BILLS DIGEST NO. 83, 2017–18              27 February 2018

Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017

Matthew Thomas
Social Policy Section 

Date introduced:  25 October 2017

House:  House of Representatives

Portfolio:  Treasury

Commencement: 1 July 2018

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at February 2018.

Glossary

Table 1: abbreviations and acronyms

CSHA

Commonwealth-State Housing Agreement

IGA

Intergovernmental Agreement on Federal Financial Relations

NAHA

National Affordable Housing Agreement

NHHA

National Housing and Homelessness Agreement

NPAH

Transitional National Partnership Agreement on Homelessness 2017–18

NPRH

National Partnership on Remote Housing

NSPP

National Specific Purpose Payment

States

Refers to the Australian states, the Australian Capital Territory and the Northern Territory

Purpose of the Bill

The purpose of the Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017 (the Bill) is to amend the Federal Financial Relations Act 2009 to repeal the current National Specific Purpose Payment for Housing Services and replace it with new funding arrangements under which payments to the states and territories will be contingent on their being party to primary, supplementary and designated housing agreements.

Background

National Affordable Housing Agreement

Following the adoption of a new Intergovernmental Agreement on Federal Financial Relations (IGA), the Rudd Government introduced the National Affordable Housing Agreement (NAHA) in 2009.

The NAHA replaced the Commonwealth-State Housing Agreement (CSHA), which had, since 1945, been the main vehicle through which Australian governments introduced housing policy initiatives and, along with state and territory governments, provided funding for housing.[1]

Under the NAHA a number of existing Commonwealth housing and homelessness assistance programs were rationalised with a view to introducing a whole-of-housing system approach to housing affordability and placing affordable housing at the core of the national agenda. The programs that were rationalised included the Supported Accommodation Assistance Program (SAAP), a joint Commonwealth-State funded program that was introduced in 1985 to consolidate under one nationally coordinated program a range of homelessness programs that were funded by individual state and territory governments and the Federal Government.[2]

The NAHA is an on-going agreement, but one that was subject to a five-year review, and that may be amended as necessary by agreement of the Council of Australian Governments (COAG).[3]

The Agreement is supported by the National Specific Purpose Payment for Housing Services which is an indexed on-going payment to the states and territories to be spent on housing services, paid at around $1.3 billion per annum.[4]

With the COAG reforms to Commonwealth-state financial relations a number of changes were made to Specific Purpose Payment arrangements. National Specific Purpose agreements, including the NAHA, were not to be subject to prescriptiveness (conditionality) financial or otherwise; the focus of Specific Purpose Payments was to shift to results, outcomes and outputs and away from inputs; indicators were to be developed to measure performance against agreed outputs and outcomes; and the COAG Reform Council was to independently assess states’ and territories’ performance against the indicators.[5]

In keeping with the changed arrangements, the states and territories are not required to match Commonwealth Specific Purpose Payment funding. Under the NAHA there is no identified program funding—that is, funding that is provided for a specific housing or homelessness purpose (as was the case under the CSHA). Instead, the states and territories are responsible for determining the amount of funding to be directed to particular government housing programs and services. They are not required to report on their allocation of NAHA funding.

National Partnership Agreement on Homelessness

Commonwealth funding to the states and territories to support affordable housing services in particular areas is provided through National Partnerships.

Under the National Partnership Agreement on Homelessness (NPAH) funding is allocated to the states and territories primarily to support the provision of homelessness services. This funding is required to be matched by the states and territories.

When the NPAH was introduced it was funded over four years from 2009–10 to 2012–13.[6] In 2013 the Gillard Government allocated one year’s funding of $159 million under the NPAH. This was to be a one-year transitional agreement for 2013–14 while the government negotiated ‘an integrated and holistic response to homelessness beyond 2014’.[7] As a part of the 2014–15 Budget the Government provided $115 million to extend the NPAH for a further year.[8] In the 2015–16 Budget, the Government allocated $230 million over two years to extend the NPAH until 30 June 2017.[9] The funding was to be targeted towards frontline services, focusing on women and children experiencing domestic and family violence and homeless youth. On 9 December 2016, the Government announced, in advance of the 2016–17 Budget, that it would be providing just over $117 million to the homelessness sector for one year, to provide certainty to homelessness service providers.[10]

Under the National Partnership Agreement on Remote Indigenous Housing (NPARIH)—now the National Partnership on Remote Housing (NPRH)—funding of around $4.68 billion has been allocated over ten years towards the provision of housing for Indigenous people in remote communities. The Agreement is due to expire in June 2018 and it has been reported that some of the state and territory governments that are party to the Agreement are concerned that the Commonwealth funding will not be continued.[11]

Problems with the NAHA

In a 2013 report comparing the performance of the jurisdictions with regard to their response to homelessness, the COAG Reform Council expressed some criticism of the performance framework set out in the NAHA.[12] The Council argued that further work was needed to improve the measurement of sustainable housing outcomes for people who are homeless or at risk of homelessness. The Council also indicated that it had experienced difficulty in assessing performance against NAHA outcomes due to insufficient data and an inability to link activities under National Partnership Agreements to the NAHA objectives.[13]

A 2013 Australian National Audit Office (ANAO) evaluation of the implementation of the NPAH made similar criticisms of this agreement’s performance measurement and reporting framework.[14] Among other things, it argued that any future agreement should link payments to the achievement of agreed milestones, and that state and territory governments should be required to report financial information to provide assurance to the Minister that they were making appropriate levels of co-contribution.

More recently, figures from the 2016 COAG Report on Performance 2016 indicate that three of the four key benchmarks identified in the NAHA have not been met.[15]

Australia’s stock of public housing has fallen consistently over recent years.[16] While this reduction has been offset to some degree by an increase in the supply of community housing,[17] the overall stock of social housing is not increasing at a rate sufficient to keep up with demand.[18] As at 30 June 2017, there were 189,404 applicants on the waiting list for social housing across Australia.[19]

In 2016–17 an estimated 95,000 requests—261 requests per day—for assistance from specialist homelessness services providers were unable to be met.[20]

The Government has for some time expressed dissatisfaction with the performance of the states and territories under the NAHA.[21] It has also criticised the NAHA for a perceived lack of transparency and accountability. For example, in an address to the Australian Housing and Urban Research Institute in early 2017 Treasurer Scott Morrison stated:

This agreement is a one way ATM providing important resources without accountability for outcomes … NAHA does not link funds to delivery of supply, even for public housing ... ever since matched capital arrangements were removed from Commonwealth State Housing agreements the growth in social housing stock has flat-lined … we are frustrated by the lack of accountability and results for this significant taxpayer commitment.[22]

In view of the failings of the NAHA, the Government indicated its intention to introduce a new National Housing and Homelessness Agreement (NHHA) as a part of its 2017–18 Budget measures.[23]

The new three year national agreement is to link funding to state and territory governments to specified outcomes in priority areas; include bilateral schedules with clear targets, improved transparency and reporting for each state and territory; and, provide indexed funding towards the provision of homelessness services, to be matched by the states and territories.[24]

The National Competition Council was to be responsible for the ongoing assessment of performance under the NHHA, with $6.5 million provided to it over the forward estimates for this purpose.[25] This funding was subsequently withdrawn as a part of the 2017–18 Mid-Year Economic and Fiscal Outlook, with the Treasury to ‘assist with the implementation and ongoing assessment of performance under the National Housing and Homelessness Agreement, from within existing resources’.[26]

Committee consideration

The Bill was referred to the Senate Economics Legislation Committee (the Economics Committee) for inquiry and report by 6 February 2018.[27]

In its report, the Economics Committee supported the Bill.[28]

In response to concerns from submitters that the Bill could pose a threat to the delivery of funding for essential social housing and homelessness services, the Economics Committee stated that it considered ‘that the proposed framework for a new national housing agreement between the Commonwealth, states and territories will ensure adequate ongoing funding for housing and homelessness services’.[29] The Committee also considered that ‘the Bill strikes a reasonable balance between achieving accountability and transparency, and a degree of funding certainty to the sector’.[30]

While the Committee acknowledged concerns regarding the lack of detail in the Bill and Explanatory Memorandum about the required content of housing and homelessness strategies, data collection and reporting, it believed that ‘these concerns will be addressed as part of the new NHHA negotiations’.[31]

Senators from the ALP and the Greens made additional comments, which are discussed below.

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee) has considered the Bill and raised some concerns.[32] These are discussed in the Key issues and provisions section below.

Policy position of non-government parties/independents

The ALP

In the lead-up to the 2016 Federal Election the Australian Labor Party (ALP) indicated its intention, if elected, to negotiate a tougher deal with the states and territories under the NAHA.

As a part of its proposed National Affordable Housing Strategy, the ALP committed to working with the states ‘to drive better outcomes and performance in the National Affordable Housing Agreement, including strengthening benchmarks across the housing affordability spectrum such as housing supply, planning reform and inclusionary zoning’.[33]

In an address to the St Vincent de Paul Society in the lead-up to the 2017–18 Budget, Shadow Minister for Housing and Homelessness, Senator Doug Cameron stated:

we want transparency and accountability from state and territory governments in [the National Affordable Housing Agreement]. We want to see inclusionary zoning and growth targets. We want to see increased stock through the $1.3 billion NAHA funding every year.[34]

The ALP Senators on the Economics Committee made additional comments in the report on the Bill. They are highly critical of the Bill and of the Government’s housing strategy more generally, on a number of grounds.[35]

Firstly, they argue that the input controls that the Bill would place on the states and territories as a condition of funding will not necessarily contribute to improved performance against housing and homelessness outcomes under the National Housing and Homelessness Agreement (NHHA). The ALP Senators argue that ‘a far more effective way to improve housing and homelessness outcomes under the NHHA would be to build mechanisms into the Agreement that provide a clear basis for outcomes’.[36]

Secondly, the ALP Senators argue that, despite its 2017–18 Budget measures and proposed new NHHA, the Government does not have a truly comprehensive plan to improve housing affordability. Any such plan, they maintain, must include the reform of existing negative gearing and capital gains tax discount arrangements.[37]

Thirdly, the ALP Senators are critical of the fact that the Government had not reached an agreement with the states and territories about the details of the Bill before its introduction to the Parliament.[38] Similarly, they criticise the Government for having failed to provide any details about future funding arrangements for remote Indigenous housing.[39]

Finally, the ALP Senators agree with a number of submitters to the Inquiry that the Bill poses a risk to ongoing assistance to the states and territories ‘while it retains provisions that would allow a Commonwealth Minister to make a subjective or capricious judgement about the validity, credibility or prospects of success of a state or territory’s housing or homelessness strategy’.[40]

While the ALP Senators have serious reservations about the Bill they nevertheless ‘do not believe the Bill should not be passed’ given that such an outcome would result in funding for homelessness services—which is contingent on the Bill’s passage—being placed under threat.[41]

The Greens

The Australian Greens (the Greens) are critical of the Bill’s perceived failure to contribute to ensuring the provision of housing as a human right. The Greens made a number of recommendations with a view to assisting the promotion of housing as a human right. These include:

•       developing a national strategic plan and re-establishing a body similar to the abolished National Housing Supply Council

•       allocating funding to meet the current shortfall and expected demand for social housing, as determined by a national body and with reference to a national housing strategy and

•       removing from the Bill the threat of withdrawal of funding as a sanction, and replacing it with alternative sanctions that do not impact on funding for social housing or homelessness services.[42]

Independents

The independents do not appear to have publicly expressed a position with regard to the Bill.

Position of major interest groups

Stakeholder submissions to the Economics Committee have raised a number of concerns with the Bill and the NHHA that it would enable. Some of the most substantial of these may be broadly characterised as follows:

•       The Bill requires state and territory governments to produce housing and homelessness plans and commit to various reforms and initiatives but makes no similar demands of the Federal Government. This fails to acknowledge that, firstly, housing assistance is a shared government responsibility, and, secondly, that the Federal Government has responsibility for a number of areas that have some influence on housing affordability.[43]

•       The Bill makes additional demands of state and territory governments and broadens the scope of the national housing agreement but provides no additional funding. This is despite the fact that existing Federal Government funding levels do not reflect the costs of maintaining and operating the current social housing system.[44]

•       The Bill allows for the Federal Government to withhold funding to the states and territories if they fail to meet the stipulated terms and conditions. Were this conditionality to be exercised, this could harm vulnerable people who are in need of affordable housing and at risk of or experiencing homelessness.[45]

•       While the Bill is prescriptive, reintroducing conditionality that was absent under the NAHA, neither it nor the Explanatory Memorandum provides sufficient detail regarding the required content of housing agreements. For example, the Explanatory Memorandum indicates the states will need to have in place a ‘credible housing strategy’ and a ‘credible homelessness strategy’ in order to receive Commonwealth funding, but gives very little guidance as to what a strategy will need to contain in order to be deemed credible.[46]

Financial implications

Estimates of the financial impact of the measure are reported in the Explanatory Memorandum to the Bill and 2017–18 Budget Paper No. 2.[47]

The total cost of the measure over the forward estimates period (2018–19 to 2020–21) is $375.3 million. This funding towards the provision of homelessness support services is to be matched by the states and territories.

It should be noted that the additional funding for homelessness services only makes up part of the total funding that will be provided under the new NHHA. The balance of the funding for affordable housing measures will be the funding that is currently allocated under the National Affordable Housing Specific Purpose Payment.[48]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[49]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights considers that the Bill does not raise human rights concerns.[50]

Key issues and provisions

Section 14 of the Federal Financial Relations Act sets out the arrangements under which National Specific Purpose Payments for housing services are made to the states and territories. As noted above, these payments provide support for the NAHA. Item 3 of Schedule 1 to the Bill repeals section 14, thereby doing away with those payments.

Item 4 of Schedule 1 inserts proposed new Part 3B into the Federal Financial Relations Act which sets out the new arrangements under which funding for affordable housing and homelessness programs and services is to be provided to the states and territories. Essentially, payments relating to housing, homelessness and housing affordability matters may be made to a State under two separate arrangements:

1.       the State is a party to both a primary housing agreement and a supplementary housing agreement for the financial year

2.       the State is a party to a designated housing agreement.

Primary and supplementary housing agreements

Determination by legislative instrument

Within new Part 3B, proposed subsection 15C(2) of the Federal Financial Relations Act provides for the Minister to make a determination for a payment to be made to a state or territory to be expended in accordance with both a primary and supplementary housing agreement. Proposed subsection 15C(3) provides that such a determination is a legislative instrument, but one to which section 42 of the Legislation Act 2003—which provides for the disallowance of legislative instruments—does not apply.[51]

The Explanatory Memorandum states that this exemption is justified because:

The determinations facilitate the operation of an intergovernmental scheme involving the Commonwealth and a State and are made for the purpose of that scheme. In this instance, the scheme is the primary housing agreement supported by the supplementary housing agreements or the designated housing agreement, and payments made by the Commonwealth are for the purposes of that scheme.

This is consistent with other payment arrangements, such as NSPPs and National Health Reform payments, where there is an obligation on the Commonwealth to make payments in a prescribed manner as part of an intergovernmental body or scheme involving the Commonwealth and the states.[52]

The Scrutiny of Bills Committee has drawn Senators’ attention to this proposed exemption, stating that it is ‘of the view that the removal of parliamentary insight is a serious matter’.[53] However, the Committee goes on to note that ‘in this instance, the removal of parliamentary oversight appears to be consistent with subparagraph 44(1)(a) of the Legislative Act 2003, which provides that the section 42 disallowance process does not apply to instruments if the enabling legislation ‘facilitates the establishment or operation of an intergovernmental body or scheme’.[54] Given this, the Committee has stated that it ‘leaves to the Senate as a whole the appropriateness of exempting these determinations from disallowance’.[55]

Nature of the housing agreements

Proposed subsections 15C(4)–15C(8) of the Federal Financial Relations Act stipulate the terms and conditions under which financial assistance will be payable to the states and territories. The assistance must be spent in accordance with both the primary and supplementary housing agreements (proposed subsection 15C(4)).

The primary housing agreement is similar to the current NAHA in that it is a high-level agreement entered into by the Commonwealth and each of the states and territories. It is to contain details of how funding will be provided, any national objectives, and envisaged outcomes and common details that apply to all jurisdictions.[56] Item 2 in Part 1 of the Bill inserts the formal definition of primary housing agreement into section 4 of the Federal Financial Relations Act.

Supplementary housing agreements are specific to the individual states and territories. They are to outline how the state or territory intends to implement its housing and homelessness strategy and to acknowledge differences in the states’ and territories’ housing markets and policy priorities.[57] Item 2 in Part 1 of the Bill inserts the formal definition of supplementary housing agreement into section 4 of the Federal Financial Relations Act.

Need for a national housing strategy

A number of submissions to the Senate Economics Legislation Committee inquiry into the Bill (the Inquiry) argued that the Bill is one-sided; it requires state and territory governments to produce housing and homelessness plans without making a similar demand of the Federal Government.

While housing has not traditionally been a Commonwealth responsibility, the Federal Government is accountable for a number of areas that have a significant impact on housing affordability.[58] In view of this, several submitters maintain that the Government should, in collaboration with the states and territories (and external stakeholders), develop a long-term national housing strategy. Without such a strategy, and a truly cooperative approach, they insist, it will not be possible to make meaningful inroads into the problem of housing affordability:

ACOSS strongly urges the Australian Government to work with state and territory governments as well as relevant peaks, organisations representing low-income tenants and prospective home-owners, financial institutions, housing and homelessness service providers, and those directly affected by policy change in this area to develop a national housing and homelessness plan containing national targets and complemented by a suite of policy reforms and necessary funding to achieve them.[59]

Housing affordability is a complex and important issue and requires joined up approaches across all levels of government to achieve outcomes. However, this Bill shifts responsibility for housing affordability to the States alone. This is not feasible. To tackle housing affordability, the Commonwealth must use the levers it has at its disposal (such as taxation, migration and income support, including the level of [Commonwealth Rent Assistance]) and work in partnership with the States. There is no mechanism in the Bill that compels the Commonwealth to exercise these levers or undertake any activity to address housing affordability.[60]

If the legislation is to fulfil its promise it needs to be framed within an over-arching national housing strategy and supported by a commitment from all levels of government to the additional investment which is needed to boost the supply of social and affordable housing. The National Housing and Homelessness Agreement itself provides an ideal vehicle to draw all jurisdictions together in constructive dialogue around a national housing strategy. We urge the Commonwealth government to engage with the other levels of government and with the community housing sector and other stakeholders on a long-term national housing strategy as a matter of urgency. Without strong Commonwealth leadership, substantial improvement in housing affordability and homelessness outcomes under this new agreement are unlikely.[61]

Insufficiency of funding

A majority of stakeholders maintain that existing Commonwealth funding to the states is insufficient, and has not kept up with housing and service delivery costs.

This shortfall, it is argued, restricts state and territory governments’ ability and willingness to restore and expand Australia’s run-down public housing stock. The nature of the problem has been identified by Australian housing experts for some time, and is summarised in a Reform of the Federation White Paper issues paper:

Current public housing rents are heavily subsidised and generally well below market prices. The rental income states and territories receive is insufficient to support critical stock redevelopment, or cover the cost of maintaining existing stock. This problem is exacerbated as properties age and the costs of property and tenancy management increase. As a result, public housing is not sustainable in its current form. This has created a perverse incentive for state and territory housing authorities to either sell stock or transfer it to community sector providers. This reduces maintenance costs to state and territory governments and has contributed to a reduction in the number of public housing dwellings…[62]

The Government has made a commitment to introduce an affordable housing bond aggregator that could help to attract institutional capital into Australia’s social housing sector.[63] However, the success or otherwise of this initiative will depend on the degree to which the Government is prepared to close the financing gap associated with social and affordable housing investments.[64] Housing experts Michael Perusco and Guy Johnson have estimated that the Government contribution to closing this gap will need to be in the order of $2.5 billion per year.[65]

In any case, other housing experts have argued that a government-backed aggregated bond financing model—along with the clearer targets and more transparent cost accounting that the NHHA is intended to provide for—cannot replace the need for an enduring program of federal funding for operational expenses. If a sustainable social housing system is to be achieved, then Chris Martin and Hal Pawson argue this will demand:

capital funding for new social housing stock, distributed according to an assessment of current and projected needs in each state and territory; recurrent funding, distributed according to the number of social housing dwellings in each state and territory and an assessment of reasonable net recurrent costs; and clear accounting by social housing providers for costs of provision and the contributions of tenants, government funding and other sources of income towards meeting these costs.[66]

In short, Martin and Pawson maintain that ‘both state and territory housing authorities and non-government affordable housing providers need a larger subsidy than present funding provides’.[67]

Distribution of funding

Under current arrangements funding to the states and territories is distributed on a per capita basis. There is no suggestion that this arrangement is to be changed under the NHHA. A number of housing experts, such as Martin and Pawson, and submitters to the Inquiry, have argued that this is a flawed method of distribution, and one that should be changed. For example, NT Shelter insists that ‘funding received from the Commonwealth under NAHA and NPAH for affordable housing and homelessness is manifestly inadequate for the particular and unique circumstances facing the Northern Territory’.[68] Because there is such a high level of disadvantage across the Northern Territory, NT Shelter maintains that the allocation of funding on a per capita basis is ‘not appropriate and delivers nonsensical distributions’.[69] As NT Shelter sees it, ‘if the state of public housing and homelessness in the NT was comparable to that of other states and territories [then] a per capita distribution would be reasonable’.[70] ACOSS has similarly argued that the allocation of funding on a per capita basis, irrespective of differences among the jurisdictions, is a fundamental flaw that has limited the effectiveness of the NAHA.[71]

Housing strategy to meet ‘demand’

Under proposed subsection 15C(5) of the Federal Financial Relations Act the state or territory to which the financial assistance is payable must have a housing strategy that specifies ‘the level of housing supply needed to respond to projected housing demand, and outlines the reforms and initiatives that will be implemented to meet this need’.

It is worth noting that while the Bill uses the terms ‘demand’ and ‘need’ interchangeably, the meanings of the terms are quite distinct. While ‘demand’ refers to the desire of consumers for housing, ‘need’ refers to people’s requirement for housing.

It is also important to bear in mind that there is a great deal of variability in estimates of housing demand. For example, the National Housing Supply Council (NHSC) estimated that in 2011 there was an Australia-wide shortfall of 284,000 dwellings.[72] Subsequently, the Reserve Bank of Australia (RBA) estimated a housing supply shortage of between zero and 30,000 dwellings in 2015[73] and the Australia and New Zealand Banking Group (ANZ Bank) is reported to have estimated a shortfall of 250,000 dwellings in 2016.[74]

Estimates from other sources suggest that there is no housing shortfall in Australia as a whole, but rather, a housing oversupply. For example, based on an analysis of housing supply and demand in Australia at a regional level, Ben Phillips and Cukkoo Joseph have estimated that between 2001 and 2017 the Australian housing market experienced an oversupply of 164,000 dwellings.[75]

The point is that without some consistency in the assumptions and methodologies employed by analysts, housing supply and demand estimates will always vary, and sometimes substantially. This has significant implications for the usefulness, and the Commonwealth’s assessment of, state and territory housing strategies.

In 2008 the Rudd Government established the NHSC to monitor housing demand, supply and affordability and to identify gaps between housing supply and demand.[76] Since its abolition in 2013, there has been no official independent estimate of housing supply and demand in Australia. In its submission to the Inquiry, the Community Housing Industry Association observed:

In the absence of any independent forecasting agency such as the National Housing Supply Council, it is difficult to see how the States and Territories will be able to design credible strategies to meet projected housing demand (particularly the demand for housing which is affordable and available to people on low to moderate incomes). Equally, it is difficult to see how the Commonwealth could assess the credibility of the demand forecasts or the adequacies of the strategies proposed to meet demand without the benefit of an independent forecaster.[77]

As noted above, the Treasury is to be responsible for monitoring progress under the NHHA.

It is also a condition that the strategy be made available on a publicly accessible website.[78]

Homeless strategy

The state or territory must have a homelessness strategy that gives attention to the priority homelessness cohorts identified in the primary housing agreement and ‘includes reforms and initiatives that contribute to a reduction in the incidence of homelessness’.[79] As is the case for the housing strategy, the homelessness strategy must be made available on a publicly accessible website.[80]

Generally speaking, submissions to the Inquiry are critical of the perceived lack of necessary detail regarding the required contents of housing and homelessness strategies. According to the Explanatory Memorandum, it is intended that the NHHA will provide that state and territory housing and homelessness strategies must be ‘credible’ if the states and territories are to receive Commonwealth funding.[81] However, the term ‘credible’ is not defined in the Explanatory Memorandum and, beyond a few very general details, ‘little information is provided about the expected scope, purpose, focus, level of detail and quality of information required in the plans’.[82]

Need for greater clarity

In their submission, a number of the states and territories have argued that the Bill, while prescriptive, ‘provides the states with limited guidance on how they can meet the Commonwealth’s expectations’.[83] Most submissions to the Inquiry have recommended that the Bill be amended to better clarify the minimum criteria that must be met by the states and territories in order for them to meet the Commonwealth’s requirements and receive NHHA funding.

In the joint Treasury and Department of Social Services submission to the Inquiry, the departments attempted to allay concerns about the lack of detail regarding the relevant requirements. The submission states:

… the Commonwealth will not assess: the form or content of a State’s housing or homelessness strategies; the validity or robustness of supply and demand projections in a State’s housing strategy or supplementary housing agreement (bilateral schedule) – and funding will not be conditional on whether projected supply is met; or the validity or robustness of reforms or initiatives in homelessness strategies – and funding will not be conditional on the nature or delivery of these reforms and initiatives.[84]

A number of submissions have been critical of the Bill’s not spelling out the consequences of a state or territory’s failure to have in place a housing and homelessness strategy, or to meet their other requirements under the Bill, outlined below.[85] Several submitters have also expressed concern that the imposition of financial penalties could have a negative impact on disadvantaged people who are reliant on affordable housing and homelessness services.[86]

To counter this possibility, ACOSS has suggested that assurances should be given that financial penalties will not be imposed where this would impact on funding for housing services for people on low incomes. And, instead of imposing financial penalties that will impact on funding for housing and homelessness services, ACOSS has proposed that the Commonwealth require governments that are not meeting set targets to provide a public explanation and develop and publish a plan to improve their performance.[87] The Community Housing Industry Association has proposed that the states and territories should be given a specified period in which to comply with their requirements, after which the withheld funding would be ‘reallocated to a capital funding pool to be offered on a competitive basis to community housing providers in the relevant jurisdiction’.[88] This, the CHIA argues, would ‘underpin the integrity of the conditionality requirement in the legislation and at the same time ensure that housing outcomes for lower income people are not compromised by withdrawal of funding from the system entirely’.[89]

As noted above, it is a condition of the current NPAH that the states and territories match the homelessness funding provided by the Commonwealth. This requirement is retained under the new arrangements set out in proposed subsection 15C(7). ACOSS has argued that this requirement should be extended to include matched state and territory funding for housing programs, as was the case under the CSHA.[90] This would be with a view to ensuring growth in the stock of affordable housing for people on low incomes. 

Provision of data

The states and territories must also provide to the Minister any information relating to housing, homelessness and housing affordability specified in the primary or supplementary housing agreement. This must be in a manner and time-frame determined in accordance with the primary or supplementary agreement.[91]

As a number of the states and territories see it, making payment of funding under the NHHA conditional on their fulfilling any data request of the Minister is unreasonable. They argue ‘there is no valid reason for putting funding for the community’s most vulnerable people at risk by making funding conditional on the delivery of undefined information requests’.[92] While they insist that they are ‘very supportive of improved transparency, reporting and data collection and willing to work with the Commonwealth to make these improvements’ they feel that ‘this should not come at the expense of funding certainty’ and that the Bill should not ‘allow for unconstrained data requests that increase overheads in administering the NHHA’.[93]

In their joint submission to the Inquiry, the Treasury and Department of Social Services have attempted to assuage concerns that funding essential for the provision of housing and homelessness services could be withheld from the states and territories, stating:

The approach reflected in the Bill addresses the concerns expressed by States that directly tying funding to the delivery of achievement of performance requirements could be seen as putting funding for core services at risk.

The Bill, and the associated explanatory material, provides funding certainty to the States and service providers. It proposes that 100 per cent of funding will flow to the States provided they have housing and homelessness strategies in place, and contribute to the development and implementation of a nationally consistent data set and transparent reporting. It also retains the requirement for matched homelessness funding in line with current arrangements under the NPAH.[94]

Designated housing agreement

Proposed section 15D provides for financial assistance to be made to a state or territory under a designated housing agreement. Item 2 in Part 1 of the Bill inserts the formal definition of designated housing agreement into section 4 of the Federal Financial Relations Act.

Unlike primary and secondary housing agreements, a designated housing agreement does not have any associated legislated conditions. So long as states and territories meet the terms and conditions stipulated in the designated housing agreement, they will qualify for financial assistance from the Commonwealth. The purpose of the designated housing agreement is to provide the Minister with the flexibility ‘to enter into other agreements as needed from time to time’.[95] As with the primary and secondary housing agreements, the amount payable under a designated housing agreement will be specified in a determination that is a legislative instrument—but is not disallowable by the Parliament.[96]

The Scrutiny of Bills Committee has expressed some concerns with regard to the absence of terms and conditions applicable to designated housing agreements in the Bill itself.[97] The Committee also has reservations about the lack of a requirement in the Bill for housing agreements to be subjected to either Parliamentary or public scrutiny.[98] It has suggested:

it may be appropriate for the Bill to be amended to:

•        include some high-level guidance as to the terms and conditions that States will be required to comply with in order to receive payments of financial assistance under a designated housing agreement; and

•        include a legislative requirement that any primary, supplementary or designated housing agreements are:

–       tabled in the Parliament within 15 sitting days of being made, and

–       published on the internet within 30 days of being made.[99]

The Treasurer, Mr Scott Morrison has rejected the first of the Committee’s suggestions on the grounds that including in the Bill additional guidance on terms and conditions that states would be required to comply with may ‘unduly limit the Commonwealth’s ability to provide financial assistance in the future and the States’ ability to respond flexibly to jurisdiction-specific circumstances’.[100] Mr Morrison noted the second of the Committee’s suggestions, but responded that ‘all agreements under the Federal Financial Relations framework are available publicly on the Council on Federal Financial Relations website’.[101]

In its response to Mr Morrison’s advice, the Scrutiny of Bills Committee reiterated its concerns and proposals to address them.[102]

Concluding comments

As noted above, should it be passed, the Bill would repeal the current funding arrangements on 30 June 2018, irrespective of whether or not new primary and supplementary agreements have been reached with the states and territories. Until such time as these agreements have been settled, the states and territories would receive no funding for housing and homelessness services. As ACOSS sees it, this arrangement ‘seems to be intended to pressure negotiating parties to come to agreement to ensure the continuation of funding’.[103] However, ACOSS is concerned that the short timeframe could result in less than effective agreements being arrived at.

ACOSS has proposed that the current arrangements should be extended to 31 December to ensure that a funding gap does not occur if agreements are not able to be settled before 30 June 2018.[104]

Should the Bill fail to pass before 30 June 2018 then this could result in NPAH funding not being paid to the states and territories, as the NPAH agreement expires on this date.

However, funding provided under the NAHA would continue. Until such time as the Bill is passed and the Federal Financial Relations Act amended, the Commonwealth is required under section 14 of the Act to provide NAHA funding of around $1.3 billion to the states and territories.

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.

Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library’s Central Enquiry Point for referral.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.

[1].              Commonwealth and State Housing Agreement Act 1945. For an historical account and comprehensive analysis of the CSHA, see P Troy, Accommodating Australians: Commonwealth Government Involvement in Housing, The Federation Press, Sydney, 2012.

[2].              Department of Families, Housing, Community Services and Indigenous Affairs (DFHCSIA), Which way home? A new approach to homelessness, Commonwealth of Australia, Canberra, May 2008, pp. 27–8.

[3].              The National Affordable Housing Agreement and National Partnership Agreements are available on the Council on Federal Financial Relations website, ‘National agreements’.

[4].              Financial assistance is paid under section 14 of the Federal Financial Relations Act.

[5].              R Webb, R de Boer, M Harrington, C Kempner, J Phillips and M Thomas, Federal Financial Relations Bill 2009, Bills digest, 103, 2008–09, Parliamentary Library, Canberra, 2009, p. 6.

[6].              Council of Australian Governments, National Partnership Agreement on Homelessness, [Commonwealth of Australia, Canberra], December 2008.

[7].              M Butler (Minister for Housing and Homelessness), $159 million for national homelessness agreement, media release, 18 March 2013.

[8].              Australian Government, Budget measures: budget paper no. 2: 2014–15, p. 205.

[9].              Australian Government, Budget measures: budget paper no. 2: 2015–16, p. 165.

[10].              M Turnbull (Prime Minister), S Morrison (Treasurer), C Porter (Minister for Social Services) and Z Seselja (Assistant Minister for Social Services and Multicultural Affairs), $117 million in new homelessness funding, joint media release, 9 December 2016.

[11].              H Davidson and C Wahlquist, ‘Indigenous minister under fire over funding for remote housing’, The Guardian, 22 December 2017.

[12].              COAG Reform Council, National Affordable Housing Agreement–Homelessness 2011–12: comparing performance across Australia, COAG Reform Council, Sydney, 30 April 2013, pp. 33; 42–3.

[13].              Department of Prime Minister and Cabinet (PM&C), Reform of the Federation: white paper: roles and responsibilities in housing and homelessness, Issues paper no. 2, 2014, p. 47.

[14].              Australian National Audit Office (ANAO), Implementation of the National Partnership Agreement on Homelessness: Department of Families, Housing, Community Services and Indigenous Affairs, Audit report, 31, 2012–13, ANAO, Barton, ACT, 2013, pp. 18–19.

[15].              Department of Prime Minister and Cabinet (PM&C), Council of Australian Governments: report on performance 2016, Australian Government, Canberra, March 2016, pp. 11–14.

[16].              Public housing refers specifically to dwellings that are owned or leased by state and territory housing authorities to provide affordable rental accommodation. Public housing is one of four forms of social housing, with the others being state owned and managed Indigenous housing (SOMIH), community housing, and Indigenous community housing. Steering Committee for the Review of Government Service Provision, Report on Government Services 2018: volume G: housing, Productivity Commission, Canberra, 2017, p. 18.2.

[17].              Ibid. Community housing is ‘rental housing provided for low to moderate income and/or special needs households, managed by community-based organisations that have received a capital or recurrent subsidy from government’.

[18].              From around 2007, the states and territories have been transferring an increasing amount of public housing to community housing providers, and, at the 2009 Housing Ministers Conference, a target was set to increase community housing stock to make up 35 per cent of the social housing sector. See H Pawson, C Martin, K Flanagan and R Phillips, ‘Recent housing transfer experience in Australia: implications for affordable housing industry development’, AHURI Final Report, 273, Australian Housing and Urban Research Institute, Melbourne, 2016, p. 2.

[19].              Steering Committee for the Review of Government Service Provision, Report on Government Services 2018: volume G: housing, op. cit., p. 2 Table 18A.5; p. 1 Table 18A.6; p. 2, Table 18A.7.

[20].              Australian Institute of Health and Welfare (AIHW), ‘Specialist homelessness services annual report 2016–17, Unmet demand for specialist homelessness services’, web report, AIHW website, last updated 12 February 2018.

[21].              When he was Minister for Social Services, Kevin Andrews suggested that the Government intended to make the National Affordable Housing Agreement more competitive and performance-based—making more demands of the states and reintroducing tied funding. K Andrews (Minister for Social Services), Remarks to the Community Housing Federation of Australia (CHFA) Housing and NDIS Forum, Manuka oval function centre, speech, 27 March 2014.

[22].              S Morrison (Treasurer), Address to the Australian Housing and Urban Research Institute, Melbourne, speech, 10 April 2017.

[23].              Australian Government, Budget measures: budget paper no. 2: 2017–18, p. 155; Australian Government, A new National Housing and Homelessness Agreement, Reducing pressure on housing affordability fact sheet 1.7, current at 12 May 2017, p. 2.

[24].              Australian Government, A new National Housing and Homelessness Agreement, op. cit., p. 2.

[25].              Australian Government, Budget measures: budget paper no. 2: 2017–18, p. 155.

[26].              S Morrison (Treasurer) and M Cormann (Minister for Finance), Mid-year economic and fiscal outlook 2017–18, p. 186.

[27].              The terms of reference, submissions to the Senate Economics Legislation Committee and the final report are available on the inquiry homepage.

[28].              Senate Economics Legislation Committee, Inquiry into the Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017 [provisions], Report, The Senate, Canberra, 2018, p. 29.

[29].              Ibid., p. 28.

[30].              Ibid.

[31].              Ibid.

[32].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 13, 2017, The Senate, 15 November 2017, pp. 61–3.

[33].              B Shorten (Leader of the Opposition), Chris Bowen (Shadow Treasurer) and D Cameron (Shadow Minister for Housing and Homelessness, Labor’s plan for housing affordability and jobs, media release, 21 April 2017.

[34].              D Cameron (Shadow Minister for Housing and Homelessness), Address to the St Vincent de Paul Society affordable housing lunch, speech, 5 May 2017.

[35].              ALP Senators, Additional comments, Inquiry into the Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017 [provisions], op. cit., p. 35.

[36].              Ibid.

[37].              Ibid., p. 36.

[38].              Ibid., p. 40.

[39].              Ibid., p. 42.

[40].              Ibid., p. 48.

[41].              Ibid.

[42].              Ibid., pp. 53–4.

[43].              See for example Victoria State Government, NSW Government, Queensland Government, Government of Western Australia, Tasmanian Government, ACT Government and Northern Territory Government, Joint Submission to Senate Economics Legislation Committee, Inquiry into the Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017 [provisions], 18 December 2017.

[44].              See for example Australian Council of Social Service (ACOSS), Submission to Senate Economics Legislation Committee, Inquiry into the Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017 [provisions], 21 December 2017.

[45].              See for example Homelessness Australia, Submission to Senate Economics Legislation Committee, Inquiry into the Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017 [provisions].

[46].              See for example ACOSS, Submission, op. cit.

[47].              Explanatory Memorandum, Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017, p. 3; Australian Government, Budget measures: budget paper no. 2: 2017–18, p. 155.

[48].              Australian Government, Budget measures: budget paper no. 2: 2017–18, p. 155.

[49].              The Statement of Compatibility with Human Rights can be found at pages 16 and 17 of the Explanatory Memorandum to the Bill.

[50].              Parliamentary Joint Committee on Human Rights, Human rights scrutiny report, 12, 2017, The Senate, Canberra, 28 November 2017, p. 96.

[51].              Federal Financial Relations Act, proposed subsection 15D(2) is in equivalent terms.

[52].              Explanatory Memorandum, Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017, p. 14.

[53].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 13, 2017, op. cit., p. 61.

[54].              Ibid., pp. 61–2.

[55].              Ibid., p. 62.

[56].              Explanatory Memorandum, Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017, p. 10.

[57].              Ibid.

[58].              These areas were spelled out in the NAHA: The Commonwealth is responsible for leadership for national housing and homelessness policy including Indigenous housing policy; income support and rental subsidies; immigration and settlement policy and programs; financial sector regulations and Commonwealth taxation settings that influence housing affordability; competition policy relating to housing and buildings; provision of national infrastructure; housing-related data collected by the Australian Bureau of Statistics and Centrelink; and coordination of homelessness data collection from States and Territories.

[59].              ACOSS, Submission, op. cit., p. 5.

[60].              Victoria State Government, NSW Government, Queensland Government, Government of Western Australia, Tasmanian Government, ACT Government and Northern Territory Government, Joint Submission, op. cit.

[61].              Community Housing Industry Association, Submission to Senate Economics Legislation Committee, Inquiry into the Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017 [provisions], 19 December 2017, p. 2.

[62].              PM&C, Reform of the Federation: white paper: roles and responsibilities in housing and homelessness, op. cit., p. 18.

[63].              Australian Government, Budget measures: budget paper no. 2: 2017–18, p. 169.

[64].              The financing gap is the difference between the low rates of return available on social and affordable housing investments and the market returns available on alternative investments with similar risk profiles.

[65].              M Perusco and G Johnson, ‘What the Federal Budget 2017 means for housing and homelessness’, ProBono Australia, 10 May 2017.

[66].              C Martin and H Pawson, ‘Australia needs to reboot affordable housing funding, not scrap it’, The Conversation, 20 February 2017.

[67].              C Martin and H Pawson, ‘Budget 2017 charts new social and affordable housing agenda’, The Conversation, 12 May 2017.

[68].              NT Shelter, Submission to Senate Economics Legislation Committee, Inquiry into the Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017 [provisions], 18 December 2017, p. 1.

[69].              Ibid., p. 2.

[70].              Ibid.

[71].              ACOSS, Submission, op. cit., p. 3.

[72].              National Housing Supply Council, 2013 State of supply report: changes in how we live, National Housing Supply Council, 2014, p. 1.

[73].              M Kohler and M van der Merwe, ‘Long-run Trends in Housing Price Growth’, Reserve Bank of Australia Bulletin, September Quarter 2015, p. 26.

[74].              ‘Is there still a housing shortage in Australia? ANZ research says about 250,000 dwellings’, Property Observer, 23 March 2016.

[75].              B Phillips and C Joseph, Regional housing supply and demand in Australia, Working paper no. 1/2017, Centre for Social Research and Methods (CSRM), Australian National University, Canberra, 2017, p. 1.

[76].              The Treasury, ‘The National Housing Supply Council’, The Treasury website.

[77].              Community Housing Industry Association, Submission, op. cit., p. 6.

[78].              Federal Financial Relations Act, proposed paragraph 15C(5)(b).

[79].              Federal Financial Relations Act, proposed subsection 15C(6).

[80].              Federal Financial Relations Act, proposed paragraph 15C(6)(b).

[81].              Explanatory Memorandum, Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017, p. 7.

[82].              ACOSS, Submission, op. cit., p. 7.

[83].              Victoria State Government, NSW Government, Queensland Government, Government of Western Australia, Tasmanian Government, ACT Government and Northern Territory Government, Joint Submission, op. cit., p. 3.

[84].              The Treasury and Department of Social Services, Submission to Senate Economics Legislation Committee, Inquiry into the Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017 [provisions], December 2017, p. 13.

[85].              See for example ACOSS, Submission, op. cit., pp. 7–8.

[86].              See for example Council to Homeless Persons, Submission to Senate Economics Legislation Committee, Inquiry into the Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017 [provisions], pp. 4–5.

[87].              ACOSS, Submission, op. cit., p. 8.

[88].              Community Housing Industry Association, Submission, op. cit.

[89].              Ibid.

[90].              ACOSS, Submission, op. cit., p. 5.

[91].              Federal Financial Relations Act, proposed subsection 15C(8).

[92].              Victoria State Government, NSW Government, Queensland Government, Government of Western Australia, Tasmanian Government, ACT Government and Northern Territory Government, Joint Submission, op. cit., p. 5.

[93].              Ibid.

[94].              The Treasury and Department of Social Services, Submission, op. cit., p. 4.

[95].              Explanatory Memorandum, Treasury Laws Amendment (National Housing and Homelessness Agreement) Bill 2017, p. 9.

[96].              Federal Financial Relations Act, proposed subsections 15D(1) and (2).

[97].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 13, 2017, op. cit., p. 62.

[98].              Ibid.

[99].              Ibid., p. 63.

[100].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 15, 2017, The Senate, Canberra, 6 December 2017, p. 109.

[101].              Ibid.

[102].              Ibid., pp. 109–10.

[103].              ACOSS, Submission, op. cit., p. 6.

[104].              Ibid.