2016 Budget to deliver income management for Social Housing tenants?

A few weeks ago we noted the NSW Government's continued interest in a Compulsory Rent Deduction Scheme for social housing tenants, as they took the idea to the recent Council of Australian Governments meeting.

Such a scheme would make it compulsory for tenants in social housing to have their rent taken from a social security payment and paid directly to the landlord. As we have noted many times before, such a scheme already exists, but it works on a voluntary basis. Direct rent deductions work for some people some of the time, but they won't work for all people all of the time. Making the use of such a scheme compulsory will produce awkward results.

Now the idea has resurfaced as an expense measure in the 2016 Federal Budget. Here's what the budget papers say:

The Government will establish a Compulsory Rent Deduction (CRD) Scheme. 

Under the Scheme, occupants of public and some community housing who receive income support payments or Family Tax Benefit will have their rent and related tenancy costs deducted from their payments and automatically transferred to the relevant public and state approved community housing providers. 

The CRD Scheme will reduce the likelihood of individuals accumulating rental debt, leading to an expected reduction in evictions and improved social outcomes. It will also improve rental income streams for housing providers and so encourage investment in public housing stock. 

The expenditure for this measure is not for publication as the arrangement is subject to negotiation with the States and Territories.

We're not sure either claim - reducing evictions and increasing revenue collection - will hold true in New South Wales. Whenever we've raised concerns about the over-zealous management of rental arrears and recovery of related amounts by FACS Housing we've been politely informed that only a very small number of their tenants are ever in rental arrears, and that in monetary terms the outstanding amounts do not dramatically affect their bottom line.

On the other hand, current arrears management practice is to issue a notice of termination and apply to the Tribunal, rather than enter into sensible discussions with a tenant about getting arrears under control. We're told this is because tenants who are in rental arrears do not read their mail or answer their phones, but we're not convinced. We've heard of many Social Housing tenants who have started diligently paying off a rent arrears debt only to find themselves in the Tribunal to fend off a notice of termination anyway.

We're all for FACS Housing and other Social Housing landlords taking steps to reduce their use of the Tribunal for managing rental arrears, but allowing them to compulsorily redirect tenants' Centrelink benefits into their own accounts is nothing short of overreach.

Further information about the proposed CRD is available on the Department of Human Services website. Notably it provides that the Scheme is subject to the "passage of legislation", which suggests a change to Social Security laws is on the cards.

Of course, there's an election to be had in the meantime, which begs the question - will Labor support this Scheme? They tried to introduce something similar when in Government back in 2013. They even got as far as introducing an amendment bill into Parliament, before dropping it cold. Here's hoping they leave it there, where it belongs.