Page 1184 - Week 05 - Wednesday, 24 June 1992
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The Commonwealth-State Housing Agreement is the major avenue through which the Commonwealth distributes funds to the States for direct expenditure on housing. Housing programs funded through the Commonwealth-State Housing Agreement include public housing, capital funding for crisis accommodation, cooperative funding, mortgage relief, Aboriginal housing, youth housing, rooming houses and estate improvements. The Commonwealth-State Housing Agreement is a specific purpose grant from the Commonwealth to the States, most of which is matched on a dollar for dollar basis. Nearly $800m of the $1.05 billion housing grant is untied, with a balance dedicated to particular housing needs such as the aged, the disabled, Aboriginal housing, crisis accommodation, and local government and community housing. The impact of untying the Commonwealth-State Housing Agreement is what I shall now focus on.
The untying of all or part of the Commonwealth-State Housing Agreement funds would be devastating. All that has been achieved over the past 10 years would be lost. It would see the Commonwealth split its funds. A portion of the funds would become part of the pool of moneys which the Commonwealth provides to the States as general revenue. The other part of the funds would be used to provide a uniform rental assistance scheme to cover both the private rental market and a new social housing sector. Untying the Commonwealth-State Housing Agreement funds would provide no guarantee that present funding for public housing, present principles or the present range of programs under the Commonwealth-State Housing Agreement would continue. The State governments would become responsible for meeting the housing needs of people but would have no legal or financial obligation to do so. The States would be able to spend their allocation on whatever they see fit. Some States would undoubtedly desert their responsibilities for public housing.
The Federal Treasurer is knocking on the wrong door if he believes that the solution to the housing crisis is to dismantle the Commonwealth-State Housing Agreement and to replace it with a rental allowance subsidy. A 1989 Econsult study found that, over the long term, expenditure on a rental subsidy would be much less effective than sustained development of public housing. It found that, over a 20-year period, up to 65 per cent more households would receive assistance if funds were channelled to public housing rather than rental subsidy. A subsidy to renters in the private market obviously has the attraction of removing immediately the largest group of those defined as suffering housing stress. It is thus a political magic wand solution: Define housing stress, provide a subsidy to prevent people from being covered by this definition, and housing stress disappears. People in housing stress are those who are paying more than 25 or 30 per cent of their income on housing costs. It is highly likely that the result of a rent assistance subsidy in the private rental market will be an increase in rents. It certainly provides a measure of rent insurance for the entrepreneur.
Commonwealth-State Housing Agreement funds have recently been the primary source of finance for the housing construction industry. CSIRO research indicates that residential building has very high job multipliers because it is labour intensive and because it uses mainly local materials. A rental subsidy may lead to an increase in private rental accommodation, but a significant part of that increase will come from existing stock rather than new stock that is required. That new stock, newly built, almost invariably will be on the suburban fringes, if it is affordable at all for the lower income groups. This, then, will simply exacerbate the problems of isolation and lack of social infrastructure and reinforce the social
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