Affordable Housing Inquiry - Senate Economics References Committee

Affordable Housing Inquiry - Senate Economics References Committee

MERCY FOUNDATION SUBMISSION TO THE INQUIRY INTO AFFORDABLE HOUSING

MARCH 2014

BACKGROUND

The Mercy Foundation is an organisation committed to social justice and structural changes to create greater social equity and inclusion in the Australian community.

The Mercy Foundation has a focus on ending homelessness and is interested in addressing its related causes and consequences. These include: affordable housing, poverty, family violence, social exclusion, mental illness, disability, addictions and brain injury.

Whilst the Foundation makes this submission in response to some of the terms of reference of the Inquiry, we have a particular interest in preventing and ending homelessness and so the focus of this submission is on housing policies and initiatives that increase supply, service integration and address chronic homelessness.

1. Introduction

It is well known that housing affordability in Australia is worsening. The NSW Parliamentary Research Service’s Briefing Paper ‘Housing prices, ownership and affordability: Trends in NSW, 1/2014 highlights the housing affordability problem in Australia, with a specific emphasis on NSW. Its conclusion, that “there is an underlying structural affordability problem in Australia” is of serious concern. If this underlying structural problem is not adequately addressed by government policy, land release and supply policies we will continue to see a larger proportion of our population permanently excluded from the long term security of housing.

The security of housing cannot be under-estimated. Housing not only benefits individuals, families and communities in obvious ways, such as shelter, warmth & privacy – it promotes other benefits, such as better health, educational access and community connectedness. Those who live in insecure, inadequate, unaffordable housing as well as those who have slipped into homelessness face a range of problems. People that become homeless and then must be assisted by crisis services can cost the government and the community a considerable amount. More details about the economic cost of homelessness is provided elsewhere in this submission.

The role of all levels of government in facilitating affordable housing

The Federal government has a special role in relation to affordable housing, given its responsibility for commonwealth taxes, funding of the States and its capacity to set national policy. Whilst State governments have a clear responsibility for public housing, land release and the setting of zoning and development policy, either though its own mechanisms or through local government, it cannot effect substantive social policy in relation to most taxes, income support or address poverty more generally.

It must be understood that homelessness is caused by poverty. Poverty is caused by unemployment and under-employment. Unemployment can be the result of many factors, but it includes short term job loss, full time parenting, long term ill health or disability. The Federal government has a capacity to address poverty in Australia. Through taxes, employment policy and income support.

2. The National Rental Affordability Scheme

This is an excellent recent initiative, based on the tax credit system in the US which has been effective in stimulating the creation of affordable housing over several decades.

However, one observed problem is the adequacy of a subsidy of $10,000 per year for 10 years as well as the definition of ‘affordable’ housing. In many areas of Australia this may be adequate, but in the capital cities where housing has been considered severely unaffordable this subsidy has not been enough to stimulate adequate housing. It appears to have been sufficient for the building of student bedsit accommodation, but less useful to other parts of the market.

In severely unaffordable housing markets, 20% lower than market rent can still be quite unaffordable for many renters to whom this program is targeted.

It is recommended that the Federal government review this scheme and assess its effectiveness in creating ‘affordable’ housing in capital city markets. Following that review it is hoped that a similar scheme will continue to be supported by the government, as it clearly has the potential to create additional affordable housing stocks into the future.

3. Public and social housing

There has been ongoing disinvestment in public housing in most States of Australia for the past two decades. To the point that public housing is now used as one of the few housing options for people in poverty, living on federal government income support. This primarily includes aged people, people with disability, single parents and the long term unemployed. So, although public housing is a State Government responsibility it is now almost exclusively paid for by the Federal Government. People on income support payments pay 30% of their income from the Commonwealth to the State Government in rent.

There is not enough public housing in NSW. Waiting lists are long and many individuals and families wait years in overcrowded housing or in homelessness to access affordable public housing. I believe this is also the case in most other States. Given the Commonwealth’s significant financial commitment to public housing in each state, through income support payments, it would not be unreasonable for the Commonwealth to support increased investment in public housing so that people are appropriately housed and in a better position to participate in employment, if relevant and if not, contribute to the community in other positive ways.

4. The impact of Commonwealth, state and territory government policies and programs on homelessness

The Federal Government’s long term commitment to the Commonwealth/State funding partnership of homelessness services is an example of its ability to significantly influence what services and how services to homeless people are provided.

A particularly timely example is the funding provided through the National Partnership Agreement on Homelessness (NPAH) for new types of service delivery that provided street outreach and support as well as ongoing support to homeless people who were housed through ‘Housing First’ initiatives. A number of these programs ended people’s long term homelessness and by so doing saved ongoing homelessness crisis support dollars. Although the government has not yet announced further funding of this program, it remains a good example of the newer approach needed to focus less on transitional and crisis models and more on solutions that permanently end people’s homelessness.

If the NPAH is not re-funded there is a great risk that some people in housing will no longer receive community support and could become homeless again.

The Federal Government’s ongoing involvement in funding homelessness services through the States must continue to be underpinned by an expectation and facilitation of housing outcomes. Servicing people indefinitely in a crisis support system is not only costly, it is ineffective. Homelessness service provision has to be linked to public and privately affordable housing supply. Without that clear link, homelessness services cannot exit clients out of homelessness. Unfortunately in Australia, those two sectors are not strongly linked.

5. The economic consequences of not preventing or solving homelessness

In the past 15 years there have been a number of studies investigating the cost of servicing people who are homeless, compared to the cost of providing permanent supportive housing to end their homelessness. Whilst it can look to the casual observer that a chronically homeless person costs our community very little, the reality is quite different. Professor Denis Culhane from the University of Pennsylvania was one of the first academic researchers to do a study that identified the cost of sustaining people in homelessness. In 2000 he reported that it cost US $41,000 per year to sustain someone with a mental illness in chronic homelessness in New York City.

The costs associated with homelessness include crisis accommodation, food services, emergency funds, emergency hospital and medical expenditure, mental health crisis care, police and public space management. Since those first studies in the US, Australian researchers have also investigated the economic costs of not ending someone’s experience of homelessness. In 2006 I estimated a cost of approximately $34,000 per year might be spent on services to assist people whilst they remain homeless in inner Sydney.

A few years ago the Sacred Heart Mission in Melbourne undertook a project called Journey to Social Inclusion (J2SI) which focussed on assisting homeless people with high needs into supported housing. A component of the project was a robust evaluation and cost-benefit analysis.

“The report contains the first cost-benefit analysis (CBA) of a program working with the long-term homeless. The CBA shows three things. First, all of the benefit-cost ratios are positive, indicating that the J2SI pilot generates positive outcomes. Second, the report shows that the initial investment is high but the long-term benefits are potentially significant. The CBA shows that in the short-term (two years) the costs to government and society outweigh the benefits – for every dollar invested the savings are 0.24 cents and 0.35 cents respectively. However, the position is reversed over a 10 year time frame where for every dollar invested there is a saving of $2.03. Finally, the results of our sensitivity analysis that adjusted for attrition suggest that the true short-term benefit for society lies between 0.35 (or a return of 35c for every dollar invested) and 1.46 (or a return of $1.46 for every dollar invested).”

The Australian Housing and Urban Research Institute (AHURI) has also looked at prevention and people at risk of homelessness and have noted that they are heavy users of health, justice and welfare services as well as being more likely to have children placed in out-of-home care and experience eviction from a public tenancy. This higher than population use of non-homelessness services represents both a cost to government and a potential cost savings to government where support is provided to prevent homelessness.

6. Solving long term homelessness

Poverty and unaffordable housing leads to homelessness. The majority of people who experience homelessness in Australia experience it relative briefly and will have their homelessness solved through achieving employment or by finding affordable housing. They may only need to access homelessness crisis services for short periods.

There is a smaller group of people in Australia (estimated at approximately 20% of total homeless numbers) who experience long term homelessness, some of whom sleep rough. As well as the problem of poverty and unaffordable housing, they are also more likely to have additional problems, such as mental illness, disability, brain injury, serious health conditions, a history of institutionalisation and foster care.

The Mercy Foundation, in collaboration with a number of other organisations in Australia has implemented and supported ‘Registry Weeks’ in 7 cities/regions. The purpose of these projects has been to identify and survey people who are chronically street homeless, using the ‘Vulnerability Index’. The VI is based on 8 health issues that place people who are homeless at greater risk of death compared to people who are housed. The VI itself is based on the research work of Dr J. O’Connell and Dr S. Hwang form the US.

The intent of the project is to identify the most vulnerable and work to link them with permanent housing and support as quickly as possible. In fact, since the first Registry Week (known as 50 Lives 50 Homes) was done in Brisbane in mid 2010, there have been projects in inner Sydney, Western Sydney, Townsville, Melbourne, Hobart and Perth.

Although the key goal of these projects is to identify who is homeless and make sure they are linked to permanent supportive housing, it has also meant that we understand a lot more about the issues facing the most chronically homeless people in Australia. The following is some national data, based on the 7 locations that have hosted Registry Weeks. As at August 2012 when this national analysis was done, 1680 people had been surveyed.

28% had been in foster care

75% had spent time in police cells

53% had been in prison

Half of the number surveyed had not been housed at all in the past three years

26% had been housed/re-housed 3 times or more

6% had been housed/re-housed 10 times or more.

61% reported a mental health condition

51% reported having received treatment for a mental health condition

73% reported drug/alcohol abuse

46% reported having received treatment for drug/alcohol abuse

51% had been the victim of a violent attack

24% reported a disability that limited their mobility.

29% reported a brain injury or head trauma.

53% identified as ‘vulnerable’(using VI – at greater risk of death).

As can be seen from the above data, people who experience chronic homelessness in Australia report significant disability. Many of this group are not able to sustain housing without ongoing community and health support. As previously noted, the economic cost to the community in sustaining people in a state of homelessness can be significant. Even more importantly, the health and personal costs to the individual are considerable.

As a result of these projects and the ongoing work of outreach teams based in each location, vulnerable homeless people have been prioritised for housing and support. For example, in inner Sydney the Way2Home Street Outreach and Support team have housed and supported 102 people from the VI register. They also report a 98% housing retention rate. Needless to say the housing results of each team in each location is dependent on the supply of affordable housing. However, what these projects have shown is that where there have been discrete permanent supportive housing programs (for example Common Ground and Platform 70) it is possible to end the experience of long term homelessness by supporting people in permanent housing.

The need for the Federal government to re-commit to targets to reduce and to ultimately end chronic homelessness in Australia is essential. One of the problems with the original target setting was that it didn’t identify mechanisms by which those targets would be assessed or measured. In relation to certain types of homelessness, the VI Registry Week methodology provides such a mechanism.

7. Women - housing and homelessness

The Mercy Foundation recently commissioned a research paper from Dr M. Petersen from the University of Queensland – which looked at older women’s homelessness. Whilst there is a group of older women that may have experienced long term housing insecurity and been homeless at times, there is another new and distinct group of older women who are now finding themselves homeless for the first time.

One reason for this is couples who have always privately rented being no longer able to afford their rent after one partner dies. Another reason is that the current population of older women haveless access to personal wealth or superannuation because of disrupted or non-existent periods in the workforce. As previously noted, living on the aged pension and trying to rent privately in a capital city of Australia is a significant difficulty. There are few options for women in this category. Accessing some crisis homelessness services is difficult for younger people, but they can be even more difficult places for an older woman with no previous history of homelessness. The Federal government’s role in both homelessness and aged services policy could effect a solution to this relatively small problem.

I am also sure that the Inquiry will receive submissions from women’s services noting that majority of women who experience homelessness in Australia are women who are fleeing domestic violence. Ensuring that there is adequate and safe crisis accommodation for women in this situation as well as affordable long term housing for women and their children to exit homelessness continues to be a vital need.

8. The impact of not having a long term national affordable housing plan

Australia now finds itself in a situation where wealth created by property is in the hands of an older generation. Younger first home buyers are being increasingly excluded from housing and the wealth that housing in Australia has created for previous generations. The government needs to consider a plan that will re-structure this situation over the longer term.

Adequate affordable and social housing options for people living long term on government income support must be addressed as part of that plan. Whilst employment opportunity is the answer to alleviating some poverty, there will remain people with illnesses, disability or caring responsibilities who cannot participate in the paid workforce. These people should not be consigned to long term homelessness or living with severe financial hardship and housing stress.

Felicity Reynolds

CEO, Mercy Foundation

Sydney

March, 2014

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