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How the Private Sector Can Help End Poverty

19 October 2016 at 11:38 am
Ellie Cooper
The private sector can play a powerful role in addressing poverty, and has the responsibility to do so, according to both not-for-profit and business leaders during Anti-Poverty Week.

Ellie Cooper | 19 October 2016 at 11:38 am


How the Private Sector Can Help End Poverty
19 October 2016 at 11:38 am

The private sector can play a powerful role in addressing poverty, and has the responsibility to do so, according to both not-for-profit and business leaders during Anti-Poverty Week.

Andrew Cairns is CEO of Community Sector Banking, a B Corp jointly owned by Community 21 and Bendigo Bank. He says he’s passionate about the private sector creating positive change.

“If you actually have a look at… the size of the Australian economy in four sectors –  households are spending around $700 billion, you’ve got a government spending about $400 billion, you’ve got the not-for-profit sector spending about $300 billion, and if you carve out schools and hospitals that’s about $150 billion,” Cairns said.

“Then you’ve got private enterprise making around $200 billion worth of profits after tax.

“We have a very fundamental belief you can be a good business and you can do good business at the same time.

“I don’t know what it’s like to fill out a form and not be able to put an address on a form… but there’s over 100,000 people in Australia who don’t know where they’re going to sleep tonight.

“And that’s a third-world problem in a first-world country, and we’ve got to change our behaviour and how we interact as an economy as a whole to actually solve problems.”

Council to Homeless Persons CEO Jenny Smith says the private sector should help address housing affordability, which she says is one of the leading drivers of poverty in Australia.

“The areas in particular that we would see are obvious places for the private sector to be involved is inclusionary zoning, so every time we have a new housing development or redevelopment, that you would expect a proportion, say 10 per cent of that, would be for low-cost housing,” Smith said.

“And also the private sector could generate more affordable housing right through our cities and towns.

“The other big area is that our superannuation funds could be more involved in financing affordable housing.

“But the other thing the private sector can do is philanthropically… or by working with community housing providers to support them in delivering affordable housing developments.

“Community housing organisations, not for profits, are building all of the time and that is a great place for the private sector to put in support in kind, providing services at cost, or donating services or funds to those sorts of projects where that makes housing at the lower and more affordable end of the market available.”

Smith says even mum and dad investors in the property business have the opportunity to address poverty.

“Where people have got investment properties there’s an opportunity for them to both reap that capital gain and get a rental return, but do it in a way that also makes that property available to people on lower incomes, and that’s what Home Ground Real Estate is doing as an example,” she said.

“That is a way people can still be operating in the property business but directly assist people on lower incomes just by forgoing a small proportion of that rent to make it more affordable to someone on a low income.”

But she says the government is holding back private sector engagement.

“The problem is at the moment our government settings in relation to housing policy aren’t sending the right signals to the private sector, or providing the incentives for the private sector to be more involved,” she said.

“[We need] the sorts of tax incentives that would encourage the private sector to get involved, like the NRAS, the National Rental Affordability Scheme, that our current government cancelled a few years ago, which basically gives a tax concession to private developers for delivering more affordable housing.

“It was just getting settled and it was defunded by our current government and so I think we should be going back to a refined version of NRAS.

“And I think we need to see government establish financial vehicles to… make it viable for superannuation funds to invest [in affordable housing].

“It’s very frustrating to see all our funds tied up with superannuation firms, and I think they themselves would say they would like to be making that investment in affordable housing but need government to assist them to feel confident to do that.

“They need the government to create the environment or the housing bonds or whatever the intermediary structure might be to make that viable for them.”

Cairns says the sector needs to change its mindset, and look for opportunities for collaboration with businesses, governments and not for profits.  

“We all need to change our behaviour and look at how we define success,” he said.

“The increase of financial outcomes is one traditional measurement of success, but it’s not good doing that without actually adding to the prosperity and the capability of the customers and markets in which you serve.

“Don’t think short term, think long term. Don’t think just single financial measurements of success, look at improvements which can actually build your marketplace rather than just leveraging off the marketplace today.

“Work differently with organisations so that you actually share in the value creation, not just one organisation winning out at the expense of others.

“Realise that a lot of people are in poverty either through generational issues or circumstantial issues, so don’t just look at the event of today, look at the capability and the capacity of people in the future.

“I think when given a chance most people respond positively and excel in outcomes. And I think if we can actually work together in that and realise that and believe in that outcome, then all of a sudden you have a different way you actually think about your business models.”  

Ellie Cooper  |  Journalist  |  @ProBonoNews

Ellie Cooper is a journalist covering the social sector.

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