WHY DO YOU BUILD ME UP?
We need to manage social housing better
Social housing? That was that 1960s thing, right?
Of course, Anthony Albanese knows the valuable role that social housing can play: he grew up in it in the inner Sydney suburb of Camperdown during that decade.
Or does he?
Yes, there are too few houses
I’ve previously posted my views that more social housing is needed amid rising homelessness (Under the Bridge).
In one of the most rapid periods of population growth in Australia’s history, the number of social dwellings has stagnated. While Australia’s population has grown 12% since 2013, the stock of public and community housing has grown about 4%.
Source: 1hand calculations based on Productivity Commission Report on Government Services and ABS population data.
This continues a longer trend. The proportion of the population in social and community housing has plummeted in the past three decades. Whereas 6.2% of dwellings were social housing in 1991, by 2021 that figure had fallen to 3.6%.
Social and community housing, % of all dwellings
Source: Vulnerable Private Renters: Evidence and Options updated by 1hand based on ABS 2021 census data.
However you cut it, governments are doing less on social housing than at any time since the early 1950s. (I’m being generous when I say ‘governments’ in not naming names, but this is legally a State responsibility.)
Why build social housing at all?
Social housing is expensive to run. There are long, administrative processes for managing waiting lists, selecting the most worthy candidates from off those lists when a dwelling becomes available, as well as the cost of managing rent collection and repairs and maintenance which is only exacerbated by the ageing of the social housing stock. On top of that, state governments carry higher financial debt and hence make larger interest payments every year, meaning that you as a taxpayer are paying more taxes.
The objectives of social housing that all states and territories have agreed are to provide social housing assistance to low income people who do not have alternative suitable housing options that support their social and economic participation and their wellbeing that is:
timely and affordable
safe
appropriate, meeting the needs of individual households
high quality
sustainable.
To verbal every state and territory government in the country, my take is that the point of social housing is that some people can’t rent privately.
I think of three groups, but there may be more.
The first is people that have a poor track-record in the private market. Perhaps they lost their job recently, couldn’t pay their rent for a few months and have found themselves blacklisted by real estate agents.
Then there are people that have particular needs of which reasonable accommodation by a private landlord isn’t feasible given insecurity of tenure. I’m thinking wheelchair ramps, for example, in some circumstances. (More to follow in a future post on insecurity of tenure in the private rental market.)
Then there are people with personal histories that make it unlikely they will be able to succeed in securing private rental housing. Here, I’m thinking of people recently released from prison, for example.
Whether you are unemployed, disabled or a reformed criminal, this country is rich enough to house you, with appropriate quid pro quos. The private rental market often isn’t the best place to do that work with you.
If you are ‘merely’ poor, then you should be supported in the private rental market instead.
Italics above are mine. Any rental housing, private or social, should be safe and of reasonable quality. And we have social welfare payments and Commonwealth Rent Assistance that are (at least conceptually) designed to make private rental housing affordable.
Unfortunately, for many social housing is not timely, appropriate to their needs, nor supportive of their social and economic participation …
The problem with social housing is that people rarely move out
‘Australia’s social housing system is broken. People in similar circumstances can receive vastly different rates of financial assistance depending on whether they rent in the private or social housing market. Even within social housing, levels of implicit assistance vary significantly.’
Productivity Commission Human Services Review, 2017.
When Australians need food, we give them cash in the form of welfare payments. We don’t say: ‘I’m sorry, you can have brussels sprouts, it’s all we’ve got so take it or leave it’. That whooshing sound you hear is 3 million kids breathing a sigh of relief.
When Australians are sick, we don’t tell a patient that needs a coronary artery bypass: ‘I’m sorry, you can have a hip replacement instead, it’s all we’ve got so take it or leave it’.
But that is, roughly speaking, how we manage social housing.
State governments do a decent job of triaging families in the most parlous conditions into social housing as dwellings become available.
But, social housing provides people with little choice over where they live, providers have little incentive to improve tenant outcomes (such as through improving the quality of properties) and income-based rents provide social housing tenants with little incentive to move out when their needs change.
Is the housing appropriate to their needs and does it support their economic and social participation? Often the answer is: No. It’s whats available and it may be suburbs away from their current employment and support networks, or future opportunities.
Is the housing timely? That varies with some spending up to 10 years on waiting lists; those most desperate are prioritised well, but still commonly wait for long periods between when crisis accommodation runs out (a couple of days to a couple of weeks) and when social housing becomes available (a few months to ‘how long is a piece of string?’).
And then they stay there.
If you are already in social housing and plan to move to somewhere with better employment prospects, you could be waiting years for another social housing offer in that region.
Those in social housing generally have rents capped at 25% of income, but sometimes 30% depending on the provider.
Those renting privately and eligible for Commonwealth Rent Assistance generally have 30% of their rent paid up to a maximum of about $90 for a single per week. Sometimes a fraction more or less depending on family circumstances.
The Productivity Commission estimated in 2017 the gap between the level of support for households in the same financial circumstances within social housing and private rental housing (through Commonwealth Rent Assistance) based on the administrative data available for some regions at that time. They estimated that:
‘as a whole, people living in public housing in Victoria receive $200 million more in financial assistance annually (or about $2500 per household) than they would if financial assistance was provided through the current Commonwealth Rent Assistance. In South Australia households receive about $80 million more (or about $1750 per household) and in the Australian Capital Territory households receive about $100 million more (or about $8500 per household).’
Social housing should be available. Indeed it should be abundantly available, in my opinion, for people with no other housing option. But to effect that change for those in most need, we have to move people out of social housing when their circumstances change — both in the interests of the incumbent tenant to allow them to pursue new employment and social opportunities, and in the interests of the person desperately waiting next in line.
That means supporting and promoting a viable path out that includes narrowing the gap between assistance provided to low income households in similar financial circumstances either by increasing social housing costs as a percentage of income (for example from 25 to 30%), or by increasing rent assistance rates further, or a combination of both options. It also includes wrap-around services for people leaving social housing.
And, importantly, it means providing a credible expectation that people that leave social housing can again move into social housing in the future if they again need it. Increasing the rate of exit from social housing will also reduce waiting times to enter social housing.
Summing up
When all the King’s Horses and all the King’s Men couldn’t put Humpty together again, finding more horses and more men was never going to be enough.
So it is with the broken social housing system. Building more houses isn’t enough.
We need to learn to use social housing more effectively. Building will relieve the logjam of applications to social housing only fleetingly; better equalising rates of support between private and social rentals would not only allow the most needy to enter social housing sooner, but also relieve the incumbent social renters of the albatross around their neck that has for too long worked against their pursuit of greater economic and social success.
Social housing should provide a means for, rather than a barrier to, people lifting themselves up.