Social and affordable housing: an economic issue that affects us all
Social and affordable housing is an economic and social infrastructure issue, not just a housing infrastructure issue. There will be long-term costs to our country if we do not supply sufficient social and affordable housing. And it is a broad issue that requires both public and private investment in order to tackle the shortfall.
These were some of the key points raised at our recent webinar, where we gathered a panel of industry experts to discuss how the public and private sector can work together on solutions to address homelessness. The panel included Jim Miller, Infrastructure Victoria Chair; Deborah Brill, NSW Land and Housing Corporation Executive Director; Robert Pradolin, Housing All Australians Founder and Director; and Greg Budworth, Compass Housing Services Group Managing Director.
The discussion around social and affordable housing needs to be broader and directed at changing people’s perceptions. It is not just a government problem, nor is it just a housing problem. As Robert Pradolin pointed out, there is a long-term benefit to society to invest in housing.
‘The payback to society, based on international reports, is well in excess of 5 to 1, if not 10 to 1. It is good business to invest in housing as a preventative,’ he said. ‘The concern is that with COVID-19, things have got worse rather than better. If that is extrapolated into the future, based on the current trajectory, then we are heading for civil unrest. Shelter is a primal need. If we don’t satisfy it as human beings, we have unintended human consequences in terms of mental and physical health issues, family violence, justice and policing issues, and long-term welfare dependency. A human being cannot be productive to society without a roof over their head.’
The economic burden to society of not housing our most vulnerable cannot be understated. Analysis by SGS Economics indicates that providing public, social and affordable housing in the right locations offers communities a cost-benefit ratio of 7:1.
Greg Budworth explained that Australia has the dubious distinction of being ‘one of the most unaffordable countries in the world that houses some of the most unaffordable cities in the world’. However, the affordability problem is not confined to our capital cities. Mr Budworth said it is creating a diaspora, particularly from Melbourne and Sydney, where people are moving from these two big cities into rural and regional areas. This is affecting affordability, especially in rural and regional areas across Victoria and NSW.
Jim Miller highlighted that COVID-19 has worsened housing affordability, rather than improving it. He also pointed out the importance of proper planning, design and funding. Planning for social and affordable housing cannot be done in isolation to other government planning objectives.
‘We acknowledge that integration is tough but it’s a smart thing to do and creates real value. You get the best bang for your buck, as well as the best social and community outcome, if you look at all components together. We also need to make sure these homes are not just fit for purpose now but are fit for purpose in the longer term, for example in areas such as energy efficiency. And the funding for these houses needs to go beyond just one budget cycle,’ he said.
One way of addressing the shortfall would be to incentivise superannuation funds to invest in local housing, rather than overseas. Mr Pradolin pointed out that the financial system as it currently stands forces superannuation funds to invest money in overseas housing, for example in the US, UK and Canada, rather than locally.
Deborah Brill highlighted a pilot partnership program that could provide one solution in fixing the shortfall. The NSW Land and Housing Corporation is partnering with NHFIC and CBUS Super on a pilot of a community housing redevelopment program that will have the capacity to scale and attract institutional investment. The pilot, launched in August 2020, is the first time that industry super funds have been involved in a social housing development.
Under the pilot, the community housing provider is given the opportunity to lead the development and then run the operation of a new build to rent mixed tenure housing. The provider can also apply for a financing package from NHFIC and CBUS Super.
The webinar discussion was a real eye-opener in terms of understanding the massive economic and social impact homelessness causes and the real challenges faced by the various sectors in addressing the problem. Hall & Wilcox looks forward to continuing the discussion and we will shortly be announcing details for our next webinar on this critical issue.
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