Speech to the AHURI beyond the current NAHA Conference, Melbourne
Thank you very much, and can I also acknowledge of course Rod Fehring from AHURI and can I thank Auntie Winifred for the lovely Welcome to Country.
I’d also like to pay my respects to the traditional elders, both past and present.
It’s great to be with you, and good to be here to talk about the future of housing policy and also the future of the NAHA.
I’ve now been the Minister for Social Housing and Homelessness for about 12 months and I have to say that I’ve learned a great deal in that time.
I’ve been I guess one of the Ministers in these areas who has preached reform in terms what has to happen in social housing.
Why I’m excited to be here is because we need a debate in this country about social housing. We need to discuss the pressures on the system and we also need a way forward, and government can’t do it alone.
And one of the first political storms I walked into was when I started talking about reform of social housing and the issues and the problems we are facing. In my local community, I live in an area that’s mixed – there are private houses and there are also housing commission homes.
I gave a speech about the need for reform probably a month out from the last NSW election and neighbours came and showed me what was being letterboxed in the local community that I lived in.
The pamphlets said that Labor – and this was using my words about community housing, about reforming social housing –that Labor was going to get rid of public housing, we were going to kick people out of public housing estates.
It is a very sensitive area and unfortunately it is an area that has been used for many years to try to score political points.
My view is that the time for point scoring in terms of housing is over and we need to get on with reform.
The NAHA, from the Federal Government’s perspective, and from my perspective, is probably the most important lever that we have in driving change in terms of both social housing and also affordable housing.
It was brought home to me two days ago when I was in Tasmania visiting homelessness services.
We went down to have a look at the Common Ground sites which are going extremely well down there and I was urged to go see a Salvation Army homelessness program.
The Salvos were running a program that linked prison offenders to housing. They were able to get funding from the Tasmanian Government to run a pilot and had had some fantastic results out of the pilot, and they were able to get re-offending rates down from around 65 per cent to around 3 per cent.
The program was all about getting offenders into the housing as quickly as they could, stabilising their situation and wrapping the services around them – a brilliant program.
One of the things which I asked them and wanted to get to the bottom of was where the money came from in terms of running it. Lo and behold, it was actually coming out of the NAHA.
And for me that was a surprise because, while I know the states are working very hard on the ground, and while I know there’s a lot of effort going on, in terms of accountability, in terms of transparency, it’s very difficult for the Commonwealth to see what is being delivered out of the NAHA in terms of on the ground supply and also programs.
So this sort of debate is important, because as we move towards the renegotiation of the NAHA there will be discussions about the look and feel of the next NAHA, and certainly the debate that happens in this room, the debate that happens in the community is something that is necessary in order to get the change that’s required.
So I do appreciate and thank AHURI for taking on the debate and leading the debate and I urge you to continue it on.
I have talked in the past about why we need reform in social housing.
The system over the last 60 years has changed a great deal, it really has. In 1945 Ben Chifley’s government introduced the first Commonwealth-State Housing Agreement.
The impetus behind it came from a report by the Commonwealth Housing Commission in 1944, which said there was an estimated housing shortage across Australia of 300,000 dwellings.
I receive similar reports now – we have a shortage of around 200,000 homes at the moment, and if we don’t reduce the trends Australia will be short a whopping 400,000 homes in the next 10 years.
The Commission advised the Commonwealth Government to get involved and take an active role in providing affordable rental housing to overcome the shortage.
The housing was targeted both to ex-defence force personnel and to Australian families in need of temporary support.
The housing was mostly constructed on large estates on the outskirts of major cities, and these housing commission homes became an important safety net for low income workers and their families.
In those days it was used as a springboard to help people save for their own home and move to independence.
There’s been a big shift in the way social housing has been used since then.
Around 1973, federal and state and territory governments started to focus on the eligibility for housing in terms of those most in need.
While that was the right course, it has changed the complexion of social housing and it has added a great deal of pressure onto the system, both financially and, of course, in a resource sense.
But by and large, while we have seen the change, the demographic change in terms of social housing and the new stress that that provides, the actual delivery of social housing, the on the ground bricks and mortar, is largely delivered exactly as it was back 30, 40, 50 years ago.
There has been very little change in the way governments, of all persuasions, deliver social housing on the ground.
But we need to acknowledge that without reform we have a system that is collapsing under the weight of demand without adequate levels of new stock and supply.
The NAHA, last time when negotiated, was negotiated in the first 12 months of us becoming the new government.
It acknowledged quite importantly that you need to look at housing in a holistic fashion.
It set up targets and some of those targets were quite ambitious.
It also went further than just social housing; it also made a connection with affordable housing, and it clearly identified both homelessness and remote indigenous housing as significant issues in the housing space that needed to be addressed.
The NAHA left the implementation, of course, to the states and territories, in recognition of their jurisdictional control over social housing.
But at the same time Federal Government underpinned the NAHA with specific National Partnership Agreements worth about $7 billion.
And you all know these agreements in terms of indigenous housing, on homelessness, on social housing, have specific targets and outputs.
What we were able to do when the global financial crisis hit, of course, was we intervened – we invested in infrastructure, and a great deal of the infrastructure we invested in was social housing.
$5.6 billion was invested through the states to deliver almost 20,000 new social housing dwellings.
80,000 existing dwellings benefited from repairs and maintenance under the stimulus, which helped to save around 12,000 homes from being lost to stock due to become uninhabitable.
This funding brought our Commonwealth investment up to around $20 billion.
The stimulus funding has been widely regarded to be a godsend by the housing industry, by workers in the sector whose jobs were protected, by tenant organisations, by state governments and by the community housing sector.
On top of this the federal government has also acknowledged that there is a strong link to affordability and, again, has worked with the sector, has worked with people in this room to set up programs like NRAS and, of course, the Housing Affordability Fund.
Two programs which I think are absolutely critical to the work that we do day in day out, and demonstrate the commitment from the Federal Government to not just stand on the sidelines when it comes to housing and housing affordability but to get involved.
So we are continuing to enter the space and part of what we’re doing is making up for the past.
The Howard government through their housing agreements actually stripped around $3 billion out of the social housing system, which when you put that together saw a loss of 33,000 social housing homes.
So, we’re coming from a long way back and, at the moment, when you put together all the programs that the government is funding and the number of housing and dwellings it comes to close to 80,000 – so it’s a large number that is being constructed at the moment.
So let’s go through some of the challenges in a bit more detail. I’ve given you a rough outline of where they are, let’s get into some detail.
The biggest problem is the cost of the system to maintain and run, and the cost of new supply.
In the ten years prior to the current NAHA, about $10 billion was paid to the states under the Commonwealth-State housing agreement to deliver social housing.
During that time, the Commonwealth spent $10 billion but the number of social housing homes actually declined.
It’s not hard to see when you realise that on average each public housing dwelling was recording a deficit of $181 per dwelling to operate each year.
This is an amazing figure, particular when you consider that in 1991 public housing dwellings were operating on an average surplus, of $620 per home.
The major shift during that time was in 1996, when eligibility for social housing was even more tightly constrained to those in greatest need, as a reflection of the mounting demand for affordable housing.
So the Commonwealth funding was being absorbed by an incredibly expensive and cumbersome system that was going into subsidising the cost of the housing and providing largely for repairs and maintenance.
Interestingly community housing owned social housing dwellings operated at an average surplus of $805 per dwelling at the same time. But we’ll talk a bit more about community housing later on.
At the same time as that we’re experiencing increasing pressure on social housing demand.
The lack of housing affordability in the wider market is no doubt causing this and I know that’s something you’ll be talking about.
In 2007, nearing 20 per cent of lower income private renters were paying rents that swallowed at least half of their income, and that’s after rent assistance was paid by the Commonwealth – which now helps 1.1 million Australians and their families at a cost of $3.1 billion each year.
But the other pressures we are experiencing at present are demographic.
In particular, the ageing of the population. Demand for public housing rental homes for older people are expected to double by 2028 and one of the key challenges we face is that, as the Productivity Commission recently found, to avoid a crisis in the aged care system we need to help older people stay living at home for as long as possible.
The second reason is that the number of single person households is expected to increase by over 30 per cent by 2029.
Overall, according to the National Housing Supply Council, future demand for public housing is estimated to increase by 28 per cent, or around 93,000 houses, by 2023.
In today’s dollars that would cost about $25 billion – that’s one stimulus package every two years to try and stem the rising demand let alone address the backlog.
So, let’s get to the NAHA and where I think we need to make some changes.
As I’ve said previously the states are working hard, there’s no doubt about it, but in the end I don’t want the states to work harder I want the states and the territories to work smarter.
We need to work smarter and use the money more effectively.
The social housing system currently has $80 billion worth of assets and very little of it is leveraged for growth.
So these are lazy assets largely unused in an investment sense and this needs to change.
First of all, the NAHA has to be unashamedly pro-growth.
It must have proper targets, there must be proper transparency. Tying it all together, there has to be a national strategy led by the Commonwealth and a detailed plan about how we will achieve the results.
There are a few things that need to happen to make this work:
- we need to maintain the current housing-wide focus of the NAHA, which is critical;
- we need to ensure that the link between social housing and affordable housing is on the table. The solution for public housing is affordable housing in the long term;
- we need to get rid of funding systems that create a disincentive to growth, particularly the per capita system of funding existing housing. It is absolutely perverse and it’s not acceptable.
- to put growth at the centre of the NAHA, we need to encourage the private sector to help with renewal of social housing, similar to what occurred in Kensington here in Melbourne or Bonnyrigg in Sydney.
It’s always been described as the Holy Grail, bringing in private investment, but this is the work that the states and the territories and the people in this room need to focus on: using the asset base, leveraging against it and encouraging investors at every level.
Part of it has to be about empowering and giving support to the community housing sector. This is a sector that has benefited greatly from the stimulus that has really taken off and has shown what it can do for residents and what it can do for growth.
And it has a model that works – cross subsidising social housing with private affordable housing, it works at a financial level along with, obviously, government support but at the same time as that it works at a social level.
When you walk into Bonnyrigg, when you walk into Kensington, it’s a mixed community. It’s impossible to know which is social housing, which are private rentals and that has a social impact. And when you go out and talk to St. George Housing in Bonnyrigg about the changes they’ve seen in the community, it’s a model that I believe must be followed into the future, and something that I intend to work towards.
Community housing is the future but at the same time as that work needs to be done to ensure that the sector can grow sustainably.
At the moment we’re working with the states in terms of national regulation, ensuring that the sector has the regulatory framework that it needs to be able to talk to banks and financial lending organisations so they understand investments in community housing will be safe and secure.
The capacity of the sector needs to continue to mature, the financial skills in this sector need to grow and mature as well, and we are seeing that, we are seeing that in every level of community housing organisations and that is something that we hope and will drive through the NAHA.
I mean again the stimulus package for me is a good model and one of the best things has been those innovations achieved.
When we’re constructing the NAHA I will be very closely looking and reviewing what took place in the Social Housing Initiative.
One of the strengths is that I can tell you to the number how many houses have been completed in each of the states and territories, I can tell you how many houses have been repaired in each of the states and territories.
The lines of communication, the reporting, the transparency is second to none and it provides a model that I believe should be adopted as we move forward into the next renegotiation.
One of the areas which is very important to me, and I think needs to be in any future NAHA, is the way we deal with the issue of homelessness.
As the portfolio Minister, I see every day the result of an unaffordable housing market.
We are dealing with some of the most vulnerable and disadvantaged people in society who fall out of the private rental market, who can’t get themselves into public housing, who can’t find housing; and can end up on the street.
Again in the stimulus package, one of the requirements was that a proportion of the social housing was to go to Australians who are homeless or at risk of homelessness, and I will be speaking with the states about how we might be able to roll that out into the next NAHA.
I think the work that is rolling out across the country in terms of homelessness at the moment has been excellent, but our response to homelessness has suffered because of the lack of housing available and we need to increase that housing.
Most, if not all of our services, are now accepting that we need to run a housing first model when we’re dealing with homelessness, that we need to get people into long term housing as quickly as possible and to wrap the services around them to keep them in those houses.
The problem is when you talk to the service providers who are actually delivering the housing first model there’s not enough houses to make it work.
So the NAHA can be the key driver in ensuring that those providers, on the frontlines in terms of homelessness, have the supply they need into the future for people experiencing homelessness.
So, I might wrap up there and take questions.
I every day, when I come to work, understand that I represent some of the most disadvantaged people in society and housing for them can change their lives.
We see everyday that if you give someone stable secure housing, it provides the foundation, the base for them to go out, to go into training, get further education and to move into employment, which is one of the most important things we can do to improve someone’s life.
I think the NAHA if we get it right the next renegotiation can be the lever that does that in terms of delivering that secure housing.
Thanks very much.