Future Directions for Social Housing in NSW – Is it good policy?

26 May 2016 | Posted In: 129 – Winter 2016, 132 – Winter 2017, Housing Types and Issues, Public Housing, Public Housing – Policy changes, Research, | Author: Peter Phibbs

The redevelopment of public housing estates and the management of tenants will take place within the context of the recently released Future Directions policy. Peter Phibbs while acknowledging the importance of the policy, also raises some significant concerns.

Phibbs2Let me say at the start – if you are working for the Government, it’s hard to write good policy. If you are the Minister it’s hard to get good policy through a cabinet process, especially when you are dealing with colleagues who have little real experience of your portfolio.

There are a lot of good things in the Government’s Future Directions document. For a Minister from a conservative Government to be able to attract substantial funds to increase the level of social housing and to renovate a large number of existing dwellings – Is a fantastic outcome for social housing. And who would argue about a plan that wants to improve the experience of social housing tenants? Another big tick.

However, I have some significant concerns with the document. One is the notion that people will transition out of social housing and into the private rental market. Clearly a lot of people do this already. An AHURI study on Social Housing exits led by Ilan Weisel from City Futures (AHURI Research and Policy Bulletin Issue 190) quantified the level of exits in some detail1. The study found that annually, vacancies caused by voluntary tenant-initiated exits represent approximately five per cent of all public housing stock. It also found that about a quarter of tenants who entered social housing in 2007 voluntarily exited within six years, although some of these will have subsequently re-entered or sought to do so.

The study suggested that increasing the level of exits from social housing of people who are unable to sustain a private market tenancy is likely to be counterproductive. This is the risk for a policy that sets a target of doubling the level of successful exits from public housing.

The problem is a simple one. Private rental markets, particularly in Sydney, are very difficult places for low income households. Tenancies are very expensive and often insecure, since the majority of investors are focussed on their returns from buying and selling property and not holding them long term. Moreover, social housing tenants who do find work are often employed on a casual or contract basis in low wage industries. In market terms, social housing tenants in this situation are facing revenue risk (from uncertain employment outcomes), cost risks (from increasing rents) and eviction risks (from landlords who want their rental properties vacant so they can sell them). Social housing tenants who voluntarily moved out of social housing in these circumstances would be exposing themselves to a number of short term and long term risks, and social housing landlords would be likely to have a duty of care to counsel them against leaving, rather than having a KPI to move them on.

People are “staying” in social housing not because the social housing system is broken – rather because the private rental market is unsuitable as a long term tenure for people on low and moderate incomes in Sydney. Fixing it would require a radical change in private tenancy laws (not likely given the tenor of the recent discussion paper on Tenancy Law Reform in NSW) and a real effort by the NSW Government to address affordable housing. The Policy document talks about a joined up process between agencies, but it is not very evident. The reference to Fair Trading is very vague: “FACS will also work with the Department of Fair Trading to examine ways to make the private rental market more suitable for people on low incomes” (page 15).

My other concern with the document is the lack of evidence in the policy. For a document which was a long time in the making and included a significant amount of public resources devoted to a number of large consulting reports, why couldn’t we see more evidence in the policy. In particular, why wasn’t there a systematic examination of the costs and benefits of some of the new programs in the policy.

For example, making the poorest people in our community pay rental bonds to FACs Housing seems like a strange policy. To write as a justification that you are preparing them for a transition to the private rental market, when most of them won’t go near the private rental market (for reasons outlined above) does seem strange. Would the tenants be better off spending $1400 on the education of their kids rather than having it locked away in the Rental Bond Board? If it’s about the tenant damage issue, why not use it as a “stick” for tenants who damage their property rather than for every tenancy. How much will it cost to administer and will these costs exceed the assumed benefits? What are the equity issues with only applying it to new leases? It seems like a thought bubble by someone in the Minister’s office rather than a carefully considered policy. It clashes in a spectacular way with the policy aim of “A better social housing experience”.

My final comment relates to the issue of “joined up services”. This is a crucial issue for social housing tenants, particularly for children living in social housing. Education could have a transformational role for children of social housing tenants (think TAFE programs in housing construction and maintenance). So what is the only educational initiative mentioned?

It is: Commissioning a joint research project to determine the extent that living in social housing explains under performance, beyond that which is explained by socio economic status.

As a housing researcher, this makes me despair. AHURI has undertaken a range of housing research that demonstrates exactly the opposite. Children who move into social housing have a better educational experience than kids operating in the private rental market. There are a number of reasons for this, but the main ones are increased housing, and hence school, stability and increased disposable income of parents who can now help support their children by connecting them to the internet, buying books etc. (see AHURI Final Report No, 47 Housing assistance and non-shelter outcomes)2.

The NSW housing agency actually helped pay for the research. Someone in FACS should go and read it.

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Professor Peter Phibbs is the Chair of Urban and Regional Planning and Policy at the University of Sydney and also Director of the Henry Halloran Trust at the same University.

Resources and Links

1 What are the incidence, motivations and consequences of social housing exits? (PDF 394.2 KB) Ilan Wiesel; Hal Pawson; Shanaka Herath; Wendy Stone; Sean McNelis

2 Housing assistance and non-shelter outcomes (PDF 4.4 MB) Peter Phibbs; Peter Young

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