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Social housing helps economy as well as renters

OPINION PIECE: Investing in housing helps not only the low-income and those in rental stress but creates jobs to build an appreciating asset, writes Greg Ogle in Indaily.

Three reports on housing released last week all reached one conclusion: that governments need to act to make renting more affordable. It was a deluge of data, but worth wading through to find out what is happening for those struggling in the rental market.

The widely recognised National Rental Affordability Index shows that for average income earners, Adelaide is the second least affordable capital city in Australia with median rents equalling 27% of average income. Hobart was least affordable.

It is not that Adelaide rents are higher than in Sydney or Melbourne, but average income here is proportionately lower, which leads to greater affordability difficulties.

However, the story is a bit different for those on low nationally-determined incomes (e.g. Centrelink payments, minimum wages). For people receiving those incomes, rental affordability is better in Adelaide than most other capital cities. But this news is not as good as it sounds because rent for those groups is still unaffordable. Median rent of relevant housing still accounts for well over 30% of income for JobSeekers, pensioners and single parents on Centrelink payments.

Of course, as with everything else, rental affordability was changed by the COVID pandemic and response. A report by UNSW City Futures Research Centre (and ACOSS) showed that of Australian capitals, Adelaide has had the second largest percentage increase in rents since the beginning of the pandemic (behind Perth).

The South Australian government’s initial response in addressing homelessness and rental affordability had good immediate results, but the report argues that overall the protections for tenants from rent increases and evictions were weaker here than elsewhere – although they were kept in place for much longer. And curiously, government rent relief provided through cash payments or land tax discounts for landlords was underspent – in South Australia it was $17.2m below the government’s initial estimate for 2020. This leaves some scope for further action on rental affordability.

In the end, despite the protection measures, South Australia had 3000 evictions in the first year of the pandemic. This was around half the rate of the previous year, which probably also shows that rental affordability was an issue well before the pandemic. Pandemics expose existing fault lines.

As the UNSW/ACOSS report concludes, while the COVID measures around the country have had some effect in providing emergency protections, they have not moved the country “towards the systemic change needed to tackle the deep-seated housing inequities increasingly recognised as a serious national problem”.

Front and centre of these systemic challenges is the declining stock of public and community housing. As a Grattan Institute article points out, with fewer people owning their own home or living in public and community housing, more poorer Australians are having to rent in the private rental market where they will be living in poverty or financial stress. Grattan’s report proposes building more public and community housing using a Social Housing Future Fund model to finance the significant investments required. Essentially, they propose a one-off $20bn national investment, with the dividend used to fund around 3,000 extra social houses every year. However, this funding would need to be matched by state governments – something that could prove a challenge.

Whether or not a future fund model is used, there is no doubt that more public and community housing is needed. The UNSW/ACOSS report noted above looks at projected social housing building commencements and losses over the next three years. While Victoria, Queensland, WA and Tasmania have all announced substantial new investments in public housing, South Australia has pledged little or no post-COVID housing stimulus and is mainly focused on replacing aging stock.

The report calculates that, as a result, SA will see a net increase of only 36 new social houses over the next three years.

Given population growth, that will see a further decline in the percentage of South Australians in public housing, and it is nowhere near enough when we had 17,000 applicants on the public housing waiting list last year.

But as SACOSS has constantly argued over the last year, public housing is not simply a welfare measure. It is an investment in a public asset which creates jobs in its construction, holds or accumulates value over time for government and the community, and puts downward pressure on rents for everyone by housing those who would otherwise be in the private rental market.

Greg Ogle is a Senior Policy and Research Analyst, SACOSS. This opinion piece was published in InDaily on 6 December 2021.