Federal Budget 2024-2025 – continued strong focus on social and affordable housing

By Katrina Reye and Shaun Whittaker

Creation of additional much-needed social and affordable housing stock has been a key plank of the Albanese Government’s policy platform. This continues in last night’s Federal Budget announcements, with $6.2 billion in new commitments to the cause. This is good news for our important community housing provider client base and for superannuation and impact investment funds exploring investment in this sector. The commitments mainly relate to additional funding and funding enhancements to previous major initiatives, such as the Housing Australia Future Fund and the National Housing Infrastructure Facility.

Key announcements include:

• Increasing the cap on the Government’s guarantee of Housing Australia’s liabilities through the AHBA bond aggregator by an additional $2.5 billion to a total of $10 billion, with an associated increase in the line of credit that supports the Affordable Housing Bond Aggregator of $3 billion to $4 billion. This was a largely expected announcement to provide capacity to deliver senior debt requirements for the successful and heavily oversubscribed social and affordable housing projects to be delivered under Round 1 of the Housing Australia Future Fund.
• $1.9 billion to increase the maximum rates of Commonwealth Rent Assistance by a further 10 per cent (over five years from 2023-2024). While this will practically deliver some much-needed relief to vulnerable households around the country, it is also a welcome increase to improve the viability of social and affordable housing projects given CRA increases are typically modelled at CPI or lower.
• Providing $1.9 billion in concessional loans to community housing providers and other charities to support delivery of new social and affordable homes under the Housing Australia Future Fund and the National Housing Accord. This announcement is the most intriguing of all, as it is unclear if this is new funding or simply reflective of the funding required to grant the 10 per cent concessional loans required for projects in Round 1 of the Housing Australia Future Fund.
• $423.1 million in additional funding (over five years) to the National Agreement on Social Housing and Homelessness to boost support for social housing and homelessness services. The additional funding will increase existing annual funding to $1.8 billion per year from 2024-2025.
• $1 billion in 2023-2024 for states and territories to support enabling infrastructure for new housing.

In addition to the above, useful capacity building initiatives have been announced, which will be important for delivery of the pipeline of social and affordable housing projects, such as:

• $7 million over three years from 2023-2024 to provide targeted assistance to residential builders seeking to obtain accreditation under the Work Health and Safety Accreditation Scheme. This will be important for availability of builders to work on successful projects under the Housing Australia Future Fund.
• $6.2 million over two years from 2024-2025 to support building industry peak employer associations to assist residential builders in obtaining accreditation under the Work Health and Safety Accreditation Scheme.
• $19.7 million over six years from 2024-2025 to support housing research and fast track feasibility studies on the release of Commonwealth land to support social and affordable housing on such land.

There also appears to be some rebalancing of existing Housing Australia Future Fund subsidies and grants including:

• the Budget shows a focus on housing for women and children fleeing domestic violence. This includes targeting the pre-existing funding of $1 billion for social housing under the National Housing Infrastructure Facility towards crisis and transitional accommodation for women and children feeling domestic violence. The Budget announcements also include $925 million to permanently establish the Leaving Violence Program over five years to provide initial cash support of $5000 to assist eligible victims and survivors with immediate cash flow needs.
• redistribution of the mix of concessional loans and grants under the Housing Australia Future Fund to increase the proportion of grants to $700 million. An increase in the proportion of grants will support the provision of housing that may not be financially sustainable using the concessional loan product, especially social housing for very vulnerable cohorts of tenants.

In addition to the above, there was good news for housing in the Northern Territory, with the Government providing $839.4 million over five years from 2023-2024 (and $2.1 billion over 10 years from 2024-2025) to accelerate housing delivery in remote Northern Territory communities and increase investment in homelands. The Northern Territory Government has committed to match the Commonwealth’s remote housing investment, bringing the total investment to $4 billion.