BACKGROUND

In 2012, the Auditor-General of NSW conducted a Performance Audit into the New South Wales social housing system (NSW SHS). The Audit Report, released in July 2013, identified serious challenges facing the NSW SHS, stemming from resource constraints, under-occupancy in dwellings, and rising maintenance costs.

The Audit Report recommended that the NSW Government urgently develop a clear direction for delivering a sustainable NSW SHS, stating that ‘it is crunch time for public housing in NSW’.

THE NSW GOVERNMENT’S RESPONSE TO THE AUDIT REPORT

On 18 November this year, the Minister for Family and Community Services published ‘Social Housing in NSW: A discussion paper for input and comment’ (Discussion Paper) in response to the Audit Report. The Discussion Paper sets out broad directions for reform to the NSW SHS and invites stakeholders to comment on the future of NSW SHS. The Discussion Paper’s stated overall objective of the reformed NSW SHS, is to ‘provide a safety net for vulnerable people, while they need it and where they need it.’

The Discussion Paper argues that the current NSW SHS is unsustainable. It highlights that:

  • tenants are staying in social housing longer than ever
  • exit rates are falling
  • waiting lists are growing larger
  • maintenance costs of the ageing NSW SHS stock continue to increase
  • the stock itself has become poorly adapted to its purpose, as tenant demographics have moved away from family-based housing to predominately singles

A compounding factor is that NSW SHS revenues have not kept pace with market rents, declining relative to growing operating costs. Significantly, the NSW Government observes that no social housing provider in NSW can fully cover its costs without accessing non-social housing sources of revenue.

THREE PILLARS

To address these challenges, the NSW Government has identified three ‘pillars’ on which the NSW SHS reform is to be based:

  1. Pillar 1: a social housing system that provides opportunity and pathways for client independence;
  2. Pillar 2: a social housing system that is fair; and
  3. Pillar 3: a social housing system that is sustainable.

PILLAR 1: INDEPENDENCE

The NSW Government wants the NSW SHS to move away from what it describes as a de facto ‘housing-for-life’ approach. People of working age, children, and young people are identified as groups most in need of clearer pathways out of the NSW SHS, whilst a pathway out of social housing may not always be appropriate. The risk of losing stable housing and Commonwealth payments and concessions are potential disincentives to a tenant’s ability to gain independence from the NSW SHS. The Discussion Paper flags the fact that there is no policy in the current NSW SHS to support easier re-entry into social housing for those who need it, hinting that this may be an area of future reform.

The NSW Government will explore opportunities to form partnerships with NGOs and the private sector in order to better link social housing products with pathways to independence. Significantly, the availability of schools, health services, jobs and access to public transport will play a large role in where the NSW Government locates NSW SHS assets going forward.

PILLAR 2: FAIRNESS

The Discussion Paper states that tenants should be expected to take care of their dwelling, to pay rent, and to make a positive contribution to their community. Both Victoria and Queensland have implemented policies discouraging anti-social tenant behaviour in their SHS’s. In this regard, the Discussion Paper makes special mention of tightened eligibility criteria and the growing use of fixed term leases as tools for improving fairness and equity in the NSW SHS.

Perhaps most significantly, the Discussion Paper signals the NSW Government’s dissatisfaction with the current income-based rent model which ensures that tenants on similar income pay similar rents, but fails to capture the fact that some tenants live in highly sought-after areas, or may be living in a new home. Some tweaking of the rent model therefore seems a likely reform. Other issues to address are the current inability of applicants to influence the dwelling allocation process, or to make personal trade-offs between location and dwelling type.

PILLAR 3: SUSTAINABILITY

The Discussion Paper notes that the current NSW SHS is largely government owned and operated, and that it places little emphasis on partnerships with NGOs and the private sector. The NSW SHS is also highly dependent on Commonwealth funding, which accounts for roughly 60% of the system’s $811 million budget. A number of Commonwealth reviews which have the potential to further impact on the NSW SHS, include the McClure Welfare Review, the White Paper on the Reform of the Federation, and the Review of National Housing Agreements.

The NSW Government’s key sustainability concern is the $330 million discrepancy between annual rental income and the costs of maintaining and constructing public housing. To date, the Government has resorted to selling high-value social housing properties and reinvesting in inexpensive supply, to plug the gap, strategies which will not be sustainable in the long term. The Discussion Paper highlights social housing bonds, outcome-based funding models (for assets and tenancies), and public-private partnerships for delivery of new supply as potential avenues of reform. ‘Delivering value for money, regardless of provider type’ is to the be the catchcry.

IMPLICATIONS

As NSW SHS cannot be delivered by government alone, the Discussion Paper calls for ‘models, innovations, or practices’ relating to social housing reform which have been successfully implemented by the non-government and private sectors.

For example, the Discussion Paper notes with approval the social housing reforms implemented in Atlanta, Georgia which have focussed on transitioning social housing system away from concentrated housing estates to mixed income communities.

‘Salt and pepper’ redevelopments are likely to find favour – where a developer, working in cooperation with the public sector, redevelops a social housing estate whilst ‘adding-on’ private-housing units and community amenities. The developer will then be in a position to profit from the sale of the ‘added-on’ private housing units.

Overall, the Discussion Paper sends a clear signal that the NSW Government expects NGOs and the private sector to play a material role in the supply, and implementation, of the revamped NSW SHS.

SUBMISSIONS

Submissions in response to the Discussion Paper can be made by 20 February 2015:

via the online feedback form;

email to socialhousingreform@facs.nsw.gov.au; or 

to: Social Housing Policy Team
Department of Family and Community Services
Locked Bag 3002
Australia Square NSW 1215