10 May 2017
CHP’s reaction to the Federal Budget
On Tuesday night the Treasurer handed down the much anticipated Federal Budget 2017-18.
As a sector, we are celebrating the Federal Government having maintained the existing levels of homelessness funding, and the increased certainty of that funding, but have expressed concern that the additional investment needed to cope with the demand crisis was missing.
Watch this video of Jenny Smith giving a Budget reaction on behalf of Homelessness Australia, and read the Homelessness Australia media release, and read on for deeper analysis of Budget papers.
What happened to housing and homelessness funding?
The Federal budget locked in funds currently in the National Partnership Agreement on Homelessness (NPAH) into the forward estimates with some indexation and a requirement for matching contributions from the States. This means that the current one year agreement is now ongoing.
Table: Funding previously included in the National Partnership Agreement on Homelessness (see Table 2.8)
The increase from $115 million to $117.2 million will pay for rising staff salaries granted under the Equal Remuneration Order for Social and Community Services workers. It’s unclear why the funding then reduces by $0.6 million in 2018-19.
We are relieved to see that the Budget also maintains the $1.34 billion p.a. funding in the National Affordable Housing Agreement (NAHA), without the cuts that were threatened in February. This is a great relief, as any cuts would have pulled the rug out from public and community housing creating a tsunami of homelessness.
From 1 July 2018 federal homelessnes and housing funding will change from a multilateral to a bilateral agreement, incorporating both the NPAH funding and the NAHA funding into one new combined agreement, the National Housing and Homelessness Agreement (NHHA). The NHHA will include stronger accountability, tighter outcome measures and indexation at Wage Cost Index 1 (about 1.5%). You can read more about this in the Budget Fact Sheet.
Table: Total housing and homelessness funding ($ millions)
|Ongoing ‘NPAH’ funding
You can see the stability of the overall funding over time here.
Other homelessness funding in the NHHA
Under the NAHA, a portion of the funds were intended for homelessness service provision, with the remainder going to fund public and community housing. The homelessness funding component continues within the NHHA, but will be separately identified, and the Commonwealth’s contribution to homelessness funding will be matched by the States (See p. 43, BP3).
This is not additional funding as it’s described in the budget, as it’s included within the total above, but is specially reserved funding.
Other housing affordability measures
The Budget also includes a number of other measures relating to housing affordability as part of an overall package. These include:
This is the body that will administer the bond aggregator. The aggregator is a welcome initiative that will enable the community housing sector to more easily access cheaper loans. It should increase the capacity of community housing to grow stock, but doesn’t address the ‘subsidy gap’ needed for community housing to be able to house tenants on very low incomes. That is, the Budget does not acknowledge the need for the Government to provide an ongoing subsidy to ensure a viable income stream to the operator.
This will provide an extra 10% capital gains tax discount when investors sell housing that has been used for affordable housing provision for a minimum of three years. This is intended to enhance the attractiveness of investing in below market rental housing, though the value of the incentive will only be realised at point of sale, increasing the likelihood of investors ‘churning’ stock for capital gain.
Helping people to save for housing is positive, but it doesn’t address the key issue which is house price inflation being driven by investor tax incentives, and to some degree will only add to inflationary pressure. It will have no impact for households who can’t put away savings because they are spending too much on rent.
These provide some reduction in the incentives for investors that are driving house price inflation, but are not a significant reduction in the overall negative gearing benefit.
This is positive, but $1 million a year nationally is a very small commitment.
This is also a positive commitment, though the land at Maribyrnong has major issues with contamination that will make it difficult to develop housing on it without considerable expense to clean it up.
This is a positive commitment.
Other budget measures
The Budget also included a series of saving measures in the welfare budget that will reduce payments for many people, further tighten the existing ‘breaching’ system that already sees many people lose their benefits, and introduce drug testing for some people on unemployment benefits.
More positive measures include the axing of ‘zombie measures’ from the 2014 budget, including waiting periods for young people to access unemployment benefits, the commitment to the NDIS and schools funding.
Last night national peaks responded to the Budget. You can see the Homelessness Australia verdict here, National Shelter’s response, and the response from ACOSS.
The Budget failed to make the investment needed to deliver any significant increase in housing targeted to the lowest income households, or to enable homelessness services to respond to the massive increase in demand. Also missing was any significant response to domestic and family violence.
This will require us to continue to campaign to address these issues. Council to Homeless Persons has hosted the campaign to save NPAH and NAHA and will continue these efforts. We encourage you to stay in touch with this work by becoming an organisational supporter of the campaign by emailing supporters@SaveNPAH.org.