Operating deficits and public housing: policy options for reversing the trend
Summary
The 1996 Commonwealth State Housing Agreement (CSHA) constrained income for State Housing Authorities (SHAs) from government grants and rents from tenants, and moved to target available public housing on low-income households with multiple and complex needs. Six out of nine State Housing Authorities in Australasia are now running operating deficits that are not financially sustainable. By funding the implied community service obligation (the difference between market rent on public dwellings and the rebated rent paid by eligible public tenants), as happens in New Zealand, all housing authorities bar one would be returned to operating surpluses.
Project Number: 30154
Research Theme: Public_and_Community_housing
Project Leader: Berry, Mike
Funding Year: 2002
Research Centre: RMIT-NATSEM
Research & Policy Bulletin
Issue 041: Sustainable financing for public housing authorities
After nine years of policy and program delivery change, six out of nine housing authorities in Australasia are running operating deficits which are not financially sustainable.
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125 KB PDF Document
Description
A key constraint for mainstream public housing is that the net revenues after rebates at least pay for operational costs, (net of interest paid or received). If this is not the case, any addition to stock expands the additional funding requirement to pay for the deficit. In these circumstances the only option for reducing or freezing the additional funding requirement is to sell stock and therefore reduce the number of households provided with longer term assistance. The rate at which these operating deficits are growing, and the timing of when they will outstrip current real levels of grant funding is of critical policy concern. Clearly continuation of the current trends may carry with it the risk of a potential paralysis of housing assistance policy development, and a possible forced withdrawal to private rental subsidies as the only method of continuing housing assistance, with the possibility of a future fiscal blow-out. The aims of this project were therefore to: clarify the impact of public housing operating deficits on the development of comprehensive and expansive housing assistance policies; develop suitable policy options for returning public housing to operational surpluses; and by so doing; provide a context for more comprehensive and expansive housing assistance policies.
The project addressed four key research questions:
- How should operating deficits be defined? (addressed by discussion paper, and research questions).
- What are the trends in operating deficits and are they or are they not restricting stock additions to public housing? (addressed by public housing accounts analysis and CEO questionnaire/interview)
- What are the reasons for the development of operating deficits and what are the influences of particular cost components? (addressed by public housing accounts analysis and CEO questionnaire/interview)
- How can the components of operating regimes be benchmarked, what are the relevant international comparisons and what policy options can housing authorities introduce to improve outcomes? (addressed by benchmark literature review, analysis of overseas benchmarks and comparison with SHA's and Productivity Commission benchmarks).
More Information
Final Report: No. 055: Operating deficits and public housing: policy options for reversing the trend
3.78 MB PDF Document
Research and Policy Bulletin: Issue 041: Sustainable financing for public housing authorities
125 KB PDF Document
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