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Speech by Senator the Hon Mark Arbib

Address to the National Affordable Housing Exchange Conference

Location: Redfern, Sydney

*** E & OE – Proof only ***

Thank you Derek for that introduction, I forget that I was a beach inspector. I was a beach inspector at a beach that had no surf, so I had probably the easiest job. It was one of those harbour beaches, so I think I was there for a couple of years and I made one rescue. It was someone jumping off one of those large boats and they broke a collar bone, so it wasn’t much of rescue either.

I really do appreciate the opportunity to be here today, can I thank Aunty Norma for the welcome to country and can I also acknowledge the traditional owners of the land which we meet.

It is fantastic to be here in Redfern and I’ve got all those different portfolios but all of them for me have such a resonance and a warmth with this local community.

And I think I want to start with Redfern because Redfern is a place that has had tremendous change over the past ten, fifteen years. And I know many of you are from Sydney and some of you have come from interstate. You can’t take for granted where you are sitting right now.

Ten, fifteen years ago Redfern was one of the most depressed parts of Sydney, one of the most depressed parts of this country. Extreme poverty, extreme disadvantage, generational disadvantage and in ten to fifteen years we are seeing it turn around.

And while it’s quite sort of cool now to be down on the previous State Government, but one of the best things they did and something they should always be remembered for is the Redfern Waterloo authority because they provided the strategy and pathways and innovation to turn it around.

But it was a partnership, it wasn’t just the government, it was a partnership with the local community organisations, the local Indigenous community who worked together to turn this around. All of this we’re seeing here today comes out of this partnership, but it’s not just that. The National Centre of Indigenous Excellence over at the old Redfern Public school an amazing change in the way community sport, art, culture is delivered in the community.

It’s already got, in its gym, 1700 members. Local people coming out public housing going for the first time to a gym, to a local swimming pool, meeting other members of the community and you can see the change that is taking place on the ground. The Les Tobler construction training centre, the Yaama Dhiyaan hospitality training centre, these are all coming, popping up across Redfern.

The change is happening and community housing is also changing the face of Redfern. Right now Bridge Housing has something like 1500 properties that it manages so community housing is playing its part in the renovation, in the rejuvenation of Redfern.

And that is why I am such a big supporter of community organisations and I’m such a big supporter of community housing.

We’re talking today obviously about affordable housing and the challenge that Australia faces. And of course we face some major challenges as housing only becomes more and more unaffordable in this country and it is hurting the most vulnerable in our society.

As a policy maker, someone who deals with social housing obviously I’m extremely disturbed by that. When I started this job about six months ago and I had a view of public housing, I had a view of social housing and so it was interesting to sit down with the community providers to discuss what is being delivered.

For me, the biggest change I’ve had in my mindset is the future of social housing is affordable housing. That is where we need to take it and have our mind set right, everyone needs to have their mind set right to make that change.

Affordable housing is the future and it’s certainly something this Government and Minister Burke and also the Treasurer and Minister Macklin is focused on.

So today I want to talk to you about affordable housing but I also want to talk to you about the reforms we need in social housing to meet the demands of our growing community.

I have spoken a number of times about the need for reform and many of you have probably been at those speeches. So I don’t wish to bore you but I think it’s important that we understand the need for reform and the problems we see in the social housing system.

Right know we have a shortfall of public housing of around 90,000 homes and there are more than 60,000 households on the current waiting list in greatest need – many of whom are waiting up to two years to be allocated a home.

Now we know in the past, prior to this government there was an underinvestment in community housing. Around $3.1 billion had been ripped out of the system – only now are we starting to make up for that shortfall.

The gap between supply and demand is only expected to grow and the shortfall will rise from 90,000 to 150,000 by 2020.

The cost of meeting that sort of shortfall we estimate to be around $24 billion – it’s not financially possible for governments to meet a cost like that and manage their budgets.

Prior to the stimulus, over 10 years, under the Commonwealth State Housing Agreements, the Federal Government put $10 billion dollars into social housing – and the number of social housing homes went backwards.

So not only do we have this $24 billion gap at the same time the money we are putting into the system is not leading to more homes. So 90,000 shortfall, the money is not leading to more homes. Something has got to give.

At the same time we face an aging population. We are now starting to see the baby boomers retiring and it’s only just started. So the pressure on the system is only going to grow, is only going to become more acute and then we get down and start looking at the micro, looking at the stock itself we start seeing the pressures of the stock level, the age of the stock.

Much of it from the 1950’s, 1960’s and certainly most of it needing to be renewed in the decades ahead.

The system was operating at a surplus in the 1990’s it’s now operating at a significant deficit.

And of course system problems are connected to the affordability issues in the wider housing market, there is no doubt about that.

The stimulus has been a godsend, I would say, for the housing market, for social housing in particular. But it’s a one off and the need for more social housing and the need for more affordable housing will continue to grow.

As I’ve said on a number of occasions in terms of social housing, business as usual cannot be allowed to be maintained. We’ve got to make changes and we’ve got to make them soon.

So we’ve got to reform; what’s it going to look like?

I have said from day one that we really need to look at the community housing sector and affordable housing is the future.

I want to see a bigger, more robust community housing sector to deliver the sort of scale we need in developing more housing for those in need.

That doesn’t mean an end to government-owned public housing – but it means we need to think creatively and practically about how we can achieve growth because the traditional models are not working.

Together we have already started making the shift, I talked a little bit about the stimulus but the stimulus has set us down a policy path which we need to follow.

Under the stimulus we’re now constructing something like 19,300 new social housing homes. Already we’ve completed around 13,000.

The stimulus was the largest single investment ever in affordable housing by any Australian Government. The beauty of the stimulus, in a policy sense, is up to 75% of it will be transferred to the not-for-profit sector.

Here in NSW, they’ve already surpassing that, with a goal of around 90% owned or managed by the not-for-profit sector.

So what is important is not just the growth in stock in the sector, but the innovation that this is going to achieve.

In partnering with the community sector, there’s been an incredible amount of change in the way we deliver housing for the most in need.

Many of the houses that are being constructed are in mixed communities, which I think is a positive result, not only in terms of financially viability but also in terms of ensuring that disadvantage is not compounded.

Unfortunately when many people think of social housing, they think of the ugly old buildings built decades ago, hundreds in a block that are poorly constructed and poorly designed in many areas.

Part of what we’ve been able to show through the stimulus funding is that affordable housing is on par with any other new modern housing being built and that they are undeserving of any stigmatisation whatsoever.

We saw at work what community housing providers are best at delivering entrepreneurial spirit, innovation in design, and supporting those most in need and we are seeing some amazing results on the ground.

And as I travel around the country, going to these stimulus properties I’m seeing people who are saying, who are almost in tears that are telling me they couldn’t believe that the Government, that community housing would invest so much in them.

They didn’t believe that they were deserving of a place that was so wonderful that was new, that was modern and they thought that was going to provide them with a chance to change their lives, to allow them to go back and get a job, to allow them to study.

Now many of you probably in the crowd are saying they are just words, but I am seeing it every day. Every day people are telling me that these homes are changing their lives, people from the most disadvantaged backgrounds. So the work that the community housing sector has done in terms of the stimulus is certainly the model that I see, the country and the Government taking into the future.

The Stimulus has been good, but again it’s a one off and it has created momentum. But if we don’t follow that up as we know you lose momentum quickly and if we lose momentum then things will go back to the bad old days. So we need to keep the momentum, we need to keep our foot on the pedal.

One of the most important things we can do is around providing certainty, regulatory framework and also governance with the community housing sector. This is an area that I am working on right now with the State Governments and Territory Governments, trying to get a result.

As all of you know who’ve been involved in the sector, it is an extremely slow process. This work was undertaken previously by Minister Plibersek and as yet hasn’t been finalised.

If we want to see the growth of the sector that we are talking about, it has to be managed sustainably If we are going to draw enough new capital into the market, into the system then they have to be sure, then they have to have confidence in the system we are creating.

The regulatory system will also need to address the need to protect the very legitimate needs of tenants – which are part of the core mission of any thriving community housing organisation.

We want to see robust regulation that requires minimum standards, but not excessive regulation that harms not-for-profit providers by forcing them to waste valuable time and resources filling out pointless forms.

I think that is a key issue for the sector and one that I want to assure you is at the front of our minds and is that the national regulatory code will look like a code that protects tenants but at the same time provides good governance and the common registration requirements.

Overregulation would undermine the purpose of attracting private sector investment to leverage for growth – they are unlikely to want to invest where a sector is fettered with unnecessary restrictions and time-consuming processes that don’t appear to deliver an outcome.

We need to make sure that there is only one set of reporting and monitoring obligations and that organisations aren’t going to need to jump through a complex set of hoops when operating across state borders.

We have already agreed that registrars are to be independent – a concern which the sector voiced during the consultations – and there is to be mutual recognition so that an organisation only needs to register once.

It appears that all providers will be covered in a tiered approach where the level of regulation will be proportionate to the risk level – some organisations will want to remain small and others will have a policy of growth.

At this stage, I think the most likely outcome for a national system will be for one jurisdiction to enact national laws as a host, with other jurisdictions directly referring to it or adopting that law.

And we know this model has worked in a number of governmental areas for example in the legal profession and the health profession.

An independent national body would need to be set up to ensure consistency in the application and interpretation of the code over time.

Uniformity is one of the key outcomes necessary. Again it is absolutely ridiculous for organisations need to establish subsidiaries to deliver affordable housing in each jurisdiction.

But national regulation must not be lowest common denominator – where a national system is merely a compromise between different states and territories’ systems.

It needs to be a robust system, not merely one that allows for a box to be ticked at the next Housing Ministers’ Conference. It needs to be a robust, effective, and user-friendly.

We need to see best practice and we need to have input into the design from experts from the community housing sector as well as from the finance sector and from tenants – all of whom have an interest in getting the system right.

Now we have, as I’ve said, encountered some resistance in some quarters in the past about moving to the national system of regulation and what I have been clear about is that if we don’t go down the path together, the Commonwealth will eventually have to go down it alone.

But I think we are on track to be able to make an announcement at the next Housing Ministers’ Conference in June and establish an independent expert panel to assist with the design of the legislation from that point.

Our hope, in relation to timing is that all legislation will be passed around the country by the end of 2012.

Its sounds like a fair way away, but there is still a great deal of work to do and getting legislation through every one of the State and Territory parliaments is a huge task.

So hopefully we can meet that timeline if not before.

Regulation is one area, obviously, we are working on but of course it’s not going to be enough on its own and there is a challenge we face as government policy makers but there is also a challenge that you face in this room, that I put to you.

To really restructure the social housing system, we need the community housing sector, the not-for-profits to take up the fight. We need you to take up the fights with the states, take up the fights with the territories, with local council but we also need you to be able to step up and sell yourselves to the community.

I would guess that most Australians would have little understanding of what community housing does. And I certainly would have no doubt that they wouldn’t understand some of the benefits of community housing, and its capacity to innovate.

The cost-efficiencies, the professionalism, grass roots linkages, the benefits that arise out of mixed communities.

If the sector is guilty of anything it’s of under-selling itself, under-selling its benefits.

Because the sector can’t wait for the next stimulus, the sector can’t wait for the next opportunity for growth to happen, residents can’t wait. So we have to proactively seek it, we have to sell who we are, we have to sell what we’re doing.

The first challenge of providers it to convince the finance sector that community housing is a secure investment.

I look at this challenge in the same way that industry superannuation faced up to it some thirty years ago. When industry super got under way there was a great deal of doubt about its ability to deliver. Amongst the financial sector there was very little confidence in industry superannuation funds.

But they aggressively, absolutely aggressively went into the market place and sold themselves. Sold themselves to their members, sold themselves outside their own organisations but also went outside and sold themselves to finance groups. They were aggressive about it, they advertised, they took it extremely seriously and we’ve seen the rapid growth.

One of the most remarkable transformations this country has been has been industry superannuation funds and I think in a similar vein we need that sort of growth, we need that sort of campaign amongst community housing providers.

Everyone has an interest in ensuring that that growth takes place and everyone has an interest in ensuring that the finance sector understand that this is a secure investment, that there will be a profit, that there will be a yield and that this is a sector that is going to be around for the long term.

Regulation will help them understand that, but at the same time the sector needs to understand that it needs to be absolutely aggressive in its work.

We also need to look at our board structures, we also need to look at the expertise we have inside our organisations. All organisations need to capacity build and certainly in terms of community housing we need to need to work towards building our financial expertise, our accounting expertise and making sure the financial sector understand that that sort of professionalism inside your ranks.

So that’s first, the first challenge with the financial sector. Second we need to further demonstrate to State and Territory governments that the sector has the capacity and the sophistication to manage extra stock.

As I said before, growth needs to be maintained at a sustainable level and organisations should not take risks that jeopardise their viability.

But if stock transfers are part of the solution to growing the sector and therefore supply then I believe it’s important to accurately sell your ability to deliver to State Governments.

Some Sate Governments have set and are looking at large targets such as in New South Wales, others have more moderate targets. Some have great confidence in the sector, others are yet to be convinced. I sit down with the housing ministers and I’m trying to negotiate in this area national regulation. We need the community housing sector to come together on these issues, have one voice across the country and to be campaigning every day at the level of the housing ministers and at the local government level to make the changes we need.

The other challenge, of course is- and possibly the most important challenge – is around tenants. We as policy makers, and also you as community housing providers need to demonstrate that tenants will be protected and supported and that community housing is highly effective at delivering to those most in need.

I know that there are a range of organisations in the sector, some that focus on different people in need such as the elderly, women fleeing domestic violence, families in financial crisis, but all sharing the same mission to provide affordable housing for those at the time when they need it most.

Community organisations have an excellent track record of housing people with high needs, and they have also shown that they achieve higher rates of tenant satisfaction.

That record must not be sacrificed at the expense of expanding in scale.

It is a core mission and it must never be forgotten.

And I think it’s extremely important to educate the wider community as to what you actually do in this area in terms of tenants. Tenants need to be assured about what their tenancy will look like if they’re transferred to social housing into community housing.

Over a week ago I was at the ACOSS conference and I had a question from a concerned tenant who talked about one the speeches I’d given in the past and said: “You’re talking about privatising public housing and I and my friends are scared. We don’t want to be privatised, we live in public housing”.

We need to educate and help our tenants understand that the community sector is not akin to privatisation. We need to educate that the profits of a community housing provider remain in the organisation – they are not distributed to shareholders – and are reinvested into the delivery of services for people in need.

That’s where the sector grew from, and that’s where its focus will always remain.

One of my favourite movies, and I say this often, is the Castle, where that great Australian philosopher, Darryl Kerrigan, says “it’s not a house, it’s a home”. For people a home really is the basis, the foundation of which they can have a better life. So we need to educate and inform people in public housing about the benefits of social and community housing. Because at the moment I think there are a lot of people scared that they are going to be moving into a private system.

And it’s something I think will restrict the expansion of this sector if we don’t get it right.

When we look at the timeframes that we’re working on for these sorts of reforms, they aren’t great and they’re not long.

Community and not-for-profit housing in the UK, when you look at the model there, took around 20 years for the reforms that they put in place and for the changes and the growth in that sector. We are going to need to do that in a much, much shorter time frame.

It’s important to emphasise that when I talk about growth as well, and this is something that we need to keep in our minds, I’m not saying bigger is always better and I’m not saying get big or get out.

This is not a one-size-fits all model of delivering for people in need and the strength of community organisations and community housing is the ability to operate at all levels. To operate in small tenancies but to operate at a much larger scale.

I know there are some providers that simply do not want to grow as they’re assisting some of the most vulnerable members of our society. Growth may in some cases compromise their ability to adequately support the people they’re working with.

So my message to the community housing sector is that we will work with you to ensure that while the sector grows at the same time there will be a place for providers of all size in the regulation but also in the policy settings.

Can I finish with where we need to take some of the policy and the help and assistance I need from you in relation to the next big issue on our agenda which is of course the NAHA and the renegotiation of the National Affordability Housing Agreement.

While the agreement is still a little way off in terms of being set at the same time the renegotiation starts very soon. And it’s important if change is to happen that this sector is lobbying the states and territories to ensure that your voice is heard.

I will be at the table when the NAHA is being renegotiated lobbying for more community sector involvement, for more not-for-profit housing. At the same time I need your voices heard.

We need a change from a system of per capita funding for operational costs to per dwelling. It’s a big change and a large number of the states, the larger states, are extremely opposed to it. But for the system to grow it needs to happen and I need your support to make it happen.

We need to think about contestability and a contestable pool of funding so that no provider of accommodation takes it as a given that their funding stream will continue regardless of their performance. In the end all of us – governments and providers need to perform – and contestability needs to be an important part of the sector.

At the same time we need to continue the lobbying in terms of regulation because that will become very important in the structuring of the NAHA.

When I look at the sector, when I talk to the housing organisations, I can see the changes happening. It’s happening now. We’re changing people’s lives.

The challenge around affordable housing is great but this sector, the community housing sector, can be and is at the forefront of the change. And if we work together over the next 24 months then this sector can grow. We can see a confidence, a vitality and a new sense of professionalism that draws in investment that allows us to leverage off the asset base but at the same time delivers for the people who we really need to deliver for – the most disadvantaged.

So thank you for the support you have given me over the past 6 months and I look forward to working with you in the years ahead.

Thank you very much.

[END]