By Katrina Reye

Partner

Hall & Willcox Law

There has never been a better time to invest in Australia’s social housing stock. Funding is at record low levels, the economic benefits would add to our recovery from the COVID-19 recession, and research shows social housing can reduce strain on other government services.

Building more social housing not only has a widespread positive economic effect, it aligns with the 2021-22 Federal Budget’s focus on employment – social housing provides undoubted immediate stimulus from the many architects, engineers, planners, professional services, construction and tradespeople employed.

In its Budget, the Federal Government announced $127.4 million in funding over 2021 and 2022 to support workers in the housing and homeless sector. This is useful, but does not address shortages in social housing stock. While well-publicised initiatives such as HomeBuilder and the New Home Guarantee scheme provide stimulus to the private sector, social housing requires government intervention and must be considered as critical infrastructure for our economic and social wellbeing. This was acknowledged in Anthony Albanese’s budget reply speech where he pledged to deliver an additional 20,000 social housing properties in the first five years if the Labour government was elected.

Australia’s social housing system was already under strain before the pandemic, and this has only increased post-COVID. While there are positive signs in business confidence and prospects of a  ‘V-shaped’ economic recovery, social housing will remain left behind without action.

There is compelling economic opportunity in governments taking action and committing to more government investment in social housing stock. Such investment provides significant economic stimulus and jobs growth. But it also provides another important economic benefit – providing a home.

Research shows stable shelter is integral in being able to hold down secure employment, to live in and contribute to a community. It has also been shown to reduce costs on government services such as health care. The whole community benefits from having its people reliably and well housed. None of us benefit from social housing uncertainty.

Government intervention is critical because evidence shows the private sector will not produce new housing stock without it.

An unusual merging of events

Before COVID-19, wait lists for social housing in many parts of Australia had blown out to chronic levels. In my home patch of the Hunter Valley, and in much of NSW, wait times of around 10 years for social housing is common. It’s a similar story across many parts of Australia.

COVID-19 was always going to introduce additional challenges as the virus spread and plunged the economy into recession – we weren’t exactly sure how these challenges would materialise, and the results have been quite unexpected.

Higher unemployment was exacerbated by a unique combination of higher house prices, fuelled by record low interest rates, and higher rents – this has been keenly felt in the regions, where city dwellers have fled to buy or rent housing.

While there remain under-performing pockets in the private rental market, such as inner city apartments aimed at international students, we are seeing widespread and coordinated boom conditions in housing across Australia.

Meanwhile, community housing providers have had to negotiate an environment where there has been downward pressure on rents as tenants have struggled to meet their rental commitments, and there has been moratoriums on evictions.

This unusual merging of events has created arguably the hardest conditions for social housing seen in some time.

A compelling opportunity for governments and communities

The conditions are perfect for government to create new social housing stock, and there should be more projects with some level of government funding.

The most ambitious recent move was announced by the government of Victoria, a plan to introduce new housing stock and stimulate the economy via its ‘big housing build’ program. This program aims to provide fast starts to community housing – with streamlined planning – to be spread across Victoria, including the regions. Similar programs could have a tangible impact in other states.

While there have been welcome Budget announcements in NSW this year, when we analyse the investment we see most funds have been directed to apprenticeships in social housing and maintenance of existing dwellings. These funds address an important issue, but the most acute problem remains lack of stock across the nation, and this is where the biggest opportunity lies.

Aside from ‘big housing builds’, governments may also consider the following options:

• simplifying the SAHF program in NSW, making it easier to administer and building on the sector’s current experience by releasing additional rounds of funding;
• making clearer pathways for unsolicited proposals for community housing providers that have land available for the construction of fresh social housing. This may need subsidisation from government to allow the land to be used for social housing stock and not general residential or affordable housing;
• extending the NRAS scheme or making clear announcements about what schemes or funding is going to replace it as the program winds down; and
• considering programs like the ‘big housing build’ program in other jurisdictions.

With unemployment, house prices and rents rising in unison, it is harder than ever for people who would fall into social housing to get social housing. Long wait times were a reality pre-COVID, but are likely to worsen as social housing supply fails to meet demand.

With funding available at record low rates, there has arguably never been a better time to invest in the nation’s social housing stock. And there has arguably never been a greater need for the economic stimulus this would provide.

Used with permission