Introduction by Croakey: The Australian Council of Social Services (ACOSS) is among those welcoming the Labor Government’s recent decision to make stage three tax cuts fairer.
ACOSS CEO Cassandra Goldie said the changes “are a better deal for people earning low, modest and middle incomes, including people earning under $45,000”.
But she also noted that the revised package does not help those on the lowest incomes – people whose incomes are below the tax threshold and pay no income tax – and nor does it address our ongoing revenue challenge, with Australia the ninth lowest taxed amongst 40 OECD countries.
Meanwhile, the Everybody’s Home campaign has urged the Government to scrap tax concessions for property investors and to build more social housing across Australia.
It released a report showing that the value of tax concessions for property investors over the next decade could build more than 500,000 social homes.
In a statement, Everybody’s Home spokesperson Maiy Azize said “if the Government wants to make housing more affordable and fairer for all Australians, it can choose to put money into homes instead of investor profits”.
The report, titled Written Off, recommends:
- abolishing negative gearing and the capital gains tax discount to reduce speculative investment
- building one million social housing properties over the next two decades
- increasing and expanding Commonwealth Rent Assistance so that it relieves financial stress for people on low incomes.
In a separate statement, Everybody’s Home also called on the Federal Government to work with states and territories to limit rent increases and prioritise housing affordability in its cost-of-living relief package.
Meanwhile, public health graduate Yuchen Jia has outlined some suggestions for better supporting young Australians with housing costs, in a submission for the Public Health Association of Australia’s 2023 Student Think Tank competition.
The National Public Health Student Think Tank Competition run by the PHAA is a chance for students to showcase their innovation and enthusiasm for the field of public health.
This year, students were invited to submit a written response to address the following prompt: Describe an innovative approach to tackling a public health threat for young people in Australia. How can public health professionals drive meaningful change in the face of this challenge?
This is the final article in a #PHAAThinkTank2023 series published by Croakey.
Yuchen Jia writes:
Governments need to do much more to address homelessness among young Australians whose needs are not being met by existing policies.
With high rates of homelessness experienced among young Australians, it is important that government policies including the National Rental Affordability Scheme and Housing Australia Future Fund – legislated last September – enable secure, safe, and affordable housing for young adults.
Nearly one-quarter of all Australians experiencing homelessness are young people aged from 12 to 24 years, according to the 2021 Census. The Census also showed that 19- to 24-year-olds experience the highest rates of homelessness – 91 per 10,000 people compared to 70 per 10,000 people in the 25-34-year-old group – the second highest group.
A recent report shows that young adults engaging with tertiary education also face insecure housing. This is associated with multiple social and economic determinants, including precarious employment, lower income, inadequate dwellings and a lack of financial support.
Housing costs, including rent payments or mortgages, commonly take up the highest portion of the disposable income (30 percent) for young individuals.
Although causes of housing insecurity are varied, this problem negatively impacts young adults’ general health and wellbeing.
Health problems including poor nutrition, back pain, and elevated blood pressure levels are common in young adults experiencing or have experienced homelessness.
Inappropriate housing situations not only lead to higher risks of physical health conditions, but also cause mental health conditions, including persistent depression, anxiety and suicidal thoughts.
Multi-faceted systemic solutions are required to address the compounding issues and reduce inequality among young people.
Improving rental affordability scheme
One way to address the housing crisis in young people is by delivering targeted financial support through programs including the National Rental Affordability Scheme – a Rudd-era housing initiative that allows eligible people to rent dwellings at a 20 percent discount in market rates for 10 years.
Despite the NRAS not specifically targeting young people, young people with poorer economic circumstances are eligible for the NRAS as eligibility is based on income.
From its inception in 2008 to 2015, the NRAS delivered 27,603 affordable dwellings to a low-income population residing across urban (75.7%), regional (22.6%) and remote areas (1.7%). However, the program is expected to end in 2026 – with 6,000 properties leaving the Scheme in 2023 and more to leave in subsequent years – raising concerns that many people will be faced with rising and unaffordable housing costs as a direct result.
Advocacy groups have called for the program to be extended beyond 2026 to ensure people renting NRAS properties will not be left homeless, emphasising the urgent need to address the scheme and other housing policies.
Additionally, my suggestion is for the NRAS to target those most impacted by housing insecurity including young people between 19 and 34 years old. Financial incentives could be offered to real estate agents that lease properties through the NRAS to young adults.
It is also important that tenants are given sufficient notice of lease expiration to ensure they have time to find new lodgings if the property leaves the program.
The Housing Australia Future Fund (HAFF) is a new initiative that could potentially compensate for some of the housing losses in the NRAS.
The HAFF will help deliver 30,000 “new and affordable rental homes in the fund’s first five years”, according to Minister for Housing, and Homelessness Julie Collins, some – or all – of which could be utilised as part of the NRAS scheme.
Although this will help increase social and community housing stock, 30,000 new homes will not cover the real housing demands.
Lessons from overseas
Housing programs in the United States including household-based vouchers, public housing and the low-income housing tax credit have helped provide housing for low-income people since the 1980s.
The US Housing Choice Voucher (HCV) program demonstrated that private landlords were motivated to participate in the program because:
First, this program helped private landlords to match with suitable voucher tenants as soon as possible and prevent vacancies in their dwellings. This suggests participating in this program could offer steady and substantial profits for these landlords, compared to non-agent landlords.
Second, the Baltimore Housing Choice Voucher program showed that collecting rent from the tenants in high-poverty neighborhoods is considered a challenge. The rules established by the HCV program could partially offset the financial losses from private landlords, which may compel tenants in arrears of rent to pay the debt before eviction.
Demographic structural inequalities underlying housing vulnerability in the US and Australia are similar – Australia could adopt a plan similar to the low-income housing tax credit scheme, according to Taylor Purcell and Dr Danielle Davidson.
The low-income housing tax credit functions when financial investors and individuals redeem a four to nine percent reduction in income tax annually, in exchange for their commitment to offer real estate for low-income people at a 30 percent below-market rate. It guarantees that investors profit from the low-income housing tax credit program, which stimulates private-sector investments and helps sustain the continuity of this program, without the government’s direct costs for rent subsidies (equate to US$1.7 billion).
Simultaneously, private landlords who successfully joined the low-income housing tax credit scheme must comply with the covenant that it is illegal to evict eligible tenants of subsidised dwellings for a specific period unless there are legitimate causes. This landlord-tenant law enabled long-term and stable housing situations for low-income people.
The success of the low-income housing tax credit program in the US underscores the significance of private investors as a key driver in tackling housing insecurity.
Sustaining programs
Although there are advantages to private housing programs, challenges exist in sustaining them. One of the main challenges in Australia is the shortfall of stable and secure housing stocks.
Additionally, it will be essential to establish clear and consistent policies to maintain tenants’ stable renting and standardise the design of affordable rental dwellings. This may include, but is not limited to, provisions for sufficient natural light, ventilation, and access to maintenance and cleaning services.
Another challenge will be in maintaining sufficient financial incentives to motivate private landlords’ participation in this new approach.
Around 70 percent of Australian rental dwellings are owned and managed by private landlords as freehold land, meaning there is limited room for the development of built-to-rent dwellings.
HAFF will focus on the built-to-rent route to develop more social or community housing, and the Federal Government will be in charge of managing and renting these houses.
However, private housing occupies a large proportion of available Australian lands. This suggests that even though the Federal Government is committed to constructing more affordable dwellings for young adults in need, there is a lack of lands for executing this plan.
While land tax in Australia is only assessed on the value of land, private landlords who usually occupy immovable properties are exempted from land tax if the land value is below a threshold $600,000). If there are no-tax offsets for constructing dwellings, private landlords may be demotivated to join the NRAS and rent out dwellings at below-market rates.
For a decade, NRAS has worked effectively for the homeless in Australia, and has not only benefited young adults but also a wider demographic. To be fully successful, the Federal Government’s HAFF program could adopt a built-to-rent model involving private housings. This change may alleviate the shortage of social or community housing, while also retaining private landlords’ participation in housing programs.
An innovation of HAFF will be high-risk but lucrative, as we urgently seek to provide affordable and secure dwellings for homeless young Australians.
About the author
Yuchen Jia is a public health graduate from the University of Queensland. Yuchen’s international student journey ignited a passion for digging into personal health, dietary habits, and the prevention of top-ranking contagious diseases. Yuchen is also a cat person and loves indoor bouldering.
From Twitter
Read the full report by Everybody’s Home.
See Croakey’s archive of articles on the social determinants of health
