What the Federal Budget 2017 Means for Housing and Homelessness

Something more than a scalpel, but less than a chainsaw is going to be required to address housing affordability, writes Michael Perusco, CEO of Unison Community Housing, and Guy Johnson, Professor of Urban Housing and Homelessness.

After years of neglect by both political parties housing affordability has finally become a major public policy issue.

Addressing housing affordability is a serious policy challenge. Australians store a great deal of their wealth in housing. As such any policy responses that seek to address housing affordability must avoid creating a housing market shock which could ripple out into other areas of the economy. To avoid such a shock the federal government describes its policy approach as akin to using a scalpel rather than a chainsaw.

The budget contains a number of measures to address housing affordability and combined, they provide a good platform for future growth. The establishment of the National Housing Finance and Investment Corporation (the Corporation) is a welcome move. The Corporation will establish a bond aggregator from 1 July 2018 which will issue bonds to investors and use the funds raised to lend to community housing providers to increase the supply of affordable housing.

The benefits of this approach are twofold. Firstly, it enables institutional investors, including superannuation funds, to invest in social housing at scale. Secondly, it provides community housing providers with cheaper finance for longer periods.

The bond aggregator will only make a real difference if it is accompanied by a subsidy from government that makes the overall investment in social and affordable housing viable. Given the under investment in social and affordable housing over the past decade, an additional 10,000 to 15,000 dwellings per year nationally is an appropriate target. The funding required would be in the order of $2.5 billion per year, which would need to be shared across jurisdictions. While this sounds like a large amount, it pales in comparison to funding in other areas of government and represents the minimum required.

The budget includes tax incentives to increase private investment in affordable housing. Managed Investment Trusts will now receive concessional tax treatment if they invest in affordable housing and make it available for at least 10 years. Individuals will get concessional capital gains concessions if they invest in a affordable housing property for at least three years. These are also welcome steps that will result in some innovative investment options that increase supply of affordable housing.

The Commonwealth has also committed to establishing an online land registry to encourage proposals to use the land for affordable housing and other infrastructure purposes. Combined with other initiatives in the budget and opportunities that already exist at the state level, this could lead to increased supply of affordable housing in well located areas.

These are good ideas, but in and of themselves they are insufficient to address the current housing crisis in any meaningful way. The budget did not set out a national affordable housing strategy, nor did it increase rent assistance to those struggling in the housing market or increase government funding for new social housing. There were also missed opportunities in relation to reforming negative gearing and capital gains concessions which play a key role in fuelling the current housing crisis. Something more than a scalpel, but less than a chainsaw is going to be required to address housing affordability.

With respect to homelessness, the budget commits to ongoing funding for homelessness services.

For homelessness services funding uncertainty creates unnecessary pressure and threatens service continuity, a key element in securing good outcomes for people experiencing homelessness. While this is good news for homelessness services other measures in the budget are likely to exacerbate housing instability among disadvantaged Australians. First, despite making some effort to address housing affordability, as we note, the approaches identified in the budget do not go far enough. This means that housing affordability will continue to be a problem for many disadvantaged Australians, some of whom will tip over into the homeless population. Further, for those who become homeless, the lack of affordable housing will continue to make exiting homelessness difficult.

Second, the budget contains a number punitive welfare reform measures that are likely to contribute to homelessness. More specifically, the budget penalises welfare recipients who have substance misuse issues. There are high rates of illicit drug use among the homeless, but among homeless drug users, drug use is often not the reason they become homeless. Rather drug use is most commonly an adaptive response to the brutal, stigmatising condition of homelessness itself.

Targeting illicit drug users and reducing and/or cancelling their payments is likely to have an impact on homelessness services, as well as the justice and social housing systems. Indeed, any potential cost savings will likely be offset by new costs to the justice, health, homelessness and social housing sectors.

Rather than conduct an ideological war against welfare recipients, the federal government would be better served by investing in drug treatment services that are available on demand  –  an effective, evidence-based approach is always better than a punitive one.

The budget signals that housing affordability is finally on the political agenda. That is good news.

Clearly though there is still much to do before the current housing crisis is addressed. We welcome welfare reform but believe it should be conducted in ways which improves the lives of welfare recipients rather than demonises them.

About the authors:

Professor Guy Johnson is the inaugural Unison Housing chair of Urban Housing and Homelessness. He leads the Unison Housing Research Program at RMIT University, an industry led partnership that aims to address the ongoing issue of housing insecurity and homelessness in a way that looks at both the existing failings in the housing system and preventative measures to help alleviate disadvantage. Prior to his appointment he was director of the Centre for Applied Social Research (CASR) at RMIT University. He has been involved in the area of housing and homelessness for over two decades. His research investigates theoretical and applied questions relating to the dynamics of homelessness and housing. His research has contributed extensively to government policy and agency practice that address the housing and support needs of disadvantaged and low income households. Johnson has also co-authored a number of books, more than 50 reports and refereed papers, as well as eight book chapters. He has served on numerous government committees and advisory bodies, and is a regular presenter at public and policy forums. Johnson is recognised nationally and internationally as a leader in innovative policy and practice relevant research. He is currently an Honorary Principal Research Fellow at The Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, and in 2015 spent 12 months in the US as a visiting scholar at the School of Social Policy and Practice, University of Pennsylvania.

Michael Perusco is the CEO of Unison Housing, one of the largest community housing providers in Victoria. Unison was formed in 2017 as the result of a merger between Yarra Community Housing and Urban Communities Limited. Unison provides a diverse range of housing services across Victoria and in Adelaide, including social and affordable housing, commercial real estate activities and homelessness services. Prior to joining Unison Housing,  Perusco was CEO of St Vincent de Paul Society NSW. His experience also includes nine years as CEO of Sacred Heart Mission and he has been chairperson of the Council to Homeless Persons and Australians for Affordable Housing, a member of the NSW Premier’s Council on Homelessness and the Board of the NSW Council of Social Services. He is currently on the board of the Australian Institute of Health and Welfare and, the Community Housing Federation of Victoria. He is also a member of the Victorian government’s Family Violence Housing Assistance Taskforce. Perusco also has experience in the commercial sector including KPMG and Arthur Andersen, and has worked at the Department of Prime Minister and Cabinet where he had responsibility for a range of social policy areas including the social inclusion and not-for-profit reform agendas.