Rental Affordability Scheme in 2010 to assess the extent
to which it is meeting its objectives.
The review should examine:
the extent to which institutional investors have been attracted
to the scheme and any barriers to their participation;
- the number of new dwellings brought on line or in development
under the scheme and whether the scheme is on track to meet its target of 50 000
new dwellings by 2012;
- the extent to which factors such as workforce shortages in the
construction industry or land shortages have limited the rollout of the programme;
- whether the scheme is improving access to affordable rental
housing equally across the country, or whether there are geographical pockets
of high need that are not being addressed;
- whether there is a continuing issue of attracting and retaining
'essential workers' in some communities and to what extent, if any, the National
Rental Affordability Scheme has addressed this issue; and
- any additional contributions to the scheme provided by state and
territory or local governments and the extent to which these appear to have affected
the uptake of the scheme in that state or local government area.
While home ownership is an important aspirational goal for many
Australians, long term rental may be a more attractive prospect if some of the
benefits of home ownership could be translated into the rental market. According
to the Western Sydney Organisation of Councils:
There appears to be the perception that ownership in its current
form is the only form of desirable housing, whereas surveys indicate that what
people really want is security of tenure.
Lack of secure tenure was seen as one of the major deficits of
the private rental market and something which often prompted people to enter
home ownership even when they could not afford to do so:
We have transitional communities because
leases are often for six or 12 months and people are moving endlessly.
When they are offered the First Home Owner Grant, they think, ‘This is an
opportunity for me to set up home, to have some security,’ but they do not have
the income to cover their mortgage.
Several witnesses suggested that security of tenure might be
addressed via the development of more uniform tenancy laws across Australia:
We would like to see a consistent national framework specific to
tenancy legislation. It is quite complex at the moment. We operate in a number
of states and there does not seem to be any consistency.
The Australian Council of Social Service suggested that such an
approach might be incorporated in the future National Affordable Housing
Many international experts have come to the country and said
that one of the things that could possibly be done under... the National
Affordable Housing Agreement, is to provide a national set of standards for
people in the private rental market. Clearly, they are not strong enough.
It is argued, however, that stronger tenancy laws could provide
disincentives for investment in the private rental market, leading to decreased
supply and increased housing affordability problems in the longer term.
A number of witnesses suggested that the best way to address
security of tenure in the rental market was to provide people with a more
diverse range of tenancy options than are currently available. Housing
cooperatives were put forward as one such alternative.
Mr McInerney, from Common Equity Housing, currently provides
community housing on a cooperative basis in Victoria
We ask the tenants to form a local cooperative, usually of
between 12 and 20 households, in an area or with an interest group. They form a
corporative and manage their own rent collection. They pay rent to their own
cooperative and pass on 55 per cent of the rent collected to the company. We
service the debt and provide them with assistance, expertise and resources to
run their little businesses—they actually run small businesses. They are
responsible for the day to day maintenance of their properties, and the company
does any capital works on the properties. The effect of this is that the
tenants take great pride in their homes.
Under their current scheme, Common Equity Housing owns the houses
that are being rented by the Co-operative, however Mr McInerney sees
opportunities for equity cooperatives, where people invest in the co-operative
and the co-operative provides them with a home, at reduced rent. The
co-operative would offer secure tenure and people would be able to decorate the
house and make improvements (at their own expense), meaning it would be much
more like a home that they actually owned.
With this equity housing, you buy into a company or a
co-operative rather than into an individual property and the investment that
people put in themselves is protected. They would not get capital gain—that
would stay with the not-for-profit provider—but their money would be refundable
when they left and probably CPI-ed as well for the duration of the time they
stayed in the property...
The submission to the inquiry from the Urban Research Centre
provides a more detailed overview of how limited-equity co-operatives work
In cooperative housing, residents are members and shareholders
of a non-profit co-operative corporation holding title to the housing, with
ownership of that share granting a right to reside in a housing unit. In
market-based cooperatives, share values increase in line with surrounding
property prices, but the pooling of resources into the cooperative make initial
purchase easier. In limited-equity cooperatives, shareholders are entitled to a
limited equity gain on their corporate share at resale; this gain is indexed
according to a pre-determined formula which may correlate to CPI or a
percentage of surrounding market gain. This ensures that the affordability of
the share is retained over time. Housing cooperatives are unique in that
residents are shareholders in the corporation owning their home and as such,
have ultimate control over the corporation’s assets and operations and over the
enforcement of restrictions placed on title and occupancy. The terms of
occupancy are secured via a lease between the homeowner and the co-operative.
The Urban Research Centre also notes that the use of
limited-equity housing is quite extensive in some countries, such as Sweden, where
market-based and limited-equity cooperatives house over 500 000 individuals,
representing 15 per cent of the housing market.
The committee recommends that the Australian Government examine
the capacity of the community housing sector to operate as a provider of choice
of affordable adaptable housing for people living with a disability, and
investigate how it can support this sector to provide more units of appropriate
10.115 The committee recommends that the Australian, state and
territory governments investigate options to encourage community housing
associations to develop more housing to meet the future needs of an increasing
number of older Australians for affordable and adaptable housing that supports
'ageing in place.'
The Stretton scheme
Another alternate tenancy model was presented to the committee by
eminent academic Professor Hugh Stretton, who proposed a scheme aimed at improving
affordable housing by separating the shelter aspect of home ownership from the
speculative motive. It would introduce a new 'style of housing which should
have the special capacity that it could not be inflated. It could not
contribute to the inflation of other housing and might well moderate it
While this model relates primarily to home ownership rather than rental, it is
included here because of the rent-to-purchase aspect of the proposal, as
The scheme involves the government sponsoring a public trust
which would build and then sell (at cost) homes whose price could not rise
faster than the CPI (as they could only be resold back to the agency that sold
them). This would exert a dampening influence on overall house price inflation.
The homes would be built by private builders who submit competitive tenders and
commit to training a quota of apprentices.
For people unable to buy the homes immediately, Mr Stretton suggests the trust
could offer them on a 'hire purchase' basis; paying an above-market rent for a
number of years but then most of that rent being deducted from the purchase
price. At least in its start-up stages, the scheme would require government
subsidy, but may be more cost-effective than other forms of housing assistance.
While Mr Stretton's scheme is innovative, there are some
similarities with cooperative housing schemes internationally.
Given the failure of the housing market in Australia to provide
access to appropriate and affordable housing for many Australians, there seems
to be value in exploring options for alternative forms of rental tenure, which
have the potential to provide the security and social benefits usually
associated with home ownership, but without the financial cost of a mortgage.
The committee recommends that the Department of Families,
Housing, Community Services and Indigenous Affairs conduct an independent evaluation
of alternative tenancy and ownership models, such as housing cooperatives,
currently operating in or proposed for Australia or overseas, to assess their
efficacy in providing secure and affordable housing in the Australian context. The evaluation should include a review of any legislative or administrative
barriers to the introduction or expansion of such schemes in Australia.
10.121 If the results of the evaluation indicate that there may
be a role for alternative tenancy and ownership models in the Australian
context, options should be developed for supporting and promoting uptake of
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