Large Scale Stock Transfer and Relationships with the Community
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1 Large Scale Stock Transfer and Relationships with the Community Andrew Beer and Charmaine Thredgold Australian Housing Institute Centre for Housing, Urban and Regional Planning The University of Adelaide October 2014
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3 The Transfer Process In August 2013 the South Australian Government issued a tender entitled Better Places, Stronger Communities Public Housing Transfer Program for the transfer or 480 Housing SA properties in Elizabeth Grove/Elizabeth Vale and 600 properties in Mitchell Park. The transfer was to include the management of properties with ownership remaining with the State Government and there was an expectation that this transfer would be the first of several, with the management of potentially 5,000 properties affected by Housing SA presentations to interested parties noted: The South Australian Government was committed to growing the community housing sector; The government sought to ensure that South Australia remained an affordable place to live; There remains an intention to develop a multi provider system of housing assistance and supply; and, The government sees itself partnering with non-government community housing organisations to build a stronger social housing sector (DCSI 2013). The initial tender release in 2013 focussed on full property and tenancy management for an initial three year period, with a possible extension to 20 years management.
4 The Transfer Process The transfer of stock announced for South Australia is in keeping with developments in other jurisdictions, including Queensland. Over recent years governments have increasingly engaged in the large-scale transfer of stock, and/or the management of such stock, to social landlords. New South Wales, Tasmania, Victoria and the ACT have already transferred significant numbers of dwellings (Pawson et al 2013). Queensland has announced its intention to transfer the majority of its stock and State Government actions are consistent with the Australian Government s aspiration to have up to 35 per cent of social housing managed by the community sector.
5 Issues for Communities and Local Governments The transfer of management of housing from the public to the social housing sector has potentially profound adverse implications for local government. Such transfers may impose additional costs on local governments already serving some of the most disadvantaged communities across Australia, and this risk is amply demonstrated in South Australia. Housing stock transfers have the potential to adversely affect some South Australian local governments because the State Government has granted a 75 per cent rate exemptions to housing associations, on the grounds they are considered a community service. The Local Government (Accountability Framework) Amendment Act 2009 revised Section 161 of the Local Government Act 1999 and introduced an expanded definition of bodies eligible for the 75 per cent mandatory community services rebate to include registered housing associations. Individual local governments may also choose to provide a higher rebate at their own discretion.
6 Issues for Communities and Local Governments A second important risk factor for local governments is the degree of concentration of public housing assets in particular regions and therefore local government areas (LGAs). Potentially these LGAs will be subject to a significant decline in rate revenues as Housing SA properties which pay local government rates are replaced by community-managed housing properties. Local governments will be forced to either raise the rates paid by other property owners or reduce services, or both.
7 Statewide Distribution
8 Metropolitan Distributoin
9 Issues for Communities and Local Governments Major issue 1: Fiscal impact In SA, local governments are required to provide rebates There is no opt in or opt out Major issue 2: Impact on urban regeneration and renewal Will management leases lock out urban regeneration in the long term? Major issue 3: Tenant resistance Often vocal
10 Legislation on Exemptions Across Australia State Legislation Local Government Waiver SA Sub-section 161 (1) of the local 75 per cent rebate (at the discretion of the council Government Act 1999 a higher rebate) for community service organisations. Tasmania Victoria NSW ACT Queensland NT WA Sub-section 87 (1) (d) of the Local Government Act 1993 Sub-section 154 (2) (c) of the Local Government Act 1989 Sub-section 169 (1) (d) of the Local Government Act 1989 Sub-section 556 (1) (h) of the Local Government Act 1993 Sub-section 8 (1) (b) of the Rates Act 2004 Sub-section 8 (2) of the Rates Act 2004 Sub-section 93 (3) (i) of the Local Government Act 2009 Sub-section 144 (1) (f) of the Local Government Act Sub-section 6.26 (2) (g) of the Local Government 1995 Rates exempt for land or part of land owned and occupied exclusively for charitable purposes. The focus of the legislation is occupation rather than use. Rates exempt for land used exclusively for charitable purpose. Councils may grant a rebate or concession to support the provision of affordable housing to a registered agency (includes community housing provider (CHP)). Thus community housing providers do not automatically qualify as organisations which use land for charitable purpose. Rates exempt for land owned by institution or charity. Rates exempt for benevolent institutions and buildings used exclusively for charitable purposes. Excludes community housing purposes from the meaning of public charitable purposes. Discretionary power (lies with individual local government) to give a rates exemption. Rates exempt subject to use (non-exempt purposes must be incidental). Under consideration.
11 Impact of Rebates on Associations In South Australia, the consulting group Sphere (2013) was commissioned by the Community Housing Council to examine ways to maximise the growth of potential of housing associations. It concluded local government rate rebates were important to the generation of a surplus from transferred stock and the creation of a capacity for further growth and: Our modelling estimates that without council rate rebates the surpluses available to the 500 dwelling portfolio in our study halves. In practice this means a significant reduction of the portfolio s capacity to grow (2013 p 2). Perhaps more importantly, Sphere (2013) highlighted the potential importance of title transfer rather than management alone in enabling the further growth of housing associations.
12 Findings Fieldwork in Victoria, NSW, ACT and SA Only SA provides mandated rebates Some NSW local governments provide rebates for housing associations, but not all Some Victorian local governments choose to provide subsidies/capital grants Issues of ownership/management have limited stock transfer in the ACT Local governments have a positive attitude to housing associations But are concerned about the impact of management transfers on place making/regeneration Some local governments reflect the anxiety felt by public housing tenants their constituents
13 Findings Stock transfers have a significant impact on the revenue base of local governments, with implications for their ability to provide services and support for their low income communities; Almost 2,000 rate exemptions in the four LGAs of Marion, Onkaparinga, Playford and Charles Sturt; The rate exemptions for these four councils total $2 million per year. Given that rates are an annual charge, the total loss of revenue is significant, with substantial implications both for cash flow and overall budget position. The potential impact on individual councils is severe, with one estimating that up to $2.6 million per annum in revenue could be lost; There is clear evidence of both cost shifting from the State Government to local governments, and of community housing rate rebates exacerbating already significant challenges within communities, as one local government noted: The financial impact increases for our community each year particularly those on fixed incomes. Currently we have 16,526 or per cent of our residential properties who are in receipt of State concessions. Where properties are in receipt of mandatory and/or discretionary rate rebates the State withdraws the State pensioner concession. The whole exercise appears to be cost shifting from State Government to Local Government. The rate rebate has compounding fiscal effects for Council and the broader community, with the cost burden associated with the Natural Resource Management affected by stock transfers and associated rebates;
14 Conclusions This is an issue of risk and governance: Risk for housing associations in the loss of community support Risk for state governments in compounding disadvantage Risk for local governments in shaping their communities Cost shifting Note Griffith Universities findings on attitudes to governments in Australia
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