Experts disappointed in federal budget's lack of focus on affordable housing

Housing providers and experts have slammed the federal government for failing to deliver a missing puzzle piece to boost housing supply for low and moderate-income earners in this week’s budget.

Though lower income earners were dubbed budget winners thanks to personal tax cuts, they would be better off if the government focused on increasing affordable housing, according to the NSW Federation of Housing Associations.

“If you’re on a very low income any extra bit of income you can keep is gratefully received,” said chief executive Wendy Hayhurst.

“But if you look at the difference between affordable housing rent and market rent that would make a massive difference, if more people could get [subsidised rent].”

According to the federation’s calculations, the disposable income of a inner Sydney renter on the minimum wage would be almost four times higher if they were offered below market rent instead of a tax cut.

Fewer than one per cent of properties in Sydney and Melbourne are affordable for people on welfare or single people on the minimum wage, according to Anglicare’s recent rental affordability snapshot.

While few housing budget measures were expected to be announced after the raft of changes last year, experts had hoped for a subsidy to help plug the funding gap caused from renting affordable housing out at below market rate.

Without additional funding it’s feared the new affordable housing bond aggregator, which will provide cheaper and long-term finance for the community housing sector, will do little to encourage investment. 

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“They brought out the bond aggregator which is great, but if there isn’t any resource to fill that financing gap, I think we’ll be struggling to get investment,” Ms Hayhurst said.

If just a portion of the $140 billion that personal tax cuts will cost the government was directed towards a subsidy similar to the National Rental Affordability Scheme to make affordable housing more appealing to investors, it could make a huge difference, she said.

Ms Hayhurst said spending on infrastructure and congestion could also be shaved to improve affordable housing supply, and noted building more affordable accommodation closer to where people worked would ease pressure on infrastructure and transport networks.

She added it was disappointing the government would not make changes to the capital gains tax discount or negative gearing, as that could redirect home ownership away from investors and back to first-home buyers, while also bringing in more revenue the government could use to fund affordable housing. 

Hal Pawson, associate director of the University of NSW’s City Futures Research Centre, said it was it was “glaringly obvious” that the National Housing Finance and Investment Corporation wouldn’t work as is.

“I think the [government] is very well aware that the [bond aggregator] makes no sense and will do absolutely nothing unless there is additional support … it’s not going to go anywhere without another piece of the puzzle,” Professor Pawson said.

He suspected the federal government had hoped that if they created the aggregator structure, it could encourage the states to supply additional revenue under the new National Housing and Homelessness Agreement, also announced last year. 

“They were saying states would have to supply specific affordable housing targets, commit to using planning powers to deliver more affordable housing, that they should make new commitments to further transfes public housing to community housing providers,” he said. 

“It’s disappointing that a year later, as far as we know, nothing that has eventuated from that.”

There has been little incentive for the states to “play ball” when it comes to establishing the new national agreement, according to Leonie King, chief executive of affordable housing provider City West Housing. 

“[The federal government] is getting the states to negotiate agreements with existing funding, there are no real incentives for them to play ball,” Ms King said.

The federal government would need to put more money on the table and tie it to planning reforms and specific housing goals, if they wanted the state to jump on board. 

Ms Hayhurst said government could not continue to ignore such a large segment of the population with an increasing number of people in rental stress. 

“If they’re not going to put money into affordable housing how are they going to accommodate cost of not doing it,” she said, noting a lack of affordable housing had negative flow on affects on consumer spending, health, education and transport.