MS BURCH (Brindabella—Minister for Disability, Housing and Community Services, Minister for Children and Young People, Minister for Ageing, Minister for Multicultural Affairs and Minister for Women) (11.24), by leave: Arising from the budget estimates hearings in May of this year I undertook to address the Assembly on public and community housing in the ACT and the various approaches of others states and territories.

 

There are approximately 360,000 units of social housing in Australia made up of 320,000 public housing stock and 40,000 community housing stock, including Aboriginal managed housing. This is a huge national asset and it needs to be well managed.

 

The national investment in housing provided under the national affordable housing agreement and its associated national partnership agreement is almost $10 billion over five years. The additional $5.64 billion has also been provided to states and territories through the National Building and Job Plans and an unprecedented level of investment in social housing.

 

Mr Speaker, these agreements commit governments at all levels to deliver fundamental reform of the social housing and homelessness landscape. Housing Ministers have already provided a substantial report to the council of Australian governments on the progress of the reform under the national affordable housing agreement and I commend the report to members and it is available on the COAG website.

 

Today I will focus on two key areas of this national reform agenda. The first is the ACT and other jurisdictions approach to the growth of community housing as required under the national affordable housing agreement. And the second, the increased targeting of public housing nationally and the financial and social pressures this targeting puts on the public housing system.

 

I will go on to outline how the ACT has argued for funding reforms to address these pressures and show how the ACT has maintained stock numbers and indeed grown stock numbers despite the perverse incentives that the commonwealth provides to reduce stock numbers.

 

The conclusion the Assembly must draw, Mr Speaker, is that the ACT continues to be at the forefront of the reform agenda providing improved housing and support services, more housing and better outcomes for clients.

 

Mr Speaker, strengthening and growing the community housing sector is an explicit objective of the reforms agreed by COAG which are being delivered by housing ministers under the national affordable housing agreement. Housing ministers have agreed that up to 75 per cent of housing stock, constructed under stage 2 of the $5.64 billion Nation Building and Jobs Plan, will be transferred to the community housing providers by 30 July 2014 and that jurisdictions and the commonwealth will develop over time a large scale not for profit sector in Australia comprising up to the 35 per cent of social housing by 2014.

 

My predecessor, John Hargreaves, strongly represented the interests of small jurisdictions on this issue and achieved the following important concessions. That community housing growth should not occur through the loss of overall stock numbers in public housing; that public housing must still be viable; and thirdly that there should be no reduction in the capacity overall to house priority clients into the future.

 

Mr Speaker, these are ambitious targets for growth and to achieve it there is a significant focus on strengthening the role and capacity of community housing in the not for profit sector nationally. The community housing sector in each jurisdiction varies greatly and the commonwealth has acknowledged that each jurisdiction will require individual plans for community housing growth in recognition of the specific circumstances in each jurisdiction.

 

The sector in the ACT is very small with fewer than 400 tenancies compared to the 11,200 tenancies in public housing. This arrangement is largely historical and reflects the vital role of public housing in building the Canberra community. The aim of these reforms is to develop a strong, vibrant community housing sector that affords customers the opportunity to make a genuine choice over their landlord and to drive up the quality of service delivery by introducing competition including competition for capital funding.

 

The growth of social housing stock will also be supported through the higher rents charges, up to 75 per cent of market rent; tenant access to commonwealth rent assistance and lower taxation arrangements through exemptions from income tax and GST.

 

There will be new players in this space who have expertise in other types of social housing and other types of supportive housing. The commonwealth’s national rental affordability scheme has attracted several large welfare and church organisations for whom social housing has not to date been a call part of their business. These organisations bring considerable capability and substantial assets, including land holdings, which would accelerate growth across the sector.

 

There are now a small number of growth providers in the community housing and they have grown steadily over the past three years and will receive a significant boost through the national rental affordability scheme and the transfer of stock funded under the social housing initiative and the nation building economic stimulus plan.

 

Mr Speaker, these two measures alone will roughly double the number of community housing dwellings and take a proportion of social housing stock in community housing hands to around 15 per cent nationally. This will provide a solid base for further expansion of the sector.

 

However, the objective of creating a diverse and growing community housing sector will need to be carefully balanced against the risks of transferring title of potentially up to $20 billion worth of public housing asset to a community housing providers nationally. This investment in the community housing sector must deliver sustainable growth. Sustainable growth means that providers are able to provide high quality and responsive housing services into the future and have the portfolio and rent structures to enable it.

 

It also means that providers are able to maintain and manage their assets. It also means that they are able to utilise their rental income stream and asset base to increase their portfolio. The best option will be a phased in approach of community housing could progressively assuming responsibility for a tenancy management up to 35 per cent of social housing stock over the next five years. With transfer of title contemplated once effective regulatory systems are firmly in place and providers establish a clear record against agreed performance benchmarks.

 

Mr Speaker, substantially greater tenancy management responsibility will need to be underpinned by a strong regulatory framework and integrated waiting list for social housing at each place in each jurisdiction. The ACT, like other jurisdictions, will grow the community housing sector under the national building economic stimulus plan, and the ACT is one of the first jurisdictions in Australia to pass legislation for a regulatory framework preceded only by Victoria and New South Wales.

 

The framework with oversight support provided to CHC Affordable Housing under the government’s affordable housing action plan 2007. It will also protect the dwellings constructed and/or managed by affordable and community housing providers under the nation building and jobs package.

 

These measures will provide protection for government assets, tenants, the viability of the sector and provide reassurance to investors. The ACT’s focus for community housing is to ensure viability and capacity for growth, which contributes to increased housing supply overall underpinned by strong regulation. This is consistent with the ACT’s own affordable housing action plan.

 

Using the commonwealth’s stimulus funding and the land provided for free by the ACT government, Housing ACT will deliver an additional 421 dwellings by July of 2011. With a targeting of Housing ACT’s normal capital program and the total number of dwellings delivered, it increases to 507. Two hundred and ninety seven of the dwellings will be constructed on the community facilities land transferred to Housing ACT from the ACT government at no cost to Housing ACT. Control of 109 of these newly constructed units on the community facilities land will pass to the community housing sector.

 

Mr Speaker, this will provide a significant injection of properties into the community housing sector and enable new national providers to enter the ACT market and enhance sector capacity. This includes the Salvation Army and Blue Chip. Mr Speaker, there must be clear—we must be clear that the stock transfer alone will not deliver effective and efficient community housing. There is considerable work still to be undertaken both within the ACT and nationally to ensure the quality of community housing is adequate and that it operates as a viable sector, not reliant on government funding alone to deliver additional properties.

 

The ACT has a strong legislative regulatory framework and providers receiving nation building properties will become registered and take allocations from the social housing register.

 

So what is happening elsewhere in Australia? Mr Speaker, in South Australia, South Australia has entered into an agreement with the commonwealth that it will transfer up to 75 per cent of stage 2 of the nation building and jobs plan stock to preferred growth providers by 2012, and in July 2009, 18 organisations accepted the offer of preferred growth provider status. These properties will not receive any ongoing government subsidy, and the growth providers will be able to retain 100 per cent of the rental income and fund maintenance and operating costs through the rental income received.

 

Mr Speaker, Queensland has identified two options for increasing the scale of the not-for-profit sector in Queensland. Firstly, capital grants to non-government organisations and head leasing or title transfer to non-government organisations, and, secondly, transfer of existing social housing currently directly managed by the state to the not-for-profit sector, combining strategies could accelerate growth.

 

The not-for-profit sector in Queensland is mainly small organisations with very small numbers of properties. Queensland has over 300 registered providers. Outside the remote communities, only a handful of organisations have more than 200 properties under management. There are very few organisations solely dedicated to the provision of social and affordable housing, while the nation building and jobs plan injection for a small number of organisation will result in rapid growth, it is not without risk. Both for the organisation and for social housing in Queensland.

 

Under the nation building jobs plan, over 4,000 new additional dwellings will be added to Queensland’s social housing stock. Queensland must focus on ensuring the new homes are built in areas of unmet need for social housing, which has resulted in the state maximising the stimulus effort right across the state and particularly in regional areas.

 

Through this process, Queensland has gained the greatest level of involvement of the not-for-profit sector in the development and construction of new dwellings in all jurisdictions across Australia.

 

The sector is providing a contribution of over $50 million in value to the Queensland program. The sector will own approximately one-third of the properties from the outset, and the balance will initially be owned by the department and head leased to organisations with a view of transferring title in the future.

 

At the affordable housing end of course, Brisbane Housing Company is well known as a vehicle of the Queensland government and the Brisbane City Council.

 

Mr Speaker, Western Australia is finalising its five-year community housing growth strategy. Western Australia has attracted to the community housing sector’s ability to unlock the equity in its housing assets to attract finance from bank and other investors, and its access to a number of other cash flows and tax benefits which support the growth agenda. The Western Australian Treasury Corporation modelling has identified that for every $1 of investment provided by government, the community housing sector can provide $1.20 returned by way of making additional social and affordable housing.

 

Mr Speaker, up to 75 per cent of stage 2 stimulus housing will be transferred to the community housing sector for the purpose of growth through the request for the proposal and transfer of freehold title of social housing initiative dwellings to community housing organisations. The WA Department of Housing registered growth and preferred providers who are invited to bid for six packages divided by a geographical region, which clearly outline how they would achieve growth in social and affordable housing for each of these packages.

 

Western Australia is concerned that it does not yet have the regulatory framework to manage the risk associated with the title transfer. Western Australia is also using direct funding grants to community housing providers for stage 2 stimulus construction. In addition, they are also working with community housing providers and developers who have formed strong partnerships.

 

Mr Speaker, Victoria and New South Wales have legislation in place to regulate their community housing providers and are homes to a few national growth providers. Victoria has a very robust regulatory framework which has been in operation for over four years. The Victorian regulatory system has extensive intervention powers, including the power to order mergers between providers.

 

Approximately half of the community units in Victoria are leased from the Victorian government, while providers hold title to the remainder. Mostly subject to a director’s interest held by the Victorian Director of Housing. In Victoria, community housing providers are developing approximately 2,400 units under the nation building plan, which will have title to subject to a director’s interest. This amounts to approximately $52 per cent of Victoria’s nation building units. There is also potential for some additional units to be transferred to the sector by the Director of Housing. Given the size and capacity of their sectors, this additional investment will create a strong platform for growth.

 

A regulatory framework commenced operations in New South Wales in 2009, and has so far registered 116 organisations with a further 219 organisations to be assessed by May of 2011. New South Wales amended its legislation this year to introduce some intervention powers enabling it to require organisations to appoint special advisers to their boards in particular circumstances.

 

Mr Speaker, New South Wales has 20,000 units under community housing management, 15,000 on lease from New South Wales government and 5,000 rented the private market with the rental and management subsidy from the New South Wales government.

 

The total number managed by community providers will grow to approximately 26,000 by late 2011, due to further transfers from public housing. New South Wales will transfer most of its nation building properties to the community housing sector.

 

Mr Speaker, we all want a strong and vibrant community housing sector and we all want to provide choice for tenants. It is therefore crucial that community housing be able to meet the depth and breadth of need, including serious and complex need. This of course brings me to the largest service provider, for complex need, and that is our public housing system.

 

Mr Speaker, public housing is a finite resource; 320,000 properties nationally, 5 per cent of the total housing stock in Australia. In the ACT public housing accounts for 8 per cent of stock in the ACT. To allocate it in a fair and transparent way, all housing authorities have criteria for allocation and they all have a waiting list. States and territories continue to target public housing to those most in need. Housing is allocated across all jurisdictions on a priority needs basis. As a consequence, the proportion of newly assisted households, that are in the greatest need, has steadily risen.

 

The ACT has created 557 new public housing tenancies in 2009-10 and 89.2 per cent of these were allocated to people in the greatest need from the public housing register. This rate of priority allocation was second only to Tasmania, which allocated 94.8 per cent of its 291 new allocations to people in the greatest need. This targeting to a highest need also influences the ability of housing organisations to be responsive to people’s changing housing needs over time. So when we look at the total number of people housed in the ACT for 2009-10, 83 per cent of these were people off the priority or high needs housing list. This means that clients must have crisis or priority responses needs to move.

 

The national average for priority allocations was 74.9 per cent, with Queensland at 87.7 per cent and South Australia at 80.3 per cent, which were also above the national average. Victoria, at 72 per cent, New South Wales at 69.5 per cent, Western Australia at 61 per cent and Northern Territory at 45.7 per cent are all well below the national average.

 

New South Wales has created the most new households in 2009-10, with 5,851. Victoria established 3,799, Queensland 3,886, Western Australia 2,400, South Australia 2,249 and the Northern Territory 467.

 

Mr Speaker, the increased targeting of public housing has led to a more complex tenant population in public housing. 2009-10, the ACT reached a level where 90 per cent of its tenants’ population was on a rebated rent. This means their incomes are so low that their rent was more than 25 per cent of their income, so they got rent rebate from housing ACT. All jurisdictions face similar pressures, with New South Wales also at 90 per cent and other jurisdictions having a rebated rental population higher than 83 per cent of their total tenant population. The largest average rebate of $224.70 per week belongs to the ACT, which is $97.50 over the national average of $127.20.

 

So let us stop for a minute to think about that. Public housing tenants in the ACT on average receive rent assistance from Housing ACT on an average each week worth $224.70. That is a significant level of support and I am proud to be able to provide it to individuals and families who need it. New South Wales average rental rebate is $145.20. By way of comparisons, the Northern Territory’s average rebate is $157.70.

 

Over time, increased targeting to the most disadvantaged has placed too critical pressures on our system. The targeting of clients it affects puts extreme pressure on the rental revenue stream. The complexity of this client group also faces upward pressure on the cost of service. Additional resources are required to assess and manage complex tenancies and their impact on the community, as well as increased costs for maintaining, repairing and upgrading stock portfolio. For the majority of jurisdictions in Australia, except the ACT, the response to these pressures has been to sell properties in order to reduce maintenance and property cost, and to fund ongoing operational cost.

 

The ACT government has not taken this approach. Stock numbers have been maintained over the life of this government but by the end of the Nation Building program, we will add over 500 new houses to our stock. The national funding system provides perverse incentives for jurisdictions to sell stock and there is no penalty for jurisdictions that have reduced their portfolio over time.

 

The commonwealth government funding of states and territories is allocated on a per capita basis, rather than the proportion of public housing dwellings managed. So the less stock you have, the higher per property share of the available funding there is to maintain stock and support tenancies. This funding system significantly disadvantaged the ACT as we have the highest ratio of public housing stock in Australia and a commitment to maintain the stock numbers.

 

Mr Speaker, the 11,500 properties owned by Housing ACT is almost 8 per cent of the total dwellings in Canberra, which gives the ACT the highest ratio of public housing in Australia. The ACT continues to press the case for funding reform to remove those perverse incentives to reduce stock numbers and the funding issue is under discussion and negotiation as part of the ongoing work of the housing ministers under the National Affordable Housing Agreement.

 

In summary, Mr Speaker, I have provided a broad overview of some of the major reforms initiatives I am progressing with my colleagues under the National Affordable Housing Agreement. With respect to community housing, we are growing and supporting the sector. I have also painted the picture of increasing targeting for public housing and the impact that has on the rental revenue stream of all state and territory housing authority and the social impact as well.

 

Mr Speaker, from creating vibrant and community housing organisations, to growing social housing stock and supporting tenants, and applicants most in need, it is clear that this government is at the forefront of progressive social change.