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Australia can, and must, build the post-pandemic recovery with more social housing

Posted by on May 22nd, 2020 · Affordability, Government, Guest appearance, Housing, Housing supply, Pandemic, urban renewal

By Bill Randolph, City Futures Research Centre, and Wendy Hayhurst, Community Housing Industry Association. Originally published on John Menadue’s Pearls and Irritations.

The Australian Treasurer has acknowledged that boosting infrastructure spend would be a good way to kickstart our country’s recovery from the current pandemic.

What follows is a reasoned case for that infrastructure spend to include substantial government investment in additional and refurbished social housing. Not only would that meet a pressing social need but it would also provide a substantial boost to employment in the vitally important construction industry and related sectors.

With Australia’s economy taking a record-breaking pandemic hit, governments now face the huge challenge of reviving employment as the health crisis subsides. Treasurer, Josh Frydenberg, has been clear that infrastructure expenditure would drive the recovery and a stimulus spending program should be a central plank of the recovery plan.

Construction is an obvious stimulus target because it normally employs 10% of Australian workers. We’ve just recently learned that employment and new orders have fallen to all-time lows because of the pandemic.

Ramping up infrastructure spend would help make inroads into Australia’s long-term investment deficit in this area. But it’s vital that this extends beyond ‘more roads fixed and bridges built’, as recently advocated by the Prime Minister, to include building social housing infrastructure. Stimulus investment projects like building social housing would combine economic value-add through rapid job creation with longer term social and economic benefits, through reducing inequality, countering climate change, and meeting community needs.

The Social Housing Acceleration and Renovation Program (SHARP), proposed to government this week by a coalition of affordable housing and homelessness organisations, ticks all these boxes. SHARP estimates show that if the Commonwealth government, backed by state/territory and Council contributions (see following paragraph for details), were to invest $7.7 billion in social housing infrastructure, it could deliver 30,000 additional social housing units and renovate many thousands more existing properties to high environmental standards. This is envisaged to happen in four overlapping ‘waves’ – starting with social rental property maintenance and upgrading, leading on to large scale new housing development projects. And it can be implemented immediately.

A program like SHARP would engage multiple players in the private, not-for-profit and government sectors. Commonwealth investment would be channelled through a tender process open to registered community housing organisations (CHOs), who would use public funding to leverage additional private finance. State and territory governments would be incentivised to contribute land or other material support. House builders and maintenance contractors would construct new homes and renovate existing dwellings. For the private finance input, institutional investors would be invited to subscribe to high quality bonds issued by the National Housing Finance Investment Corporation (NHFIC).

Unlike some other forms of infrastructure investment, such as major transport projects, we know that a social housebuilding program can have immediate impact. There are planned maintenance projects ready to go at the flick of a switch, and community housing organisations (CHOs) have already identified ‘shovel ready’ new build projects. In Victoria alone, CHOs have estimated that they could start working on over 2,500 units within a year, with 1,000 in hard-hit regional areas. A solar and thermal efficiency program that includes Aboriginal owned properties is also ready to roll.

Boosting social housebuilding under the SHARP program would harness existing community housing sector expertise in developing liveable, energy efficient buildings. A good model for what is proposed is SGCH’s new Redfern project, that provides 160 social and affordable housing units with an 8-star rating under the Nationwide House Energy Rating Scheme (NatHERS). Located close to public transport, with renewable energy on site, plenty of communal space and public art to connect the development to Aboriginal heritage, that Redfern project is a taste of what could be achieved across Australia.

Building more social housing would also generate a ‘multiplier’ effect. The evidence from similar projects suggests that the jobs boost could be around 1.3 indirectly generated jobs for every directly created position, potentially creating around 20,000 new jobs – two thirds in the construction industry. The stimulus could also be used to kick start mixed tenure urban renewal initiatives, particularly in town centres and precincts where affordable homes would otherwise be left out.

Social housing led recovery presents us with a chance of beginning to redress decades of under investment in this vital sector, a history that has seen social housing provision contract by a third since the 1990s, despite soaring demand. It’s now nearly 25 years since Australia saw the effective end of a routine social housebuilding program. Had the program been maintained in line with rising need over that time, Australia’s social housing portfolio would be around 130,000 units larger than its actual current size. This highlights the magnitude of our national deficit in social rental provision, although most other yardsticks produce a larger shortfall.

Even before the pandemic hit, homelessness and rental unaffordability were running at record levels, while some 140,000 households languished on social housing waiting lists. And while private rental vacancies have burgeoned in our current crisis conditions, tens of thousands of tenants have been placed at risk of eventual eviction through redundancy and resulting inability to meet rental payments.

Meanwhile, as highlighted in the latest Anglicare rental market Rental Affordability Snapshot, tenancy affordability for low income earners remains highly stressed. Across Australia, only 22% of rentals advertised for let in late March 2020 were affordable to households on a minimum wage. Even factoring in the coronavirus supplement, the scarcity of low rent properties is such that barely any were comfortably affordable to single adults on Jobseeker payments.

The construction of 30,000 social homes as part of a pandemic recovery stimulus package won’t, on its own, provide a total fix for our ailing housing system, but it will help to put us on a healthier track. For this reason, along with the building industry and CFMEU, housing and homelessness organisations, academic experts and respected professional bodies are uniting behind a call for investment in social housing to help dig Australia out of its current predicament.

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