I am pleased to report that 2004-05 has been a year of significant change – and achievement – for the Department. The most important of these changes was the release by the Government in April 2005 of its plan, ‘Reshaping Public Housing’, a major public policy shift in NSW.
Additionally, the Department embarked upon a number of initiatives aimed at improving the viability of social housing and better managing its property portfolio.
During 2004-05, the Department was given the task of implementing wide-ranging reforms to public housing in NSW. These reforms are designed to ensure that the public housing system can assist people with the greatest need in a manner that is financially sustainable.
The reforms include a new approach to eligibility for public housing that will target and prioritise those with the greatest need. These include low-income households who cannot access the private market and who require support services.
The reform package also institutes a new tenure policy for public housing tenants. In future, tenancies will no longer be for life. Tenants will instead be granted tenancies for the duration of their need. This will mean that, in the longer term, more people in need will be able to access public housing.
Reshaping Public Housing will also see an increase in the rents charged to clients on moderate incomes. These households will now pay 25% to 30% of their household income (or market rent, whichever is lower). A two-fold benefit is anticipated from this change in rent policy. Firstly, increased revenues are likely to improve the financial sustainability of the Department. Secondly, the small increase in rents may encourage those with greater capacity to seek housing in the private market, thereby freeing up public housing for those in greater need.
During 2004-05 the Department played a vital role in advising Government on these policy changes, communicating the policy changes to tenants, and making the necessary administrative changes in order to implement them.
Strengthening community housing
In addition to the changes in public housing policy and administration outlined above, the Department continued its work to strengthen the viability of the community housing sector. One of the key initiatives for 2004-05 was the implementation of a performance-based registration system for community housing providers in NSW. This system is a significant step in the development of best practice in the sector, with implementation being phased in over three years. The focus during 2004-05 has been consultation with the sector, developing performance measures, and providing initial training to community service providers as well as undertaking reviews of the first 24 housing providers. The system has generally received a positive response.
Innovation through partnerships
In 2004-05 the Department also commenced the Bonnyrigg Living Communities Project. As part of this project, a private sector partner is being sought for a full-scale redevelopment and renewal of the Bonnyrigg Estate in Western Sydney. Valued at around $500 million, this will be the biggest public private partnership for social housing in Australia. During 2004-05, the Department engaged in extensive community consultation to plan the project and inform residents of proposed changes, and expressions of interest were sought from private sector partners. The Department will issue a request for tenders in 2005-06.
As will be seen elsewhere in this Report, the Department continued to develop a range of other partnerships with community organisations, businesses and governments in order to bring a number of other innovations to social housing.
Leading the way with new ideas
The Department has long played a role in developing new ideas about social housing. Of particular note, this year the Department hosted the first national Affordable Housing Conference in Sydney. Over 400 delegates attended, with representatives coming from all state and territory governments, the not-for-profit sector and business. Keynote speakers were drawn from among leading practitioners in the field in Australia and internationally.
The conference identified a range of innovative affordable housing financing and delivery models that are operating successfully in Australia and overseas. It is hoped that these will be translated into increased supply of affordable housing in New South Wales over the coming years, through effective partnerships between the government and non-government sectors, and the attraction of additional private sector financing.
Improving asset management
The Department aims to foster a culture of continuous business improvement, and I am pleased to report that significant steps were taken in 2004-05 in this regard.
An asset portfolio strategy was developed in order to guide realignment of the public housing stock over the next ten years to best meet the needs of a changing client profile. Realignment involves replacing and upgrading outdated dwellings, with the strategy providing indicative targets and budgets for local planning and programming of asset projects.
Additionally, the Department initiated wide-ranging changes to the way it maintains its property portfolio, and has made a commitment to invest $1 billion to upgrade all public housing properties over the next five years. During the year under review, total expenditure on asset maintenance and upgrading was $352 million.
A new Executive
In 2003, the Department commenced a review of its executive structure to ensure that it was in a position to meet the changing needs of its clients and implement business improvements. This review was completed in 2004, along with the recruitment of the current Executive Team.
The roles, responsibilities and reporting lines of the new team reflect an enhanced focus on governance, as well as the separation of governance, policy and service delivery functions. A significant additional role created was that of Deputy Director-General, with responsibility for overall management of operations. This position will be critical to the successful implementation of the Government’s Reshaping Public Housing reforms.
The year ahead
The main challenges in the year ahead will be implementing the Government’s reforms to public housing. The Department will need to devote considerable resources to making the administrative arrangements necessary to implement the new eligibility and tenure policies. It is also working to develop better partnerships with other government agencies and community organisations that serve our clients in an endeavour to provide service in a holistic way.
An additional policy change that is part of the reform package and will come into effect in 2005-06 is that, for the first time, clients will be charged for their water usage. Implementing a user pays principle for the 125,000 households in public housing is likely to see a reduction in water usage across the state. It will also assist in the financial sustainability of the housing system as a whole.
The coming year will also give us an opportunity to define the future strategy for community housing. This sector offers enormous potential to complement public housing in achieving a viable social housing system that assists those in greatest need.
These and other policy changes will require the Department to continue to actively engage with our clients, as well as the broader communities we serve.
The Department will also consolidate its maintenance reforms and improvements in portfolio management, while the public private partnership at Bonnyrigg will be advanced. Together, these initiatives will ensure that the Department of Housing is well positioned to meet the challenges presented by changing demographics and emerging housing need in NSW.
It has been an extremely busy and rewarding year for the Department. Having seen the dedication of our staff, and with a highly skilled Executive team now in place, I have no doubt that we will meet many of the challenges in the year ahead. I look forward to keeping you informed of our progress.
Terry Barnes
Director-General