Monday, June 27, 2016

NSW Budget: Private rental subsidies

With NSW budget night behind us, the fourth and final entry in our series on the 2016-17 State budget looks at a suite of new and expanded rental subsidies for targeted groups in the community.

Rent money features heavily in the 2016-17 budget

The largest announcement is that funding for 'Start Safely' will be increased dramatically - from $43 million to $100 million over four years. The Start Safely rent subsidy assists women leaving domestic violence to move from crisis accommodation to the private rental market. The additional funding will allow the Department of Family and Community Services to extend the maximum length of the subsidy from 2 to 3 years, and raise the income eligibility threshold - though by what amount is not clear. It should also free up spaces in crisis accommodation in turn. 

Also prominent is the creation of two new rental subsidies. 'Rent Choice' is a medium-term subsidy that will require recipients to engage with education/or employment, as well as unspecified 'relevant supports'. The 'Youth Private Rental Subsidy' will be available to persons aged 16-24 and at risk of homelessness, and may also require engagement with education and/or employment programs. The full value of these new subsidies is not yet clear.

Both Start Safely and the new rental subsidies were flagged in the 'Future Directions' roadmap for Social Housing from 2016-2026.

Thirdly, the Government has allocated $1.1 million in 2016-17 for rental assistance products to support the Commonwealth Government's one-off increase to Australia's refugee intake. The Family and Community Services budget briefing provides that these funds will support the existing 'Rentstart Bond Loan' and 'Rentstart Advanced Rent' programs. Respectively, these provide recipients with interest free loans for payment of a rental bond, and assistance with rent payments to establish a tenancy. Though this initiative was not canvassed explicitly in Future Directions, it is reflective of the plan's intention to 'promote the uptake of existing rental assistance products'.

Though exact figures are nebulous, it's clear that tens of millions of dollars towards helping prospective tenants establish and keep tenancies will leave these most deserving groups markedly better places. This should not be discounted nor understated.

Nonetheless, question marks remain. Most notable is an issue of overarching policy direction - is the private rental market best-placed to be doing the 'heavy lifting' of housing especially vulnerable, low income groups? Certainly, there is a strong argument on value for public expenditure. That land and construction costs are exceedingly high in NSW is well-established; though it indexes national prices, The Economist's global house price index reflects this as starkly as any source. In this respect, rent subsidies are an easy fix, given they require no State investment in land or capital works. But as we have noted time and time again, the private rental market lacks stability, liveability, and affordability - including in comparison to Social Housing, which has traditionally housed many in these groups. This particularly impacts tenants that are already vulnerable for other reasons. To use an obvious example, will a landlord that issues a no-ground notice of termination consider that their rent-subsidised tenant may be particularly affected as a result? And though NSW Fair Trading's review of the Residential Tenancies Act may deliver some improvements, it appears it will be a case of incremental rather than revolutionary progress. 

There is also the question of how precisely Rent Choice and its youth-oriented offshoot will function. If participants fail in their obligations to engage with supports and 'opportunities', will subsidies be decreased or even removed? Available information suggests this is a distinct possibility. Though educational and employment opportunities for these groups should certainly be welcomed, jeopardising their security of tenure in this manner should not. 

Finally, we note that it appears possible that NSW will house the majority of the 12,000 refugees arriving in Australia as part of the on-off increase in the national intake, and resettlement could occur over a period of 1-2 years. Accordingly, we hope that the modest allocation of $1.1 million for refugee-specific programs is sufficiently large - and will be carried over if arrivals are staggered over future budget cycles. 

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