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New housing ministers – new housing policies?

Posted by on January 30th, 2017 · Affordability, Affordable housing, Government, Housing, Social housing

Congratulations to Anthony Roberts, the Minister for Housing, and Pru Goward, the Minister for Social Housing, on their appointments to NSW Premier Gladys Berejiklian’s new Cabinet. Congratulations too to Matt Kean, Minister for Fair Trading, whose housing-related portfolio includes residential tenancies.

This is the first time New South Wales has had two housing ministers.  From the Second World War, ‘housing’ was a discrete ministry in New South Wales for almost 70 years, until the State Coalition, upon coming to office in 2011, dropped it, and later replaced it with a ‘social housing’ ministry. Arguably the new arrangement reflects the prominence given by the Premier to housing affordability policy; it may also be a way of avoiding the curse of previous housing ministers who, after promising to prosecute policies for the whole of the housing system, inevitably became caught up in the administrative apparatus of social housing. (The two-minister arrangement is also unusual, but not unique, amongst other Australian jurisdictions: South Australia currently has separate ministries for ‘social housing’, and ‘housing and urban development’. The Federal Government still does not have either.)

Minister Roberts takes on the new portfolio in the absence of an existing formal State Government policy for housing affordability. The Government’s Affordable Housing Taskforce, established 2011, did not produce a final report, and other policy actions flagged by the taskforce did not eventuate. Recent initiatives such as the establishment of the Social and Affordable Housing Fund  and the Greater Sydney Commission’s adoption of inclusionary zoning are promising, but lack a clear overarching strategy that sets out the housing outcomes to be achieved and how different instruments of government will be coordinated to achieve them. As City Futures’ Hal Pawson wrote last week, setting this strategy must be a priority for the State Government – and the new Minister.

For Minister Goward, the social housing portfolio is not quite as ‘greenfield’, with the State Government’s ‘Future Directions for Social Housing‘ agenda published one year ago, and a review of social housing rent models by the Independent Pricing and Regulatory Tribunal (IPART) currently underway. Both these developments, however, show how much more needs to be done to place social housing on a sustainable footing.

As City Futures observed when it was published, ‘Future Directions’ commits to new social housing construction, but is vague as to how all the resources for developing and maintaining this stock will be put together. It also doubles down on tightly rationing social housing, out of which tenants can be made to ‘transition’ as their circumstances improve – despite 10 years of this approach making work disincentives and poverty traps worse, and doing nothing for applicants on the waiting list. What’s needed is a more detailed strategy that proceeds from an rigorous assessment of the extent of housing need that should be served by non-market housing, and makes firm commitments of resources – cash subsidies for ongoing operations, land for development, government backing for bond financing – to social landlords to meet that need.

This also goes beyond what’s being considered in IPART’s review of rent models. As we said in the City Futures submission to IPART (now published by IPART), the question of how rents are set in social housing is important in terms of equity of assistance between households, affordability outcomes, work disincentives and simplicity and ease of administration; however, no changes to rent settings on the present stock of social housing, with its present clientele, can generate revenues that are sufficient to sustainably grow and maintain the stock to meet future needs.

To address the question of the sufficiency of social housing system revenues, the Commonwealth Government will have to be joined in any reforms, to overcome the present problem of States being discouraged from bringing on much-needed additional stock, because of the ‘loss’ each new dwelling represents, and to ensure that changes to welfare payments do not undermine social landlords’ revenue base.

And in order to properly address the objectives of improved equity of assistance, reduced work disincentives and ease of administration, the review should challenge the idea from ‘Future Directions’ that tenants must be categorised into ‘safety net’ and ‘opportunity’ classes (with the latter expected to ‘transition’ out of social housing), and the associated idea that social housing equals ‘dependence’ while private market housing means ‘independence’. This demeans social housing tenants and ignores the subsidies – greater, in dollar terms – delivered through our tax and transfer settings to owner-occupiers. It also ignores how the present system of income-related rents in social housing actually allows households whose incomes improve to ‘transition’ out of deep housing subsidy into lighter subsidy – or even into being a net provider of subsidy to others – without having to move out of their homes.

The real challenge for the IPART review will be to identify where the present system of income-related rents, which is strong on affordability and targeting assistance to need, can be adjusted to achieve greater equity between tenants in dwellings and locations of different amenity, and a greater degree of choice, such that tenants can respond to any trade-offs between amenity and subsidy. The challenge for both new Ministers goes further than that.

 

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