Mark Fowler (11 May 2015)
Last Friday, 08 May 2015, the Senate Committee conducting an inquiry into affordable housing in Australian released its report.
This update is divided into the following headings:
- Means to Address Lack of Affordability;
- Public Stock Transfers;
- White Papers on Federation and on Tax;
- Extension of the National Rental Affordability Scheme;
- Charitable Endorsements and the National Rental Affordability Scheme; and
- Dissenting Report by Coalition Senators.
The report contains a number of recommendations that will be of interest to community housing providers and those entities operating within the National Rental Affordability Scheme. The Committee finds that ‘based on the evidence … a significant number of Australians are not enjoying the security and comfort of affordable and appropriate housing—[and] that currently Australia’s housing market is not meeting the needs of all Australians.’
Means to Address Lack of Affordability
In light of this the Report (which is promulgated by the Australian Labor Party dominated majority of the Committee) canvasses a number of differing mechanisms to address what it terms a ‘matter of national importance’, both at the supply and demand ends of the spectrum, including detailed analysis of the following:
- Housing supply bonds;
- Shared Equity Schemes;
- Institutional investment ‘as a core policy objective in affordable housing’;
- Release of information on land supply;
- Investigation into the further use of prefabricated housing;
- A focus on efficiency, transparency, predictability and equity in the charging of Infrastructure charges.
Public Stock Transfers
On public housing stock transfers, the Report recommends that the Australian Government request the Productivity Commission undertake an inquiry into the merits of transferring public housing to the community housing sector with particular emphasis on the advantages and disadvantages of transferring property title.
White Papers on Federation and on Tax
In light of the Federal Government’s announcement that it’s projected review of homelessness and housing policy will now be considered as a component of the Federation White Paper process, the Committee makes several recommendations for consideration as a component of that process, including:
- Improvement of the National Affordable Housing Agreement; and
- Introduction of housing supply bonds using the Australian Housing and Urban Research Institute’s (AHURI) research.
The Report also anticipates that the Tax White Paper will investigate the effect of stamp duties, negative gearing and the capital gains tax discount on home purchase affordability and on the rental market.
Extension of the National Rental Affordability Scheme
The Report concludes that Round 5 of the NRAS should be continued, finding that ‘design and administrative shortcomings have overshadowed NRAS’ success but, while they point to the need for refinement, they in no way warrant its discontinuation.’ The Committee then makes the following recommendations:
Recommendation 36
The committee recommends that:
• in the absence of any credible alternative scheme designed to increase the supply of new affordable housing and considering steps have already been taken to improve the administration and implementation of NRAS, that the Australian Government continue with NRAS round 5;
• the Federation White Paper process look at the Queensland NRAS model, which appeared to have much tighter controls over eligibility, as a means of determining where further improvements or fine-tuning could make the system more robust and effective;
• the Federation White Paper process look at how NRAS or a replacement scheme could be reframed to take account of the particular housing circumstances of regional Australia and ensure that NRAS housing was better targeted to areas in most need; and
• as part of the Federation White Paper process, a thorough cost benefit analysis of NRAS be undertaken, and that any such analysis include comparison of forgone revenue from demand subsidies such as the first home owners grant, and negative gearing and capital gains tax.
Recommendation 37
The committee recommends that when considering NRAS, the Federation White Paper process:
• take note of the concerns raised by many submitters and witnesses about the need for continuity and certainty in order to attract and to gain the confidence of private investors; and
• ensure that any proposed refinement or a replacement of the scheme:
• places the highest priority on restoring and building on the initial success that NRAS had in attracting private investors;
• provides investors with certainty regarding the scheme by committing to a consistent flow of incentives extending over a period of at least five years; and
• takes note of lessons to be learnt from NRAS such as the need for clear and tight eligibility criteria and better targeting to areas of need (the ANAO audit should provide a sound starting point).
The above recommendations were not supported by the dissenting Coalition Senators, who say that both are matters ‘for Government’.
Charitable Endorsements and the National Rental Affordability Scheme
Noting submissions by several groups, including this firm (a copy of our submission to the Inquiry may be obtained here), the Committee made the following recommendation:
Recommendation 38
The committee recommends that the Australian Government, through legislative recognition of charitable status, resolve any uncertainty over the effect that participation in NRAS or any similar scheme would have on the tax status of entities operating as charities, or public benevolent institutions (PBIs).
Charities should note the occurrence of the following developments in charity law following the lodging of this firm’s submissions to the Senate Inquiry in January 2014:
- The release of the Australian Charities and Not-for-profits Commissioner’s Interpretation Statement on Housing. A copy of our update on the Statement is available here; and
- The handing down of the Full Federal Court’s decision in the Hunger Project case. A copy of our update on that case is available here.
These two matters provide further clarity on the matters raised in our submissions to the Senate Inquiry, although charities should take advice on the application of both to their individual circumstances.
Dissenting Report by Coalition Senators
Finally, whilst the majority of the recommendations were not supported by the Coalition Senators, recommending instead that many be deferred for consideration by the White Paper on Federation, the dissenting Senators did support a number of initiatives, including:
- Investigation of the use of Tax Increment Financing by State and Territory Governments; and
- The White Paper giving consideration to the use of Housing Supply Bonds.
A full copy of the report is available here. If you have any queries or concerns please contact us.
DISCLAIMER: This update contains general information only. It is not all inclusive and should not be considered legal advice. You should always obtain legal advice for your specific circumstances before relying on general information.