ACOSS and National Shelter release 6 point National Housing Affordability Plan

With Federal budget speculation growing, ACOSS and National Shelter today urged the Federal Government not to shirk its lead responsibility to address the housing affordability crisis affecting millions across the country and increasing financial risk to the national economy.

‘The Federal Government must grasp the housing affordability crisis with both hands and put in place the right policies for the future.” said Dr Cassandra Goldie, ACOSS CEO.

Recent speculation of a Government retreat, and various proposals that lack broad support – including widely criticised ideas such as using super to fund housing deposits – suggest some within the Government view this task as beyond them. It is not. There is broad expert consensus about what needs to done.

Releasing today its 6 point “Housing Australia’s People: A Serious Plan'”, ACOSS and National Shelter set out a comprehensive package of reforms that would deliver growth in social and affordability housing for people on low and modest incomes and take the heat out of the open housing market for all.

Dr Cassandra Goldie, CEO of ACOSS said today: “Australia’s housing affordability crisis is serious and we need a serious plan to tackle it.

“We have become a nation of housing haves and have-nots: The housing ‘haves’ bought their first home years ago and many have investment properties as well. They have secure housing but worry about their children and grand-children, who will struggle to pay a mortgage or save for a deposit. The housing ‘have-nots’ are the 800,000 low-income people paying more than 30% of their income in rent, who know they could lose their home at the end of the 6-12 month lease. Their children live in a constant state of uncertainty and fear of losing their homes. More than 100,000 people are homeless.

“A growing number of people on social security payments or modest wages are being pushed out of our cities – where most of the jobs are – by a creeping crisis in housing affordability.” Adrian Pisarski, CEO of National Shelter said. “We estimate that half a million more affordable homes are needed.”

“Governments are spending billions of dollars in tax subsidies for people who are already comfortably housed or investing, pushing up housing prices and debt to unprecedented levels. At the same time, the programs to make housing affordable for people on low incomes – social housing, Commonwealth Rent Assistance, and homeless services – are collapsing under the weight of escalating home prices and rents and slashed income supports and low wages.” Dr Goldie said.

“The Budget must give priority to strengthening these programs, beginning with public investment in social housing for people with low incomes and homelessness services through the National Affordable Housing Agreement (NAHA). Social housing for people with low incomes must be substantially increased. Expansion of affordable housing for middle income-earners is also a priority, but not at the expense of programs for low income-earners and homeless people.”

“State Governments are making multi-million losses on public housing – NSW alone is ‘losing’ over $900 million,” Mr Pisarski said. “The reason is simple: to keep rents affordable they are held at 25% of income, and social security payments are too low: $270 a week for a single adult on Newstart Allowance. It’s not surprising that the share of social (public and community) housing dwellings has fallen from 5.5% to 4.5% over the last 15 years and waiting lists stand at 180,000 people nationally.”

“Most tenants with modest incomes rent privately. For a low-income single parent with one child renting privately, the maximum Commonwealth Rent Assistance payment is $78 a week, less than one fifth of the median rent of $420pw for a two bedroom flat in outer suburbs of Sydney and less than one quarter of the $315pw they would have to pay in Melbourne.” Dr Goldie said.

“Community housing (social housing run by non-government agencies) has potential to expand to provide secure and affordable housing for people on low incomes. The Government aims to achieve this using private funding and low-cost credit. Tenants receive Rent Assistance and their rents are held at 25% of income. The challenge here is the same as for public housing: even with Rent Assistance, theirincomes are far too low so this sector can’t thrive on private finance alone.” Mr Pisarski said.

“Too many domestic violence survivors and other homeless people are stuck on a homeless shelter merry-go-round which they can’t get off due to a lack of places in social housing. A report by the Australian Institute of Health and Welfare found over one in ten social housing tenants were previously homeless. Homeless shelters themselves are stuck in an annual funding merry-go-round.”

“We can finance the reforms we need by curtailing housing tax concessions which are a part of the problem, and help to stimulate housing construction and supply of the right kind.” Dr Goldie said.

ACOSS and National Shelter had welcomed the Government’s commitment to make affordable housing a centrepiece of the Budget and it’s vital that they follow this through. We also welcome Labor’s commitments to reform housing tax breaks, and curbing borrowing by self managed super funds and to restore a national Housing Ministry.

“It will take more than a decade to repair the damage done by the last decade of unrestrained housing price speculation. A long-term housing affordability plan led by a Commonwealth Housing Minister and backed by the States is vital,” Mr Pisarski said.

The ACOSS-National Shelter plan has six parts:

• Slow the growth in home prices and rents by reforming tax breaks like Capital Gains Tax and negative gearing that encourage speculation in property prices. Policies that add to home prices, such as allowing people to use superannuation to buy or invest in housing, should be avoided.
• Re-invest in social housing through the NAHA, with clear accountability for States to expand and properly maintain social housing (public and community) for people with low incomes.
• Improve the incomes of people relying on social security payments, especially the $38 a day Newstart Allowance and Rent Assistance. Consider higher Rent Assistance payments in the most expensive areas.
• Encourage private investment in social housing through a social housing finance corporation (bond aggregator) to provide low cost credit, and a new rental housing investment incentive for affordable housing for low and modest income-earners to replace ‘negative gearing’.
• We welcome the Government’s and Labor’s support for a bond aggregator but this alone will not make social housing sustainable: direct public investment and Rent Assistance must be increased.
• Funding for homelessness services must be secured for at least five years, and innovations like ‘housing first’ strategies and better links with social housing should be promoted.
• States should work with the Commonwealth and Local Government to release land for affordable housing through ‘inclusionary zoning’ and progressively replace housing Stamp Duties (which make it harder to buy a first home or move house) with a Land Tax extending to owner-occupied properties.