Shelter NSW seminar, 'Building blocks: housing challenges and opportunities for New South Wales', Sydney, 9 November 2006

'Challenges and opportunities for social housing' – presentation by Michael Darcy, University of Western Sydney

The social housing system is in crisis. We know this because we read it in the SMH on 19th August. Debra Jopson explained that, while there was some dispute over the actual figure, federal contributions through the CSHA have fallen between $558m and $850m over the last decade; the NSW Dept of Housing has had to be consistently bailed out by Treasury because of operating deficits, and carries $1 billion in debts going back to the 80s, and the condition of stock is poor with maintenance backlog estimated at $660m. The SMH article further reported that DoH is unable to increase revenue from rents due to targeting policies and that these would become harsher as stock is reduced to make estates more manageable by creating opportunities for privately financed redevelopment.

For those who have been around this debate for a while, possibly the most interesting thing about this article is the fact that all this is still considered newsworthy! After all Federal CSHA funds have bee falling in real terms since the eighties, and NSW Ministers have talked publicly about debt and the need to the address maintenance backlog since at least the time of Andrew Refshauge. In 1999, the Dept asked Bill Randolph and myself to conduct a series of consultations and to prepare discussion papers and recommendations concerning the broad directions for housing assistance over the following two decades. The situation then was described in the now familiar terms: falling CSHA funds, falling rent revenue, rising demand, maintenance backlog, stock mismatch, debt. Of course, we were not the only ones to address this issue. On a national level, the Affordable Housing National Research Consortium (comprising amongst others ACOSS, HIA, and Finance Industry) commissioned research and modelling; more recently Mike Berry and Jon Hall (AHURI) published a significant analysis of the viability of State Housing Authorities, and before them work had been done by the Productivity Commission.

In our final paper, Bill and I identified two alternative pathways: the first based on tighter targeting and a smaller, fully subsidised social housing system; the second using private investment to subsidise large scale growth in the system, ultimately paid for by rental income based on opening up of eligibility to include most of those now in private rental and to provide an real alternative for many households at the bottom end of the owner occupier market. Many others wrote papers and discussed plans along similar lines as we also examined emerging models in places like NZ (a smaller more targeted system, and Europe).

So why do we still have a crisis? Is it because government did not respond to the issues identified nearly a decade ago? Is it because they chose the wrong alternative? Far from it. In fact, it would appear that they have chosen both! And that this runs a serious risk of addressing neither the increasing housing needs of lower income households, nor the viability issues of the system.

On the one hand, redevelopment of existing estates is to be financed by the private sector, but rather than using a securitised investment vehicle that might allow an expansion of stock, this is being done through an equity/sales model which may well actually reduce dwelling stock. At the same time, the “Re-shaping Public Housing” reforms in NSW represent a whole new order of targeting which will, over time, effectively reduce public housing to a kind of extended crisis accommodation. Recent Parliamentary inquiry found the problems so complex they decided to focus simply on allocation, i.e. rationing the disappearing resource.

So ‘problem’ estates disappear, subsidised housing is tightly targeted on those most I need at the time, and the backlog of debt and maintenance is relieved through sale of surplus assets. This dream scenario strategy is supported by rhetoric about “de-concentrating disadvantage”, “bridging social capital” and “more natural social mix”. But it comes at the cost of reducing housing security for the poorest households, new poverty traps and work disincentives, and the disruption of existing social networks and communities. So, will it work?

Public housing in Australia has always been a problem, for some. As early in its history as 1956, the Federal Hansard records conservative members attacking it as a form of creeping communism sapping the incentive of the working class. Now it is a problem because it is inadequate and the scale of that inadequacy makes poverty and disadvantage more visible, and sometimes the ungrateful tenants have the temerity to become unruly.

But public housing (in whatever form: subsidised non-profit and secure) is actually a solution. For many it is the only solution. It provides stability, community, and the ability to improve one’s circumstances without threat of being moved on. There is plenty of evidence of this. We hear so much about intergenerational unemployment, and other evils of housing estates, but rarely see any figures. We hear so much about socially mixed estates and neighbourhood employment effects, but the evidence shows that these don’t exist (Anthea Bill and Bill Mitchell).

What we do know is the important part that secure affordable housing plays in people’s lives when they are most at risk. For example, one of my oldest friends – a storeman for 35 years, made redundant at 49 – refused for years to apply for PH. As his $30K redundancy payment dwindled and he was reduced to a boarding house, he finally relented and qualified for an inner city unit close to his mentally ill sister. He was then diagnosed with a serious and incurable cancer and spent the last two years of his life in and out of hospital. His only security and refuge was the PH lease, and without it he would have died homeless, yet under the reshaping reforms he probably would not have qualified until after he was diagnosed.

We heard in the news this week from Gary Rothman of Broadmeadows UnitingCare in Melbourne, that requests for emergency relief from owner occupiers are now outstripping those from PH tenants (The Age 8/11/06). This is evidence of the success of PH in underwriting self reliance, rather than creating dependency. Despite all we have heard in recent years about ‘evidence based policy’ it seems that in this field Martin Mowbray’s description of “policy based evidence” applies. This is when policy is determined by ideological, or short term political, imperatives and then government seeks to find the cases or commission the research to justify it.

There are two flickering lights of hope in this scenario. The first is the community housing sector, which so far appears to have sidestepped the ‘reshaping’. If there is a way in which Housing Associations can leverage their assets to dramatically expand provision to a less residualised tenant population then I now believe we should be supporting that strongly. (Note that Shelter supported this in a submission to the Parliamentary inquiry). Second, the Dept has hinted that there might be a way in which tenants whose circumstances mean they are no longer eligible for PH can stay in their houses as ‘private tenants’ (presumably with management outsourced to either a HA or private agent). Structured properly, with attention to tenure security and the right to re-enter subsidised tenancy, this might open the door to creative and positive outcomes. It should be pursued vigorously.

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Updated 19-Apr-2010