From Public Housing to Vouchers: An American Perspective

4 September 2014 | Posted In: #122 Spring 2014, Housing Types and Issues, Public Housing, Public Housing – Policy changes, | Author: Celia Ettinger

As the Inner Sydney Regional Council’s intern for 6 weeks Celia Ettinger observed the relocations process currently being undertaken in the Millers Point area and worked on an alternative needs assessment that could be independently implemented in such situations. Here she reflects on what she saw.

From public housing to vouchers

Throughout my internship I was able to compare my knowledge of public housing in the US to public housing in NSW in order to bring a different perspective to the housing relocations process than my fellow Australian co-workers. What was particularly interesting to me is how both Australia and the US have implemented some form of a subsidy system in order to separate public and private housing.

Before my internship I had explored The Rocks area. Based on my experiences with public housing, it never even crossed my mind that the area contained numerous public housing dwellings. On the second day of my internship I was driven around the area again. I was very surprised to find that the area was home to public housing.

In the US, there is no diversity in communities comprising of public and private housing. Public housing is typically located in slums that consist of solely public housing and other government supported homes. This is because over the past 100 years the US has gentrified many areas and pushed public housing into undesirable areas, consciously separating private and public homes.

What Australia has done so well at preserving in The Rocks area, until now it seems, is the integration of public and private housing in order to make the area desirable for all types of people regardless of income.

Section 8 of the US Housing Act, authorizes the payment of rental housing assistance to private landlords on behalf of approximately 3.1 million low-income households in the US. The largest part of the section is the Housing Choice Voucher program that pays a large portion of the rents and utilities of about 2.1 million households.

The Housing Choice Voucher Program provides “tenant-based” rental assistance, so a tenant can move from one unit of at least minimum housing quality to another. The goal of Section 8 in the US was to create a sector of the private market that aimed to supply low cost housing. This initiative has not worked and instead has created an ever-growing gap between the rich and the poor that seems to be infinitely expanding while separating private and public housing dwellings.

The largest problem for the US is that as it demolishes public housing areas, it does not create new housing facilities. The reliance on these vouchers creates more inequality in the country rather than remediating the problem of housing inequality. This is the path that many seem to believe public housing in Australia is heading towards.

Australia does not have a voucher program the way that the US does but there has been a very similar attempt to move away from public housing provision. This has taken place through increased reliance on Commonwealth Rental Assistance (CRA) since the Hawke Labor Government in the 1980s.

There are two main criticisms of the CRA. One critique is that it acts as a demand subsidy, meaning it adds more money to the system without building more properties, and therefore inflates rent. The second criticism of the CRA is that because it is not indexed to rent increases, it has failed to keep up with the actual cost of housing, effectively reducing over time.

This is Australia’s equivalent to US vouchers. Both systems are demand subsidies that support market provision of essential services and public goods.

Many believe the CRA demonstrates the political failure of targeting payments like this: it’s too easy to fiddle with indexation and watch it decline slowly over time.

If the Australian government continues on the same path that it is on with demolishing public housing and trying to remedy the lack of public housing with subsidies, it will find itself with more slums and a higher of inequality between home owners. Australia needs to learn from the mistakes that the US has made and create more public housing facilities as it destroys them.

Prior to coming to Australia with my American study abroad group, I expected to encounter deadly creatures, explore the country and learn about a different culture. While I did experience these things, I actually got something much more valuable out of my trip down under. I learned that there is a difference between eliminating the problem of public housing and solving the problem of public housing. Demolition techniques can do the former, but only profound policy changes and substantial public investment can bring about the latter.

Celia Ettinger is an American student studying Sociology at the University of Michigan