By Hal Pawson and Vivienne Milligan

Finally, the long wait is over. Five years after taking office the State Government’s Family and Community Services Department (FACS) has at last pronounced on ‘Future Directions for Social Housing in NSW’. All of the paper’s broad themes – modernisation, additional supply and supporting tenants – will resonate with the affordable housing industry. But despite numerous evidence-based policy pledges on proposed micro-measures, none of the State’s overarching affordable housing and support needs are quantified and none of the solutions clearly costed.

Boosting social and affordable housing supply?

Acceptance of the case for more social housing (p5) signals a welcome recognition of the existing affordable property shortage and that putting rooves over heads for low income and seriously disadvantaged groups cannot be responsibly left to the market. Government plans will, according to the paper, result in a $22 billion housebuilding program and ‘up to 23,000 new and replacement social housing dwellings’. In the context of a social housing system currently encompassing some 147,000 homes, this new build ‘target’ is certainly a big number. And, as we have noted elsewhere, it is impressive that – in contrast with most comparable countries – the NSW Government has committed to funding new social housing (rather than only the less deeply-subsidised ‘affordable housing’ variant).

Equally, these stated commitments (or aspirations) raise some rather fundamental questions. What proportion of the overall quantum of investment will be Government-funded? What proportion of the ‘up to 23,000’ homes will be net additions to the social housing stock, what proportion will effectively replace estate renewal demolitions, and what proportion will be accounted for just to offset ongoing open market property sales like those at Millers Point?

The whole discussion about ‘additional supply’ also needs to be seen in the context of overall population and household growth. Social housing in NSW had, by 2011, fallen to under 5% of all housing. Simply maintaining this share over a decade would imply the need for a net addition to the social housing stock of at least 25,000 homes.

A whole of government approach?

As the paper rightly notes, the Premier’s already-announced Social and Affordable Housing Fund (SAHF) represents one active program supporting new housebuilding targeted at low to moderate income groups. However, the Phase 1 state-wide SAHF target of 3,000 homes over several years is little more than a drop in the ocean. And, while rightly stressing the importance of a ‘whole of government approach’, it is disappointing that the new paper contains no new pledges on potentially effective ways that Government departments other than FAC S could unlock substantially greater gains in affordable housing supply. In particular, it contains no Treasury commitment for the discounted provision of government land (e.g. in UrbanGrowth NSW renewal projects), nor any NSW Planning intention to enable affordable housing supply through inclusionary zoning.

Transitioning tenants out of social housing

In maximising system capacity to meet housing need, the Government remains strongly focused on the idea that there is more scope to free up the occupancy of social housing by ‘transitioning’ more able tenants out of the sector – primarily into private tenancies. Thus, the document highlights as one of its ‘three strategic priorities’ the aspiration to provide ‘more opportunities, support and incentives to avoid and/or leave social housing’ (p5). Some of the associated proposals – e.g. an independent review of rent setting to consider, among other issues, work disincentives – will be welcomed in the industry.

Future Directions rightly acknowledges that many social housing residents are ‘people who require support for an extended period’ (e.g. low income earners already above working age). Certainly, public and community housing tenants will also include some others with the scope to be helped to ‘transition’ out of the sector – so called ‘opportunity’ tenants in the Government’s language. Recognising that positive incentives will be needed here, the paper constructively suggests introducing 3-year top-up rent subsidies (historically restricted to those priority-approved clients FACS is unable to house due to their specific needs). The downside of the proposed approach is that if it doesn’t work it’s a very costly alternative in the longer run.

In any event, while recognising the equity logic of working to ‘create more space’ for the most needy housing applicants, there are real questions about the scope for significant gains from such an approach. Given the tight and ever-tighter tenancy allocation rules for social housing, it seems highly doubtful that the ‘opportunity’ group in reality amounts to more than a small fraction of social housing entrants. This seems evident from the fact that, as noted by the NSW Auditor General, the post-2005 fixed term tenancy regime for public housing has failed in its aspiration to significantly expand new letting capacity through ‘tenancy reviews’ to filter out ‘opportunity group’ tenants having improved their economic situation. And, as revealed by our recent AHURI research, much as it may be desirable that social landlords actively assist work-capable tenants to reconnect with employment, the current scale of such activity is extremely small.

Moreover, as confirmed by other recently published City Futures research, the prospect of ‘transitioning’ out of social housing commands little attraction for most tenants who might theoretically be able to do so, especially given that this will involve a much less secure private tenancy (notwithstanding the public housing fixed term tenancy rules). As we argue in our recent submission to the currently ongoing Residential Tenancies Act review, one possible means of at least moderating this problem might be to legislate a ban on ‘no grounds evictions’ – that is, to stipulate that tenancies may be ended only for certain defined reasons (e.g. property sale).

More fundamentally, we would argue that the best means of improving the ‘private rental offer’ to create a more viable pathway out of social housing would be through restructuring private rental supply through engaging institutional investors more likely to prioritise long term rental returns rather than the ability to cash in on capital gains. Government actions that might help to bring this about would include guaranteeing affordable housing investment and sponsoring a financial intermediary agency. Regrettably, however, such ideas are eschewed in the paper’s somewhat vague and apparently unambitious suggestions on ‘innovative financing’.

Transfer to community housing

Finally, what of the increasingly cash-strapped and hollowed-out state of the public housing system more generally? Acknowledged in the report is the particularly low tenant satisfaction rating for NSW public housing. And although the fundamentally insolvent condition of the system is left unsaid, these twin considerations may underlie the suggestion that a further tranche of public housing will be transferred into community housing management.

Such as it exists, however (p10), the document’s transfer pledge is decidedly lukewarm. Other than indicating that the process will be competitive, the paper is also notably silent on the specifics on how transfers might, in fact, be achieved. The aspiration to grow community housing to represent ‘up to 35%’ of all social housing within 10 years implies expansion of community housing by about 15-20,000 homes over and above current holdings (which, if it was wholly achieved through transfers would imply the handover of up to a fifth of all public housing).

Also left unsaid is that in 2009 the NSW Government committed to achieve the ‘up to 35%’ aspiration by 2014! With progress towards that modest objective stalled since 2011, pushing the target date out to 2026 seems seriously at odds with the urgency of the need to improve accommodation quality, tenant satisfaction and tenant support in public housing.

Progress review

Ultimately, despite worthy aspirations and proposed micro-measures, Future Directions unfortunately amounts to a lot less than the comprehensive, evidence-based and costed strategy so badly needed. The paper not only lacks any quantified analysis of affordable (and social) housing need, but includes little exploration of the challenges needing to be overcome if the existing social housing system is to become part of the solution rather than remain as part of the problem.

But we are where we are, and what is now essential is a detailed 10-year implementation plan and a pledge for an annual progress review.