Chapter 1
Introduction
1.1
On 12 December 2013, the Senate referred an inquiry into affordable
housing to the Senate Economics References Committee for inquiry and report by
26 June 2014. The Senate subsequently extended the reporting date on four
occasions: first to 27 November 2014, then to the first sitting day in March
2015 and
14 April 2015 and finally to 8 May 2015. The terms of reference are
comprehensive and include the
following matters:
- the role of
all levels of government in facilitating affordable home ownership and
affordable private rental, including:
-
the effect of
policies designed to encourage home ownership and residential property
investment,
-
the taxes and
levies imposed by the Commonwealth, state, territory and local governments,
- the effect of policies designed
to increase housing supply,
- the operation, effect and future
of the National Rental Affordability Scheme,
-
the
regulatory structures governing the roles of financial institutions and
superannuation funds in the home lending and property sectors, and
- the operation and effectiveness
of rent and housing assistance programs;
-
the impacts,
including social implications, of public and social housing policies on housing
affordability and the role of all levels of government in providing public and
social housing;
-
the impact of
Commonwealth, state and territory government policies and programs on
homelessness;
-
the
contribution of home ownership to retirement incomes;
-
the
implications for other related changes to Commonwealth government policies and
programs, including taxation policy, aged care, disability services, Indigenous
affairs and for state and territory governments;
-
the need to
develop improved overview and accountability mechanisms in relation to
Commonwealth grants and funding to the states and territories in order to
ensure that public funding delivers outcomes consistent with Commonwealth
objectives;
-
planning and
policies that will ensure that women, particularly vulnerable women, have
access to secure, appropriate, affordable and adaptable accommodation;
-
planning and
policies that will ensure emergency and essential service workers have access
to affordable housing close to where they work;
-
planning and
policies that will ensure the availability of an appropriately skilled workforce;
-
the role of
innovation in building materials and construction, including prefabricated and
sustainable materials;
-
the impacts
of improving sustainability (including energy efficiency) of new and existing
housing stock on improving housing affordability;
-
the role of
innovative and responsible funding mechanisms used in other countries,
including the United Kingdom, United States of America, France, Canada, Austria
and the Netherlands, that provide a stable and cost effective way of funding
affordable rental and social housing, such as affordable housing supply bonds
and an affordable housing finance corporation;
- the role and contribution of the
community housing sector in delivering social and affordable renting housing;
-
the need to
increase the supply of accessible and adaptable housing, and housing that is
culturally appropriate;
-
the impact of
not having a long-term, national affordable housing plan; and
-
any other
matters the committee considers relevant.
Conduct of inquiry
1.2
The committee advertised its inquiry on its website and in the Australian.
The committee also wrote directly to the Commonwealth, state and territory
governments, organisations, academics and other people known to be interested
in housing in Australia drawing attention to the inquiry and inviting them to
make written submissions.
Submissions
1.3
The committee received 231 submissions, which are listed at Appendix 1,
as well as additional information and answers to a series of written questions.
They are listed at Appendix 2. The committee held eight public hearings in
Adelaide, Canberra (3), Melbourne, Brisbane, Sydney, and Perth. A list of
witnesses who appeared is at Appendix 3.
Relevant reports and publications
1.4
In addition to the evidence presented during the inquiry, the committee
relied on information and data produced in numerous reports which included
Australia's future tax system (the Henry Review); the National Commission of
Audit, a New System for Better Employment and Social Outcomes (welfare
reform interim report)[1]
and the Pension Review Report. It also drew on various publications by the
Australian Housing and Urban Research Institute (AHURI), Australian National
Audit Office (ANAO), Australian Institute of Health and Welfare (AIHW), Australian
Bureau of Statistics (ABS), National Housing Supply Council (NHSC) and the
Productivity Commission. A selected bibliography is provided at the end of the report.
Federation and Tax White Papers
1.5
The committee has also taken into consideration the development of two white
papers that have a direct bearing on matters covered by the inquiry's terms of
reference: the White Paper on the Reform of the Federation (the Federation
White Paper), and the White Paper on the Reform of Australia's Tax System (the
Tax White Paper).
1.6
In May 2014, the government announced that the two white papers were to
be completed by the end of 2015. They would consider the spending and taxation
roles and responsibilities of the different levels of government in Australia
to ensure that, as far as possible, the states were sovereign in their own
sphere.[2]
A related discussion paper explained in full:
The White Paper on the Reform of the Federation is
considering options to achieve a more efficient and effective federation, which
supports Australia's growth and living standards. Any changes to roles and
responsibilities of the Commonwealth and states and territories may have
revenue and tax implications. The white paper processes on Australia's
Federation and taxation are proceeding in tandem and, as such, provide a unique
opportunity to inform a system-wide approach to taxation.[3]
Federation White Paper
1.7
Working with the states and territories, the Australian Government has
committed to develop a Federation White Paper. A taskforce within the
Department of the Prime Minister and Cabinet is producing the White Paper.[4]
As part of this process, an issues paper was published in December 2014 on
roles and responsibilities in housing and homelessness.[5]
Tax White Paper
1.8
The Tax White Paper is intended to provide a longer-term considered
approach to tax reform that is consistent with the government's core principles
of fairness and simplicity.[6]
A Tax White Paper taskforce has been set up in the Department of Treasury. A
tax discussion paper was released in March 2015.[7]
Background
1.9
Every Australian has a fundamental right to an adequate standard of
living including access to a safe, secure, habitable and affordable home.
Australia is party to seven core international human rights treaties which
uphold this right to appropriate housing. As such the Australian Government
recognises that adequate housing is essential for human survival with dignity.
Indeed, the Australian Government and the states and territories have entered into
an agreement that has as its aspirational goal:
...all Australians [to] have access to affordable, safe and
sustainable housing that contributes to social and economic participation. [8]
1.10
Recently in Australia, however, much attention has focused on housing
affordability, with concerns mounting that some Australians were not only being
priced out of home ownership but facing difficulties accessing appropriate
housing in the rental market. This inquiry, with its comprehensive terms of
reference, canvasses many aspects of affordable housing.
Structure of report
1.11
The report is divided into two parts—the first part of the report deals
mainly with affordable housing in the context of home ownership; the second
part considers affordable housing from the perspective of Australians who are
unlikely to own their home and must rent.
1.12
In Part 1, the committee provides an overview of housing affordability
in Australia, including detail on defining and measuring housing affordability.
It determines the extent to which Australia has a housing affordability problem
and its significance to Australian households. The committee also examines the
role of the Commonwealth, both through its funding of affordable housing and
its contribution to developing a national policy and strategic approach to
affordable housing.
1.13
The committee also looks at the supply- and demand-side factors that
shape Australia's housing market and considers in detail:
-
relevant state and local taxes, fees and charges and their effect
on housing affordability;
-
zoning, planning and approval processes including land release, rezoning,
infill development and densification;
-
building costs, codes and regulations and innovations in
construction and building materials;
-
the Commonwealth tax regime as it affects housing in Australia,
in particular negative gearing and capital gains tax discounts and exemptions;
-
financing for home purchases, the housing investment market,
lending practices and macro prudential regulation;
-
home ownership in Australia—covering the social and financial benefits
of home ownership, trends in home ownership, and mechanisms to help first home
owners such as first home owner grants and shared equity programs; and
-
older Australians and home ownership, including the assets test
for the aged pension and downsizing (or 'rightsizing').
1.14
In the second part of the report the committee's focus turns to those who
through necessity must rent—those whose circumstances do not extend to home
ownership. It considers the Australian rental market, the supply of rental
properties, the costs of renting, the growing disparity between rents and
income, the changing profile of the rental market, and the challenges and
difficulties that low-income earners experience in accessing suitable
accommodation. The committee looks at the level of rental stress in the
community, the security of tenure for Australian renters and their rights as
tenants.
1.15
Recognising that for some Australians the private rental market cannot
deliver affordable and appropriate housing, the committee examines options
provided by social housing. In this context, the committee considers both
public and community housing, the particular attributes of each sector, the
waiting lists for such accommodation and the incentives for the tenants of
public and community housing to remain in their rental properties. The
committee looks at the transfer of public houses to the community housing
sector, the contribution that community housing makes to affordable housing,
the potential for it to increase the supply of affordable houses and the
challenges for community housing providers to finance the maintenance and development
of their properties.
1.16
Having established the difficulties confronting low-income earners to
access affordable and appropriate rental houses, the committee considers the
challenges that Australians with particular needs face in finding a safe,
secure and affordable home. They include older Australians dependent on income
support, women and children experiencing or under threat of domestic violence,
people with a long-term health condition or disability, young unemployed
Australians, migrants and refugees and Indigenous Australians. The committee
then looks at the most extreme manifestation of housing stress—homelessness. It
considers what is meant by homelessness, the nature and magnitude of the
problem and what is being done to help people out of homelessness and to keep
them in safe and secure accommodation.
1.17
The committee analyses and evaluates the principal forms of Commonwealth
assistance and the partnership agreements it has with the states and
territories to improve access to affordable housing. In particular, the
committee examines:
National Affordable
Housing Agreement (NAHA)—a broad ranging housing agreement which
commits a significant amount of Commonwealth funding to the states and
territories through a national specific purpose payment. The agreement provides
the overarching framework within which the Commonwealth and states and
territories work together to 'improve housing affordability and homelessness outcomes
for Australians'.
National Partnership
Agreement on Remote Indigenous Housing (NPARIH)—an agreement between
the Australian Government and the states and territories with the principal aim
of ensuring that Indigenous Australians have the same housing opportunities as
all Australians. It is a subsidiary agreement to NAHA designed to address
significant overcrowding, homelessness, poor housing and severe housing shortages
for Indigenous communities.
National Partnership Agreement
on Homelessness (NPAH)—an agreement between the Australian Government
and the states and territories, which focuses on prevention and early
intervention to stop people becoming homeless, breaking the cycle of
homelessness and improving and expanding the service response to homelessness.
The agreement has two headline objectives:
-
halve overall homelessness by 2020; and
-
offer supported accommodation to all rough sleepers who need it
by 2020.
National Rental
Affordability Scheme (NRAS)—a partnership between the Australian
Government and the states and territories to invest in affordable housing. It
was designed to stimulate and add to the supply of affordable housing by
offering annual financial incentives to private investors and community
organisations to build and rent homes to low- and moderate-income households at
a rate at least 20 per cent below market rates.
Commonwealth Rent
Assistance (CRA)—recognises that many renters in private or community
housing are struggling to pay high rents. It is intended to ensure that adults
with limited means can afford to live in rental housing that satisfies adequate
standards. CRA payments are provided to eligible income support recipients,
which involves a base payment to certain households to help them meet basic
living needs. It is paid at the rate of 75 cents for each dollar above the
rent threshold up to a maximum rate.
1.18
Finally, the committee looks at the role of the Commonwealth as both an
investor in, and enabler of, affordable housing. The committee's main focus in
this section, however, is on efforts to attract institutional investors into
affordable housing.
Acknowledgements
1.19
During the course of this inquiry, the committee has benefitted greatly
from the participation of many individuals and organisations located throughout
Australia. The committee thanks all those who assisted with the inquiry,
especially witnesses who put in extra time and considerable effort to appear
before the committee.
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