During their successful campaign to wrest the state seat of Northcote from Labor earlier this month, the Victorian Greens campaigned hard on housing. The state government, they claimed, was selling “80 per cent of Northcote’s public housing land to private developers.” The inference was clear: this is a zero-sum game, and powerful interests will always win out. Beyond the political fights, though, are signs of promising new approaches to providing more affordable housing.
At issue in Northcote was the fate of eighty-seven dwellings on the Walker Street estate, built in the 1960s and slated for redevelopment under Labor’s $185 million public-housing renewal program. The program promises to replace “older, rundown housing” on nine inner- and middle-ring estates with “new, modern, low maintenance homes.”
While the Northcote stoush has its own special characteristics, similar battles are being fought across Melbourne and in Sydney and other cities. They are symptomatic of how public housing is being reshaped in two main ways.
First, state governments are trying to replace or refurbish ageing public housing without investing large sums of public money or taking on substantial new debt. By giving private developers access to well-located land that is home to public-housing estates, governments can offset the cost of renewing social housing. Second, and simultaneously, state governments are increasingly transferring the management or ownership of public housing to community-housing associations, the other much smaller branch of the social housing sector.
These shifts come on top of a long period of neglect. According to data compiled by the Australian Institute of Health and Welfare, the number of households in state-owned and state-run housing dropped from 331,100 to 312,200 in the decade to June 2016, a fall of 6 per cent despite overall growth in the population.
Given Australia’s ageing demographic and changing household composition, the tally of individuals in public housing probably fell even faster. In 2007, families with children (couples and sole parents) made up 27 per cent of households in public rental; ten years later their share had fallen below 20 per cent. The proportion of single-person households rose from 50 per cent to 54 per cent.
As public-housing assets age, maintenance becomes more expensive. In a report released in June 2017, the Victorian auditor-general found that 60 per cent of the state’s public-housing stock was more than thirty years old — up from 42 per cent just five years earlier. As a result, state governments struggle to maintain existing dwellings at an acceptable standard, let alone expand their portfolios.
In any case, the public-housing mix is no longer fit for purpose. Though many existing houses and flats have three or more bedrooms, designed to accommodate families, growing numbers of long-term tenants live as couples or singles. Children have grown up and moved out; couples have separated or a partner has died. As a result, says the Australian Institute of Health and Welfare, more than 16 per cent of public housing is underused — that is, the property has at least two more bedrooms than the residents need. One- and two-bedroom accommodation is also by far the most sought-after option among people on waiting lists.
Add to those factors the age profile and levels of disability among current and potential public-housing tenants, and it’s clear that older-style “walk-up” flats like those at Walker Street urgently need to be replaced. Lifts will provide access to higher floors for people with limited mobility, better air circulation will create healthier environments, and energy-efficient design can reduce heating and cooling costs.
All these pressures help explain why state governments are looking to leverage private-sector investment and engage the not-for-profit sector in building, upgrading and maintaining public housing.
In theory, allowing the private sector to build commercial residential property on well-located public land is win–win, because it generates revenue to offset the cost of public-housing renewal. This enables government not only to replace stock that is run-down, inaccessible or unsuitable with new more appropriate dwellings, but also to increase the supply of dwellings overall.
In the case of Walker Street, the Victorian government says it included private housing to “help fund” the redevelopment, and insists that its renewal program will increase the total number of social housing properties by “at least 10 per cent.” Existing residents will have to move away during construction, but housing minister Martin Foley has pledged that any public tenant who wants to can return when the work is complete.
Yet the potential benefits were hotly disputed at the Northcote by-election, with the mayor of Darebin, the Greens’ Kim Le Cerf, warning that redeveloping the estate could permanently displace forty-seven families.
Foley and Le Cerf can’t both be right, so what is going on here?
The government’s claim that the number of public-housing dwellings will rise is technically correct. As the plans stand, the eighty-seven existing homes in Northcote will be replaced by ninety-five new social housing units. But the overall number of bedrooms appears to decrease by about 25 per cent (from 201 to 149) because smaller one- and two-bedroom apartments will replace mostly three-bedroom dwellings. So it’s possible that the new estate could end up with more public housing but fewer public tenants.
According to researchers Abdullahi Jama and Kate Shaw, this was what happened when the state government used a similar technique to redevelop an ageing estate in inner-city Carlton. They estimate that 146 public tenancies were lost as a result of renewal and conclude that “the social-mix approach to inner-city estate redevelopments in Australia is driven more by an imperative to capitalise on the sale of public land than it is to assist public tenants.”
But private-sector development has potential benefits. Along with ninety-five new units of public housing on the 1.1 hectare Walker Street site, another 125 dwellings will be built and sold on the open market. This expansion in medium-density housing means that existing infrastructure will be used more efficiently and more housing will be available close to public transport and jobs. All things being equal, it should improve overall affordability and reduce the constant pressure to develop on the metropolitan fringe.
Where the government is on more uncertain ground is when it argues that mixing private development and public housing helps transform “pockets of disadvantage” into “genuinely integrated communities.” Critics argue that this promise rarely translates into practice, with Jama and Shaw again citing the Carlton redevelopment as an example. Far from being integrated, “public” and “private” residents ended up living in separate blocks, entering through different foyers and parking in different areas. The surrounding open space was not fully shared either, with owner-occupiers enjoying a “private courtyard garden” that public tenants can’t use. This parallels the “poor doors” found in notionally integrated developments in New York and London.
Even if these problems were overcome, the evidence that social integration makes a material difference to the lives of public-housing tenants is mixed at best. According to the Australian Housing and Urban Research Institute, or AHURI, “a vast literature compiled over many years” has produced only “inconclusive” findings about the benefits for disadvantaged residents.
What’s more, selling public land to fund the renewal of housing estates is a one-off that can never be repeated. AHURI cautions that “forward-thinking governments” should be planning for forty years hence, when today’s “new” public housing needs replacing and there is no public land left to sell.
More broadly, are state governments driving a hard enough bargain when they redevelop estates? After all, Victoria’s plans to increase the stock of public housing by 10 per cent are hardly ambitious.
The Coalition government in New South Wales appears to be extracting greater value from its public-housing assets than its Labor counterparts in Victoria, at least if the promises made about the redevelopment of the Ivanhoe estate in Macquarie Park are anything to go by. Under its “innovative approach to social housing,” dubbed Communities Plus, the NSW government is hoping to transform “259 social housing properties on the 8.2 hectare site into a socially integrated neighbourhood of around 3000 properties including at least 950 social and 128 affordable rental apartments.” The state government seems to have accepted that the necessary price for getting the private sector to build more social housing in Sydney is much higher levels of density.
Oona Goldsworthy, CEO of the not-for-profit housing association United Communities, based in the English city of Bristol, has dealt with private developers in creating mixed residential communities. “The land owner is in the driver’s seat,” she told me recently. It can require developers to meet particular design standards or insist on a bigger share of public housing on a revamped estate.
“One developer wanted to put all our social housing at the back of the site,” says Goldsworthy. The development was on municipal land, and a progressive city government used the planning system to demand a different layout. It’s true that governments may end up having to accept a lower price on the sale of public land as a result of applying constraints to private-sector development, but she believes this is an acceptable trade-off for more high-quality social housing.
Goldsworthy is visiting Australia on a Churchill Fellowship studying the way other countries are planning to house millennials. Her initial impression is that the problem here “is even worse than in the UK” because so many factors work against an increased supply of affordable housing. “The tax system gives such a huge advantage to people buying investment properties,” she says. “And the split of responsibilities between federal, state and local government makes things extra complicated.”
Yet Goldsworthy, who is speaking at AHURI’s 2017 National Housing Conference this week, thinks not-for-profit housing associations could play a key role in the delivery of affordable housing in Australia, just as they do in Britain. There, around 10 per cent of all housing is owned or managed by housing associations, considerably more than the 7 per cent owned by local government. Less than 1 per cent of Australian housing is owned or managed by not-for-profits.
“Housing associations in the UK grew out of an ideological and political push that the state is not necessarily the best provider of housing and the view that it can be better handled by smaller organisations that are closer to the community,” says Goldsworthy. “Ironically, some community-housing providers are now much bigger than local councils.”
She says the community-housing sector in Britain “matured relatively quickly.” Housing associations were able to borrow proactively, capturing a relatively small amount of public subsidy and matching it with lending from other sources — something public authorities couldn’t do. This agility makes housing associations attractive for Australia too, and similar arguments are being used to justify putting public-housing assets under the control of community organisations.
In a modest way, Victoria is following that lead. Under its affordable housing strategy, Homes for Victorians, the state government plans to hand over the management of 4000 state-owned properties to housing associations, about 6 per cent of its existing stock. New South Wales is going a bit further, with 14,000 public-housing dwellings on nine entire estates to be transferred to community management as part of its social housing reform program. This will increase the share of the state’s social housing managed by community-housing providers from 19 to 32 per cent.
From the perspective of state governments, transfers make sense for four main reasons. Housing associations are generally closer to the ground and more in touch than public servants tucked away in CBD offices. Housing associations do the very thing governments are reluctant to do themselves — create more housing by borrowing against the assets and their rental return. The shift to the community sector pulls in additional subsidies from the federal government, since it enables social housing tenants to qualify for Commonwealth Rent Assistance. And as long as community-housing providers hold rents below 75 per cent of market value, they are exempt from paying GST on any inputs used in building, repairing or maintenance. (State governments do not enjoy the same exemption.)
It all adds up, says David Cant, who spent sixteen years at the helm of the Brisbane Housing Company, one of Australia’s most innovative community providers. Cant, who is also speaking at the AHURI conference, reckons that every dollar invested in public housing by the state government generates a return of just 85 cents, whereas the same dollar invested in a community-housing provider can generate at least $1.35 — and significantly more if local government can be persuaded to join the party with cash or in-kind contributions, such as free or discounted land.
Victoria’s plan is part of a trend. The renewal of Sydney’s Ivanhoe Estate is a joint venture between community provider Mission Australia Housing and private developers Frasers Property Australia and the Citta Property Group. The project promises not only to generate affordable housing but also to reduce residents’ utility costs by building in solar panels, green roofs, high-efficiency centralised hot water and other environmental and energy-saving features.
The shift from public housing to community housing can have big benefits. One example is the Brisbane Housing Company’s award-winning Caggara House, in the middle-ring Brisbane suburb of Mt Gravatt. The $15 million development created fifty-seven one-bedroom apartments designed for older tenants who were living alone in public housing that had become too large for their needs. Residents who previously felt isolated, or were overwhelmed by the upkeep of a three-bedroom home with a garden, express relief and pleasure at moving into a brand-new apartment located close to shops, public transport, a library and medical services.
The advantage for the Queensland government is that a $15 million investment in Caggara House freed up existing public housing worth $25 million. “What makes Caggara work is that it is liberating houses worth $500,000,” says David Cant. He thinks the capacity of community-housing associations for innovation is even more important than the hard numbers. “Small not-for-profits know their residents and know their geography,” he says. “We’ve overheard so many conversations between the kids and Mum about how she’s always cold in winter because she’s living in a draughty old Queenslander, and the lawn always needs mowing.”
Working face to face at a local level, with a single focus on affordable housing and a willingness to take risks, community associations can do things “quicker and smarter” than an overly cautious public service, says Cant.
A “gradual but steady” shift from “public” to “community” housing has been apparent for some time, says Cant. Over the past decade, the decline in state-provided public housing has been offset by a doubling in the number of households living in housing provided by not-for-profit community organisations, up from 35,700 in 2007–08 to 72,400 in 2015–16.
As a result, the total stock of social housing (public and community housing combined) has grown, although not quickly enough to match population growth or keep up with demand. As a proportion of all housing, the share of households in social housing has fallen from 5.1 per cent to 4.7 per cent over the past decade and almost 200,000 households are on waiting lists for social housing nationwide.
Can community-housing associations be scaled up rapidly to meet this pressing need? Recent federal moves should help. In this year’s budget, treasurer Scott Morrison announced two measures designed to enable not-for-profit associations to develop more housing for low-income households by borrowing long-term at low interest rates: the National Housing Finance and Investment Corporation and an affordable housing bond aggregator.
The Victorian government has created similar mechanisms: a $1 billion loan guarantee to help housing associations borrow at affordable rates, and a $100 million revolving credit facility to provide them with long-term, low-cost loans.
Despite governments’ emerging ideological and practical support for community housing, the kind of take-off seen in Britain will only be achieved with much higher levels of subsidy than what is currently on offer. In the meantime, thousands of Australians are being denied safe, secure, affordable housing.
At the end of last year, more than 34,000 households were on the waiting list for public housing in Victoria, and upwards of 10,000 of them were classified as priority cases in urgent need. According to the state’s auditor-general, applicants “who are homeless or experiencing family violence” face an average wait of almost nine months. Applicants “who are in insecure, unsafe or inappropriate housing, or who have a serious medical condition” can expect to wait sixteen months on average, and “low-income households that may benefit from public housing” face nearly two years in the queue. The expected wait for “general social housing applicants” in most suburbs of Sydney, is “ten-plus years.”
All this serves as a reminder that community-housing providers can’t work miracles with only relatively modest government help. “Community-housing providers can extend public money much further,” says Oona Goldsworthy, “but you still need the subsidy in some form, whether that is land, financial grants or tax concessions.” David Cant agrees. “If you want to house people on lower incomes then you have to find a bit of a subsidy,” he says. “If public money comes in, private capital will follow.” ⦁