2016/7 Pre-Budget Submission
Cost Effective Affordable Housing Solutions February 2016
Contact Chantal Roberts Executive Officer Shelter WA
[email protected]
08 9325 6660 33 Moore Street EAST PERTH 6004
Contents Background ................................................................................................................................ 2 Recommendations ..................................................................................................................... 3 Increase the supply of social and affordable housing ........................................................... 4 Review eligibility for public housing and improve access for those in greatest need and with special needs. ......................................................................................................................... 5 Funding for community services contracts to remain in line with the Wage Price Index..... 6 Expand rental brokerage as a cost-effective solution to the affordable housing shortage .. 6 Specify a return of a minimum of 15% social and affordable housing from the disposal of all state realty assets .................................................................................................................. 8 Deliver visitor accommodation in two sites in the metro area ............................................. 8 Continue to prevent and develop pathways out of homelessness through continued Specialist Homelessness Services funding ............................................................................. 9 Conclusion ................................................................................................................................ 10
Shelter WA – Pre-Budget Submission 2016/2017
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Background Shelter WA welcomes the opportunity to provide this 2016/17 pre-budget submission to the Department of Treasury on issues impacting affordable housing and homelessness in Western Australia. Our submission focuses on cost effective ways the WA Government can increase the amount of affordable housing and address homelessness in the state, given the challenging economic environment. Various sources were drawn together to inform this submission, including a joint sector consultation hosted by Shelter WA and the WA Council of Social Services (WACOSS) on 12 August 2015, which involved 46 housing and homelessness service providers, advocates and community members. Shelter WA also drew on housing research, as well as feedback and information collected through its membership of committees in undertaking its peak body functions. Finally, we consulted closely with the Housing Authority in relation to the costings contained within this submission.
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Recommendations Increasing unemployment, casualisation of the labour market, and greater economic uncertainty are contributing to housing insecurity for many Western Australians. Although the private rental vacancy rate, at 5.2%, is the highest it has been in some years, many – including over 22,000 people on the social housing waitlist - are still unable to secure appropriate, affordable housing. The economic downturn in WA has created new challenges for housing consumers, but it could also provide new opportunities for the WA Government to address the shortage of affordable housing. For example, some private property investors may be willing to rent to social housing applicants if guaranteed a steady rental income. Given the current economic climate in Western Australia, Shelter WA recommends the State Government embrace cost-effective measures to create sustainable, affordable housing, while also stimulating the economy. Recommendations: 1. 2. 3. 4.
Increase the supply of social and affordable housing; Increase priority access to housing for those in greatest need and with special needs; Funding for community services contracts to remain in line with the Wage Price Index; Expansion of the rental brokerage program as a cost-effective solution to the affordable housing shortage; 5. Specifying a return of a minimum of 15% social and affordable housing from the disposal of all state realty assets; 6. Delivery of visitor accommodation in two sites in the metropolitan area, in Perth and either Fremantle or Midland; and 7. Continue to work towards the prevention of, and develop pathways out of, homelessness with ongoing funding for specialist homelessness services.
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Increase the supply of social and affordable housing Issue: Shelter WA supports the State Affordable Housing Strategy and its goal to achieve 30,000 affordable housing opportunities in WA by 2020. Thus far, the Strategy has been most effective in developing affordable home ownership opportunities but has been less effective at increasing the provision of social housing. In fact, according to the Productivity Commission’s 2016 Report on Government Services, there has been a net decrease in the number of social housing dwellings in Western Australia. The decrease, from 42,496 social housing dwellings in 2012-2013 to 39,969 in 2014-2015, coincided with growing demand for social housing.1 The social housing wait list was 22,696 in 2015, up from 20,003 the year before.2 The extent of demand is likely to exceed those on the wait list since WA maintains the lowest income eligibility of any jurisdiction, just under the weekly income of a single person on an Aged Pension.3 There is an urgent need to invest in the growth of the social housing sector. Recommendation: The Social Housing Investment Package (SHIP), announced by the State Government in 2015, will deliver 1,000 additional social housing dwellings, aimed at halving the number of seniors and families with children on the priority housing waitlist. This meaningful investment should be continued beyond 2017, in order to enable a continued increase in net social housing stock in the state. As with the current SHIP, a significant proportion of new dwellings should be delivered in partnership with not-for-profit entities and the private sector to maximise the public investment in low cost housing. This investment could also be combined with redevelopment of existing underutilised and declining Housing Authority assets, to increase both social and affordable housing in the state. The current state of the WA economy offers an ideal opportunity for the WA Government to maximise investment in social and affordable housing. Building costs have moderated, which could result in a two-pronged gain for Government – through developments at decreased construction rates to those available over recent years; and in boosting the construction industry, thereby lifting employment and stimulating the WA economy. A report prepared by KPMG for the Housing Minister’s Advisory Committee found that investing in social housing
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Productivity Commission (2016) Report on Government Services: Volume G Housing and Homelessness, Table 17A.3 2 Productivity Commission (2016) Table 17A.5 3 Income limit: $430 per week for a single with no children and $540 for people with a disability. Productivity Commission (2016) Table 17A.62. Single Aged Pension: $434 including pension supplement and energy supplement. Department of Human Services (2016) Age Pension Shelter WA – Pre-Budget Submission 2016/2017
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has a multiplier effect of 1.3 through increased employment and spending by the construction industry and its suppliers.4 Impact on Budget: $280 million per annum in forward estimates to add a minimum of 500 dwellings per year to the amount of social housing stock. In addition to providing positive outcomes for individuals and families, investing in social housing contributes to economic growth, and will stimulate the construction sector. Hence this investment will in fact enhance the WA economy.
Review eligibility for public housing and improve access for those in greatest need and with special needs. Issue: There is a need to review allocations and eligibility policies for social housing in Western Australia with a view to improving access for those with greatest or special needs. According to the Productivity Commission’s 2016 Report on Government Services, Western Australia has performed poorly over some years, relative to other states, in allocating housing to those with greatest need. It reports that Western Australia has over recent years placed fewer households with high needs in housing than any other state and takes longer than any other state to do so.5 While Shelter WA acknowledges that allocations policies are not directly comparable between states, and that a tenant mix is desirable, the statistical gap, according to the Productivity Commission, in the equity outcomes between Western Australia and other states is concerning. Western Australia’s income limits for public housing are also the lowest in the country. While Shelter WA acknowledges there are some differences in the way combined household income limits are assessed for the purposes of housing eligibility which may counter this effect, they are still among the lowest in the country and have not, according to our research, been reviewed since 2004, despite the increases in Centrelink payments and the unprecedented rise in housing costs since that time. This unrealistically low income eligibility criteria in fact serves to exclude many vulnerable households from eligibility for social housing. Recommendation: There is an urgent need for the policy settings for income limits and the allocations policy in relation to need to be reviewed to ensure an appropriate emphasis on equity outcomes.
4 5
KPMG. (2012). Housing Minister's Advisory Committee: Social Housing Initiative Review. Productivity Commission (2016) Report on Government Services: Volume G Housing and Homelessness 17.2
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Impact on Budget: Shelter WA understands that changes to policy affecting eligibility and equity will have funding impacts. However, we would be supportive of modelling of these changes using existing resources. The impact on the budget would therefore be negligible, although there will be some costs associated with the policy review process.
Funding for community services contracts to remain in line with the Wage Price Index Issue: The recent review of the annual funding indexation to Western Australian community services will impact on the provision of community services at a time when these services are most needed. Community Services should continue to be indexed in line with the Wage Price Index, rather than the lower Consumer Price Index so services can maintain their key cost centre which is wages, noting that wage growth will be lower than in previous resource boom times. Shelter WA acknowledges the impact on government revenue as a result of the changes in global economic conditions, and the downturn to WA’s economy. These changes have also resulted in significant negative impacts on local employment; which in turn will see an increased demand for community services in the state, including for housing support, financial counselling and emergency relief. Housing and homelessness community service providers are struggling to meet this increased demand, while at the same time facing a tightening funding base, further reduced with the changes in annual indexation. At this time of increased demand for services, WA community services require additional government support to ensure those most in need have access to appropriate services. Recommendation: Indexation levels for housing and homelessness services should be maintained, in line with the Wage Price Index, so services can keep up with demand for critical housing support in a time of increasing economic difficulty for Western Australian citizens. Impact on Budget: Maintain funding for human services, including housing and homelessness services, in line with the Wage Price Index. (Cost $30.4 million).
Expand rental brokerage as a cost-effective solution to the affordable housing shortage Issue: Even with a relatively high vacancy rate, many low income households continue to experience difficulties in accessing affordable housing in the private rental market. To some extent, this is impacted by the large number of households renting below their affordability level. To another extent, it is also impacted by the unwillingness of landlords to take risks in renting to low income households with limited tenancy histories. The increasing social housing wait list does little to address the increased need for affordable housing in WA, given the limits of the eligibility criteria for public housing. Shelter WA – Pre-Budget Submission 2016/2017
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In accordance with a 2014 report by the Bankwest Curtin Economics Centre, in Western Australia 36% of households in the bottom 40% of household income distribution spend more than 30% of income on housing costs, 23% spend more than 40% and 14% spend more than 50%.6 These households are in housing stress as they are unable to access affordable housing in our current housing market, and social housing also remains inaccessible for many of these households. Recommendation: As a cost-effective solution, Shelter WA recommends expanding the Rental Pathways Scheme, to support people on the social housing waiting list to access affordable private rental accommodation. Providing subsidies and incentives to private property investors, and exploiting the higher vacancy rate to negotiate affordable rental prices, is a sensible way to make use of available housing and address a persistent housing issue at minimal cost. The Housing Authority Rental Pathways Scheme assists over income tenants to transition out of public housing and into the private rental market. Extending the Rental Pathways Scheme to those on the waiting list, thereby diverting them from the social housing system, could provide people with subsidised housing in the private rental market and offer appropriate support services (i.e. tenancy support, links to employment/training, financial counselling) at a fraction of the cost of housing them in public housing. It could be structured as a fixed term program (3-5 years), and delivered by the non-government sector, to target support to those with the capacity to increase their income through employment over the period of the support. Such a program takes advantage of the high vacancy rate, provides security to landlords to rent their property, and enables tenants to access the private rental market in a variety of locations throughout the metropolitan area, avoiding a concentration of social housing. The program could also be beneficial in regional areas with high private rental vacancy rates. Impact on Budget: Total cost $1.8 million per year, based on $7,200 per household (plus $1,800 administration) for 200 households on the wait list, compared to a deeper subsidy of $15,000 per household, per year7, which is required to house someone in public housing. This initiative could be funded by re-allocating funding from the First Home Owners’ Grant (FHOG), which has an inflationary impact on the housing market.
6 Bankwest Curtin Economics Centre (2014) Housing Affordability: The real costs of housing in WA, Focus on Western Australia
Report Series No. 2, Bankwest Curtin Economics Centre: Perth. 7 Housing Authority (2015) Annual Report 2014 – 2015, Housing Authority: Perth, p.29. Shelter WA – Pre-Budget Submission 2016/2017
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Specify a return of a minimum of 15% social and affordable housing from the disposal of all state realty assets Issue: The WA State Government is under growing pressure to provide an increasing number of services within a limited budget and has begun to identify state owned assets to be sold to the private sector. When this has happened in other jurisdictions, many sites have been lost from public ownership without a true assessment of their cultural, environmental or social significance to the public. Recommendation: Sales of public realty assets should be considered carefully with regard to the best outcomes, including social outcomes, for Western Australians. The sale of any state assets in WA should be considered in the context of the State Affordable Housing Strategy, which states that all government land and housing developments must include a minimum of 15% affordable housing targeted at low-to-moderate income households. Impact on Budget: No expenditure is required to put this measure in place, however there may be a minimal impact on the budget in terms of foregone revenue due to caveats on the sale of state assets to include the requirement for 15% affordable housing over extended time periods. The benefits to the State far outweigh the minimal loss in returns from asset sales, increasing the amount of affordable housing and lifting Western Australia’s liveable status.
Deliver visitor accommodation in two sites in the metro area Issue: Aboriginal peoples travel from their traditional lands to the metropolitan area or other regional centres for many reasons, often resulting in significant numbers of Aboriginal peoples from Country sleeping rough or staying in overcrowded dwellings. Crisis accommodation providers are unable to cater to the needs of these visitors, due to the size of family groups or issues associated with addictions. In many cases the distance from health and other facilities is also problematic. For those visitors who travel for medical treatment or to accompany family, the Patient Assistance Transfer Scheme is not responsive to the needs of these family groups for appropriate accommodation, nor to the realities that many patients have addictions which cannot be resolved instantly by virtue of the allocation of accommodation in specific locations. Recommendation: Low-barrier visitor accommodation centres could provide safe accommodation for Aboriginal visitors and their families while they remain in Perth. This would also reduce the impact of large family groups sleeping in parks in neighbourhoods and city centres, and the issues related to homelessness in public open space. There are currently short-stay visitor facilities in Kalgoorlie and Derby, both managed by the not-for-profit sector, and funded through Royalties for Regions. The Kalgoorlie site has been Shelter WA – Pre-Budget Submission 2016/2017
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in operation since 2012 and is a successful example of this type of facility. With the cuts to future funding in remote communities from the Commonwealth Government, Shelter WA would urge the State Government to provide funds for similar facilities in the metropolitan area of Perth, designed in conjunction with Aboriginal communities to provide culturally appropriate short-stay accommodation and supports. Impact on Budget:
$23 million to build two low barrier visitor centres in the Perth metropolitan area.8 $600,000 per annum over forward estimates for ongoing operating costs of both centres.9
Continue to prevent and develop pathways out of homelessness through continued Specialist Homelessness Services funding Issue: Almost 10,000 Western Australians experience homelessness, including 1,500 children under the age of 12.10 People experiencing homelessness in our state require access to suitable accommodation as well as support services to help address underlying issues, such as undiagnosed mental health issues, family and domestic violence, addictions and/or poverty. Recommendation: Adequately addressing homelessness in WA will require an ongoing investment from the State Government. Funding is needed for both service provision and capital expenditure in future funding. This is particularly important given there was no funding allocated for capital works in the 2013-14 and 2014-15 extensions of the National Partnership Agreement on Homelessness (NPAH) by either the State or Commonwealth Governments. Numerous studies have shown that addressing homelessness reduces costs to government in other areas. In their study on The cost of homelessness and the net benefit of homelessness programs, Zaretzky and Flatau found the net savings to Government of providing specialist homelessness services, through reduced costs in health and justice services, is up to $3685 per client per year.11 This research confirms that clients participating in homelessness services present less often at emergency facilities, and are less likely to have ongoing engagement with the justice system. 8
Based on capital costs of $11.6 for 31 unit Derby Visitor Centre. Based on annual operating cost of the Derby Visitor Centre of $300,000 per annum. 10 ABS (2012) 2011 Census of Population and Housing: Estimating Homelessness, Australian Bureau of Statistics: Canberra. 11 Zaretzky, K., & Flatau, P. (2013). The cost of homelessness and the net benefit of homelessness programs: a national study. Australian Housing and Urban Research Institute Final Report No. 205: Perth. 9
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Impact on Budget: Shelter WA is seeking a commitment from the Western Australian Government for homelessness funding in forward estimates, to ensure specialist homelessness services continue to provide valuable services to address homelessness in our community and retain specialist staff. For the 2016/17 WA Budget, Shelter WA recommends providing $15 million for homelessness services and $5 million capital funding for infrastructure.
Conclusion Shelter WA acknowledges the WA Government is under increasing pressure to deliver essential services while restricting its expenditure. Our recommendations in this submission are focused on utilising public resources efficiently and effectively to meet current community needs and to invest in the future of Western Australia. Through better management of current assets, combined with programs that channel investment into social and affordable housing and homelessness services, the State Budget for 2016/17 can alleviate some of the current high demand for public housing, homelessness services and affordable accommodation, while achieving cost savings in other areas in the future. Increasing the supply of affordable housing, preventing and addressing homelessness and assisting those who are homeless to access and maintain accommodation quickly is a cost effective use of public funds. Ensuring low and moderate income families have access to safe, affordable accommodation leads to better social outcomes in terms of engagement in employment and education, and improved health and well-being now and into the future.
About Shelter WA Shelter WA is the peak body for social and affordable housing in Western Australia. Shelter WA is also committed to the elimination of homelessness across the state, through provision of social and affordable housing and appropriate support services. Shelter WA was founded in 1979 as an independent community based peak body committed to accessible, affordable and secure housing for Western Australians. It provides a link between government and the community through consultation, research, systemic advocacy, policy advice, and community engagement. Shelter WA is in large part funded by the Western Australian Housing Authority and thanks the State Government for this support.
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