Australia has a housing affordability problem, with many Australians struggling to rent or buy a home, according to the Productivity Commission’s review of the National Housing and Homelessness Agreement (NHHA) released today.
“The NHHA is intended to improve access to affordable housing, but it is ineffective. It does not foster collaboration between governments or hold governments to account. It is a funding contract, not a blueprint for reform,” Commissioner Malcolm Roberts said.
“Over the life of the NHHA, housing affordability has deteriorated for many people, especially people renting in the private market. The median low-income renter spends over a third (36 per cent) of their income on rent. About 1 in 5 low-income households are left with less than $250 after paying their weekly rent.
“With the private market becoming less affordable, demand for homelessness services and social housing is rising.”
As governments develop a new intergovernmental agreement and a national plan, there is an opportunity to better target the $16 billion they spend on housing assistance.
“As a first step, the Commission is recommending that all housing assistance be brought under the next intergovernmental agreement (the NHHA covers just 10 per cent of government spending on direct housing assistance). This will help governments prioritise spending to the people in greatest need.
“A two-track approach is needed to ease the pressure on low-income renters — the capacity for low-income renters to pay for housing needs to be improved and constraints on new housing supply need to be removed.”
The $5.3 billion Commonwealth Rent Assistance program should be reviewed. There is a strong case to improve its adequacy and targeting. At the same time, State and Territory Governments should commit to targets for new housing supply and accelerate planning and other reforms.
“The safety net — homelessness services and social housing — should be improved. More support is needed for homelessness prevention and early intervention programs. As governments invest more in social housing, they should also test more flexible and timely ways to assist people,” Commissioner Romlie Mokak said.
“The Commission is recommending the new NHHA have a greater focus on coordinated policy action across jurisdictions, homelessness prevention and early intervention, and Aboriginal and Torres Strait Islander housing.”
A full copy of In Need of Repair: The National Housing and Homelessness Agreement is available from the Commission’s website: www.pc.gov.au/inquiries/completed/housing-homelessness/report
Key facts: Key points
Australia has a housing affordability problem. Australians, particularly those on low incomes, are spending more on housing than they used to. Many low-income private renter households spend a large share of their income on rent. Demand for social housing is rising. More people are seeking help for homelessness and more are being turned away. Home ownership rates are falling, particularly for young Australians.
The National Housing and Homelessness Agreement — intended to improve access to affordable, safe and sustainable housing — is ineffective. It does not foster collaboration between governments or hold governments to account. It is a funding contract, not a blueprint for reform.
The next intergovernmental Agreement (and the proposed National Housing and Homelessness Plan) is an opportunity for governments to work together on a national reform agenda to make housing more affordable. Rising rents and low vacancy rates are placing private renters under pressure, which increases demand for government-funded housing and homelessness services.
The focus of the next Agreement should be on improving the affordability of the private rental market and the targeting of housing assistance. Improving the capacity of low‑income renters to pay for housing and removing constraints on new housing supply are key to making housing more affordable.
• The Australian Government should review Commonwealth Rent Assistance as a priority. There is a strong case for changes to improve its adequacy and targeting.
• State and Territory Governments should commit to firm targets for new housing supply, facilitated by planning reforms and better co-ordination of infrastructure.
• The $16 billion governments spend each year on direct housing assistance could achieve more if it was better targeted to people in greatest need. The nearly $3 billion given to first home buyers works against improving affordability. This money would be better spent preventing homelessness.
• Social housing is an important part of the affordable housing solution, but it has a number of shortcomings. Governments should trial a housing assistance model that provides equivalent assistance to people in need regardless of whether they live in public, community or privately‑owned housing. It should also test innovative ways to help people at risk of homelessness sustain tenancies in the private market and assist social housing tenants move to the private rental market.
These changes will help more low‑income households in the private rental market and reduce the number of people who experience homelessness or need social housing.
The next Agreement can support these changes by including:
• principles to guide how housing assistance should be provided and assistance dollars spent
• a broader scope, covering all forms of direct housing assistance
• achievable and measurable targets focused on outcomes for people
• a new performance monitoring framework with annual reporting on outcomes and performance indicators
• effective governance, including oversight by a ministerial council and channels for key stakeholders to be involved in the design and delivery of major programs
• a new approach to supporting Aboriginal and Torres Strait Islander housing and homelessness services
• a greater focus on building the evidence base essential for good policy and accountability.