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Does NSW really need to double its social housing output?

Posted by on June 23rd, 2018 · Uncategorized

By: Hal Pawson, Associate Director, CFRC

Homelessness: NSW government ‘must double public housing’ soberly declared the Daily Telegraph’s Saturday headline. This, above a story warning that ‘The NSW government needs to double the amount of social and affordable housing it aims to build to prevent a huge leap in homelessness’ according to ‘experts’. Further, ‘the $1.1 billion earmarked in the Budget need[s] to be bumped up to $3.6 billion to tackle the impending crisis’.

As one of the cited ‘experts’ I wanted to sate any reader’s curiosity about the basis for such lurid claims. Although the prospective ‘huge leap in homelessness’ is correctly not attributed to me, the assertion about the amount of extra taxpayer-funded cash needed to fund the minimum required amount of additional social housing was mine. While avowedly a ‘back of the envelope’ estimate assembled in response to a media query, it does have a logic – as summarised in the table at the bottom of this post. First, the commentary….

The NSW Government expects, at best, to fund the construction of 9,900 additional social and affordable rental homes over the next 10 years. But, just to keep pace with growing need implied by expected rates of population growth, 21,000 additional social and affordable rental homes would be needed.

If it was possible to add 21,000 to the NSW social and affordable rental housing stock over the next decade it would be expected that the current level of ‘unmet housing need’ (e.g. social housing waiting list circa 60,000 households; 38,000 people homeless on Census night, 2016) would remain steady. On current plans, however, with additional provision expected to be less than half the minimum increase in need, we must expect that the number of low income people lacking suitable housing in 10 years from now will be substantially higher than at the moment. A larger housing waiting list, higher numbers of homeless people.

Just keeping pace with growing need will call for the construction of at least 11,100 new social and affordable homes additional to those currently planned and budgeted for by the State Government. Given that the current Social and Affordable Housing Fund (SAHF) initiative is expected to generate 3,400 social and affordable homes over several years, there would be a need to create 3.3 additional initiatives of this size to underpin the construction of that 11,100-home cohort.

Given that the current SAHF is being funded from an endowment of $1.1 billion, this would require an additional investment of $3.6 billion. A large amount, but less than the current annual NSW State Government budget surplus ($3.9 billion) and far below the extra $18.5 billion that Government has reaped from additional stamp duty revenue over the past six years thanks to the property boom.

(a). Additional social housing needed over 10 years (to 2026) to match growing need (population increase) 21,000
(b). Expected additional social/affordable housing to be generated through Communities Plus public housing estate renewal program 6,500
(c) Expected additional social/affordable housing to be generated through Social and Affordable Housing Fund (SAHF) 3,400
(d) Shortfall – according to current plans (a – (b+c)) 11,100
(e) Additional SAHF initiatives needed to fill the gap 3.3
(f) Cost of required additional SAHF initiatives (@ $1.1 billion per fund) – $billion 3.6

For a further explanation of the ‘planned  housing supply’ and ‘projected housing needs’ statistics above see earlier post: NSW is overselling its social housing commitment

The Telegraph’s assertion of a new $1.1 billion social housebuilding pledge in last week’s State Budget was unfortunately a reference to the original 2015 SAHF announcement. In fact, despite the evident need, the Treasurer’s plans included no new funds for such investment.

So, in answer to the opening question, yes – even if the aspiration is only to keep the current high level of housing need from rising higher,  currently planned social housebuilding in NSW should be more than doubled. To be fair to the State Government, the Commonwealth should also be expected to contribute to the heavy lifting here. But, with Scott Morrison also forgoing his recent budget opportunity to do so, there is regrettably little immediate prospect of this.

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