Prepared by: Albert Oberdorf & Bruin Christensen
Canberra, ACT, September 2022
Introduction
In this paper we seek simply to show, using readily available reports and findings, that there is a crisis in the provision of genuinely social housing in Canberra – a crisis which has already severely disadvantaged numerous individuals and families in Canberra and is setting us up for even more social inequality and injustice in the future. We also gesture towards a solution, along lines proposed by the ACT Council of Social Services (ACTCOSS).
What do we mean by Social Housing?
By social housing we mean policies and programmes for providing people on moderate, low or indeed even no independently derived income with housing of a standard they deserve and to which they have a right as human beings in general and citizens of our town in particular. These will include government policies and programmes but they can also include initiatives from non-government actors. They express the will of the community at large to ensure that no one in the community is unfairly left behind. On this understanding of it, therefore, Social Housingincorporates the provision of public and community housing, as well as the implementation of policies designed to preserve and enhance affordability of home ownership and rental accommodation.
The provision of genuinely social housing is, of course, a national, not just a local problem. Thus, KPMG, – see Social Housing - KPMG Australia (home.kpmg) – speaks of a “substantial increase in social and affordable housing growth required to meet growing demand,” describing it as “an unprecedented challenge for this generation of Australians.” They note that:
while the COVID-19 pandemic has had a profound impact on vulnerable members of our community, with many joining social housing waitlists for the first time, it has also created an energy for reform that needs to be harnessed quickly to benefit the broader population. Housing prices have soared by more than 500 percent over the past 25 years (Real Estate Institute of Australia, 2021). Shortage of affordable dwellings for low-income households in the private rental sector has grown to 173,000.
Types of Social Housing in Canberra
Public Housing is housing owned and managed by a government agency. In the ACT, this is Housing ACT, part of the Community Services Directorate. Public housing offers long-term rental accommodation for people on low to moderate incomes. Tenants of Housing ACT pay 25% of their income in rent, or the market rent for that particular property, whichever is lower.
Community Housing is housing managed and, in many cases, also owned by non-government providers, e.g., religious organisations and certain NGOs, such as the YMCA. It mainly offers long-term rental accommodation for people on low to moderate incomes. Some Community Housing Providers also offer short-term transitional supported accommodation. In the ACT, most Community Housing properties are owned by the ACT Government but managed by not-for-profit organisations under head-lease arrangements while some properties are owned by the organisations themselves.
Community Housing provides a valuable alternative to either private and public housing. In principle, it allows individuals greater choice in housing options. In reality, given the decline in direct government intervention in the provision of social housing over the last fifty years, it has become for many the only option.
A National Regulatory System applies to Community Housing providers. The National Regulatory System ensures that the viability and quality of Community Housing providers is maintained in a consistent way across all jurisdictions, hence in the ACT.
Affordable Housing refers to measures designed to enable households on incomes low but above the eligibility limits for Public and Community Housing to participate in the private market—either the rental or the real estate markets. In the ACT, the current emphasis is on facilitating rental accommodation. Tenants pay a proportion, usually 75%, of market rent for a particular property, rather than a proportion of their income, as with public housing. Some Affordable Housing properties are owned by the ACT Government but managed by not-for-profit organisations under head-lease arrangements while some properties are owned by the organisations themselves.
The ACT Government has a small Affordable Rental scheme within the Community Services Directorate.
In 2007 the ACT government introduced measures to enable first-time home-buyers to enter the real estate market. In particular, it sought to use the powers of land release it has under the ACT’s leasehold system to ensure a supply of land sufficient to prevent rapid land price inflation for the kind of dwelling those on low to moderate incomes typically purchase—in 2007 “dwellings in the price range of $200,000 to $300,000.” (ACT Government Affordable Housing Action Plan 2007, p. 6)
The Failure of Current ACT Housing Policy
According to the Report of the Productivity Commission quoted above,
· The ACT continues to have the highest rate of rental stress of any jurisdiction (73% compared with 50% nationally);
· House prices have continued to rise at rates far beyond the CPI and increases in wages and salaries and, since the emergence of Covid in 2020, they have literally exploded: in a year – from the December quarter of 2020 to the December quarter of 2021 – prices roses 28.8% (https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/residential-property-price-indexes-eight-capital-cities/latest-release), the highest rise in the country, although they have fallen slightly since.
· The number of ACT public housing dwellings in 2021 is below the number in 2012 (10,950) and the peak in 2018 (11,181);
· There are 164 fewer public houses in the ACT in 2021 compared to 2020 and this number is lower than a decade ago in 2012 (11,328) and its peak in 2017 (11,345);
· More than 30% of clients who in recent years have approached homeless services with a need for accommodation did not have their needs met.
In addition, as ACTCOSS noted:
1. The ACT Housing Strategy has been in place for four years but there are increasing numbers of Canberrans experiencing homelessness or at risk of homelessness with a shortfall of more than 3,000 social dwellings and 2,000 Canberrans experiencing homelessness last year.
2. The ACT Government has failed to deliver meaningful outcomes for Canberrans despite it promising $80 million for maintenance of public housing, $19 million for the Growing and Renewing Public Housing Program and $8.6 million for specialist homelessness services in its last Budget. Consequently,
a. The ACT is the most expensive capital in which to rent a house or unit, and has the highest rate of rental stress among low-income private rental households, with 73% of lower income private tenants paying more than 30% of income on housing.
b. Even people in full-time work are increasingly unable to afford rental rates with recent research finding essential community workers need to spend 1/3rd to 2/3rd of their wages to rent an apartment in Canberra, forcing them into rental stress.
c. In 2021 applications for ACT public housing over the past four years have increased to 1,1920 new applicants in the category of having the greatest need, an increase of 117% from 2016;
d. The average waiting time for standard social housing is now more than 4.2 years because the share of social housing has declined from 7.6% in 2014 to 6.7% in 2020;
e. The ACT public housing conditions are worsening. In 2021, more than 26.6% of public housing households had less than four working facilities and more than two major structural problems, and 28.9% of tenants with disabilities found public housing did not meet their needs.
f. Homelessness and housing stress consistently disproportionately impact on marginalized and disadvantaged people including Indigenous people, the LGBTIQA+, people with disabilities, young people and older women.
In the light of these facts, ACTCOSS has called upon the ACT Government urgently to
“review the implementation of it housing strategy and improve community oversight following the 2022 Productivity Commission’s Report on Government Services Report that shows major failings in the ACT Government’s policy to address Territory’s housing needs.” – Media release: Canberra's Housing and Homelessness Crisis Worsens | ACT Council of Social Service Inc. (actcoss.org.au)
Some Demands from ACTCOSS
ACTCOSS has demanded a range of policies designed to address the interrelated problems of housing unaffordability and homelessness in the ACT. These include:
· Delivering in timely and transparent fashion the ACT Housing Strategy and all commitments in the Parliamentary and Governing Agreement signed by both parties. This includes 400 additional public houses and 600 affordable rental dwellings.
· Empowering Community Housing Providers (CHP) to address the shortfall of affordable homes through access to affordable land, rezoning to allow development by CHPs and Rates exemptions.
· Enacting all economic, social and cultural rights in the ACT Human Rights Act 2004, including a Right to Housing.
Delivering on these objectives amounts to developing and implementing the kind of plan which the ACT government’s Housing Affordability Action Plan of 2007 sought to be. Since at least 2012 this plan, which sought to use the powers of land release possessed by the ACT government under the leasehold system to address housing affordability, has first been neutered then quietly dropped. Instead, the ACT government now uses the leasehold system in order to raise revenue. Thereby it participates in and profits from the speculative character of Canberra’s property market.
A General Lesson: We need to stop telling Lies about Housing and Planning Policies
Evidently, the measures advocated by ACTCOSS and the Housing Affordability Action Plan of 2007 can be seen as designed to provide ‘more supply’. And ‘more supply’ is touted by property interests and the housing industry as the key component in any strategy for dealing with the interrelated problems of homelessness and housing affordability across all forms of tenure. It is thus crucial to differentiate the approach recommended here from that of these interests and this industry.
The difference is in large part one of means. The means envisaged here consist in meaningful government intervention in the property market in order to constrain its speculative character. This is exactly the opposite pathway to that recommended by big property and construction because these latter, seeking as they do to profit from this speculative character, want only to exacerbate it. This is the reason why they see de-regulation as the key to providing ‘more supply’: government, they argue, needs to stand back, not to intervene. In particular, government needs to reduce planning controls in order to give them a freer hand. For this reason, they are the driving force behind the current ACT government planning review, which will replace the current rules-based system by a performance-based one.
There is not the space in this article to show that the pathway of de-regulation advocated by property interests will not only do more enhance their bottom line than social housing but will also, more importantly, only exacerbate the current speculative free-for-all.
As for the effectiveness of the regulatory reform they are promoting see https://www.canberraplanningactiongroup.com/post/the-significance-of-the-current-act-government-planning-review and, for a shorter version, https://www.canberraplanningactiongroup.com/post/outcomes-focussed-planning-the-spurious-foundations-of-act-planning-reform. Let us instead make a general point: both local and nationally, we need to stop telling lies about our housing and planning policies.
Prices rise, people worry, social housing advocates get louder and the government finally decides to hold an inquiry. And the response is very predictable: after 20 years they say the same thing: the only problem is red tape, taxes and planning regulations. The federal agencies say it’s land supply. The RBA says it’s nothing to do with us and the Grattan Institute blames NIMBYs.
Insufficient supply due to government ‘red tape’ as the major cause of sky-rocketing prices has been debunked many times—see Why the RBA is wrong about zoning and house prices. Again, an article particularly relevant because the Federal Government is about to embark on yet another housing inquiry. Peter Phibbs points out that precisely in Sydney, the city with the highest number of housing approvals in the developed world, Housing supply in Sydney is a success story! Yet as noted in the KPMG report cited above:
(t)he most extreme shortage [of affordable housing in Australia] is in Sydney, where 71 percent of all low-income private rental households pay unaffordable rent (AHURI, 2021).
In fact, the idea that too little social housing and housing affordability are caused by too little supply caused by too much regulation is an example of what Phibbs calls “structured misrepresentation.”
As Phibbs says, prices rise, people worry, social housing advocates agitate and the government decides to hold an inquiry. Yet nothing happens. Instead, there is the ineffectual stand-off he describes: developers planning regulation, federal agencies land supply, the RBA washes its hands of the matter and the Grattan Institute blames Not in My Backyard groups (NIMBYs).
The reality is that:
· Politicians sound concerned and apportion blame elsewhere but do nothing because they are terrified about the prices falling and most voters are home owners.
· Developers claim to want lower prices but as soon as the prices fall, they stop building despite already holding large reserves of land approved for housing.
· The development lobby blames policy failure but for decades the system has operated exactly the way the state and powerful private interests have wanted it to operate.
According to Phibbs, what is particularly intolerable is that in recent times public servants have fallen into this trap. They, too, have begun to engage in the same deceptive data manipulation in order to conceal inaction on a problem. Let us end with an example of how this has occurred in Canberra—to the serious detriment of public housing.
Structured Misrepresentation in the ACT: Public Housing Funding lost to Light Rail
In their article Public housing money lost to funding light rail, Jon Stanhope and Khalid Ahmed detail the yawning gap between the ACT Government’s claims about its achievements in social housing and the reality thereof. They point to the claim made in the ACT Housing Strategy Growing and Renewing Public Housing - Housing that the government is making an unprecedented investment of more than $1 billion in the growth, renewal and realignment of public housing over 10 years from 2015-25. This is supposedly the largest per capita investment in public housing in Australia. In addition, the government claims that, over four years to 2019, the public housing renewal program renewed 1,288 older, inefficient multi-unit properties into smaller density homes across the ACT. It goes on to claim that its Growing and Renewing Public Housing program will continue this accelerated program of renewal by
adding at least 400 more homes to grow the public housing portfolio and provide homes for more households in need, and
delivering 1,000 high-quality homes that are more modern, energy efficient to help improve the quality of life for tenants.
The spin is impressive, the reality less so. According to the leader of the ACT Opposition, the ACT Government has in the three successive budgets from2017-18 committed to provide some $700 million in public housing but not done so. The ACT Minister for Housing has responded to this criticism by claiming that funding was provided through the Asset Recycling Initiative Program of the former Federal Government under Tony Abbott. Under this scheme the ACT Government sells off public housing sites for development in order to receive a 15% bonus on the sale price from the Federal Government, which money is then supposed to be re-invested in the construction and purchase of new public housing.
Just this has not happened, as Stanhope and Ahmed note. According to the ACT Government’s 2016-17 Budget Paper No. 3, Chapter5.5: Asset Recycling, “all proceeds of the asset sales (currently estimated at $448 million) and incentive payments from the Commonwealth (currently estimated at $67 million) will be invested in Light Rail – Stage 1, making a total contribution of $515 million.” (P. 221)
Stanhope and Ahmed further note that the 2017-18 Budget Paper No. 3, Chapter 5.6 Asset Recycling, states that “it is estimated that a total contribution of$528.4 million towards Light Rail – Stage 1 will be made as a result of the Asset Recycling Initiative, comprising of $459.5 million from asset sales and $69.6 million from Commonwealth incentive payments.” (P. 217)
Finally, they note that the 2019-20 Budget paper No. 3 states that in 2018-19, as of June 2019, $536.905 million had been generated of which $389.615 million had been paid towards Light Rail – Stage 1, leaving a balance of $147.290 million, to be used for future recurrent payments to the Light Rail consortium. (See p. 222) So, in total, sales of ACT Public Housing plus incentive payments from the Commonwealth totaling $1,580.305 million have been used to fund the ACT Light Rail Stage 1, not the construction and purchase of new public housing! Structured misrepresentation indeed!