Background

This section provides the context of the Framework for National Action on Affordable Housing initiatives

Information sources

This guide draws together recent work in Australia. Key information sources include working papers prepared for the Framework for National Action on Affordable Housing, Australia (NAAH), and research for the Australian Housing and Urban Research Institute (AHURI) and Queensland, South Australia, Victoria and NSW (Richardson R, Phibbs P and Gurran N) 'Housing Kits'.

A full list of references is provided in the references section of this site.

The resources and guidance in the Affordable Housing National Leading Practice Guide and Tool Kit is not designed to be relied upon. Users of the guide should consider the individual circumstances of each project or policy, use other resources and take independent advice.

Who is responsible for affordable housing?

No individual reform is sufficient to address housing affordability. A range of levers to improve housing affordability exist, operating across the three tiers of Government. Each level of government has different roles in housing and housing assistance in Australia.

The Commonwealth Government provides Commonwealth Rent Assistance (CRA) and shares responsibility with state and territory governments for housing assistance provided under the Commonwealth State Housing Agreement (CSHA). CRA is a non-taxable income supplement payment added on to the pension, allowance or benefit of eligible clients who rent in the private market. The multilateral CSHA is a five-year agreement (from 2003–04 to 2007–08) between the Commonwealth and state and territory jurisdictions to set objectives and funding levels for national housing assistance. Under the new federal government, discussions are proceeding around the concept of a broader National Housing Agreement which would replace the CSHA.

The Commonwealth also influences the housing market through direct and indirect means, including taxation and home purchase assistance.

The main housing responsibilities of governments at the state and territory level are:

• ensuring an effective supply in response to housing demand, that is, an effective and diverse supply of well-located land and associated infrastructure for housing in both established and greenfields areas; and
• assisting households with high housing needs who are not adequately supported by Commonwealth rental assistance (Abelson, P., 2007).

The Council of Australian Governments (COAG) met in December 2007 and identified housing as one of seven key areas for its 2008 work agenda. All governments agreed to progress a housing work program that includes improving housing affordability for home buyers and to ease rental stress, particularly for low to moderate income households.  It was also agreed to negotiate a new National Housing Affordability Agreement, which builds on previous agreements and includes housing for indigenous peoples.

State and territory governments currently provide housing assistance under the CSHA (for the homeless, public housing, community housing, Aboriginal rental housing, private rental assistance and home purchase assistance). Some also contribute to the delivery of housing assistance through mechanisms such as home lending programs and joint ventures with the private sector. State and territory governments are also responsible for land taxes, stamp duties and residential tenancy legislation.

State and territory planning systems should facilitate a range of housing outcomes including the provision of affordable housing. A land-use planning system that actively supports the provision of affordable housing helps to ensure a diverse mix of housing responding to the range of household needs. To provide that support, there is a need for:

• planning instruments that support affordable housing and the inclusion of affordable housing targets (for market and social housing) in significant development schemes
• an efficient planning system delivered through progressive reform of development assessment practices and the forward planning system.

Councils actively affect housing outcomes through their social planning activities, as well as their role in encouraging economic development, and by the preparation of planning schemes, building and planning regulation and local infrastructure provision.

The Housing Affordability Fund and the National Rental Affordability Scheme are 2007 federal election commitments made by the Commonwealth Government.

The Housing Affordability Fund was established with an investment of $512 million to be spent over five years in order to lower the cost of building new homes.  The Fund will make housing more affordable by addressing two significant supply-side barriers to housing development:

• holding costs incurred by developers and home purchasers through lengthy planning and/or development assessment processes
• infrastructure costs, such as water, sewerage, roads, open space and community facilities, which are incurred variously by local and state governments, often passed on to developers and in turn to buyers of new homes.

The Fund will be established on 1 July 2008 with funds distributed through funding agreements, primarily to local governments.

The Commonwealth Government has also established a National Rental Affordability Scheme to fund tax incentives for investors to build up to 100,000 new affordable rental properties. Under the scheme the Commonwealth and state and territory governments will provide subsidies in the form of a tax credit to institutional investors for ten years who construct new affordable rental housing for income eligible households at a rent which is at least 20 per cent below the market rate in the area. Some $623 million would be available nationally in the first five years. It is estimated that this would lead to 50,000 new rental dwellings across Australia. 

In March 2008, the Prime Minister announced an expansion to the Scheme, with a commitment that if 50,000 new homes are achieved by June 2012, and if the market demand from renters and investors remains strong, an additional 50,000 incentives for new affordable rental dwellings will be available from July 2012 onwards.

In particular this will assist where planning instruments seek the provision of affordable housing as private sector developers will be able to attract institutional investors to purchase the affordable housing produced. The Federal government has announced the scheme will be also be available to not-for-profit community housing providers (who have charitable status and do not pay tax) in the form of a refundable tax credit essentially a grant.

Section 4 on Delivering Affordable Housing has more details about the Housing Affordability Fund, the National Rental Affordability Scheme and the expanded role of community housing providers in providing affordable housing.

The private sector is responsible for most new housing development, so is potentially a major partner in the delivery of housing that is affordable to low and moderate-income households.  Non-government community housing providers and advocacy groups also play an important role in responding to affordable housing needs by raising awareness and proposing policy solutions to affordability problems, and in many cases by helping to develop and manage affordable housing for low and moderate-income households.

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Background to the Leading Practice Guide

Framework for National Action

In August 2005, a joint meeting of state, territory and Australian Government Ministers for Housing, Local Government and Planning and the President of the Australian Local Government Association noted the initiatives being taken in individual jurisdictions to improve the supply of affordable housing.

Acknowledging the significant issues facing all governments in the provision of affordable housing, including market forces of supply and delivery, the meeting agreed to adopt a Framework for National Action on Affordable Housing (NAAH).

In adopting this framework, Ministers agreed to develop initiatives and to implement a range of actions over the next three years aimed at addressing a predicted shortfall of affordable housing.

As part of this work, a National Approach to Use of Planning Mechanisms for Affordable Housing was developed, setting out a national definition of affordable housing, the key principles and components of planning systems that support affordable housing approaches. The NAAH also committed to audit existing state and territorial progress against this work regularly.

A nationally-agreed description

The Framework for National Action on Affordable Housing describes affordable housing as:

• appropriate for the needs of a range of low and moderate-income households; and
• priced so that households are able to meet other essential basic living costs.

This description recognises affordable housing across all tenures, including home ownership, private rental as well as public rental. The section called Housing Needs Analysis discusses this description in greater detail, and provides indicative price benchmarks.

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Affordable housing and sustainable communities

Housing is critical to meeting basic human needs for shelter, security and a sense of connection with communities. It is also linked with the success of those communities in a broader way. The availability of a suitable range of housing contributes to the community’s ability to function in an efficient, equitable, prosperous and sustainable manner. A mix of appropriate and affordable housing is needed to accommodate community diversity within existing, and planned communities. Diverse communities, in turn, play a critical role in maintaining social cohesion, supporting local economies and sustaining a range of local services and businesses.

A shortage of affordable accommodation limits the ability of a local area or region to attract essential workers to maintain services such as transport, medical support facilities, schools, local council utilities and childcare, to name a few. Similarly, a variety of housing types, tenures and costs is required to achieve the concentration and diversity of people needed to support a full range of local services and facilities.

More important still is the contribution of housing to community cohesion. Without a suitable range of housing, some households or whole segments of the community may be forced to move elsewhere if their needs or financial position change. Impacts may fall, for example, on young people leaving home, couples starting a family or older people whose existing accommodation is no longer suitable. In the same way, a lack of housing diversity can work to exclude entire sections of the population from particular locations. This leads to spatial concentrations of disadvantage and the polarisation of society.

At a more individual level, housing and its accessibility are also strongly linked to people’s ability to meet their basic human needs and to pursue goals in their lives, whether related to family, work, education, recreation or other areas.

In summary, a shortage of affordable housing—including affordable rental housing—represents a constraint on economic growth and a barrier to the economic and social participation of individuals and families.  So affordable housing is an important consideration at every stage of the planning process—from the design of new residential development or redevelopment areas, through to managing processes of change within long-established neighbourhoods.
 

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