Keynote address to the 3rd National Affordable Housing Exchange
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Thanks for your kind introduction and for inviting me to open the Third National Affordable Housing Exchange. This is a very good opportunity to have community housing providers from all over the country in one room at one time to share ideas and experiences.
I know that many of you in this room are keen to hear about what governments are doing for the sector in coming years.
Before I turn to that, I’d like to start with a few words about the state of our economy generally, and the state of the housing sector specifically.
There has been some irresponsible reporting lately suggesting that the economy is about to fall into a hole. It is not.
Much of this reporting is based on one or other of the business or investor or consumer sentiment surveys which float around.
These surveys are essentially no more than opinion polls and there is absolutely no evidence that they have any forecasting accuracy or value.
The facts are these. We do have contained inflation – in fact, the lowest inflation for 13 years. Unemployment half the OECD average. Growth with a four at the start. Low interest rates. A massive pipeline of investment. Growing real wages and consumption.
Of course, there will always be think tanks and forecasters who know they can get a cheap headline and a news grab if they make dire predictions about the state of our economy.
Take for example Deloitte Access Economics, which this week predicted the mining boom will end in two years.
The prediction got blanket coverage – just as it has every other time in the past eight years that Access Economics has made the very same prediction. In May 2003, September 2004, January 2005 and May 2006.
Every time, they’ve been wrong and there’s no reason to believe that this time they’ll be right.
Indeed, on Tuesday the Governor of the Reserve Bank delivered a body blow to the doomsayers who want to talk our economy down.
Mr Stevens said our economic performance had been – in his words – “remarkably good” and that we are well placed to cope with any moderation in China’s demand for our resources.
And while forecasters are fond of predicting a burst in the housing bubble, Mr Stevens said there were no signs of an imminent crash in house prices.
On Tuesday of this week, I was in Canberra talking to the Housing Industry Association about their concerns for the housing sector.
Yes, I concede there are some impediments in the industry, and all levels of government need to take responsibility to reduce red tape and unnecessary or excessive fees and taxes.
But the upside is good for housing affordability.
House prices have come down from unsustainably high levels of the late 1990s and early 2000s.
And let’s not forget that the official cash rate has been cut by a total of 125 basis points since November last year.
The official rate is now lower than at any time under the previous government.
Australians on a $300,000 mortgage are paying around $4,000 less interest per year than they were when the Howard Government left office.
Of course, we understand that many people are still struggling to pay the mortgage or the rent. And we know that we must increase our stock of affordable housing – social and community housing, affordable rentals, and private homes.
The importance of community housing
A healthy, sustainable community housing sector is important because of the people – the families, the pensioners, the vulnerable for whom life hasn’t quite worked out as planned.
The evidence shows that community housing improves people’s lives. The 2010 National Social Housing Survey of people living in social or community housing confirms this contention. It found that over than 90 per cent felt more settled and more than two-thirds attributed their better health to their housing. More than half were able to start or continue education, 91 per cent managed their money better, and 80 per cent felt more able to cope with life events.
And most importantly for those here in this room, more than 80 per cent felt supported by their community housing organisation.
These are impressive statistics, and of course they apply to community housing tenants across the country.
They are also a great credit to the effectiveness and reach of the community housing sector.
But while we all appreciate the benefits that community housing delivers, we also know that there is still not enough of it to go around.
Three and a half years ago, to alleviate the shortage and stimulate the economy, we kickstarted the Social Housing Initiative.
Since then, we have built almost 18,000 new social housing homes with the assistance of the not-for-profit sector.
And as a result of the cost effectiveness of the program, we are in a position to deliver an additional 2,000 homes nation-wide.
Repairs and maintenance have also been carried out on around 80,000 existing homes, many of which would have been uninhabitable without this work.
That arose from our response to the global financial crisis. To replace the contraction in private capital, we spent taxpayers’ money to prevent people losing their jobs and small businesses going under.
But we had to make a decision about where we would spend it. The economic decision to spend it was there, as was Treasury’s advice, but it was the Government’s value decision as to where we spent it, and we
chose to spend it on education and social housing. And it was opposed by the Opposition – voted against in the Parliament by the Opposition.
The National Rental Affordability Scheme
While social housing is important to get people back on their feet, it’s also vital to have the capacity to transition them into rental accommodation when they can afford it.
The Government introduced the National Rental Affordability Scheme (NRAS) in July 2008. As you would be aware, NRAS aims to support the delivery of more affordable private rental housing by encouraging private investment and reducing rental costs for low and moderate income households.
Many of these homes are being built to six-star energy efficiency ratings, with solar panels, water tanks and reticulated water systems for the toilet and gardens.
This may not seem that important to some. But recently in Adelaide, I met a couple who told me that their utilities bills had halved since they moved from the old South Australia Housing home into their modern NRAS townhouse – actually halved. And you can imagine what that meant for people on such modest incomes as those two.
So far, we have delivered almost 9,000 homes under NRAS, with a further 31,000 still in the pipeline.
Our contribution is $4.5 billion with a further $1.5 billion from state and territory governments, either in cash or in kind.
We greatly appreciate the support and participation that the Community Housing Federation of Australia (CHFA) and its members have given to the scheme.
Over the next year, our focus for NRAS is on the continued delivery of homes and the release of the remaining incentives, of which there are around 10,000.
So one of the great tasks for me to deal with as Minister is to really bring forward as quickly as possible the construction of those homes. And there are areas where things are going well, and there are arrangements with certain providers of the construction of such homes which are not going as well as I would like, and I will be personally involving myself in those areas which are not going so well.
The Government will soon begin consulting stakeholders on the design of the next round of NRAS. I look forward to hearing the suggestions of CHFA and its members. I invite people to let me know what they think
I know many of you here are very interested in life after NRAS. All I can say in this regard is that the Government understands the need for certainty and the importance of forward planning, and once we are in a position to publicly announce what will come after NRAS you will be among the first to know.
While future programs are of interest, I note that we still have a long way to go in delivering the NRAS we have today.
I understand that NRAS has experienced the same post-GFC obstacles and pressures to investment as the Australian residential property sector more generally.
Encouragingly, I can share with you today that the Government has recently received a number of promising approaches from institutions about participating in NRAS. We are continuing to explore with these groups what their NRAS participation might look like, because there’s no doubt in the changing fiscal environment for the Government, it’s very important that we find new ways to have capital invested in housing,
in particular social housing. We won’t be in the position to find five-and-a-half billion dollars that easily again. We need to find new ways to unlock private capital and have it invested in the housing sector.
While I am not sure if these institutions are quite ready to invest in affordable rental housing, I can assure you that I will be doing everything I can to encourage them to get on board. We need to do everything we can to lift our housing stock because, as you know, there is a direct correlation between housing affordability and homelessness.
National Partnership Agreement on Homelessness
One of the challenges we face in tackling homelessness is measuring precisely the magnitude of the problem in this country.
We know from the 2011 Census data and the figures being collected by the Australian Institute of Health and Welfare from specialist homelessness services that many thousands of Australians are homeless on any given night – either on the streets, couch surfing or staying the night in a shelter.
Almost half are under the age of 25, 59 per cent are women and very disturbingly – well, they are all disturbing figures – 18 per cent are under the age of 10.
In a country as wealthy as Australia, it is indefensible that a mother and her children have to sleep in a car to escape family violence, or that a teenager sleeps rough because staying at home is intolerable and there is no alternative accommodation.
All governments in Australia need to turn these figures around. Together we are investing $1.1 billion in initiatives under the National Partnership Agreement on Homelessness.
We are closely monitoring the Agreement to make sure it achieves the maximum possible reduction in homelessness by pinpointing what works, and by helping us address any common structural impediments across jurisdictions.
But governments cannot do it alone and the contribution of the community and not-for-profit sector cannot be overstated.
I recently met a woman who never imagined that she and her family would find themselves homeless.
But tragedy struck, as it can do to any of us. Her husband had cancer and while he was ill he had to stop work and she became his carer and neither of them ultimately could work.
When he died, she and her two young daughters had nowhere to live and no hope of paying market rent. They had instantly crossed the line from being a family finding it difficult to afford housing to becoming a homelessness statistic.
Luckily, the Wesley Mission helped her out.
Her story, and many others like it, is why we have made the single largest investment of any government in public and community housing.
We have also made significant investments in housing related infrastructure through the Building Better Regional Cities program and the Housing Affordability Fund.
So far we have put in place $20 billion worth of policies and measures right across the housing market – from home ownership to homelessness.
In all, the Labor Government has made a direct financial contribution to one in every 20 homes built since 2008.
This was necessary, given the decade of neglect under the previous government, where there was no housing minister, where there were billions of dollars taken out of the public housing system with no investment in social housing.
But as you know, we do not do it alone.
It’s a dynamic and productive partnership between all levels of government and housing providers like you.
And forums such as the one we are at today give us the opportunity to sit down together and work out what we can do and how we can do it better.
National Regulatory System for Community Housing
An important point of discussion over the next two days will be the new National Regulatory System for Community Housing, due to start next year.
It’s a significant step.
Having a national, regulated, transparent system will make it a much more attractive option for private sector investors.
The community housing sector has been a stand-out leader in the not-for-profit sector in being able to attract private debt financing to build more social housing.
However, as I’m sure many of you have found, it can be an uphill battle to gain access to debt financing on competitive terms, especially given the lack of information on the performance of the community housing sector nationally.
The National Regulatory System will give assurance to private lenders that community housing providers are well governed and financially viable.
This will help you to deliver more housing and match the increasing levels of unmet need.
The new system will also help protect vulnerable tenants because providers will be operating under a National Regulatory Code with consistent standards for them and their services.
It will enable providers to operate easily in other jurisdictions without being stymied by the red tape of different regulations and registration processes.
The benefits are many – benefits that are generally recognised and agreed among housing providers, government, tenant organisations, the finance industry and other key stakeholders.
I commend the NSW Minister for Family and Community Services, Pru Goward, for introducing legislation into the NSW Parliament in June.
This is the first step in a process in which all states and territories will introduce the same or similar legislation in their own jurisdictions.
I will be signing an Inter-Governmental Agreement committing all governments to the new system on behalf of the Commonwealth.
While I understand that most of my colleagues in state and territory governments have also signed up, a couple of jurisdictions are still considering whether or not to commit.
Well what I say to them is we have come so far – we cannot afford to lose this opportunity to finally create a national system for community housing.
It’s in all our interests – and it’s especially in the interests of those who need it most: the vulnerable, the disadvantaged, the 190,000 people currently on social housing waiting lists around the country.
National Regulatory System – the operating guidelines
The passing of legislation through state and territory parliaments is a necessary and important milestone in introducing the system.
But that’s not where it ends.
The National Regulatory Code is an intrinsic part of the system, setting out the performance requirements that housing providers must meet.
It is not prescriptive in how providers should run their businesses, but rather looks at governance, financial viability, housing assets, tenancy services and so on.
And registrars appointed by the states and territories will apply the law and regulate the providers.
The detailed operating guidelines will be critical to the day-to-day running of the system.
These guidelines will determine how the National Law, including the Regulatory Code, will be applied by the different jurisdictional registrars.
I encourage you to go along to one of the state and territory consultations in August and September to have your say about the draft guidelines which are being developed by a technical working group, which
includes registrars and community housing sector representatives.
As we finalise the details of how the system will work, it is vital that we continue to have close consultation between government and the sector.
This way, we can achieve a system that is fair, transparent and delivers tangible outcomes.
The National Regulatory Council
Another important part of the new reforms is the National Regulatory Council.
This will be established as an independent advisory committee, appointed by Housing Ministers, to oversee the operation of the new system.
For the Council to do its work properly the community housing sector must be represented. I am committed to ensuring that this is enshrined in the guidelines.
I also look forward to receiving the Council’s first report which will detail the performance and strength of the sector nationally.
As you know, the new system will be operating in a more coordinated and regulated environment for the not-for-profit sector, with the Australian Charities and Not-for-profits Commission starting up in October this year.
I will be working closely with the Assistant Treasurer David Bradbury to ensure that the Commission and the National Regulatory System can work together effectively.
We want to make sure the joint aim of reducing the regulatory burden on organisations is a reality – by applying the principle of report once, use often.
Pressures on the social housing system
While it is great to see the new system finally coming to fruition, I am well aware of the pressures on social housing.
More evidence is emerging, most recently from the Census data, that rents are rising faster than incomes. There’s been some fall-off of that but it still is the case that rent is higher than CP, causing people to really have some struggles.
At the same time the public housing authorities in several jurisdictions are becoming financially unsustainable with rising maintenance backlogs and increasing operational deficits.
Meeting the demands of public housing tenants in a sustainable way will require significant reform to the way housing assistance is delivered.
Some state and territory governments are undertaking consultations on a longer term strategic view of how they manage their public housing assets, including recognising the advantages of community housing.
As I have mentioned, the Government has made a major contribution to community housing growth through the Social Housing Initiative and NRAS.
However, to achieve long-term growth, states and territories will have to continue with funding and support for community housing, and review funding agreement terms to ensure that growth is not stymied.
It will of course also be necessary to ensure that funding agreement provisions do not duplicate or contradict the requirements of the National Regulatory System.
As you would all be aware, the Specific Purpose Payment related to the National Affordable Housing Agreement (NAHA) is to be reviewed by the end of 2013. I will be taking up these issues with my state and
territory colleagues as part of the discussions we have about how to improve the current operation of the NAHA.
And I say this too – the Federal Government will also be exploring options if we cannot reach consensus post the current NAHA.
At the same time, the states and territories will need to make good on their announcements to transfer public housing to the community housing sector.
I appreciate that state and territory governments insist that stock transfers be premised on a well-regulated community housing sector which has the capacity to manage a substantial increase in housing stock.
That is why the National Regulatory System must be implemented in this country quickly and comprehensively, with the support of all jurisdictions.
The homes we live in shape us in very profound ways – in the security they provide, in the safety they offer, in the private space that allows us to work, study, raise families and day dream.
Everyone needs and deserves that opportunity to be positively shaped by their home.
The work you are doing in the community housing sector is giving that chance to people who would otherwise miss out.
So I do appreciate the opportunity today to come here to let you know the Gillard Government’s views on the community housing sector.
I want to thank you for the work you do and I commend you and the CHFA for your commitment to making many people’s dreams a reality, but we’ve still got more work to do.