10.6 Housing Assistance

There is no specific head of power under the Constitution for the Commonwealth in relation to housing. Housing affordability and homelessness prevention are the responsibility of the States.

Nonetheless, the Commonwealth currently has two major areas of spending on housing – the provision of Rent Assistance and payments to the States for affordable housing and homelessness.

Rent Assistance payments are provided to certain income support recipients. More than a million renters around Australia currently receive Rent Assistance at a cost of around $3.6 billion per year. Rent Assistance is not paid to public housing tenants (Department of Families, Housing, Community Services and Indigenous Affairs, 2013).

Rent Assistance is a non-taxable income supplement payment added on to the pension, allowance or benefit of eligible income support customers who rent in the private rental market. In order to receive Rent Assistance, a customer must first qualify for a social security income support payment, more than the base rate of Family Tax Benefit Part A or a service pension. Rent Assistance is paid at the rate of 75 cents for every dollar of rent paid above the specified threshold until the maximum rate is reached. The maximum rates and thresholds vary according to a customer's family situation and the number of children they have.

Table 10.6.1: Rent assistance rates without dependent children
Family situation Maximum payment per fortnight No payment if your fortnightly rent is
less than
Maximum payment
if your fortnightly
rent is more than
Single, with no children $124.00 $110.00 $275.33
Single, with no children, sharer $82.67 $110.00 $220.22
Couple, with no children $116.60 $179.00 $334.47
One of a couple who are separated due to illness, with no children $124.00 $110.00 $275.33
One of a couple who are temporarily separated, with no children $116.60 $110.00 $265.47

Source: Department of Human Services, 2014.

Table 10.6.2: Rent assistance rates with dependent children
Family situation Maximum payment per fortnight No payment if your fortnightly rent is
less than
Maximum payment
if your fortnightly
rent is more than
Single, one or two children $145.18 $144.76 $338.33
Single, three or more children $164.22 $144.76 $363.72
Couple, one or two children $145.18 $214.34 $407.91
Couple, three or more children $164.22 $214.34 $433.30

Source: Department of Human Services, 2014.

The Commonwealth contributes approximately $1.3 billion each year to the States through the National Affordable Housing Agreement. A further $159 million is also provided each year through the National Partnership Agreement on Homelessness (Australian Government, 2013).

The National Affordable Housing Agreement commenced on 1 January 2009 and aims to ensure that all Australians have access to affordable, safe and sustainable housing that contributes to social and economic participation.

The National Partnership Agreement on Homelessness focuses on: prevention and early intervention to stop people becoming homeless; breaking the cycle of homelessness; and improving and expanding the service response to homelessness.

In addition, the Commonwealth provides funding through the National Rental Affordability Scheme which seeks to address the shortage of affordable rental housing by offering financial incentives to business and community organisations to build and rent dwellings to low and moderate income households. Funding from this source is around $1.5 billion over four years.

Various reports from the COAG Reform Council on housing and homelessness suggest that there has been limited success in delivering affordable housing and reducing the incidence of homelessness. National agreements have added complexity and increased the administrative burden to all levels of government (COAG Reform Council, 2013).

The most recent COAG Reform Council report on housing affordability (for 2010-11) noted that ‘none of the indicators we report on, for the years for which we have comparable data, suggest housing affordability at the national level has improved from the previous period’.

The Commission considers there is a strong case for the Commonwealth to limit its involvement in this area to providing Rent Assistance to income support recipients and continuing to offer State governments access to the Commonwealth’s one stop shop social services policy.

State governments (sometimes in conjunction with local governments) control most of the levers for housing affordability including stamp duty, land tax, zoning issues and infrastructure charges. It is therefore appropriate for State governments to have sole responsibility for housing affordability.

The Henry Tax Review outlined the case for extending Rent Assistance to public housing tenants, with these tenants facing the market rent of the dwelling (Australian Government, 2010). Under such an arrangement, the Commonwealth would need to increase aggregate Rent Assistance funding. However, this additional funding could be sourced from a redirection of funding currently contributed to the National Affordable Housing Agreement and the National Rental Affordability Scheme.

As noted above annual funding for these two programmes is currently around $1.5 billion per year (Australian Government, 2010).

The Commission considers that there is merit in considering this option further. Two benefits would arise from this approach. First, the market would determine rents for public and private housing. Second, abolishing housing agreements with the States would remove duplication of effort, improve accountability and alleviate the reporting burden for State governments. Commonwealth funding currently directed to the housing agreements should be redirected to fund the extension of rent assistance to public housing tenants.

The Commission notes that there may also be flow-on effects to eligibility for Rent Assistance flowing from its recommendations on family payments, age pension and other social welfare areas. If this option is adopted, implementation should include an examination of ways of ensuring that Rent Assistance is well targeted and delivered in the most appropriate way.

Further examination of the effectiveness of the First Home Saver Account scheme may also be warranted. This is another programme run by the Commonwealth Government to promote affordability.

References

Australian Government 2010, Australia’s Future Tax System Review, (Henry Tax Review), Australian Government, Canberra.

Australian Government 2013, Budget Papers 2013-14, Canberra.

COAG Reform Council 2013, National Affordable Housing Agreement – Homelessness 2011-12: Comparing Performance Across Australia, COAG, Sydney.

Department of Families, Housing, Community Services and Indigenous Affairs 2013, Annual Report 2012-13, Canberra.

Department of Human Services 2014, A Guide to Australian Government Payments, 1 January – 19 March 2014, Centrelink, Canberra.