Promise of a big spend on social housing: Did the NSW budget deliver?

Jemima Mowbray • 18/11/2020

NSW Budget: opportunity and promise

In early October NSW Treasurer Dominic Perrottet in an interview with the Sydney Morning Herald suggested social and affordable housing would be a priority in the November NSW budget. Construction and maintenance of social and affordable housing creates jobs and has a "positive impact on society", he explained. Housing advocates were hopeful this would prove a real commitment from NSW government to step in and provide more direct investment, given the Federal government's failure to address investment in social housing in their October budget. As well as being economically sensible it addresses the urgent need for genuinely affordable housing, and repairs and maintenance to existing housing. When the Victorian government committed $5.3 billion to build 12,000 social housing homes over the next four years - 9,300 new homes, and the replacement of 1,100 existing public housing homes - they set the bar high.

In this blog we unpack what is required in NSW in terms of 'more social housing', and what was announced in the budget yesterday.

What is the current need (assessing 'housing need')?

We know there is significant, growing need for more social housing. The waiting list in NSW is long and unwieldy. Over 50,000 people were on the waiting list at the end of June 2019. DCJ Housing hasn't updated their website since October 2019, but it is likely need (and therefore the waiting list) will have increased in the last year given the hardship being experienced as a result of Covid-19. Reported wait times for public housing currently range from between 2 and 10+ years across the state. Across the Greater Sydney area wait times are consistently 5 years or longer, and in the Inner West and Eastern suburbs 10+ years. 

But the waiting list does not really provide a full picture of the number of households currently in housing stress, and who require social housing to ensure their housing costs are affordable. The current shortfall in the provision of genuinely affordable dwellings for people on low incomes (those earning the lowest 40%) in NSW is calculated in research undertaken by the City Futures Research Centre to be 137,100 (based on data available from 2016). They projected this would rise to 213,200 by 2036. This does not take into account all households in housing stress, but only those on very low incomes who would be eligible for social housing. And, of course, this was before the pandemic.

Initial research on the impacts of the Covid-19 health crisis for renting households suggests a significant number are struggling, having trouble paying their rent and bills, and sometimes skipping meals to 'make ends meet'. Many across the community and housing and homelessness sector are concerned about the potential 'wave of disadvantage' that may come in the wake of the pandemic, particularly if not enough is done to adequately address the impact of rising unemployment and the loss of income many households may face. Supporting Economic Recovery in NSW, a report the Tenants' Union commissioned alongside NCOSS and other sector colleagues earlier this year, recommended strong investment in social and affordable housing as part of economic stimulus and recovery. Investment in social housing was also strongly supported by Australia's leading economists as one of the most effective options for boosting the economy in the lead up to the Federal budget in October.

Housing campaigns such as Everybody's Home, and the Vinnies NSW' Build Homes, Build Hope call on the NSW Government to build 5,000 new social housing homes every year for the next 10 years. We agree this would be an excellent step in the right direction, but really this would only just keep up with population growth. It would halt the decline in the percentage of people in social housing, but wouldn't start to tackle the 'waiting list'. We know - and have recommended - investment needs to aim significantly higher to adequately meet NSW's current and future need for housing that is affordable.

Prior to the budget how much 'more social housing' had the NSW Government committed to?

Future Directions, the policy framework and 'vision' for social housing in place since 2016, includes delivering on 'more social housing' as one of three strategic priorities. Through Future Directions the NSW Government committed to delivering up to 27,000 new and replacement social and affordable dwellings - primarily through two programs: Communities Plus and the Social and Affordable Housing Fund.

Communities Plus involves the redevelopment of existing public housing communities or properties (estates as well as smaller sites). The program involves 'renewal' of existing public housing homes, i.e. the demolishing and replacement of old homes with newly constructed dwellings, and delivery of new, additional social housing homes. When it was originally put on the table in 2016, there was discussion of replacement of up to 17,000 existing homes, and delivery of around 6,000 new, additional social housing homes over 10 years. The funding of the program essentially relies on the sale of public housing land, with developers asked to commit to redevelopment of sites on the basis they can build at a higher density than currently exists on the site and sell any private dwellings built on the land - originally estimated as up to 53,000 private dwellings across the program. This mechanism was set out in early Communities Plus tender documentation in the following way:

"Land and Housing Corporation (LAHC) retains ownership of the land until the project is completed and appoints a Proponent [Developer] to develop the site at the Proponent’s cost. The proponent earns a return through a development fee equal to the proceeds of sale…[and] will be responsible for and accept all risk selling the private dwellings”.

The redevelopment of sites generally involves the displacement of existing communities, though it is suggested this is only temporary with residents able to return once the redevelopment is completed if they choose to. 

The Social and Affordable Housing Fund (SAHF) is a $1.1 billion dollar investment fund, with the income generated funding the provision - new builds - of social and affordable housing. There have been two procurement processes so far - SAHF 1 & SAHF 2 - resulting in 9 contracts with 8 providers to deliver over 3,400 social and affordable homes by 2023. The social and affordable housing tenancies are 'contracted' for 25 years per dwelling via SAHF. A breakdown of the contracted providers and dwellings is set out here.

Alongside these two programs, the sell off of public housing homes at Millers Point and the Rocks and the displacement and forced relocation of residents and the community was a controversial strategy the NSW Government argued was necessary to ensure they could deliver new, 'more suitable' social housing to meet NSW's growing demand. Around 400 homes were lost in the sell off. The NSW government Millers' Point website reports as of August 2020,1,458 social housing dwellings have been built from the proceeds of the sale of these homes, and another 319 are currently under construction. 

What have these commitments looked like in practice?

The SAHF and Millers Points initiatives provide a fairly clear indication of outcome in terms of the number of social housing properties planned, in construction, and/or delivered. A little over 5,000 social housing dwellings are projected for delivery by the end of 2023.

With Communities Plus the picture is much more complicated. Outcomes - projected, in progress, or even delivered - are very hard to track. We've given it a try, and if you are keen you can look in closer detail at our attempts to track proposed outcomes of Communities Plus projects here. Using information about the 'major sites' and 'other projects' we were able to track down through a mix of media releases and reports, the limited planning and tender documents available online, and Communities Plus documentation we estimate around 8,000 new social housing homes will be built within the next 15 years under the program. Note again, this is from project announced prior to Tuesday's budget announcement, and from limited information. (If you can point us towards additional sources of info, please get in touch and we'll update our collated information and estimate).

This 8,000 put together with the 5,000 from SAHF and Millers Point, plus a small number of new builds and/or renewals that aren't captured under 'other projects' (we'll generously estimate it at up to 2,000) would suggest the current commitment looks like 15,000 within 15 years. Nowhere near the 5,000 a year for 10 years called for by campaigners. Nowhere near the actual number required to make sure people who need it have access to housing they can afford.

Housing researcher Hal Pawson has previously pointed out the NSW Government oversells its social housing commitment, with reported social housing construction not translating in to an actual portfolio expansion. He noted (at the time he wrote in 2018) the 'net gain' from builds has so far generally only offset sales and demolition of existing stock. Similarly it is worth noting our estimate of 8,000 social housing homes to be delivered via currently listed Communities Plus projects is an estimate of new homes, not new, additional homes. The number of new, additional homes to be delivered will likely be significantly lower. Unfortunately we found it very hard to track this precisely for many of the projects, because so little information is made available publicly. Also because of the staged demolition and delivery of a number of the projects - especially in the larger scale projects. What does seem clear, however, is that it is very unlikely given numbers projected in currently listed projects, that the number of additional social housing homes built will come anywhere near Future Directions' 2016 promise of 6,000 additional social housing homes within 10 years.

It's also hard to determine how many additional people might be housed as a result of any new builds. We've seen that redevelopment of a housing site does not always lead to social housing homes for more people. As an example, at the Cowper Street Glebe Housing Project the redevelopment of the site involved the demolition of 134 social housing units. There are 153 apartments to be allocated as social housing once the project has been completed. That sounds like a win - a gain of 19 new, additional homes. But, as questions put by local member Jamie Parker in NSW Parliament demonstrate, there was a net loss of 820m2 gross floor area for the social housing homes on completion of the project. This drop in floor area reflected a change in the bedrooms available in the allocated social housing properties, with a shift from the numbers of bedrooms in the original public housing properties which could accommodate up to 250 - 260 people (calculated at around 1 person per bedroom) prior to renewal, to around 180 people accommodated in the 'redeveloped' site (that is, in the completed 153 units again calculated at around 1 person per bedroom).

And of course, even a calculation that adequately offsets sales and demolition of existing homes, and takes account of floor space and bedrooms, still fails to acknowledge the real 'cost' of redevelopment - that is, the human cost of community displacement and in some cases forced relocation. As residents of Millers Point and other redevelopment sites have asked on numerous occasions, why should public housing be financed by the sale of public housing? In redevelopment of estates or sites through Communities Plus where housing is replaced and in some cases additional stock is projected, 'renewal' almost always involves at least partial sale of public land. Given the high cost and low outcomes delivered so far, it seems sensible that an alternative investment pathway be considered. Surely there should or could be other ways for Treasury to fund housing? Housing is more than just 'infrastructure', an asset or physical structure. It really should be considered - and funded - as an essential service, much like health and education services.

Announcement: Tuesday's NSW budget

Unfortunately yesterday's announcement on social housing investment was a little underwhelming. The NSW Government committed around $900 million as part the 2020-21 NSW Budget to build and accelerate thousands of new homes, and create up to 3,000 jobs for the people of NSW as part of the Government’s stimulus and COVID recovery plan. The details provided in Minister Pavey's media release indicate the package will include:

  • $250 million for a housing construction program over the next two years on more than 50 identified projects, delivering about 580 new social homes across metropolitan and regional areas;

  • $150 million to accelerate the place-based redevelopment projects at the Airds-Bradbury and Claymore housing estates, delivering more than 500 new social homes and 1,000 new land lots for sale to build private homes

  • $200 million to upgrade more than 3,500 social housing dwellings, including properties managed by Community Housing Providers, to improve the quality, comfort and safety of housing for tenants and deliver more jobs for local tradespeople of NSW

  • More than $145 million to supply more than 200 new homes as Aboriginal housing, upgrades and maintenance works, including roof restorations and replacements, recladding, solar power installations, drought relief hydro panels, and air conditioning

  • Almost $67 million to support the Aboriginal Community Housing (ACHP) sector to undertake maintenance, roof restoration/replacements, air-conditioning and solar power installation and construct granny flats and extensions to improve living conditions for Aboriginal people;

  • $80 million to support 300 new housing sector pre-apprenticeships, apprenticeships and cadetships, and deliver 100 new social homes, providing career pathways for young people and social housing tenants.

Taken together this looks like close to $270 million for repairs and maintenance and upgrades of existing social housing homes, including those managed by Community Housing Providers and owned or managed by Aboriginal Community Housing Providers. The commitment of funds towards maintenance and upgrades for current social housing homes will help address the range of chronic maintenance issues and poor design of some of the existing stock.

Unfortunately though, the proposed funding for new build or construction of homes just doesn't go far enough. The Treasurer and Minister in their announcements suggest the additional funding will mean 1300 new social housing homes for the state. Looking at the detail in the package, it's clear this is not new, additional housing. It does not involve a substantial number of new or additional new projects, necessarily. At least 500 of the new social homes they reference are accelerated builds from the already underway Airds-Bradbury and Claymore housing projects. At least 250 of the new social homes identified as being a part of the housing construction program over the next two years look likely to be social housing homes from the Glebe Franklyn Street and Eveleigh South Explorer Street projects that were announced earlier this month. Looking into the detail of these two projects, just under 100 of these homes will be new, additional homes (as opposed to replacement of existing homes). It is unclear how many more of the remaining 280 new social homes falling under the 'housing construction program' are actually already announced or recycled projects, and again how many additional new social homes might be anticipated. In any case, even taken at face value there is only a small commitment in this budget to provide new social housing that wasn’t already planned pre-pandemic, with approximately 780 new properties identified as funded for the next 4 years.

Repeating the same mistakes

This week we were contacted by two residents who have just been informed their social housing community will be undergoing redevelopment. One lives at Eveleigh South, and the other at what Communities Plus is calling the Glebe Franklyn housing estate. Both received letters – their first notification of the redevelopment and their need to relocate – dated 11 November, and letter dropped to their mailboxes the next day. The letter was not addressed to either of them personally, but instead was a form letter that began generically ‘dear resident’. They were given one month – a deadline of 11 December - to provide feedback on the redevelopment. On the same day their notification letter was written - 11 November – Communities Plus issued a media release (and a number of outlets published stories) on ‘social housing renewal in Central Sydney’ providing details on the two new housing renewal projects at Franklyn Street, Glebe and Explorer Street, South Eveleigh.

As one resident said to me, “they’ve known about this for a long time. Long enough to have prepared planning documents, have a website ready to go, and write a press release. Surely they could have told us earlier. Surely we deserve the same amount of time to provide feedback on the redevelopment proposal.”

Another told me, “I haven’t been sleeping well since I found out. I waited 8 years to get my place – and it’s my only real security. My children grew up in this house – I have actually been here since 1991 when the estate was first built. Now my home is being taken away. I don’t feel like I’m getting a chance to provide real feedback on this and it’s really sad and really distressing for me.”

The Tenants’ Union NSW and Shelter NSW have done substantial work, along with social housing tenants, to identify and document in Compact for Renewal how agencies like DCJ Housing and Land and Housing Corporation might best support residents through the redevelopment process. Compact for Renewal emphasises the importance of supporting residents to engage in shaping the process, and their future neighbourhood or community. This work (the Compact) drew on the many lessons learnt from previous and ongoing renewal projects, such as at Ivanhoe and Waterloo as well as Millers’ Point. It's disappointing these agencies would get things so wrong from the get go, and on a couple of the renewal projects that make up a substantial part of the housing construction program announced through the budget.

The budget announcement was disappointing too. As others from across the sector have said this package - really any investment of additional funds - is welcome, but it does not go far enough. Covid-19 made clear - and very quickly - the importance of access to safe, secure, affordable housing and the failure of our current housing system in delivering on this. This budget was a chance for the NSW Government to tackle this failure head on, to commit to significant long term investment in our social housing system and the economy. Possibly also to consider a new pathway to funding that investment that does not involve the sale of public land. Such an investment could have meant a kickstart to economic recovery in the short term, as well as significant long term gain for our communities. It's worth pointing out the impact should be understood not just in terms of the delivery of more social homes for individual households, but also that a real or significant increase in social housing as a sector would have on the broader housing system. An increased supply of social housing effectively challenges the private market to do better, especially in terms of housing that is available for low- and moderate-income households

In other budget news

Of course the whole system of social housing is in place as an inherent acknowledgement that the rest of our housing system does not currently cater well for all of us. Governments can do a lot to reduce the need for public and community housing by ensuring the private sector is not causing harm. To that end, the Government has taken a significant step in signalling a real commitment to broaden the base of land tax. We have long been supporters of this and if implemented well, land tax is one of the fairest taxes on earth which will have significant benefits to renters (and no, it won’t raise the rent). Check out our policy position on land tax here.

The Treasurer has been flagging the benefits of land tax for a number of years, and we welcome this shift of government - but as always how effective this reform will be will depend on the details.

What do we need to see in an effective land tax system? It needs to be as broad-based as possible, and it needs to be at a rate that is effective as a tool to promote behavioural change amongst owners of housing. We look forward to the community consultation that will commence next year.