Affordable Housing

Labor’s affordable housing policy criticised

Labor’s policy to pay developers for building affordable rental homes has been criticised for being “awful value”.

Two of Australia’s top think tanks have slammed the “building on the National Rental Affordability Scheme” policy released in December that would give owners or managers of new homes $8500 a year for 15 years to rent their properties out for 20 per cent below market rates.

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It aims to build about 250,000 new homes and will cost about $6.6 billion over a decade, but the Grattan Institute’s John Daley said it would be “pretty awful value if it is anything like the last one”.

The plan revamps a previous policy launched by the Rudd government in 2008 when only 31,000 dwellings were built and subsidies of $11,048 a year paid.

Mr Daley told The Australian the subsidy was higher than the typical rent reduction for tenants, and landlords kept the difference.

He said the flat rate per dwelling also created an incentive to build smaller homes in cheaper locations, suggesting many of those built were apartments and studios that were unsuitable for those the scheme was trying to help, such as single mothers.

In a column for The Australian, Housing Minister Paul Fletcher suggested the proposed subsidy would be about double what typical renters would save under the scheme.

“Where is the sense in spending a dollar of public money to generate 56c in rent relief for low-income tenants?” he wrote.

Centre for Independent Studies research director Simon Cowen agreed a revamped scheme would be a waste of money and pointed out Commonwealth Rent Assistance already provided direct cash to support renters.

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Mr Cowen believes housing should be dealt with by state governments, and it was up to them to address supply issues in places like Melbourne and Sydney.

“The first version of this scheme didn’t generate nearly as many houses as hoped — that is because these schemes don’t ­address the real issues blocking supply: state government taxes and charges and local government planning laws,” he said.

However, Labor’s spokesman for housing, Senator Doug Cameron, said many were opposed to ending the subsidy including the Housing Industry Association, Urban Development Institute of Australia, and National Shelter.

“Nearly two-thirds of the dwellings Labor built under NRAS were two or more bedrooms,” Senator Cameron said.

Last year a report revealed Australia was facing a massive housing shortfall unless governments ramped up affordable home building.

The Australian Housing and Urban Research Institute (AHURI) warned the country would need an estimated 727,300 additional social housing dwellings in the next two decades — with the current shortfall sitting at 433,000 homes.

Report co-author Dr Laurence Troy, from UNSW Sydney, found the number of public housing units built by Australian governments had shrunk significantly from the 8000 to 14,000 new public housing units a year that were being built 40 years ago.

“Australian governments have been recently funding only around 3000 new social housing units per year,” he said. “We estimate that output of about 15,000 is needed just to stop the existing shortfall from getting even bigger. To fix the current problem as well, over a 20-year period, calls for a tenfold increase.”

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