Treasurer Scott Morrison, Assistant Treasurer Michael Sukkar, and other federal government ministers have cast doubt over the continued funding of social housing and homelessness services, leading to speculation that the National Affordable Housing Agreement (NAHA) may not survive the 2017 budget.

Morrison and Sukkar highlighted the recent Report on Government Services 2017, which revealed that the number of public housing properties has declined. They cited this decline as evidence of NAHA’s “abject failure.”

“We believe it’s crucial that every dollar of spending on affordable housing programs increases the number and availability of public and social housing stock. Clearly, this objective has not been met,” Sukkar said.

Australia’s social housing program has largely been static for the past two decades and is notorious for being severely underfunded. As a result, the program is unable to cover the costs of ongoing operations, let alone meet the demands of a growing population. Aside from a one-off boost under the 2009 federal economic stimulus plan, social housing has suffered from dwindling rations for decades. 

“The whole system is effectively being run at a loss. So, from the perspective of state governments, building a new public housing dwelling is just one more way of losing money,” said Chris Martin and Hal Pawson of the City Futures Research Centre in UNSW.

The federal government has long criticised the lack of transparency in how states and territories spend their NAHA funds (which totals roughly $1.5bn annually). Indeed, by failing to act on a 2009 commitment to modernise and enhance the Report on Government Services metrics, the states and territories cannot easily rebut claims of ineffective financial management.

NAHA should be rebooted, not scrapped

Though the threat of NAHA being scrapped altogether is very real, Martin and Pawson suggest the program should be rebooted instead.

“Although … NAHA does it inadequately, an enduring program of federal funding for operational expenses is essential to s ustain the social housing system. Such funding cannot be “replaced”, as Morrison has suggested, by a government-backed aggregated bond financing model,” they said.

Martin and Pawson recommend NAHA be rebooted to deliver three things:

  • Capital funding for new social housing stock – This should be distributed based on an assessment of current and projected needs in each state and territory
  • Recurrent funding – This should be distributed according to the number of social housing dwellings in each state and territory, following an assessment of reasonable net recurrent costs
  • Transparent accounting by social housing providers – This should cover the costs of provision and the contributions of tenants, government funding, and other sources of income towards meeting the costs