AS the federal government continues to try to sell its budget, details of cuts continue to emerge.
One budget issue that has disturbingly not received much attention is the cut to the National Rental Affordability Scheme (NRAS). The fifth round of funding will not proceed, saving $235.2million over three years (applications for this round of funding were submitted to the government in the middle of last year). The only consolation is that NRAS properties already tenanted will not have their funding altered.
NRAS was a partnership between the federal government and the states to invest in affordable rental housing. It offers financial incentives to the business sector and community organisations to build and rent dwellings to low- and moderate-income households at a rate that is at least 20per cent below the market-value rent.
The decision to discontinue NRAS is extremely disappointing and mystifying, as it was helping to address the worsening crisis in affordable housing in the Hunter and the rest of Australia.
NRAS was a cost-effective scheme that supported the government’s budget philosophy of “ending the age of entitlement” because it encouraged housing providers to contribute their own funds and attract other private funds rather than just rely on government subsidies.
NRAS was a model of the government and the private sector working together to produce both adequate returns to investors and affordable rental housing at a lower impost to the public purse than any other model has delivered. The scheme was attracting private-sector involvement, but we have now lost a key mechanism to ensure that involvement continues.
Compass Housing manages more than 200 NRAS properties across NSW. It had worked with private developers to lodge an NRAS application for a further 1200 properties.
There has been some criticism of NRAS, with allegations that a few parties had exploited the scheme. Rather than be discontinued, it should have been reformed to close loopholes.
Housing is a fundamental human need. The problem is very simple: we have a lack of housing stock. Australia already has the least affordable housing of any developed country. Waiting lists of up to 10 years for social housing exist in the Hunter. We have rising homelessness – people living in cars or on people’s lounges.
Cutting programs such as NRAS without alternatives to increase housing supply means very low to moderate income-earning households will be trapped in an growing vicious cycle. Low stock means higher rents, which pushes more lower-income people out of housing.
It exacerbates the social consequences of homelessness and housing stress, including disenfranchisement, crime, mental illness and educational outcomes for affected children. Fewer households are formed and the birth rate decreases. The community will pay for these consequences in the long run.
The federal Housing Minister has said the government will conduct a review of the program, which could lead to future affordable housing programs.
He has suggested a review will be conducted this year into the Commonwealth’s role in housing provision. Yet, we have already had a NSW parliamentary inquiry and a federal Senate inquiry into affordable housing this year.
These reviews need to be consolidated and occur quickly. Social housing providers look forward to consultation with the governments at all levels. We have innovative solutions to unlocking investment in housing.
The announcement by the NSW government last week that it would incorporate 25 affordable housing units in the redevelopment of the Newcastle’s Empire Hotel site is a step in the right direction. The other important aspect of that announcement is that the title for those affordable housing units will be transferred to Compass Housing.
Transferring title to community housing groups is key. At Compass, we aim to leverage up to 25per cent of the value of a property as borrowings to develop more affordable housing.
We need action, not cuts. The solutions are before us. We don’t have time to waste as people’s lives are being turned upside down by a lack of affordable housing. It is ironic that cuts to housing programs are being made to save costs, but the community and governments are bearing further costs because of a lack of housing.
If the consequences weren’t so serious, it would be funny. Having nowhere to sleep or to bring up your family is no laughing matter.
Greg Budworth is chief executive of Compass Housing. The Newcastle-based non-profit organisation is the largest provider of social and affordable housing in regional Australia.