Monday, June 30, 2014

Welfare reform = rent reform?

The release of an Interim Report as part the Governmnent's Review of Australia's Welfare System has everyone talking about welfare reform today. There are some things that warrant a mention here on the Brown Couch, too.

The Report spends some time looking at Rent Assistance payments, showing that rates of Rent Assistance have not kept pace with the growth in rents. Rent Assistance recipients are paying a higher proportion of their incomes towards the rent, as the rent-specific benefit is eroded by housing costs that have risen more rapidly than general inflation.

The Report concludes that "there is a need to redesign Rent Assistance to assist people in private rental who have the highest needs". As to what that 'redesign' might involve, the report is not prescriptive. But it does make reference to some earlier suggestions - such as those in the Henry Review - that would see Rent Assistance indexed to something other than the Consumer Price Index. Linking Rent Assistance to actual housing costs might have an interesting effect on Treasury's interest in the stability of market rents - but we'll leave that as an aside for now.

The Report has a go at further entrenching the idea of moving away from income related rents in social housing, too. This is also something we've seen before in the Henry Review, as well as the recent Commission of Audit. On this, the Interim Report is also a bit non-prescriptive, with a mere suggestion that "consideration could be given to moving away from the current system of income based rents towards the use of Rent Assistance as the preferred rent subsidy scheme across both private and public tenures."

But its stated rationale for this suggestion is worth a look: the apparent 'perversity' of people on low incomes 'preferring' to live in public housing, rather than the private rental market, on account of its affordability! According to the report, people might pass up the opportunity for paid work in order to maintain their position in public housing, or even on the waiting list.

(This has an eerily familiar ring to it. Of course, rather than changing the way rents are calculated, governments could instead choose to invest in more public housing. Or they could do both - but perhaps we should just stick to the issues at hand... after all, there's another Government Inquiry for all that, right?)

We'd go so far as to suggest there is another reason to prefer a social housing tenancy to one in the private market - and that's the relative security of tenure. You're far less likely to be turfed out of a social housing tenancy at the whim of the landlord, and certainly not without a reason... The Report seems to have missed this point entirely.

There's another important thing that's been overlooked here - and that's Henry's suggestion that there might be an additional payment for 'high needs' clients in social housing. This is consistent with the Commission of Audit's report - it was overlooked there as well...


Interested parties have been invited to comment or make a submission on the Interim Report by August 8th 2014.

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