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Siloed construction industry reform will fail: We need systems thinking

Posted by on October 11th, 2019 · Uncategorized

By Prof Martin Loosemore, UNSW

First published in the Fifth Estate. Read the original article here.

What is interesting about Dame Judith Hackitt’s final report that was commissioned by the UK government following the Grenfell Tower disaster is that it didn’t pin the blame on the cladding, but identified a wider systemic problem in the way the UK construction industry operates.

Dame Judith Hackitt, a chemical engineer by profession, described an industry and regulatory system that’s now unfit for purpose, which does not learn from its mistakes or from other sectors.

According to Hackitt, the key issues underpinning systemic failure in the UK construction industry include widespread ignorance and misunderstanding of regulations, indifference to quality and safety in preference for cheapness and speed, a risk transfer culture that obscures clarity about roles and responsibilities, and a high level of fragmentation and inadequate regulatory oversight and enforcement.

What is the relevance of this report for Australia and the current building defects crisis?

Hackitt points to the same problems in Australia, drawing on a report published by the Building Products Innovation Council in Australia in 2018.

This report prophetically concluded that “Australia’s building and construction industry is facing a problem of national significance that has adverse implications for the industry’s competitiveness, and potentially, for the health and safety of the community”.

The Australian construction industry was characterised as having a buck-passing culture driven by a low-cost mentality, where speed and volume take priority over clear oversight, accountability and visibility for quality and defects.

The industry is also described as highly fragmented, needlessly complex and underpinned by a regulatory framework that’s increasingly incapable of dealing with modern industry issues and rapid changes in the design and procurement of buildings and building products.

Both reviews broadly call for the same reforms: clearer responsibilities for the client, designer, contractor and owner for the delivery and maintenance of fit-for-purpose, reliable and safe buildings, simplified outcomes-based rather than prescriptive regulatory frameworks, a more rigorous risk-based approach to oversight and enforcement with real powers to drive improved behaviours and greater transparency of information, traceability and quality assurance through the life cycle of a building project. They also both acknowledge that this will come with a cost of the need for legislative change.

However, most fundamentally, both reports advocate a systems thinking approach to construction industry reform. Industry and government will need to think differently about their own organisations as part of a wider integrated system that cuts across all stages of a building’s life cycle – through planning, design, construction and operations.

So what is systems thinking?

In helping the construction sector understand what is meant by a systems approach to industry reform, it is useful to refer to the work of the late Donella Meadows.

Meadows was a scientist whose formative book The Limits to Growth is credited with highlighting the planet’s limited capacity to support life in the face of continual growth in population and consumption. This work critically informed the Brundtland Report, which laid down the foundations of the Sustainable Development movement, noting the interdependence of nations in the search for a sustainable development path.

In her posthumous book Thinking in Systems, edited by Diana Wright, systems thinking is described as a critical tool for thinking about an increasingly complex and rapidly changing world.

According to Meadows, a system is “a set of things — people, cells, molecules, or whatever — interconnected in such a way that they produce their own pattern of behaviour over time”.

A system is seen as being surrounded, buffeted, constricted, triggered and driven by outside forces that are largely beyond its control. Critically to systems thinking, the way that a system responds to these forces is seen as a function of the system itself rather than of the nature of the outside forces.

In other words, one change in an external environment may result in different consequences for different systems within it. Furthermore, the failure of any one system cannot be blamed on outside events but on the characteristics of the system itself.

Applying systems thinking to the construction industry

Taking the construction industry as one system that exists alongside other systems (industries) in a wider economic, cultural, social, environmental and political environment, a systems perspective tells us that the problems faced in construction must reside in the characteristics of the industry itself rather than in the external environment that surrounds it.

Indeed, systems thinking tells us that it’s only through understanding the industry’s problems as part of a larger set of influences that one can begin to address them.

Of course, there is something deeply disconcerting for us in the construction industry to start thinking in this way. Not only is it natural human behaviour to blame external forces for our problems, but the construction industry’s risk transfer culture exacerbates this type of thinking.

Furthermore, as an industry largely driven by an engineering mindset, its reductionist thinking causes it to solve problems by splitting them into smaller parts and by controlling the world around it rather than seeing the system as a whole.

As Meadows, states “psychologically and politically we would much rather assume that the cause of a problem is ‘out there’, rather than ‘in here’. It’s almost irresistible to blame something or someone else, to shift responsibility away from ourselves, and to look for the control knob, the product, the pill, the technical fix that will make a problem go away.”

The history of construction industry reform in Australia and overseas shows that it has been widely afflicted by this type of reductionist thinking. While there have been some laudable attempts to promote integrated procurement and bring stakeholders together to drive reform, these have largely failed.

The preference, especially in recent years, has been to fall back into our professional silos and political corners. Consequently, industry reform in Australia has been too long characterised by conflict and division, and construction has failed to effectively respond to the technological and social changes that have been so readily embraced as an opportunity to drive productivity, corporate citizenship and positive public image in many other industries.

So not surprisingly, the problems we see today, rooted in the internal structure of the industry’s complex and outdated systems, have refused to go away and now seem to have reached a crisis point where the community has suddenly lost faith in our ability to deliver safe, reliable and secure buildings that are free from liability and defects.

The sooner we recognise that the problems the industry face are problems of systems (undesirable behaviours characteristic of the system structures that produce them), the sooner we will stop casting blame and find the courage and wisdom to restructure it.

At a time when the world is getting messier, more crowded, more interconnected, more interdependent, and changing more rapidly than ever before, we need another way of thinking about how the Australian construction industry can embrace the many opportunities which surround it.

Martin Loosemore is Professor of Construction Management in the Faculty of the Built Environment at the University of NSW, Sydney. He is a visiting professor at the University of Loughborough, UK, a Fellow of the Royal Institution of Chartered Surveyors, and a Fellow of the Chartered Institute of Building.

Another stolen generation looms unless Indigenous women fleeing violence can find safe housing

Posted by on September 20th, 2019 · Government, Guest appearance, Housing, Indigenous, Law, Social housing, Wellbeing

By Kyllie Cripps, Scientia Felllow and Senior Lecturer, Faculty of Law UNSW Sydney, and Daphne Habibis, Associate Professor, University of Tasmania. This article is republished from The Conversation under a Creative Commons license. Read the original article.

In Western Australia more than half the children placed in state care are Aboriginal. The state government committed this month to reducing this over-representation, in a move that parallels the Closing the Gap Refresh draft target nationally. Despite concerns about another stolen generation, Australia has yet to act on a root cause – the difficulty Indigenous women escaping family violence face in finding safe housing.

Our research shows domestic violence and housing are linked as a cause of child removal.

Every year governments spend millions addressing Indigenous intergenerational trauma. Child removal is an important cause of this trauma.

Care for children is a cornerstone of Aboriginal cultures. Child removal often has severe mental and physical health effects, with risks of substance use, homelessness and incarceration.

Consequences are similar for children, who also suffer from cultural dislocation. Yet Indigenous children are admitted to out-of-home care at 11 times the rate for non-Indigenous children. Far from declining, rates are increasing – by 21% between 2012 and 2017.

This issue is not primarily one of isolated remote communities. The rate of Indigenous children in out-of-home care is highest in our major cities.

Child protection Australia 2017-18, AIHW (2019), Author provided

Why are children removed?

Contrary to public discourse, sexual abuse accounts for only a tiny percentage of substantiated notifications. Proportions are below those for non-Indigenous children (see chart below).

Emotional abuse, which includes the child’s exposure to family violence, accounts for most notifications. The second-most-common type is neglect. This occurs at more than double the non-Indigenous rate and includes inadequate, insecure or unsafe housing.

AIHW 2019, Author provided

Mothers have nowhere to go

In situations of family violence many Aboriginal woman face an impossible situation when trying to protect their children. If they stay with the perpetrator they risk notification for emotional abuse. If they leave but cannot find suitable housing, they risk allegations of neglect.

This dilemma applies to all low-income women, but it is most acute for Aboriginal women. The combination of discrimination and low income means few find private rental housing. Crisis services are often full. The bottlenecks in the homelessness system result in long waits for transitional accommodation.

Waiting times for scarce public housing are long. Many also face delays in being added to priority wait lists due to housing debt – even though this is often a result of their partner’s financial abuse.

These women are often trapped in a revolving door between crisis centres, homelessness and returning to an unsafe home. This is a factor in their high rates of injury and early death.

Delays in being appropriately housed can prevent children from ever being returned to their parents. Child protection timelines generally allow only 12 months before removal can become permanent.

Data sourced from Child protection Australia 2017–18, AIHW (2019)
Cripps and Habibis (2019), Author provided

A policy blind spot

Housing’s critical role at the intersection of child protection and domestic violence has yet to be recognised in public policy. The national Fourth Action Plan to reduce violence against women and their children refers to “inadequate housing and overcrowding” as a factor in Aboriginal family violence. Despite this, it offers no specific guidelines or strategies to overcome these problems.

The Closing the Gap policy focus on housing is limited to reducing overcrowding. While critical, this misses the relationship between housing shortages and family violence and its impact on mums being separated from their children. And the Refresh targets are uncertain and underdeveloped.

Without specific housing targets, it is hard to see how the other targets to reduce violence and overrepresentation in out-of-home care will be met.

As Indigenous policy is realigned under the Closing The Gap Refresh the Australian government must act on this missing link. It should increase the number of crisis beds and consider targets to reduce the numbers of Aboriginal women and children turned away from crisis accommodation.

Programs should support timely access to secure housing. This is especially important for women seeking to reunify with children in state care.

Within the Safe at Home program, special funds should be made available for housing safety upgrades so Aboriginal women can remain in their own homes.

Beyond this, what’s needed are holistic solutions that work with the whole family, including the perpetrator. These solutions need to be developed and delivered in partnership with Aboriginal people, communities and services, building on the strengths of individuals and communities to overcome the impacts of violence and intergenerational trauma.

The short-term nature of funding is also a problem. Investment needs to go beyond political cycles. Current short-term funding arrangements undermine trust in services and greatly reduce their capacity and potential effectiveness.

Given the long-term intergenerational costs of child removal and domestic violence, such measures should prove cost-effective. More importantly, they would reduce violence against women and the over-representation of Aboriginal children in out-of-home care.The Conversation

 

Affordable housing lessons from Sydney, Hong Kong and Singapore: 3 keys to getting the policy mix right

Posted by on September 19th, 2019 · Affordability, Guest appearance, Housing, International, Transport, Wellbeing
Image: Bill Roque/Shutterstock

By Youqing Fan, Western Sydney University; Bingqin Li, UNSW, and Chyi Lin Lee, UNSW. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Affordable housing is a critical problem for Australia’s biggest housing markets. Five Australian cities are in the top 25 with “severely unaffordable” housing in a 2019 Demographia survey of 91 major metropolitan markets. Sydney was ranked the third least affordable of the 91.

The average age of first-time buyers in Sydney has reached 38. And, on average, tenants spend more than 30% of their income on rent. Those who entered the Sydney market 10-15 years ago are more likely to find their housing affordable.

Cities with housing affordability issues have introduced various policy packages in response. This article compares the policies of Singapore, where housing is relatively affordable, Hong Kong (the world’s least affordable private housing market) and Sydney. Our review shows a need for coherent and coordinated housing policies – a synergistic approach that multiplies the impacts of individual policies.

Housing has direct impacts on people’s well-being. A housing market that works well may also enhance the economic productivity of a city. If not handled properly, housing affordability issues may trigger economic and political crises.

Our review covers several aspects.

A balance of renters and owners

First, an affordable housing system needs to be about both the rental and ownership sectors.

In Singapore, public housing provided by the Housing and Development Board makes up 73% of Singapore’s total housing stock, which includes public rental and subsidised ownership. HDB flats house over 80% of Singapore’s resident population, with about 90% owning their homes. The average waiting time to get public housing is three to four years.

Public housing is also important, although to a lesser extent, in Hong Kong. In this city, 44.7% of the population live in public housing. The average waiting time is three to five years, depending on household type.

In both cities, subsidised rental and subsidised ownership are an integral part of the public housing system, which aims to improve housing affordability.

Sydney takes a very different approach. Social rental housing provides only 5.56% of housing and covers only low-income households in “priority need”. The average waiting time to get into social housing is five to ten years.

Although there are other policy measures to support home buying and rental (such as the National Rental Affordability Scheme), these are not integrated with the public housing system in Sydney. Rather, the goal of these policies is to support the private housing market.

It’s not just about housing supply

Second, housing affordability needs to be backed up by demand-side policies – i.e. policies to help tenants and owners to develop financial capacity.

Despite its heavy state intervention, Singapore’s public housing stresses the responsibility of individuals. The Housing Provident Fund is a form of forced savings for housing, retirement, health and education, among other things. It is integrated with the pension system to enhance the efficiency of savings.

Forced savings are not available in Hong Kong and Sydney for housing purposes. Since 2017 first home buyers in Australia have been able to draw on their voluntary superannuation contributions for a deposit.

Work-life balance matters

Third, action on housing affordability needs to take employment and its location into account.

Ultimately, the reason people find it hard to afford housing in certain locations is because they need to achieve a work-life balance. Both Hong Kong and Singapore have developed extensive public transport systems. These offer affordable options for people to travel efficiently to and from work.

In Hong Kong, the average daily commuting time by public transport is 73 minutes. Some 21% of the residents have to travel for more than two hours a day. In Singapore, average commuting time is 84 minutes, with 25% exceeding two hours.

In Sydney, the average time is 82 minutes, but 31% take more than two hours. This means a significantly larger proportion of Sydney residents spend more time on public transport. Among the worst-affected are white-collar workers from the city’s west and southwest.

Lessons from the 3 cities

So, what we can learn from these cities’ experiences with housing affordability?

Cities take very different approaches to these issues. Each approach has its own merits and issues.

A key argument against public housing has been that it might give the tenants less incentive to save for housing. It might also not be popular with mainstream voters because of the cost to taxpayers.

Singapore’s approach seems to be a midway solution. The government plays a bigger role in providing housing, but does not waive individual responsibilities. Providing public housing and at the same time demanding individuals and employers contribute can send a strong signal: people are encouraged to join the labour force.

So far, Singapore faces the least housing affordability issues. Hong Kong and Sydney are much more liberal in their approaches to housing.

In Sydney, only the poorest benefit from the public housing system. The younger generation is struggling to get on the housing ladder.

In Hong Kong, people are forced to buy housing in the commercial market if their income is even just above the eligibility line for public housing. The severe unaffordability of private housing in Hong Kong, even for young professionals, brews social discontent.

Combining these three perspectives, Sydney’s housing, savings and public transport systems are far from well synergised to offer a competitive package of affordable housing. The 30-minute city plan prepared by the Greater Sydney Commission might improve the situation. However, similar to Hong Kong, current policies are weak in building the capacity of young people to own homes.

 

 

The rise and fall of converted housing in urban China

Posted by on September 9th, 2019 · Guest appearance, Housing, Housing conditions, Housing supply, International
By Jin Zhu, PhD candidate, City Futures Research Centre; Bingqin Li, Social Policy Research Centre, UNSW Sydney; and Hal Pawson, City Futures Research Centre. Originally published at East Asia Forum.
Internationally, commercial-to-residential conversion is useful for addressing housing shortages and for making the best use of urban space. Over the past 10–15 years, commercial property converted apartments (CPCAs) have emerged in China as a popular low-cost route into homeownership, providing units at much lower prices than purpose-built flats and carrying fewer purchasing restrictions.

But recently China’s CPCA boom has run into trouble. After more than a decade of growing conversion activity, an official drive to reverse the process has triggered large-scale public protest.

Dissent erupted in Shanghai in June 2017 in response to an order for the short-notice dismantling of residential modifications to buildings initially constructed for commercial use in two districts singled out to pilot a ‘reconversion’ process. Facing the possible loss of their homes as well as substantial financial costs, many owners of the associated CPCAs took to the streets in revolt.

Given that CPCAs have come to account for a large share of primary housing transactions in China’s megacities, these developments are likely to be viewed with alarm by CPCA owners and real estate industry stakeholders across the country.

CPCAs first emerged in the early 2000s and became popular in migrant-receiving cities, especially in response to official efforts to limit speculative housing development. For some developers, the relatively permissive planning regime for commercial buildings, together with an expectation of tolerance for residential conversion, presented an opportunity.

Naturally, the recent government crackdown has focused attention on the conversion process. In many cases these conversions were not formally authorised.

How did this situation come about? Research into the Shanghai CPCA story highlights the role of policy ambiguity on the part of governing authorities. It is well-known that China’s modern market reforms have contained an evolutionary aspect. In land-use planning, there have been many instances of rules left vague or policy change inspired by the need to legitimise formerly ‘illegal’ activities. Policy tinkering and even reversal have not been uncommon. Early ambiguity can be helpful for revision or reinterpretation later. But this also means that market players, like developers and CPCA purchasers, may anticipate that unclear rules will be likely clarified in their favour in the future.

From the local government perspective, the CPCA conversion process indeed helped solve the problem of commercial building oversupply, especially in newly-built towns. Authorities benefited from leasing land to developers, ostensibly for business development. But over time accumulating a surplus of such buildings had the potential to be seen as a failure of government planning.

The market came up with a solution to utilise unused buildings as CPCAs. For the local governments, this was seen as a cure for multiple headaches. Apart from making better use of the empty structures, it also offered a form of ‘affordable housing’, in the sense of dwellings available at a price below the standard market rate.

For consumers, CPCAs were attractive not only on cost grounds but also because they could be purchased by migrants otherwise ineligible for homeownership. CPCAs quickly gained popularity. After the initial commercial building stock ran out, new developments progressed on land designated for commercial use but with a conversion intent. While local governments did not endorse CPCAs, neither did they end developer activities, giving proponents of the scheme an impression that such activity was tolerated and could be legalised later.

Over time, municipal authorities have published a series of regulations or notices on such conversions, showing they had been fully aware of the phenomenon since 2008. But regulations were not enforced.

The ambiguous attitude of local governments towards CPCAs sent signals to market players. Many buyers bought apartments either ignorant of the risk that the dwelling could be declared illegal or in the expectation that the government might change its mind. After all, wisdom says that the law would not punish numerous offenders.

Overwhelming policy enforcement in 2017 came as a shock. It came at a time when China’s central government was wanting to strengthen its rule by law. It also reflected a municipal government push to tighten migration control where the Beijing and Shanghai governments were required to cap total migrant populations.

Perhaps fearing widespread social unrest, the Shanghai government called off the forceful implementation of reconversion after the 2017 protests. Alternative solutions, such as turning CPCAs into public rental houses and turning the owners into long-term tenants, were devised to ease tension.

An unwillingness to legalise rule-breaking market activities may reflect disagreement at the national level, where it is not as easy for the government to adapt to market changes. It is for this reason that the authority’s willingness to remain ambiguous in their policy stance at the municipal level may undermine trust in the government nationally.

Healthy built environments – considerations for Aboriginal and Torres Strait Islander people

Posted by on August 21st, 2019 · Indigenous, Planning, Wellbeing

By Professor Susan Thompson, City Futures Research Centre. Originally published in New Planner – the journal of the New South Wales planning profession – published by the Planning Institute of Australia. 

For over 60,000 years, Aboriginal and Torres Strait Islander peoples enjoyed a remarkably harmonious relationship with the natural environment that provided all their physical and spiritual needs, keeping them healthy, happy and well. This was abruptly and forcefully destroyed when the colonialists invaded Australia in 1788. The legacy of this dispossession continues today with significant gaps between the health status and life expectancy of Aboriginal and Torres Strait Islander peoples compared to other Australians.

And while this is a complex situation, with differences in health status across urban and rural communities, chronic disease rates are problematic for all Australians. Accordingly, planners have a role to play in addressing specific risk factors for chronic disease – especially obesity, lack of sufficient exercise, access to nutritious foods and social isolation.

Understanding needs and priorities

In an attempt to understand how these risk factors affect Aboriginal and Torres Strait Islander peoples, the needs and aspirations of the Awabakal community in NSW’s Hunter Region were investigated in a collaborative consultative exercise. The outcomes were written up in a report entitled ‘Healthy Country Healthy Mob’ (McGuinness, et al, 2011). While the outcomes are specific to the Awabakal people, the report is useful for planners collaborating with other Indigenous communities to create health supportive environments.

In relation to accessing healthy food, the study found that for many it was often difficult to consume the daily recommended amounts of fruit and vegetables to meet basic health requirements. These challenges were exacerbated by the high cost and poor quality of fresh produce. Consulted participants suggested that the development of, and support for, community gardens would be one positive way to help alleviate some of these issues.

Achieving at least 30 minutes of physical activity every day was also challenging for a large percentage of respondents. Improvements to the quality of footpaths, their connectivity, and the provision of shading and attractive features, were nominated to help encourage regular walking. Similarly, with cycling, participation rates would increase with more continuous off-road bike paths and lanes.

Findings around community belonging, neighbourliness and connection with the environment were also interesting. There was a strong sense of neighbourhood attachment, especially for families with young children. Volunteer rates tended to surpass those of the non-Indigenous population. Nevertheless, connections across the generations – the very young and the elders – needed improving, with suggestions for culturally appropriate events, as well as providing suitable public meeting spaces (McGuinness, et al, 2011). The location of new roads needs to be carefully assessed by planners to ensure that existing communities are not isolated or separated from easily accessible meeting and gathering spaces. Acknowledgement of traditional owners, incorporation of Aboriginal art in the region, and the protection of significant sites – be they natural or built environments – were all identified as ways of improving community connection and respect for everyone in the Hunter.

Positive visions for change

 The work undertaken in the Hunter demonstrates a positive vision for change through a collaborative and respectful process, which planners can emulate elsewhere. Another example  is the Yuwaya Ngarra-li partnership based in Walgett in western NSW. This is a community-led, rights-based, strengths-focused and holistic project where academics, from a range of UNSW faculties, have joined with the Dharriwaa Elders Group (DEG) to bring evidence-based solutions to real world challenges to improve health and well-being for Aboriginal people in Walgett. Built Environment Faculty colleagues, led by landscape architect Sara Padgett Kjaersgaard, are investigating a range of projects with the DEG, including specific healthy planning initiatives, to support community food gardens and conduct a healthy built environment audit of the town. We are excited and honoured to be part of this partnership.

 

Note on article image: Indigenous art is a powerful way of expressing connection to Country and community – this  mural has been completed along Sydney’s inner west GreenWay to celebrate the traditional owners of this land. The location of the mural is often referred to as the boundary between the lands of the Gadigal and Wangal people of the Eora Nation. Artists: Uncle Kev, Tim Phibs (lead), J.P. Simon.

Reference

McGuinness, R., Miller, K., Bromley, M., Neal, S., Eastwood, L., O’Sullivan, E., Townsend, D., Licata, M., (2011) Healthy Country Healthy Mob: Summary Report of the Awabakal Aboriginal and Torres Strait Islander Consultation for the Newcastle and Lake Macquarie Liveable Communities Assessments. Awabakal Local Aboriginal Land Council and Awabakal Newcastle Aboriginal Cooperative, Newcastle.

Building defects: City Futures’ submissions to the NSW government

Posted by on August 12th, 2019 · Construction, Government, Housing, Housing conditions, Strata, Sydney

By Caitlin Buckle, City Futures Research Centre.

The public discussion around building defects has been heating up lately. In response, NSW Fair Trading have proposed a number of reforms to the building process, and the NSW Parliament’s Public Accountability Committee commenced a parliamentary inquiry into the regulation of building standards, building quality and building disputes. City Futures has shared our perspective on these issues in two written submissions, which can be accessed here.

The NSW Fair Trading  discussion paper ‘Building Stronger Foundations’ was open for submissions until the 24th July, outlining a range of possible reforms. The reforms up for discussion included:

  • the appointment of a Building Commissioner (who has since been appointed);
  • registration and greater responsibilities for building designers; and
  • ensuring an industry-wide duty of care is owed to subsequent home-owners.

The terms of reference for the parliamentary inquiry cover a broader range of issues relating to building defects, including other consumer protections like insurance, and the role of strata committees. Submissions closed on the 28th July.

Our submissions drew on findings from over 10 years of research into strata living, including past research projects Governing the Compact City and City Living, and our current project focused on building defects in apartments (Cracks in the Compact City). The submissions emphasize the emotional and financial challenges faced by owners and tenants of defective buildings. We outline our support for extending the duty of care owed to home-owners, and greater oversight of strata development by the Building Commissioner. There remain other issues that the reforms should also address, however, such as the need for extended timeframes for building defect claims, and the difficulty owners and purchasers face in trying to obtain information about a building’s quality.

Public hearings are currently being held as part of the parliamentary inquiry, with CFRC’s Hazel Easthope and Laura Crommelin invited to provide evidence on the 16th August.

Focus on managing social housing waiting lists is failing low-income households

Posted by on August 6th, 2019 · Government, Guest appearance, Housing, Social housing

By Abigail Powell, UNSW and Chris Hartley, UNSW. This article is republished from The Conversation under a Creative Commons license. Read the original article.

A need to manage waiting lists, rather than ensuring positive outcomes for tenant households, strongly influences social housing policy, newly published research finds. This situation is not only a result of operational policies, but also a shortage of social housing stock that is suitable for tenants and a lack of viable alternatives – namely affordable, safe and secure private housing. Eligible applicants who don’t have a “priority need” can wait up to ten years to be housed. They face strict eligibility checks just to remain on the waiting list.

Since the large-scale post-war expansion to house working-class families, the social housing sector has shrunk relative to the rest of the housing system. More than 140,000 people are on public housing waiting lists.

Importantly, this figure does not capture unmet demand such as people sleeping rough and very low-income households in housing stress who are not on waiting lists.

Waiting lists also don’t include hidden demand such as people suspended from waiting lists or excluded by their visa status.

The supply of social housing stock simply does not match the growing numbers of households experiencing housing affordability problems. Between 2011 and 2016, government spending on social housing fell by 7% from A$1.42 billion to A$1.32 billion. Today, social housing is provided to over 800,000 tenants in more than 400,000 households – 76% in public housing, 20% in community housing and 4% in Indigenous housing.

The expansion of public housing (delivered by state and territory housing authorities) to community housing and Indigenous housing (delivered by non-profit community organisations and Indigenous organisations) has transformed social housing. Community housing has increased by 121% between 2008-09 and 2017-18. This growth includes tenanted stock transfers from public housing.

 

Against this background, policymakers are increasingly seeking to promote housing “pathways”. Operational housing policies are intended to improve tenant housing and social outcomes (such as well-being and economic participation), but also to manage long waiting lists and make the system more efficient.

These policies shape housing pathways, determining how tenants and households move into, within and out of social housing. But these pathways are also influenced by household relationships and a household’s changing needs. What a tenant or family need from their housing changes when, for example, relationships break down, new relationships begin, children are born or children leave home.

Our research sought to better understand the policy context behind housing pathways and their impacts on tenants’ experience.

Getting in

Pathways into social housing begin with application, which is a centralised process in most states and territories (apart from the Northern Territory). Prospective tenants apply once through a single portal, with information shared between government housing departments and community housing providers.

The success of an application depends on a range of eligibility criteria (see Table 1), starting with income and assets. Even if a prospective tenant meets the income criteria, priority is given to people and households with specific or complex needs. What constitutes “specific or complex needs” varies, but generally includes disability, poor physical or mental health, experience of family violence, exiting institutions, or being homeless or at risk of homelessness (the most common pathway into social housing).

Other criteria include citizenship and residence status (including restrictions based on permanent residency/citizen status), age and tenancy history.

Table 1: Summary of common eligibility criteria.
Source: Powell et al 2019, Author provided

An applicant’s place on the waiting list is continually checked. If an applicant is found to be ineligible, or simply does not respond, they may be suspended or removed from the list.

Staying in

Most states and territories have policies on the eligibility of tenants to continue in public housing. Criteria include income levels, use of the premises, and household change. What criteria are reviewed, and how often, varies widely.

Eligibility reviews mean tenants fear any extra income might result in an end to their tenure or having to make higher rent contributions. This potentially undermines their preparedness to undertake education and training, or take up work opportunities that might lead to greater independence.

Moving within

Policies allow tenants to apply for a transfer if household circumstances have changed. A dwelling might no longer be suitable – for example, as a result of overcrowding or family violence.

In practice, however, supply constraints make this challenging. Policies that transfer public housing properties to community housing providers result in tenants becoming less mobile as moving between public and community housing is not possible.

Landlord-initiated transfers can also occur. For example, property or housing estate renewal might require tenant relocation. A transfer might also be a result of tenant conduct or changes in eligibility status.

Moving out

Exits from social housing may occur when a tenant chooses to move to private housing or is evicted. Eviction may result from issues such as neighbourhood disputes, anti-social behaviour, rental arrears, a lease coming to an end, or changes to eligibility.

Tenants who are no longer eligible for social housing based on their income may also be evicted. These tenants often still have limited capacity to take on and manage a private rental tenancy.

Policy levers to help with moves out of social housing include: selling dwellings to tenants; providing private rent subsidies; rental transition programs; financial planning; and client-based needs planning. Some policies also target private landlords with a goal of increasing housing affordability and therefore pathways out of social housing.

By far the biggest obstacle to moving out of social housing, however, is the lack of affordable housing alternatives.

What this means

While operational policy establishes formal pathways (by setting eligibility criteria and so on), what happens in practice may be different, as service providers can interpret and implement policies in different ways, with different effects for tenants.

Further, what is known about the housing pathways of tenants moving in, within and out of social housing is based on partial evidence. It comes from social housing providers themselves (missing information about events prior to and following occupancy), or from survey research seeking to fill some of the data gaps. Many blind spots exist in the housing pathways evidence base.

Optimal policy development requires clear, up-to-date evidence on how we might understand social housing pathways within a changed housing policy and housing assistance context. We also need to consider what advances in administrative and longitudinal data can tell us about how policy innovation might improve social housing pathways.

Abigail Powell, Associate Professor at the Centre for Social Impact, UNSW and Chris Hartley, Research Fellow (Housing and Homelessness) at the Centre for Social Impact, UNSW

 

Private renters are doing it tough in outer suburbs of Sydney and Melbourne

Posted by on July 31st, 2019 · Affordability, Economy, Government, Guest appearance, Housing, Private rental, Sydney, Tenancy, Wellbeing
In low-rent outer suburbs, almost one in six households could not afford to keep their house cool and went without meals. ChameleonsEye/Shutterstock

By Alan Morris, University of Technology Sydney; Hal Pawson, UNSW; Kath Hulse, Swinburne University of Technology, and Violet Xia, University of Technology Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Private renting continues to expand at the expense of home ownership, newly released ABS statistics show. More than one in four Australians (27%) are now tenants of a private landlord (2017-18). Only one in five lived in private rental housing in 1997-98.

Our research looked at private renters in middle and inner suburbs and low-rent outer suburbs (200 private renters in each area, 600 in total) in Sydney and Melbourne. Geographical differences in income sources and deprivation rates might be expected. However, the variations in financial stress revealed by our study were startling. In low-rent outer suburbs, much higher proportions, for example, went without meals or had to pawn or sell something to get by.

Household incomes

Not surprisingly, tenants in the inner/middle suburb areas and the (low-rent) outer areas had a very different profile of income sources, as Table 1 shows.

In areas with medium and high rents, wages or salaries were the main source of income for more than four out of five respondents (83%). In the outer suburban, low-rent areas, this was true for barely half (56%). A third relied mainly on state pensions or benefits.

In more than a quarter of tenant households (28%) in low-rent areas at least one member was an unemployed job-seeker. Only 8% of households in the medium/high-rent areas included an unemployed member.

Finally, once again indicating the typically more deprived situation of the outer suburb group, a much greater proportion of these tenants, 62%, received Commonwealth Rent Assistance compared to 21% in the other areas.

Signs of financial stress

Respondents were asked: “Over the past year, have any of the following happened to you/your household because of a shortage of money?”

We found levels of financial stress varied greatly between areas. Among low-rent (outer suburban) tenants almost two-thirds (63%) experienced at least one of the eight possible financial stress indicators listed in Table 2. That’s twice the proportion for the inner/middle-area cohort (32%).

Benchmarking both of these figures against the nationwide rate of 20% (based on the all-tenure national comparator on the incidence of financial hardship) illustrates the pervasiveness of economic stress among private renters in all areas of our major capital cities. But in outer suburban low-rent areas of Sydney and Melbourne the risk of financial hardship is more than three times the national norm among tenants. Our earlier research also noted this.

Comparing the two tenant groups revealed statistically significant differences on every financial hardship indicator – see Table 2.

Strikingly, almost one in six households living in low-rent areas went without meals. A similar proportion had to pawn or sell something to get by.

One in three tenants in these areas turned to family and friends for financial help. Almost one in four (23%) sought help from a welfare or community organisation.

Exposure to multiple forms of financial stress indicators was also much greater in low-rent areas. One in five (19%) tenants here reported enduring four or more financial stress indicators versus 6% in medium/high-rent areas. For households in this position, damaging impacts on their quality of life and probably physical and mental health are likely.

A common theme to financial stress

We found that being reliant on government benefits was associated with multiple indicators of financial stress, irrespective of area. More than one in three (37%) such households experienced four or more of the financial stress indicators. Alarmingly, poverty resulted in 26% of this grouping going without meals in the last year.

Employment status was a significant factor irrespective of area. In households where a household member was either looking for work, out of the workforce or retired, 27% of these households had four or more financial stress indicators. In households where at least one person was employed full-time, only 5% had four or more stress indicators.

The ongoing trend of increasing housing cost pressures on lower-income Australians over the past decade provides the context for the high incidence of financial stress, particularly among tenants in low-rent areas of Sydney and Melbourne. Latest ABS data reveal that, for the least affluent fifth of households, typical spending on housing increased from 23% of income to 29% over that period. In contrast, typical spending on housing by the top fifth was unchanged at 10%.

The case for increasing benefits

Our study brings home that everyday life is an enormous battle on various fronts for many benefit-reliant and other low-income tenants in Sydney and Melbourne. Even if they can find a tenancy in a low-rent area to keep housing costs down, their likelihood of after-housing poverty, including energy poverty, is high.

At the most extreme end of the scale are the one in five tenants in the outer low-rent areas (one in ten across all three areas) who experienced severe financial stress (four or more indicators of financial stress). After paying for their housing, many of them lack money for essentials.

Being located on the urban fringe, and therefore often remote from services and/or employment, compounds such hardship. Not surprisingly, the incidence of financial stress is highest among government benefit recipients. This finding highlights the urgent need to increase Commonwealth Rent Assistance to offset some of their housing costs, and also to increase key income support payments, such as Newstart and the Disability Support Pension.The Conversation

 

 

Those left to pick up the bill shut out of building crisis debate

Posted by on July 24th, 2019 · Cities, Construction, Government, Housing, Housing conditions, Law, Sydney, urban renewal

By Prof Bill Randolph, Director, City Futures Research Centre. This article was originally published by the Sydney Morning Herald.

The news that the Australian Building Ministers Forum is now acting on the recommendations of the Shergold-Weir report into building defects is a welcome sign that at long last the failings of the development industry to control building quality have started to be taken seriously. But it’s taken a series of shocking revelations, accompanied by pictures of distressed residents clutching cats and children as they file out of their condemned homes, to spur politicians and the bureaucracies that support them into action.

In an industry dogged by complex state-based legislation, inconsistent and weak compliance regimes, poorly integrated regulatory frameworks, competing incentives and competency gaps among trades, poor record keeping and sheer competitive pressure, the development industry has pretty much been given a free reign to set its own standards and police itself. The success of the development sector in pushing back regulatory oversight, lobbying for increasingly permissive planning frameworks and avoiding responsibility for poor quality building has had an inevitable and predictable outcome. This approach has failed the consumer.

The scramble to apportion blame between the complex chain of actors involved in the recent building scandals exposes the risk-shifting behaviour rampant in the industry. The now widespread “design and construct” sub-contractor procurement approach, which relies on builders to adapt the designs and specifications as they go, has further disrupted the capacity of the sector to deliver a quality outcome. .

The proposals of the NSW government in its recent Building Stronger Foundations discussion paper to take a “zero-tolerance” approach to non-compliant certifiers, ensure ‘building professionals’ are registered (always assuming anyone will insure them) and appointing a Building Commissioner, all sound good in theory but may prove more difficult to implement in practice without significant resourcing and real teeth. Calls to bring back suitably qualified and independent Clerks of Work or consulting architects or engineers to oversee a development from start to finish may offer an alternative solution.

Missing from current debates has been the key role the finance sector has played in requiring pre-sales before developers can access development finance. This marketing approach lays the seeds of much of what subsequently happens. In buying “off-the-plan”, the buyer is committing to buy an apartment on the basis of very limited information about what will actually be built – often little more than that contained in a glossy brochure. Would you buy a new car under similar conditions? Of course not.

“Information asymmetry” in favour of the developer is a fundamental feature of the apartment market and a clear sign of market failure. Even for purchasers of existing apartments, it is often very difficult to obtain clear, comprehensive or reliable information about the state of the building. Nor is it feasible to have an entire high-rise inspected before settling on a purchase and yet apartment owners are entering, largely blindly, into joint ownership of these often massive and complex buildings, based on little else but trust in a system that has now been shown to have failed dismally.

The lowly position of the consumer in the process was graphically exposed last week. In the list of the government ministers and industry heavyweights who attended the Building Ministers Forum, there was no one representing the most important stakeholder of all – apartment owners. Neither were strata managers nor strata solicitors at the table. It is indicative of the whole shambles that those who are left to pick up the bill and deal with the consequences are not included as part of the solution.

While the implementation of the Shergold-Weir report’s recommendations will improve building quality control in the longer term, there’s nothing the ministers’ communique or the NSW proposals for the many owners who are experiencing, or will soon face, the trauma of dealing with substantial defects in existing buildings. An obligation on the development industry of a legally enshrined “duty of care” to subsequent owners, also proposed in the NSW government’s discussion paper, is a positive move. But given the costs involved, legal action should be a last resort. Further reforms are needed to make the process of cost recovery by owners as simple and streamlined as possible, without delaying actions through disputes or uncertainty over the appropriate respondent, and without the potential for developers to “phoenix” themselves and escape their responsibilities.

What’s needed is a wholesale revamp of the culture of the apartment development industry that puts the needs of the consumer first, not a distant last. The industry needs to embrace a culture of change or face a continued crisis of trust.

There’s a lot resting on getting this right, not least the capacity of Sydney to accommodate the 8 million people it’s expected to house by 2056. We can only hope the development industry takes ownership of its failings and, with the help of the proposed reforms, puts its house – or perhaps its apartment – in order.

Build to rent could shake up real estate but won’t take off without major tax changes

Posted by on July 8th, 2019 · Affordability, Affordable housing, Construction, Economy, Government, Housing, Housing conditions, Housing supply, International, Law, Planning, Private rental, Sydney, Tax, urban renewal

By Hal Pawson, City Futures Research Centre. This article is republished from The Conversation under a Creative Commons license. Read the original article.

In the wake of slumping demand for apartment building, it’s little wonder the multi-unit housing industry has been eagerly eyeing a possible new residential product: “build-to-rent”.

In fact, the latest figures show that apartment-building construction starts were down 36% in 2018 from 2016. But how much will this little-known built form solve our housing problems?

Build-to-rent won’t be a silver bullet solution for Australia’s housing affordability stress, but it does have potential to tick the box on several important public policy objectives. These include widened housing diversity, enhanced build standards, and a better-managed, more secure form of private rental.

But for this to happen, Australia’s tax settings need adjustment.

What is ‘build-to-rent’?

This refers to apartment blocks built specifically to be rented, usually at market rates, and held in single ownership as long-term income-generating assets.

The enduring owner might be, for instance, an insurance company, an Australian super fund, a foreign sovereign wealth fund, a private equity firm, or the building’s developer.

Although new in Australia, build-to-rent is quite common in many other countries. Under its North American name, “multi-family housing”, the format has generated more than 6.3 million new apartments since 1992 in the US alone. And in the UK, a build-to-rent sector has led to 68,000 units built or under construction since 2012.

A scattering of build-to-rent schemes are already underway or completed, mainly in inner Sydney and Melbourne. And they may prove to be the forerunners of a new Australian residential property sector – but that is far from guaranteed.

In Australia, our private rental market is almost entirely owned by small-scale mum-and-dad investors, so this kind of housing would be a largely new departure from typical Australian real estate.

Potential benefits

The build-to-rent development model, involving a long-term owner commissioning an entire building, creates an incentive for higher, more enduring quality than the standard “build-to-sell” apartment development approach.

Importantly, build-to-rent is a long-run investment that caters for rental demand, which tends to grow steadily.

This means the model is largely immune to the fickle changes in housing demand resulting from typically short time horizons and primarily speculative instincts of individual buyers traditionally dominant in our market.

So at its full potential, this new housing product could introduce a valuable counter-cyclical component into the notoriously volatile residential construction industry, helping to offset damaging booms and busts. In other words, build-to-rent can create stability in the Australian property market.

How build-to-rent can incorporate affordable housing

Optimistically, some have claimed build-to-rent could also provide an “affordable housing” fix for many lower-income earners who are doing it tough in our existing private rental market.

But this could be possible only with the aid of major government funding or planning concessions.

Ideally, housing at rents affordable to low or moderate income earners would be included in predominantly market-rate build-to-rent schemes. Indeed, one major construction industry player recently advocated this as a standard expectation.

So how should affordable housing be provided in this case?

To find out, our analysis compares the cost of developing affordable housing by a for-profit company with development under a not-for-profit community housing provider.

Thanks to that non-profit format, and the tax advantages that go along with it, community housing providers can, in fact, construct affordable rental housing at significantly lower cost than their for-profit counterparts. Less subsidy is therefore needed.

Nonetheless, government help in some form will be essential to enable an affordable housing element. The most painless way for this to happen, from the government perspective, is through allocating sections of federal or state-owned redevelopment sites to community housing providers at discounted rates.

Encouragingly, this strategy was recently advocated by newly designated federal housing minister Michael Sukkar.

Such designation of government-owned sites could, for instance, be factored into large-scale urban renewal projects like Sydney’s Central-to-Eveleigh and Rozelle Bays. This could fulfil the widely voiced demand that 30% of these developments should be affordable housing.

Levelling the playing field

Our modelling shows that under current conditions, even market-rate build-to-rent projects are barely viable – at least in Sydney.

The inflated price of developable land in Australia’s urban housing markets is an important contributing constraint. But our research also identifies a range of government tax settings that disadvantage build-to-rent, compared with both mum-and-dad-investors and traditional build to sell developers.

Removing less favourable land tax and GST treatment could markedly improve build-to-rent feasibility.

From a housing policy perspective, there’s also a case for the federal government to reconsider its recent “withholding tax” decision that treats overseas-based institutional investment in rental property less favourably than investment in commercial property.

Since such global funds would likely lead the establishment of a new Australian build-to-rent asset class, revisiting the withholding tax changes could be a significant step in making build-to-rent a reality in Australia.

In any case, build-to-rent is no simple solution for Australia’s affordable housing shortage.

But even as a market-rate product, it could fulfil several important public policy objectives. How far it might do so in practice is something that governments rightly need to weigh up when considering industry-proposed tax and regulatory reforms.The Conversation

 

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