Monday, March 24, 2014

The truth about 'subsidies' at Millers Point and The Rocks

When the NSW State Government announced last week that it would sell all the social housing at Millers Point and The Rocks, it highlighted the issue of social housing 'subsidies' there. It gave the impression that taxpayers' money – and lots of it – is being paid to tenants. This is incorrect.

Said Minister Goward:

Subsidies to tenants in the last year alone reached $8.89 million, with individual tenants receiving subsidies as high as $44,000 per annum. This compares to subsidies of $8,000 per year in Campbelltown, $7,000 in Gosford, and $11,000 in Wollongong. For every subsidised tenancy in Millers Point, the Government could assist 5 tenants in Warrawong, or 3.5 tenants in Newcastle or Minto.

The Government's media release refers variously to subsidies 'paid' and 'funded by the NSW taxpayer', and 'received by' tenants, all in dollar amounts.

The truth is that not a dollar of money raised from taxpayers is paid to public housing tenants or otherwise credited to their rent accounts. Not one dollar. Tenants pay money to Housing NSW, not the other way around.

The subsidies to which the Minister refers are accounting entries. The 'subsidy' for each tenancy is the difference between the 'market rent' for the property as assessed by the NSW Land and Housing Corporation, and the rent actually paid by the tenant, rebated according to the usual rules of Housing NSW's system of income-related rents.

The market rent for a property does not reflect the cost to the NSW State Government of providing housing or related services at the property. The market rent for a property can go up – and hence the 'subsidy' go up – without any change in the housing being provided at the property, or in Housing NSW's costs. (Housing NSW need not account for 'market rents' at all – for decades the old Housing Commission accounted for 'economic rents', reflecting the historic cost of its properties, and income-related rebated rents.)

What actually does cost money at Millers Point is repairs and maintenance. We'll take the Minister at her word when she says that in the past two years $6.8 million has been spent on repairs and maintenance there. This is a lot less than the $8.89 million per annum in 'subsidies' that was not actually spent.

It is important to note too how much tenants have paid towards that real cost of housing. There are 409 social housing tenancies in the properties at Millers Point and The Rocks. We understand the average income-related rent paid is about $100 per week, so, over the past two years, tenants have paid about $4.25 million in rent – in other words, not quite two-thirds of the repair bill.


It is bad enough that the Government's media release creates a misleading impression about subsidies in the social housing system generally and at Millers Point and The Rocks in particular. What's worse is that it takes a couple of other cracks at Millers Point and The Rocks tenants as a group and, in a couple of cases, individually.

Crack one, against Millers Point tenants:

Half of all public housing tenants in Millers Point are of working age (18-59), but 94% of tenants claim Centrelink benefits as their primary source of income.

You can see the impression it's trying to make. Let's turn it around. Half of all public housing tenants are over 60 years of age. They are ageing in homes to which they are much attached in a supportive community and should be allowed to stay there. As for the younger half: of course most of them receive Centrelink payments, that's why Housing NSW picked them to be public housing tenants! (Most tenants in Millers Point were housed there through the usual way: applying (and waiting) for social housing. A significant minority, however, have been there since before it public housing, when the Maritime Services Board owned the houses and let them to people who worked on the harbour.)

Cracks two and three are leveled against two individual tenants. The media release does not give their names, but it does disclose the gender, age, street of residence, period of residence, family circumstances of each person, and the amount of the 'subsidy' each has 'received'. We'll not repeat those details here; their privacy has been infringed enough as it is. Disclosures of personal information about clients of government services have no place in Ministerial media releases.


  1. There is one Housing NSW expense that you neglected to mention. The crack Immediate Response Team whose job is surveillance of any account that is in arrears by so much as a sideways glance. This is probably the most efficient rapid response team in the government's armoury. These people will be breathing down your neck within 24 hours to warn you of the dire consequences of falling behind by so much as half a week's rent. You should give credit where it's due!

  2. Enough to make you cry. I just feel angry and disgusted when I see what this government does to the reputations of public housing tenants. They are just poor FFS, they haven't killed anyone. This, I might add was on the agenda before the coalition came to power. I am a labor supporter but I have notice that housing is now flavour of the month- before the election no-one wanted to know and it could have made a difference to have started up a campaign before the election but no. We now have the unions jumping on the 'we need housing' bandwagon and they didn't give a flying fig before the the election. Sickening the lot of them : ) Thank you for your time

  3. Nice analysis, it's sad to see this decision by Goward is more or less a done deal. No debate, discussion, just the shoving off of "dole bludger-tax cheats"

  4. This is an excellent unpacking of the myth that public housing is taxpayer subsidised. I just wish the Brown Couch had pointed this out years ago - Ken Henry also made this claim in his tax review and the Vic gov keeps trotting it out as justification for their equally hostile plans. It's hard to be heard above the media spin.

  5. Being that, for example, the Sirus building has a lease agreement between Sydney Harbour Foreshore Authority and Housing NSW (formaly NSW Housing Commision) till 2030, wouldn't that mean that those subsidies are simply being transfered from one state government budget to another state governemtn budget?
    This lease agreement was submitted to NSW parliament early March

  6. The calculations for market rent in the area include million dollar properties on Walsh Bay. The figures mentioned by Prue Goward are not reflective of true market rent for the deteriorating, rat infested terraces from which the majority of tenants are being evicted. Also note that some properties are still operating under the boarding house system (since the early 1900s) and are not public housing tenants. These people pay close to market rent, and since the landladies were kicked out and those tenants moved to agreements with Bridge Community Housing (due to false allegations by DOH that they were gouging tenants) the rents have stayed the same, and maintenance has been virtually non-existent. Some very grubby work here by Goward. I am disgusted that this community is being torn apart for short term gain that will not improve social or public housing in the slightest.

  7. Let's continue to allow those who contribute nothing to the growth of the economy to choose exactly where they want to live - "They haven't killed anyone". All those who have continually worked hard to obtain and maintain good jobs and who are the drivers of the economy should not be given a choice.

    Choice is earnt through hard work, not doing nothing.

    1. Anonymous,

      Consider the generous tax exemptions enjoyed by owner-occupiers - those who "choose exactly where they want to live" - who bank on property values going up even while they sit idle.

      Then consider the strict eligibility criteria, the overbearing landlord (who is, in fact, the state), and the general sentiments frequently expressed towards tenants in public housing. Think about the near impossibility for public housing tenants to relocate on their own terms, and the relative ease with which the landlord can shuffle them around.

      Then let's talk about "choice".



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