Housing Australia Future Fund: what does it actually mean?

By Katrina Reye

The Commonwealth Government has released the Housing Australia Future Fund Bill 2023. The Fund is earmarked for affordable housing and hopes to provide community housing providers and associations and others with a much-needed boost to help alleviate housing shortages in the regions. We provide an overview of the reforms and comment on what will happen in the first five years, who will benefit and who will administer the Fund. We also discuss the limits of the Bill’s operation.

The Commonwealth Government describes the package of reforms as follows:

• establishing a National Housing Supply and Affordability Council to independently advise the Australian Government on options to improve housing supply and affordability;
• establishing the Housing Australia Future Fund to enhance the Commonwealth’s ability to make grants in relation to acute housing needs, social housing or affordable housing and to make payments to the National Housing Finance and Investment Corporation (NHFIC) for the purposes of enabling the NHFIC to make grants in relation to acute housing needs, social housing or affordable housing.
• expanding the remit of the National Housing Infrastructure Facility to directly support new social and affordable housing;
• expanding the remit of the NHFIC (to be renamed Housing Australia) to deliver the Government’s social and affordable housing programs; and
• developing the National Housing and Homelessness Plan, which will set out the key short, medium- and longer-term reforms needed to improve housing and homelessness outcomes across the spectrum, including to make it easier for Australians to buy a home, easier to rent and also to reduce homelessness.

How much will be invested in the Fund by the Commonwealth Government?

The Fund will be initially credited with $10 billion as soon as practicable after it is established. The funds will be invested and will then provide a funding stream of up to $500 million per year to support new social and affordable housing and to meet a range of acute housing needs.

What will happen in the first five years of the Fund?

In the Fund’s first five years, the Australian Government intends to use the proceeds of the Fund to support:

• 20,000 homes to provide social housing. 4,000 of the social housing homes will be allocated to women and children leaving or experiencing domestic and family violence and older women on low incomes who are at risk of homelessness; and
• 10,000 homes to provide affordable housing for frontline workers like police, nurses and cleaners.

What type of grants will be made from the Fund?

The power to make grants is set out in section 18 of the Bill. Section 18(1) would allow the Minister to make grants of financial assistance to a person or body in relation to acute housing needs.

This grant power allows the Commonwealth to make grants directly to people, companies and other legal entities, but only in relation to acute housing needs.

‘Acute housing’ has a narrow definition and is described as referring to crisis housing offered to cohorts at serious risk of, or who are already experiencing, homelessness. This includes short-term and emergency housing, medium- to long-term transitional housing and specialist services in relation to housing.

Section 18(3) allows the Minister to make grants of financial assistance to a State or Territory in relation to acute housing needs, social housing or affordable housing. This means that a broader range of grants can be made directly to the States and Territories as compared with other entities.

Given the narrow definition of acute housing needs, it is likely that the direct grant power in section 18(1) of the Bill will be limited to benefitting community housing providers or housing associations that provide short-term and emergency housing, medium- to long-term transitional housing and specialist services in relation to housing.

Broader grants from the Fund for the purposes of social and affordable housing will be available to the States or funnelled through State programs. Accordingly, it is important we understand:

• how the States intend to use these funds;
• what type of grants and programs they will be used for; and
• Who will be able to access the grants and programs administered by the States.

Who will benefit from the Fund?

As set out above, anyone can receive a grant of financial assistance directly from the Fund for the purpose of acute housing needs. ‘Acute housing needs’ is defined narrowly and is not broad enough to cover affordable housing (and may not even cover social housing). In practice, the types of entities that provide these types of services are community housing providers and housing associations.

The States will benefit from the Fund as the States are entitled to receive funding for a broader range of purposes than acute housing needs. This means it is very important to understand how the States intend to use these funds and for what programs or incentives.

Who will be administering the Fund?

The Fund will be administered by the NHFIC, which currently administers the National Housing Infrastructure Facility (the NHIF). The NHFIC will be renamed Housing Australia and will have a broader remit than previously. The NHIF will also be expanded and will be able to be used to finance both housing-enabling infrastructure projects as well as new social or affordable housing projects. The broader scope of the NHIF is interesting, but the detail of this has not yet been explained.

General commentary

The Housing Australia Future Fund Bill is warmly welcomed in an economic context that includes high housing prices, high rents, high interest rates and a dire need for more housing supply. However, the grants power in section 18(1) of the Bill is very narrow in its operation. This means the success of the Fund will depend on how the Commonwealth works together with the States in a cohesive and consistent way to ensure the objectives of the Fund are met.

Hall & Wilcox specialises in social and affordable housing infrastructure projects and NHFIC funding projects and we will continue to closely watch and report on the evolution of this Bill.