Understanding the ‘residualisation’ of social housing

Historic underinvestment has meant that Australia’s limited social housing stock is now targeted at those in greatest need

Last updated 4 July 2019

In contemporary discussion of public and community housing (collectively known as ‘social housing’) in Australia, the sector is often described as experiencing ‘residualisation’. What does this term mean and how did social housing become ‘residualised?’

What is residualisation?

Residualisation describes the case that social housing tenants who have the means often choose to exit this tenure, leaving behind ‘neighbourhoods comprised of those with least resources and opportunities’. As a consequence, ‘social housing has developed a significant association with crime and criminality, disorder, anti-social behaviour, welfare dependency and impressions of a detached underclass unwilling or unable to engage with labour market opportunities or mainstream norms and values.’

While this association is contentious and not necessarily deserved, historic underinvestment and a chronic shortage of social housing has meant that Australia’s limited social housing stock is now targeted at those in greatest need—individuals and households who rely on government benefits and cannot afford to pay market rents.

How did social housing become ‘residualised’?

The history of public housing in Australia shows Queensland was the first Australian government to legislate for the subsidisation of housing before the First World War (1909 Housing Act), followed by various state experiments catalysed by social movements to reduce poverty and address deteriorating housing conditions. However public housing’s biggest impact came after the housing shortages of the Second World War when its expanded role was seen as housing for returning soldiers and performing a wider role as a vehicle to advance the economy by providing accommodation for workers in manufacturing industries and ports. Indeed, investment in public housing was seen as necessary to maintain economic growth, and the bulk of public housing families had at least one employed household member. Public housing was viewed as  ‘either a transitory tenure form in a housing pathway leading towards home ownership (often through buying one’s public housing dwelling) or an alternative for those who did not choose that path’.

From the late 1970s, eligibility for public housing became increasingly means tested, becoming ‘a housing form for the poorest population groups—predominantly income support recipients—and for households in high need, particularly the elderly, single parents and people with a disability.' This targeting further increased with the 1995–96 Commonwealth-State Housing Agreement (CSHA) in which the Commonwealth Government placed ‘considerably greater priority on ensuring that new public and community housing allocations were targeted to those most in need.’

In 2016–17, 73 per cent of newly allocated tenancies in public housing and 86 per cent in community housing were allocated to tenants in the ‘greatest need’

How are tenants selected for social housing?

The selection process occurs in three ways: by narrowing the eligibility criteria for social housing (primary allocation); by creating allocation mechanisms to choose from the wait list those in greatest need (secondary allocation); and by creating rent systems—notably market rents for higher income households—that encourage such households to move out of public housing.

In 2016–17, 73 per cent of newly allocated tenancies in public housing and 86 per cent in community housing were allocated to tenants in the ‘greatest need’, which typically includes disability, poor physical health, mental illness, trauma, old-age/frailty, family violence, homelessness (or risk of homelessness), exiting institutions (e.g. prison), or ‘complex’ needs, referring to a combination of multiple risk factors.

As a consequence of such selection processes, between 1990–91 and 2000–01 the proportion of public tenancies on rebated rents rose from 78 per cent to 88 per cent, and the proportion of new tenancies allocated to priority recipients rose from 17 per cent to 49 per cent of new tenancies. A rebated rent is one where the household pays a fixed proportion (around 20 to 25%) of a designated income rather than a cost or market rent. In the early 1980s only around 60 per cent of tenants were on a rebated rent, but as targeting policies were implemented it peaked at 90 per cent in 1996–97 and has hovered slightly below this level ever since.

Over the time frame 1990 to 2001 real rental and total income per dwelling remained either flat or declined for six of the nine state housing authorities, and the rate of growth of real income for the remaining three authorities was significantly slower than the rate of growth of real net expenditure. Where all the state housing authorities except one were in financial surplus in 1990–91, by 2000–01 only Victoria and South Australia were in surplus.

The increasing demand for public housing from high need groups over time has not been ‘matched by growth in the supply of public housing. As a result, lower-need households and lower-income households participating in the workforce have been gradually excluded from accessing public housing, with access increasingly targeted to those with the greatest needs.’

What are the implications of residualisation?

As social housing policy has increasingly targeted assistance to households with complex support needs, social housing landlords (i.e. government housing authorities and community and Indigenous housing providers) have acquired a larger role providing necessary support programs, such as employment and mental health programs.

Social housing landlords also now have a greater role in managing crime and non-criminal anti-social behaviour (‘misconduct’) from tenants. As a consequence, evictions from public housing and other social housing in NSW and public housing in Victoria are two to four times the rates of evictions tenants in the private rental market.

Recent AHURI research into legal responses to crime and anti-social behaviour in social housing found cases of women held to be in breach and evicted because of violence against them; children being evicted, and insufficient safeguards as to their interests; complicated circumstances and barriers to support for Indigenous tenants; and alcohol and drug treatment disrupted by punitive termination proceedings.

Residualisation, and its associated lack of investment in expanding social housing, also means lower-need households and lower-income households who are participating in the workforce (who would otherwise qualify if it wasn’t for the fact they don’t meet ‘special needs’ criteria) are no longer able to access public housing and must pay more expensive market rents. This has led to the situation where 47 per cent of low income households living in Australia’s capital cities are in housing affordability stress (i.e. paying more than 30% of income in rental housing costs).