Speech to NSW Federation of Housing Associations Conference in Newcastle

Speech
  • Minister for Indigenous Employment and Economic Development
  • Minister for Sport
  • Minister for Social Housing and Homelessness

NEWCASTLE
10 NOVEMBER 2010

ISSUES: ADDRESS TO THE NSW FEDERATION OF HOUSING ASSOCIATIONS CONFERENCE

MARK ARBIB:

Can I start of course by acknowledging the traditional custodians of the land on which we meet and pay my respects their Elders past and present.

Distinguished guests, ladies and gentlemen, it’s a great honour to be with you today and can I thank the NSW Federation of Housing Associations for the invitation to speak at this conference and I certainly look forward to speaking at future conferences.

Having been to many conferences and spoken at many conferences, I think I lucked out on this one. You always want to be the first speaker on the first day and you certainly don’t want to be the speaker on the morning after the dinner and the awards ceremony. Can I say, congratulations to everyone here today, congratulations, you’ve made the second day.

For me this is a new portfolio and I have been in the job for less than two months. Can I say – and I know you will understand this because I’ve seen the work that you do and understand the importance of the work that you do – that it’s a great honour to have responsibility for my new portfolio – Social Housing and Homelessness. Its connections to and importance to the lives of many people is something that I am always very aware of.

It’s an area where there is great capacity to make a real difference to the lives of Australians who are disadvantaged – suffering from drug dependency, poverty, mental illness, indigenous background – and many other barriers to full involvement in mainstream Australian life. Housing – as you are all aware – is a way to bridge that gap.

I’m excited about the portfolio, I’m excited about the opportunities, and I’m excited about taking forward the strategy and the plans put in place by the previous Minister, Minister Tanya Plibersek, who I think everyone in this room and in the sector would agree did a fantastic job.

It’s important going forward – and I know that the Conference’s theme is The Future is Now is important – that you remember where you’ve come from. In the last two and a half years a great deal has happened in this country in terms of community housing.

When you look at the amount of investment the government is injecting into housing and the fight against homelessness, we’re talking about $20 billion dollars. There’s more to do and there are many challenges and I will be relying on you for your advice and feedback going forward.

I have to say, I am genuinely impressed with the innovation that many community housing organisations have shown – particularly the newer constructions. As Minister, I want to see the community housing sector continue to thrive and expand.

I had the opportunity to visit the Common Ground site in Elizabeth Street in Melbourne this week.

The service that Yarra Community Housing and HomeGround are able to deliver to the chronically homeless is an excellent example of what can be achieved when community housing organisations take the initiative and use their expertise to deliver innovative models that work and actually help change people’s lives.

Here in New South Wales, community housing has gone from strength to strength.

The number of dwellings owned or managed by mainstream community housing in NSW has grown from 10,000 in 2005 and are projected to reach 30,000 by 2012.

The impact on people who are homeless is very important to me as the Minister for Homelessness. Last year in NSW, more than 3,000 new households were allocated to community housing of which around one third went to people who were homeless.

Through COAG, it was agreed that the Australian and state governments would aim to achieve growth so that by 2014 as much as 35 per cent of all social housing stock would be managed by the not-for-profit sector – so the sector is going to continue to grow.

The growth of community housing is certainly a success story that you should all be very proud of and I want to continue to work with you all to deliver a strong and sustainable community housing sector into the future.

Part of this of course will be developing a new regulatory regime to further promote not-for-profit housing organisations using their asset base to lever access to funding from existing equity to finance further growth.

There is no doubt that one of the strengths of community housing lies in its sustainability as a financial model for social housing.

The sector’s mixed tenancy model and better tenancy management has meant that it has outperformed the state housing associations and introduced some much needed contestability into the social housing market.

As you would already be aware, the nature of public housing has shifted quite dramatically since World War II.

In the boom years following the war, public housing was built primarily to create affordable housing that people and families would transit in and out of as quickly as possible.

The purpose was to assist people (often working people) temporarily so that over time, they can work towards becoming more self-sufficient and then transfer out of public housing.

It was a safety net for the general population.

Over time, partly due to failure to maintain investment in line with population growth, public housing has by-and-large become a safety net for those in greatest need – that is the severely disadvantaged with complex support needs.

It has meant that we have a public housing system that has very little cash flow, is costly to maintain, is costly to support and as a result State Housing Associations have been in structural financial deficits since the early 1990s.

Despite the Australian Government making housing a priority and unprecedented levels of Government investment in social housing, the current public housing system is financially unsustainable as a model into the future.

I don’t think it’s any secret that the model is unsustainable and I’m sure many of you can attest to that.

The world has changed in so many ways since the 1950s and it’s important that our public housing system is addressing the needs of the modern Australian community and the challenges of the future.

The system is already failing many disadvantaged Australians.

We have more than 170,000 households on the waiting list around Australia.

That’s a lot of individuals and families who are struggling in the private rental market or who are homeless.

One of the areas of concern to me is the way in which the states receive Commonwealth funds.

Some states have resisted a shift from funding from a per capita basis to a per dwelling basis.

This means that the old system that creates no incentive for increase stock continues.

It means that in one state you could be getting more than $4500 per dwelling each year and in another state you would be receiving less than half of that at around $2000 per dwelling.

As a result, the more public housing a state has, the thinner they have to spread the Australian Government’s subsidy.

It is unacceptable and absurd that this funding system creates a disincentive to build more social houses.

This is something that I want to address in the next round of negotiations with the states and territories because the current system does not deliver adequate support for vulnerable Australians.

I am extremely concerned about the failings of a system letting families down now and letting families in the future.

When we look at the future, we’ve got to look at population growth and at the demographic shifts that are taking place across the country.

According to the Intergenerational Report, Australia could reach a population of 36 million people by 2050,.

This is up from our current population of 21 ½ million.

At the moment, we already have an imbalance between housing supply and demand, driving up the cost of housing and creating a market which is, for so many people, unaffordable.

Future demand for public housing is estimated to be a 28% increase in underlying demand, or around 93,000 houses by 2023.

In today’s dollars that would cost about $25 billion.

Governments cannot meet this challenge on their own – that is why I am determined to work with the community housing sector and the corporate sector to discuss what the Australian Government can do to encourage expanding stock through diversifying streams of investment.

I am also particularly concerned about demographic shifts as a result of the ageing of the population and the shifts that are going to need to occur in social housing.

The Housing Supply Council has found that the ageing of the population will have significant impacts on the housing sector as the proportion of older households is projected to double from 1.6 to 3.2 million households from 2008 to 2028.

The projections of underlying demand indicate that there will be pressure on both private and public rental markets to meet the needs of older renter households.

On their measure, underlying demand for private rental from older households is projected to rise from 146,000 in 2008 to 321,000 by 2028, and public rental demand is projected to rise from around 86,000 in 2008 to 190,000 in 2028.

That is more than double the need in both private rentals and public housing.

I know that there is work going on in the community housing sector around these issues. A good example is the Benevolent Society’s Apartments for Life in Bondi – but these shifts are great and the Government and the sector need to be preparing now. We need to get the policy settings right because failure to get it right could be disastrous for future generations of Australians.

We do know that a great deal of the problems we are facing now have been as a result of significant underinvestment in the past in public housing.

Over the ten years to 2007, the Australian Government’s contribution to the States for public housing fell by 24% - which is a $3.1 billion decline in investment.

We know that if public housing construction levels over the past 20 years had matched those in the 1980s, the total stock would today be about 200 000 units greater than it is today.

The Federal Labor Government has done as much as possible to put housing back onto the national agenda.

The stimulus funding and National Rental Affordability Scheme funding has done a great deal to reinvigorate social housing and I am very proud of the work that has been undertaken.

The Australian Government has committed close to $7 billion for affordable rental and social housing over the next four years.

The $5.6 billion invested in social housing under the stimulus is the single biggest investment in affordable housing by any government in Australia’s history.

I know there are representative of the NSW Government here today and I want to pay tribute to the work that they have done – the work they have carried out under the stimulus has been truly undervalued.

I thank NSW Housing and Minister Terenzini for their work and cooperation on stimulus housing – we are getting some fantastic work done, not only in terms of construction numbers and timelines but also in terms of environmental ratings, adoption of universal design principles and cost per dwelling.

Community housing organisations have a good track record of efficient and effective provision of housing – they have high rates of tenant satisfaction and inclusion of people with significant need.

I’m very happy that in New South Wales, 90 per cent of the 6,000 homes to be built under the Nation Building Economic Stimulus package will be delivered, and owned or managed by not-for-profit housing providers.

In addition, almost three quarters of homes now being built through the National Rental Affordability Scheme in NSW are being delivered by the not-for-profit sector.

The social housing delivered under the stimulus package was important for two reasons.

As you know, it supported around 15,000 jobs during the Global Financial Crisis.

Secondly, together we are able to deliver much needed, modern homes for people in need.

More than 31,000 Australians in need of social housing will have high quality dwellings under the Government’s stimulus funding.

A good example – and there are so many – but one example that I’ve been told about is John, who has recently moved into a brand new Seniors Living Unit Complex as part of the Nation Building Economic Stimulus Plan and he says he can not thank Compass Housing enough for all the help from the wonderful team at the Muswellbrook Branch.

I have been told that John had been left homeless in Sydney after losing everything he owned, including his house. John then struggled in the private rental market for a long period of time, which saw him having to move seven times in two years, until he finally couldn’t afford the high rent in the city.

John then resided in a friend’s garage which left him feeling depressed. It’s a story I hear often.

John thinks the project is fantastic for people who are really in need and opens up a whole new avenue of opportunity for the disadvantaged.

John has also said he has never met better people than the people at Compass, “who have been so caring and understanding and have helped me improve my quality of life.”

John said that he is finally now far less stressed that he has found the stability he has been looking for to move forward.

John was also very impressed that Compass had a welcoming morning tea, which enabled him to meet his neighbors- which, as everyone here knows creates a real sense of community.

The story of John and the work Compass is something that has been replicated by the people in this room, time and time again. I’m sure that many of you have similar stories but I wanted to repeat this one because it’s what I’ve seen in my time as Minister, the changes that are taking place. It’s important to point out these stories and to attract support for them so that we can continue to attract investment into the future.

In the Employment Participation portfolio, I always believed it was important to have a detailed strategy in place for the portfolio. I believe that we need to develop a quickly and effectively development a deliberate strategy for social housing development to ensure that we are meeting the needs of future generations.

In my view, and I believe in the view of many people in this room, we should not be leaving an area as important as social housing to ad hoc evolution.

There needs to be a clear and defined strategy in place to meet future needs.

We need to think about what type of social housing system we want for those in need, one which:

  • helps people when they need it and doesn’t form a poverty trap for those able to work,
  • provides tenants with the support they need;
  • creates a better match between tenant and dwelling so that we
  • are not under-utilising existing housing; andeffectively regenerates its stock to meet future need.

Of course, social housing is part of a wider system – we certainly can’t talk about public housing in isolation from affordable housing.

That’s why I will be working very closely with my ministerial colleague, Tony Burke, Minister for Sustainability, Environment, Water, Populations, and Communities, who is putting affordable housing at the centre of a plan for a Sustainable Australia. Of course, I will also be working together with my state and territory colleagues.

All of us need to understand where we’re heading. The lack of a clear strategy – which is a big elephant in the room I believe – must change. We need to make decisions with the states and territories to give you certainty for the future because when you talk to banks, when you talking to investors, they want certainty. The Government needs to set parameters in which you can operate and grow into the future.

Based on examples I have came across in my early days as Minister, I am hugely impressed by the ability of community housing to work towards greater capacity, more sophisticated expertise and stronger governance.

These attributes are elevating the reputation of the sector and have been the basis for attracting significant private finance into social housing development alongside government capital.

We are seeing the growth of large and financially sophisticated organisations that combine the best of the business world with their mission to assist those who are disadvantaged.

As you would all be aware, one of the big reforms we need to deliver in order to promote healthy growth of the sector is more effective regulation.

The community housing sector’s potential to grow will be constrained unless there are changes to enable improved access to capital funding and the ability to trade across state and territory borders.

In additional, the sector needs to be able to provide security and stability for tenants.

We need a new regulatory environment, one with strong independent prudential supervision.

Institutions will not invest unless they have confidence that there are credible, stable, well-administered and financially sound partners that can reliably manage properties on their behalf.

Tenant groups have legitimate interests about consequences for tenants should a community housing provider go down.

My predecessor, the Hon Tanya Plibersek, took a strong lead in working towards a national regulatory system.

The wide consultations that were held before the election drew significant interest and comment from the community housing sector, tenant advocates and the finance sector.

There was overwhelming support for a consistent national system that supported growth but managed the inherent risks for investors and tenants.

I am soon to discuss options for the implementation of a national regulatory system with Ministers at the next Housing Ministers’ conference later this year.

I believe we are close to agreement on a national system, but I am also keen to ensure we get it right, as I’m sure you are, in balancing prudent risk management with minimal red tape.

The Government has in mind a system where the states and territories continue to regulate but moving to a single, national regulatory code with mutual recognition of registration across the jurisdictions.

I am expecting we will seek further comment from the sector on the final design of the national system early in 2011.

Can I just touch an issue that I’m extremely passionate about – and that is homelessness, for which I also have portfolio responsibility.

The Australian Government is deeply committed to delivering the White Paper goals of halving homelessness by 2020.

It is going to be extremely challenging to meet these targets but the Gillard Government believes in aiming high and driving as much momentum as possible. At the moment, there is a great deal of momentum.

There has certainly been significant investment already – almost $5 billion dollars of new funding for homelessness since 2008, the greatest amount ever committed in Australian history.

In addition, more than half of the dwellings built under the stimulus will go to people who are homeless.I want to take all opportunities possible to work with the sector to drive the White Paper strategy and maintain the momentum we’ve started.

I am not interested in the usual short-term solutions of the past.

We’re interested sustainable strategies that will deliver long-term changes, particularly for those who are suffering chronic homelessness.

Delivering better services is going to be at the forefront of this, especially through employment – through Job Service providers – and through mental health services and even through schools. It’s critical and my priority is to drive further service delivery integration to deliver for people who are homeless or at risk of homelessness.

I want to finish by saying that I see community housing providers as key players in meeting the future challenges in social housing and I value the partnership between governments and the community housing sector.

I congratulate the community housing sector on your ability to innovate and to expand successfully. As I said earlier, I want this to continue, I want to see this sector thrive.

In terms of where I think we need to be heading:

  1. we need strategic planning for the future of social housing, with elderly people and those demographic shifts at the centre of the planning – and I will of course keep the NSW Federation of Housing Associations updated as to developments;
  2. Better regulation of the community housing sector – I think it’s a win-win for all of us if we get the regulation right and I look forward to hearing back from you early in the New Year; and
  3. We need to keep delivering for people who are homeless or at risk of homelessness – it’s a national priority and I want to drive good outcomes at every opportunity.

So thank you for having me today and I look forward to meeting you all in the near future, and hopefully visiting many of your sites.

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