Coalition urged to do more on housing

In the budget 2019-20, released last night (2 April), the Coalition government announced a range of tax cuts, relief packages and initiatives for SMEs, as well as revealing a surplus of $7.1 billion.

While the government budget noted that dwelling investment is currently, and may continue to be, a drag on growth, the Coalition government did not announce any major new plans to increase investment or drive down house prices.

However, it did allocate funding to a range of packages aimed at providing more affordable housing and shelter for those in need.

Chief among these is $1.7 billion to support state affordable housing.

The vast majority ($1.56 billion) of this will be for the National Housing and Homelessness Agreement (NHHA) – which was set up last year to help improve access to “to affordable, safe and sustainable housing across the housing spectrum, including to prevent and address homelessness, and to support social and economic participation”.

Of the $1.56 billion allocated to the NHAA, NSW will get the most in 2019-20 with $484 million, followed by Victoria ($406 million), Queensland ($320 million), Western Australia ($166 million), South Australia ($109 million), Tasmania ($34 million), ACT ($27 million), and Northern Territory ($20 million).

An additional $114.9 million will go to National Partn­­­erships in 2019-20 to support state affordable housing services, with $110 million for housing for Indigenous Australians in remote communities, particularly in the Northern Territory.

This will help address overcrowding, homelessness, poor housing conditions and severe housing shortages.

It supports the delivery of new houses, housing refurbishments and housing-related infrastructure and provides incentives to establish more sustainable housing systems in remote Indigenous communities.

The remaining money for National Partnerships will be allocated to states, provide funding to state governments to trial social impact investments, which aim to assist vulnerable priority groups a well as those that help young people at risk of homelessness.

On top of this, the government announced that it would provide:

• $75 million to fund for emergency housing for women and children escaping family violence
• $30 million to provide over 100 new social housing dwellings in Greater Hobart in partnership with community housing providers (as part of the $529.9 million it will provide to Hobart City Deal projects over 11 years from 2018-19)
• $37.5 million to South Australia to assist with costs associated with the provision of remote housing

Aged care housing also received some much-needed funding. Following the aged care royal commission that was called after identifying that these services “have badly let Australians down”, the Coalition government has committed to providing $725 million to support:

• 10,000 new home care packages, bringing to 40,000 the number of new packages announced over the last 18 months
• a one-off increase to the basic subsidy for residential aged care recipients
• an increase to the dementia and the veterans’ home care supplements to support home care recipients who require additional care to stay in their homes longer
• a trial of residential care needs assessment funding tool as an alternative to the existing Aged Care Funding Instrument
• improved payment administration arrangements for home care packages to address stakeholder concerns regarding unspent funds and align home care arrangements with other government programs, such as the National Disability Insurance Scheme

Mr Frydenberg said: “Affordable housing is also a priority for this government.

“Just over a week ago, the National Housing Finance and Investment Corporation, established by this government, successfully issued the largest social bond in Australia’s history.

“Over $300 million was raised, providing a significant injection into the community housing sector.”

Calls for more to be done

Speaking following the release of the budget, the head of research at property analytics and technology company CoreLogic, Tim Lawless, said: “While the budget speech referenced housing a few times, in the sense that falling housing prices represent a downside risk to budget forecasts, there was in fact very little in the budget directly focused on the housing sector.  

“With the performance of the housing and household sector so critical to the government achieving their forecasts and planned surplus, there is certainly an argument that more could have been provided in the budget to support these sectors.”

He continued: “The Treasurer reiterated that housing affordability was a key priority for the government, but it looks like the government is content to see housing affordability improve ‘organically’ via lower housing prices that could act as a contagion to weaker household consumption and a sharper than expected fall in residential construction. 

“While this may seems a bit passive, it’s clear that housing affordability has improved substantially since the last budget due to lower housing values in the most expensive cities as well as the lowest mortgage rates since the 1960s and a subtle rise in incomes.”

He continued: “Arguably, the state and local governments have more ability to tackle housing affordability than the federal government, with factors such as stamp duty payments, allocation of the first home buyers grant, land release, development charges and town planning all falling outside of the federal government arena. 

“Perhaps the most substantial area of the budget related to housing is a reiteration of the strong infrastructure spend and the City Deals, which will provide stimulus for specific regions of the country and help to cushion the downturn in residential construction.”

Mr Lawless concluded: “No doubt the strong infrastructure spend and investment in improving the key areas of Australia’s cities will be stimulatory for housing markets that benefit from the improvements. Tackling congestion and improving access to essential amenities should indirectly support housing affordability by making the most affordable regions of the cities more accessible and liveable. 

“Questions remain as to whether $100 billion [in infrastructure spending] is actually enough to tackle the infrastructure deficit; however, expenditure up materially, which is encouraging.

“Overall, the budget didn’t really focus on housing; however, some of the associated issues such as household incomes and infrastructure investment are being addressed, which is positive to see.”

Several housing bodies have reacted to the lack of housing initiatives in this year’s budget, with affordable housing provider PowerHousing Australia lamenting that, unlike the budget 2017-18, which focused on affordable housing, the federal budget this year offers no new initiatives in the affordable housing space.

Nicholas Proud, CEO of PowerHousing Australia, which represents 32 of Australia’s largest Tier One and scale-growth Community Housing Providers, said: “The nation built the most significant social bond and National Housing Finance Investment Corporation (NHFIC) in the two years since budget 2017, and further work around this infrastructure boost will be needed to tackle affordable housing deficits across the nation.”

While Mr Proud said it was “terrific to see the Treasurer referencing NHFIC’s work in [his] budget speech”, welcomed the new funding to provide safe places for people impacted by domestic and family violence, and congratulated the government on potentially achieving a surplus this year, he warned that “Australia is heading for a slowdown in new housing delivery at rates never seen before, which will place a handbrake on jobs, see less taxes collected, state economies decline and supply contract, which only serves to place upward pressure on pricing”.

“Whilst there is a federal election campaign just days away, the innovative leadership of the 2017-18 budget should not be a one-off, particularly as we are heading to declines in future year building approvals of up to 50,000 dwellings compared to the levels experienced in the year up to March 2018.

“There are tens of thousands of families who, over the next five years, are set to see the loss of the NRAS One incentives, which started to lapse in December 2018. A response to non-CHP managed NRAS homes is critical,” he said.

Likewise, Everybody’s Home, a national alliance of community, housing and homelessness organisations, hit out at the government for “refus[ing] to acknowledge Australia’s growing housing crisis in the budget” and called on the Treasurer for a “fairer housing budget”.

“We called for urgent relief for the hundreds of thousands of Australians who are homeless, and more than 800,000 households going without basics to pay the rent,” Professor David Adamson, Everybody’s Home campaign spokesperson, said.

“Last year, the Coalition had a chance to make a real move towards ending our housing crisis after shocking Census data revealed that homelessness in Australia had increased by 14 per cent nationally and by 22 per cent for people between 19 and 24.

“Unsurprisingly, they made no such move.”

Professor Adamson continued: “For those seeking to rent a home on low income, there are over 200,000 people waiting for social housing with a wait time often exceeding 10 years.

“So, while the Coalition announced a forecasted surplus of $7.1 billion tonight, it means little to those 116,000 people experiencing homelessness or those 800,000 experiencing rental stress.

“The federal government continues to prop up the property sector with $11.8 billion in tax breaks, but there’s nothing for ordinary Australians and renters who just want a home.”

He concluded: “It’s appalling that the government knows that there will be 116,000 people experiencing homelessness tonight and yet they have still chosen to favour property investors by continuing negative gearing and capital gains tax concessions.

“More than 800,000 Australian households have had to go without the essentials like food, just so that they can pay the rent. It’s not fair, but it’s clear that fairness is not a priority for our current government,” said Professor Adamson.

Everybody’s Home called on Prime Minister Scott Morrison and Treasurer Josh Frydenberg to rebalance the budget and:

• wind back the negative gearing and capital gains tax concessions to investors that cost billions in lost revenue
• use these savings to kick start investment in the 500,000 social and affordable rental homes desperately needed by Australians on low and middle incomes
• increase funding for homelessness services so we can end homelessness by 2030
• increase Commonwealth Rent Assistance by $20 a week to reflect the fact that rents have skyrocketed across the country

“These were all practical, doable solutions that would help make housing fairer and give every Australian the best chance to have a home,” said Professor Adamson.

[Related: Dwelling investment to detract from growth, says government]