Coalition Senators’ Dissenting Report
A LEAP OF FAITH
Social housing
elements of the Appropriation (Nation Building
and Jobs) Bill (No. 2) 2008-2009
Summary
Coalition senators welcome the intention manifest in this
legislation to increase housing choices for Australians. They acknowledge that
social housing is an important component in any housing strategy, that there is
insufficient social housing stock in Australia today and that this legislation
takes some step towards remedying that dearth.
Good intentions however are not the basis on which a
legislative package of this size should be judged. The provision of up to $6
billion to the states and territories for the building of 20,000 new dwellings
pursuant under this Commonwealth Social Housing Initiative represents a
positive step, but there are simply too many unanswered questions and missed
opportunities inherent in this package for it to win the support of Coalition
senators.
In particular, it is noted that the $6.4 billion package
depends heavily – at least at the early stages – on the efficient delivery
capacity of the state and territory public housing authorities, but evidence is
scant that these authorities are equipped to properly deliver this huge additional
investment. Indeed, the record of these authorities in delivering high quality
and timely outcomes could generally be described as woeful, and as such the
placing of so much emphasis on them for delivery of this package represents a
substantial risk to taxpayers' money.
Coalition Senators are also concerned that much of the
evidence presented to this all-too-short inquiry focused on the benefits of
this package as a social housing program, rather than as a fiscal
stimulus measure, the announced intention of the Government. The enthusiasm
of stakeholders in the housing sector for the commitment of such a large amount
of money is understandable; the Senate, however, has a higher duty to ensure
that this investment is not only good for the construction industry, but good
for the economy as a whole and that it represents the best possible value for
money.
Coalition Senators strongly doubt the Commonwealth Social
Housing Initiative meets this larger test.
The following paragraphs explore areas of concern arising
from the hearings on 10 February.
Excessive Reliance on Public Housing Authorities
A number of witnesses made reference to concerns about the
performance of state and territory public housing authorities. The Community
Housing Federation of Australia acknowledged that its members had experienced
"difficulties in the past in delivering new social housing or maintaining
existing properties by working through or in conjunction with the state and
territory housing authorities". [1]
Ms Croce added
I do share your concern about the problems that have arisen
in the past with the state housing authorities...[2]
The Master Builders Association criticised the state
authorities in these terms:
Mr Harnisch—...over the last
10 years or so the Commonwealth through the Commonwealth-State Housing
Agreement has pumped in something like $10 billion, but when I look at the
public housing stock, I am dismayed by the fact the housing stock has actually
declined... I do not know that. My simple mind says that I would have thought we
would have got a little bit more than minus X houses after spending $10
billion. [3]
The Housing Industry Association was concerned about the
procurement practices of the state authorities:
Mr Lamont—We would hold severe reservations about traditional forms of
procurement by both the Commonwealth and the state level as to their
effectiveness in providing the necessary response on this occasion... It is
clear, from our perspective at least, that in this particular fiscal package
there is a requirement for an amended procurement strategy, one involved in
off-the-plan purchases, one that is more cohesive to the requirements of the
private sector in order to deliver this package efficiently and quickly...
Senator
HUMPHRIES—Is that amendment in this package?
Mr
Lamont—It is not entertained as the delivery vehicle. That is probably more
of concern to us. [4]
Coalition senators are aware of many criticisms on the
ground of the efficiency of these same authorities. Accordingly they strongly
doubt that they should be relied upon so heavily to deliver the costly and
far-reaching targets in this package.
Moreover, Coalition senators believe that the Commonwealth
has, with its fiscal stimulus package, missed a major opportunity to drive
reform of the social housing delivery mechanism and to more closely engage the
states and territories in a process to ramp up best practice.
Although details were provided of some conditions which
would be attached to the provision of Commonwealth money, particularly around
greater transparency, the overwhelming impression is of the states being merely
the delivery mechanism, on their own terms, of the Commonwealth's money rather
than partners in a process of change and growth for this sector.
Senator HUMPHRIES—Can I take it from that, if this
is viewed as a package designed to stimulate the housing sector, that there
really is not any state and territory contribution to this process, except to
open their doors for the Commonwealth money to be poured into? They are not
making any contribution to the net value of this exercise, except to deliver
what the Commonwealth has provided. There is no cost to the states and
territories in making this package possible.
Mr Leeper—It is certainly true that the
entire cost of the package is being borne by the Commonwealth—the $6.4 billion
for housing.
Senator HUMPHRIES—Will any of the planning and
development processes be waived, fast-tracked or otherwise altered to make
these projects happen?
Mr Leeper—That would be a matter for the
states to decide... [5]
Is the Package a Fiscal Stimulus Measure or a Social
Housing Measure?
Witnesses repeatedly emphasised the value of the package for
capacity building in the social housing sector[6]
yet there was little evidence of the comparative value of these measures
against other possible stimuli to the construction industry. Coalition senators
believe that incentives for the purchase and construction of private
residential homes (eg by reducing state government land charges) may constitute
a stronger dollar-for-dollar stimulus than the kind of investment contemplated
in the Commonwealth Social Housing Initiative.
Evidence of alternative strategies was of course not
available to the Committee. Coalition senators are strongly of the view that a
thorough investigation of possible alternatives, judged on their comparative
multiplier benefit to the economy, would have been a worth while and
potentially cost saving exercise to have engaged in before this legislation was
brought forward. Again, this is not to derogate the worthiness of investing in
the quantity of social housing stock; as a device to maximise economic activity
it may however be a second rate option.
A Disturbing Lack of Detail
Coalition Senators were alarmed at the absence of a number of crucial
indicators of the capacity of state and territory authorities to roll out this
package. The Committee was unable to secure the following information about the
projected performance of the Commonwealth Social Housing Initiative:
- How many dwellings would be delivered in each state/territory;
- How dwelling numbers would be distributed between different
regions of each state/territory;
- How many dwellings were delivered in the last year, or five
years, by any of the states and territories;
- The average cost of construction per social housing dwelling for
any state or territory;
- The average completion time for construction of those dwellings;
or
- How many dwellings would be delivered by the National Affordable
Housing Agreement over the next five years.
In addition, the precise mechanism whereby states and
territories would be prevented from substituting Commonwealth dollars for
spending on their own anticipated housing projects was not outlined to the
Committee. The Committee was told that states could sell houses built using
money provided by the Commonwealth under this Initiative during the life of the
Initiative, but details of how the value and quality of total public housing
stock would nonetheless be maintained could not be provided.
All this concerns Coalition senators. They believe that an
investment of this size warrants a substantial degree of oversight and
accountability, but much of the detail of those elements was simply not
available to the Committee. The lack of past performance against the goals set,
for example, for the Commonwealth State Housing Agreement does not bode well
for accountability and transparency in this instance.
Conclusion
Passing the Commonwealth Social Housing Initiative into law
represents a leap of faith by the Senate. At $6 billion it constitutes an
enormous opportunity... and an enormous risk that the taxpayers' outlay will not
achieve a good return. Coalition senators can appreciate the potential value to
the construction industry and to the social housing sector of this package, but
they cannot in good conscience support it if its provisions are not adequately
explained, if state and territories are not to be held accountable and the
alternatives to it, as a fiscal stimulus measure, have not adequately been
explored.
Recommendation
Coalition senators recommend that the provisions of the
Appropriation (Nation Building and Jobs) Bill (No.2) 2008-2009 relating to the
social housing program not be passed.
Senator Gary Humphries
Senator Sue Boyce
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