Bonds for social housing tenancies - part 2

The State's leading journal for social housing policy analysis - the Daily Telegraph - has done it again, announcing today that Social Housing Minister Hazzard is considering bonds for social housing tenancies.

This idea has been rattling around for awhile now - the last time we spoke about it on the Brown Couch was back in 2012, when Greg Pearce was the responsible Minister. Back then, we pointed out that as a landlord, the government doesn't always do a very good job of correctly attributing blame for damage to the housing portfolio. In case you missed it, here's a look at what we said:

...it's pretty clear that there are some issues with the way the government's housing portfolio is being looked after. We're not convinced that fingers of blame should always be pointed at tenants, to whom only a fraction of the problem might actually be attributed even before we start to test any specific allegations of liability.

It's interesting that this time around Minister Hazzard has likened a bond to a warning - 'look after your property, or you'll lose some money'. But tenants are always liable for the damage they cause, and an overwhelming majority are already looking after their homes.

A bond is not a warning, or something to be held over a tenant lest they make off with the silver. It offers a small piece of security to landlords, and it is optional. Where levied, it adds a significant cost to tenants at the commencement of a residential tenancy agreement.

Households entering a social housing tenancy are already facing challenges, and one of those is necessarily a financial challenge. They wouldn't be eligible otherwise. Asking for an additional four weeks rent - no matter how many instalments you break it down to - will only add to that challenge.

As for the security a bond offers... some landlords might need that more than others. A small time speculator operating at a loss might struggle to re-hang a curtain, or repair a kitchen benchtop, without reasonably ready access to a small pot of tenants' money. (Of course, we're assuming the tenant's liability is a given, for the purpose of this little hypothetical...)

But the Land & Housing Corporation, with its operating budget in the hundreds of millions, is not such a landlord. It should always be able to find the money to fix a problem today, and seek to recover from those liable tomorrow.

And remember, when it comes to the housing budget in New South Wales, tenants are already pulling their weight. For every $1.00 that Government puts into public housing, tenants contribute around $5.00 through the payment of rent and other charges.

On this day in history - reshaping public housing

According to the internet, 17th century German mathematician and astronomer Johannes Kepler calculated that the universe was created on this day in the year 4977 BC. It turns out Kepler was a little off the mark, with later theories putting its origins at closer to 14 billion BC. Of course, we have no scientists here at the Institute of Tenancy Cultural Studies, so we'll leave that particular discussion to others.

Johannes Kepler of Stuttgart.

His grandfather was a landlord.

But this day bears significance for us, too, and we can't let it pass without a note.

Ten years ago on this day, as many of us were marvelling at the invention of YouTube, contemplating the maiden flight of the impossibly large Airbus A380, or waiting with bated breath for the next instalment of the Star Wars movies (The Revenge of the Sith) and Harry Potter books (The Half Blood Prince), the Carr Government's then Minister for Housing, Joe Tripodi, announced the Reshaping Public Housing reforms.

These reforms sought to do a number of things with the intention of making the public housing system fairer. In particular, they sought to "end the policy of public housing for life" by offering fixed-term tenancies with a review of eligibility at the end of the term; and "allocate all public housing on the principle of strongest housing need" by focusing eligibility rules to assist tenants and households whose need go beyond mere questions of affordability. In addition, the reforms changed the way public housing rents are calculated, ensuring that tenants on 'moderate incomes' would pay 30% of income in rent, instead of the 25% paid by tenants on lower incomes.

But like Johannes Kepler's apparent attempts to date the origins of the universe, these reforms have fallen well wide of the mark. The combined effect of fixed-term tenancies with reviews of eligibility, and reduced disposable incomes for tenants on slightly higher incomes, has been to ensure tenants' make tough choices about how and when to take on work. Extra earnings could result in less money in the short-term, and a loss of housing in the medium-term. In the result, there are fewer people leaving public housing of their own accord, and this puts immense pressure on the portfolio.

The principle of housing on the grounds of strongest need has lead to an increase of residualised disadvantage within public housing. Combined with reduced options for sensitive allocations across the portfolio, because of the decrease in the number of housing 'exits', the pursuit of this principle is perhaps responsible for the rise of 'anti-social behaviour' and complex neighbourhood disputes within public housing communities - which is now seen as one of the key policy challenges by some in the social housing sector.

It also combines with the State's over-stretched health and support services to the extent that while a person's housing needs are being met, other significant needs may not be. This often exacerbates the problems that have lead a household into public housing in the first place - placing tenancies at risk from the outset, and making issues caused by this residualisation all the more acute.

The impact of these reforms, and their failure to achieve the stated aims, has been well documented. We've drawn attention to them in our research, and pointed them out on our blog. More recently they've started to turn up in important discussions such as the Auditor-General's report into making the best use of public housing, and even, as we understand it, a number of responses to the Department of Family and Community Services' Social Housing in NSW discussion paper.

This is positive news, because ten years of these terrible policies is ten years too long... It's well and truly time to reshape the reforms.

Bye and thanks, Chris

The Tenants' Union farewells its Senior Policy Officer, Dr Chris Martin.

Chris' tenure has been a long and distinguished one, spanning more than a decade. He joined the Tenants' Union's staff in 2002, after a stint as a Tenants' Advocate with the Southern Sydney Tenants' Advice and Advocacy Service. He's worked long and hard to make the world a better place, by making it a better place for renters.

Chris can take a great deal of credit for many of the Tenants' Union's headline achievements over the last ten years.

He contributed to and influenced the review of the Residential Tenancies Act 1987, on behalf of tenants and the Tenants' Advice and Advocacy Services. This saw some significant changes (in the subsequent Residential Tenancies Act 2010) to the way our renting laws deal with things like co-tenancies and dealing with a listing on a residential tenancy database. It also saw a number of irksome things in the law resolved in tenants' favour, such as ensuring that a free method of paying the rent must always be offered when starting a new tenancy, and making it harder for landlords to simply dispose of a tenants worldly goods and possession after ending one.

He lead the development of the TU's plan for reform of the marginal rental sector - significant parts of which were picked up in the Boarding Houses Act 2012. Unfortunately some other parts were not, and there remains a good deal of work to do. Renters who are left out of New South Wales tenancy and boarding house legislation still lack even most basic legal protections, and access to dispute resolution processes. Chris' work in this area leaves a solid platform on which further reform can, and must, be built.

Chris also made sure the Tenants' Union was an early convert to the idea that advocates for affordable housing must grapple with taxation policies at both the State and Commonwealth levels. He's never missed an opportunity to remind us that any discussion about affordable housing needs an analysis of what motivates our nation's landlords, and that the impacts of unaffordability are most keenly felt in the private and marginal rental markets.

But it hasn't all been about the headlines. During his time at the TU Chris attained his doctorate of philosophy with a thesis on governing crime and disorder in government housing in New South Wales, and he authored the 4th edition of the Tenants' Rights Manual. He's written extensively on tenancy related law reform and policy, ranging from the most broad and overarching ideas to the minutest detail about the impact of legal decisions and crafting of legislation. He's the keenest and most entertaining - perhaps even obsessive - tenancy historian you're ever likely to come across... and always staunchly in favour of a better deal for renters.

We really can't do Chris' work justice in just a few short paragraphs, and we encourage you to take a look through the archives at the many contributions he's made to this blog. It gives great insight into the depth and breadth of Chris' knowledge and interest in all things tenancy - after all, he's also the founding and most prolific blogger on the Brown Couch.

We're sure going to miss him.

Bad weather, repairs and tenants' rights

Summer's lease hath all too short a date, as the bard said. It's quite a storm out.

If the cold wet weather is making its way inside your house, please get informed about your rights (and obligations) as a tenant by having a look at our factsheets on repairs and storm damage – and contact your local Tenants Advice and Advocacy Service if you've any questions.

Reform of the Federation and housing

Fun Federation fact! The 'Father of Federation', Henry Parkes, was a tenant.

In his final years, Parkes rented 'Kenilworth', one of the 'Witches' Houses' on Johnston Street Annandale.

Now, almost 120 years after Parkes' death, and 115 years after the federation of the colonies as States in a new Commonwealth of Australia, the Federal Government is preparing a White Paper on the Reform of the Federation. As part of the process, an issues paper on 'Roles and Responsibilities in Housing and Homelessness' has been produced – it is well worth a read.

The stated objective of the White Paper is to make the Federation more efficient and effective, simpler and clearer, supportive of increased productivity and economic growth.... and 'to ensure that, as far as possible, the States and Territories are sovereign in their own sphere.'

And that, the Government explains, means 'limiting Commonwealth policies and funding to core national interest matters, as typified by the matters in section 51 of the Constitution.'

Which really is begging the question. Should we assume that making States 'sovereign in their sphere', and limiting the Federal policies and funding to section 51 matters, will actually lead to more efficient, effective government and economic growth?

It strains common sense to treat section 51 as a timeless touchstone of good federalism. There's some very important matters on the section 51 list – for example, taxation (s 51(1)(ii), defence (s 51(1)(vi)), currency (s 51(1)(xii)), banking (s 51(1)(xiii) – and some arguably less important ones too (lighthouses (s 51(1)(vii); astronomical observations (s 51(1)(viii)). And some very important matters are not specifically named on the list: in particular, housing.

Parkes's fellow founding fathers drafted section 51 without the benefit of any special insights into housing policies for the 21st century, or even the 20th century. For what it's worth, Parkes's own ideas about housing policy were indicated in the 1860 report of the Select Committee of Inquiry into the Conditions of Working Classes of the Metropolis, where he recommended that the construction of model dwellings by private capital should be encouraged, by awards of 'medals or diplomas of distinction' – not subsidies.

When section 51 was first drafted, there was no social housing anywhere in Australia, and very little anywhere in the world. What there was a lot of was truly awful housing.

For the first half of the 20th century, State and local governments in Australia made a few stabs at housing reform, but enduring, systemic improvements in the design, construction and provision of housing to households on low-moderate incomes, were achieved only after 1945, when the Federal Government committed funds to State housing authorities through the Commonwealth-State Housing Agreement.

Of course, funding for social housing isn't the only thing the Federal Government does that affects our housing system. As we've often discussed – and the issues paper makes this point too – the Federal Government's tax settings impact hugely on the housing system. In particular, the exemption of owner-occupied housing from capital gains tax, the discounted rate of capital gains tax on other assets (including rental housing), and generous treatment of negative gearing, all operate to direct a lot of private money into the housing system, where it has pushed up prices and distorted the composition of the rental market, to the benefit of those who have already paid for their housing, and to the disadvantage of those who have not.

Now, this is something that the Federal Government does not propose to change, and in terms of the Reform of the Federation process, it passes the section 51 test (being taxation – subsection (1)(ii)).

So one's left with the impression that 'reform' on these terms would really mean the Federal Government continuing policies that benefit people who are wealthy in housing, and pulling out of programs that deliver some assistance to the housing poor.

Could States 'sovereign in their sphere' step up to funding these programs themselves? What if, as the reform process contemplates, there was also a move to address what it calls the 'vertical fiscal imbalance' between the Federal Government and State Governments?

That's a false hope. The difference in the fiscal powers of the Federal Government and State Governments is not one of mere degree (as 'vertical fiscal imbalance' implies), but a difference in kind.

As the issuer of the Australian currency (section 51(1)(xii)), the Federal Government is not fiscally constrained: it can buy anything that is for sale in the currency, can pay any liability that is due in the currency, and never run out of money. Its power to tax is vital to ensuring the acceptance and use of the currency, and the way it taxes is very important to the economic decisions of citizens, but Federal tax revenues don't actually fund Federal spending.

State Governments are categorically different: they are currency users, and as such face financial constraints that really do not apply to the Federal Government.

In our Federation, the Federal Government has, through its position as issuer of the Australian currency, a unique ability to mobilise labour and other economic resources and put them to work for the purposes of public policy. Those purposes should include the provision of housing, homeless services, and other support services and community activities that improve people's lives – and not merely defence forces, lighthouses, astronomical observances and those other matters about which legislative power was allocated to the Federal Government all those years ago.

The Brown Couch preserved for the ages!

We're chuffed that the Brown Couch is now being preserved in the National Library of Australia's PANDORA Archive. PANDORA preserves a selection of 'significant Australian websites' of 'long-term research value', and we're delighted to be added to the collection.

This also means we'd like to welcome to our readership PANDORA users, particularly those of you who are tenancy history buffs from the far-distant future. Hello!

We love our public libraries – especially the NSW State Library's Legal Information Access Centre (LIAC), which maintains the Find Legal Answers website and puts hardcopy resources into local public libraries. Thanks, librarians.

Correction: Defence Housing tenants and the 'Commonwealth tenancy disputes' legislation

When we first noticed the Federal Government's 'Commonwealth tenancy disputes' legislation, we said

it appears that tenants of Defence Housing Australia in New South Wales no longer have access to the NSW Civil and Administrative Tribunal for resolution of tenancy disputes. Instead, they'll now have to go to the Federal Circuit Court of Australia.

Since then we've corresponded about the matter with the office of the Attorney-General, Senator George Brandis. Their advice is that Defence Housing tenancies are not affected by the recent legislation, because of the particular way in which 'Commonwealth tenancy dispute' is defined at section 10AA.

As the Attorney-General's office points out, the definition effects a 'two-pronged approach'. A tenancy must be skewered by both prongs to be caught by the legislation.

The first prong of the Commonwealth tenancy dispute definition requires the Commonwealth to be in the position of the landlord: that is, the 'lessor', 'licensor' or 'grantor'... but not, it should be noted, as a 'sublessor' or 'sublicensor' (section 10AA(1)(a)(i)-(iii)). Most Defence Housing properties are in fact owned by private individuals, let to the DHA, and sublet to DHA tenants – making the DHA a sublessor. For this reason, most DHA tenancies will avoid being caught on prong number 1. 

The second prong of the definition requires a person – other than the Commonwealth or a Commonwealth officer or employee – to be in the position of the tenant: that is, the 'lessee', 'licensee' or 'grantee', other than as a 'sublessee' or 'sublicensee' (section 10AA(1)(b)(i)-(vi)). Because Defence Housing tenants are members of the Defence Force, they fit the definition of 'Commonwealth officer or employee', which means they avoid prong 2... unless they are a sublessee, as many are, but where they are the DHA is necessarily a sublessor, so they are not caught for that reason.

Put another way: where a DHA tenancy is caught on prong 2, it appears that it won't be caught on prong 1; and where it is caught on prong 1 of the definition, it appears that it won't be caught on prong 2.

So, DHA tenants in New South Wales: you're still covered by the Residential Tenancies Act 2010 (NSW), without modification by the Federal legislation, and can go to the NSW Civil and Administrative Tribunal in the event of a dispute.

*

'The drafting of the legislation in this way', advises the Attorney-General's office, 'serves to reinforce the proven dispute resolution and complaints management system that DHA currently employs.'

It also sharpens the question as to which tenancies, if not those of the DHA, were intended to be caught on the prongs of the Commonwealth tenancy disputes legislation, and to what end.

Clearly, the remaining Badgerys Creek tenancies were a target, with 37 termination applications lodged in the Federal Circuit Court two weeks after the Commonwealth tenancy disputes statutory instrument was signed into existence. Why the Federal Government thought it better to proceed this way, rather than through the 'proven' system of State law and State Tribunal, is less clear.

The TU is acting for a number of the Badgerys Creek tenants who are defending the applications. Any other Badgerys Creek tenants are encouraged to contact us. 

Also apparently caught: residential tenancies of the Sydney Harbour Federation Trust. This Commonwealth agency mostly lets its properties for non-residential purposes, but it currently has a couple of residential properties to let.

Counting the Cost- Saving the Census

You may have read that the Federal Government, at the request of the Australian Bureau of Statistics, and in response to funding pressures, is considering possible changes to the ABS Census. The next Census is due in August 2016.  Check out the back story in these two articles.

Presently there is a Census every five years. There is talk about conducting the Census every ten years and, between Censuses, to collect information from samples only. We believe that a threat to timely and accurate census data is a threat to fact-based debate and data-driven policy making.

Why? Because surveys that rely upon sampling techniques do not provide useful information at the small area level which allow results to be interpreted with reasonable confidence.

This also will have a negative impact on the provision of community services across Australia, especially for vulnerable and disadvantaged groups. Just one example. The NSW Tenants Advice and Advocacy Program applies a formula for allocating funds to local Tenants Advice and Advocacy Services that draws upon Census data. A 10-year Census will not provide an accurate picture of the demography of small towns and local government areas between Censuses.

So, in early March of this year, the Tenants’ Union of NSW wrote to the Hon Joe Hockey expressing our concern. We are awaiting his reply.

Read more about why we need to keep the 5-year Census. There is also a ‘Save the Census’ letter you can send to Canberra.

Congratulations new Ministers, MPs

The Tenants' Union congratulates the NSW Coalition parties on their re-election to State Government.

Congratulations to Brad Hazzard, who has been appointed Minister for Family and Community Services and Minister for Social Housing.

Having a Minister for Social Housing is a new development: in the Coalition Government's previous term, social housing was rolled into the Family and Community Services portfolio without distinction. Before that, social housing was the responsibility of a Minister for Housing, an office which went back to the 1940s, but which had for a long time been focused on social housing, rather than the wider housing system.

We're optimistic that the elevation of social housing to its own ministry will mean that the social housing sector will be elevated in the priorities of the State Government... but we'd still prefer to see Minister Hazzard (or another of his colleagues) as Minister for Housing, with a broad brief to develop policies for greater affordability, security and decency of housing across the tenures.

We should also note that Minister Hazzard, as Attorney-General in the previous term of the Government, deserves credit for his role in convincing the Federal Government to restore funding to community legal centres and Legal Aid which had previously been cut. We look forward to working with him on social housing.

Congratulations too to Victor Dominello, who has been appointed Minister for Innovation and Better Regulation, and whose responsibilities include tenancy law.

The 'Innovation and Better Regulation' ministry is a new development too, replacing the ministry of 'Fair Trading', which itself replaced 'Consumer Affairs' some time ago. We're a little concerned that the change in ministerial title may reflect an intention to shift away from consumer protection as the primary responsibility of the portfolio.

On the other hand, we know Minister Dominello from his early work on boarding house sector reform, so we look forward to working with him on tenancy reform.

And congratulations to all new and re-elected Members of Parliament, especially those who declared their support for More Bang for Your Bond:

Tim Crakanthorp (Labor, Newcastle)

Trish Doyle (Labor, Blue Mountains) 

Alex Greenwich (Independent, Sydney)

David Harris (Labor, Wyong)

Jo Haylen (Labor, Summer Hill)

Sonia Hornery MP (Labor, Wallsend)

Geoff Lee (Liberal, Parramatta)

Jenny Leong (Greens, Newtown)

Adam Marshall (Nationals, Northern Tablelands)

Bruce Notley-Smith (Liberal, Coogee)

Jamie Parker (Greens, Balmain)

John Robertson (Labor, Blacktown)

 and possibly more to come as counting continues!